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As talks about an impending recession heat up, startups and scale-ups are getting more calls and letters from investors to sharpen the ship and focus on profitability. Inflation, rising interest rates and the stock market’s slump have all led investors to fear companies that have yet to prove they can nimbly move through uncertain waters. Companies feel the pinch of recessionand their reserves are dwindling – and the need is to extend your runway until the tide turns again.
But how does that affect the investments in digital technology that physical companies have made? The companies that can weather the storm can generate revenue even when the market is low, and digital is key. However, investments will also be examined in the same way, but not to the same extent as in the startup world. Therefore, the answer lies in digital efficiency.
Digital efficiency can be seen as a two-pronged approach:
- refocus what that we are pursuing with our digital initiatives: We need to invest less in potentially disruptive innovation and more in the application of technology that will enable our company to be more efficient in its current iteration – operational efficiency, be it in sales, maintenance or any other part of the business.
- Be more efficient in how we arrive at those results: Improving the way our teams work to generate more business value faster with the same or less investment. This is certainly not trivial, and I outline four fundamental steps to do so below.
Related: How the changing labor market is impacting digital transformation
Embrace the product mindset
The first step towards digital efficiency is the transition from a project-based mindset to a product-based mindset. With a project mindset we focus on completing each project or delivering one specific functionality. A Product mindset is shifting from completing a single project to achieving business results that are visible to our clients and clients on a daily basis. Perhaps ironically, in the current context, this is a lesson from startups that most enterprises have not yet learned.
A project ends, but our products and processes must constantly evolve based on customer feedback. There cannot be a planned beginning, middle or end of a product, but rather an acknowledgment that we must constantly adapt and evolve as the market and consumer needs change. We need to focus on going to market quickly, with a minimum number of features, listening to customers through data analytics and evolving quickly with a minimal investment, understanding every step of how much closer we are to achieving our business goals.
Digital efficiency requires us to prioritize continuous iteration in product development. Treat your products like living organisms – they will suffocate if you don’t market them and grow them as quickly as possible. The work doesn’t stop just because the project does. It just goes to the next stage of its life cycle.
Related: Does your company need a digital transformation?
Take your engineering practices into the future
Assuming we’re already pursuing business goals with a product mindset, digital efficiency means we’ll get there quickly and efficiently – meaning our engineering practices are not only up-to-date, but also forward-thinking. Take stock of your practices, including: developer speedautomation and product quality, and measure how they relate to peak performance.
With the abundance of data now available, it’s easier than ever to benchmark our processes and improve our DevOps. DORA stats conducted in-depth market research to identify four metrics that measure elite performance: implementation frequency, change turnaround time, change failure rate, and time to restore service. And while I won’t go into the minute details of the importance of each of them (you could read ten more pages), leaders can and should use these metrics to analyze their engineering practices and measure them against the industry’s top performance standards. from 2022.
Related: The role of corporate culture in digital transformation
Lean teams are agile teams
The final element of digital efficiency is the creation of lean teams. Digital efficiency requires teams to become more autonomous to avoid communication delays and unnecessary meetings or check-ins. Lean teams focus on operational efficiency and ask the question, “Can we achieve more with the same level of investment?” No more flying from project to project – give your engineers a reason to have skin in the game and really invest in the success of every product they release.
Lean teams will be essential as we potentially head into a recession. With less overhead, we can easily cope with the coming tumult – there’s no unnecessary baggage to burden us, and we can move through even the stormiest skies with agility.
Transparency with outsourcing partners
Brick-and-mortar companies rely heavily on outsourcing, and those they outsource with need to keep their practices transparent so that the companies can see how well their outsourcing partners are doing. Companies need to know that their partners understand their initiatives as digital products rather than projects. Ensuring that their partners fully understand this mindset is key to raising the bar and setting internal benchmarks.
It’s one thing to know on paper what a good metric is, but another struggle to feel those metrics are possible. Anyone can be an elite artist, but they need to have the right mindset, practices and teams to reach that standard. This standard isn’t just something the unicorns of the world can achieve. It is something that companies should have in their organization. Once you find partners who demonstrate that they can not only meet the benchmarks set for them, but also excel, your team will have enough support to achieve that elite status.
Don’t get caught skinny dipping
It’s easy to get comfortable with the status quo when the economy is doing well – the money is flowing, so how would there be room for improvement? But to paraphrase Warren Buffet, when the tide goes down, you can see who’s naked.
With a recession looming, we are all set to determine the effectiveness of our business. Don’t get caught swimming in the pool without a bathing suit or even a towel in sight – prepare for the economic downturn today by prioritizing digital efficiency.