The Secret to Driving Revenue Even When The Markets Are Down
Opinions expressed by Entrepreneur contributors are their own.
As conversations around a looming recession increase, startups and scale-ups have seen more and more calls and letters from investors to tighten the ship and focus on profitability. Inflation, rising interest rates and the stock market’s decline have all caused investors to run scared of companies that have yet to prove their ability to move nimbly through uncertain waters. Companies are feeling the pinch of a recession, and their reserves are dwindling — and the imperative is to extend one’s runway until the tide turns again.
But how does that affect the investments in digital that brick-and-mortar enterprise companies have been making? The companies that will be able to weather the storm can drive revenue, even when the market is down, and digital is key to this. However, investments will also be scrutinized similarly but not to the same extent as in the startup world. That’s why the answer lies in digital efficiency.
Digital efficiency can be seen as a two-pronged approach:
- Refocusing what we’re pursuing with our digital initiatives: We need to place less investment in potentially disruptive innovation and more in the application of technology that will allow our business to be more efficient in its current iteration — operational efficiency, be it in sales, servicing or any other area of the business.
- Being more efficient in how we get to those results: Improving how our teams work to generate more business value faster with the same or lesser investment. This is certainly not trivial, and I outline below four fundamental steps toward that.
Related: How the Changing Labor Market Is Impacting Digital Transformation
Embrace the product mindset
The first step toward digital efficiency is transitioning from a project-based mindset to a product-based mindset. With a project mindset, we focus on finishing each project or delivering one specific functionality. A product mindset moves away from completing a single project and toward achieving business results that tangibly show up for our customers and clients daily. Perhaps ironically, in the current context, this is a lesson from startups that most enterprises haven’t learned yet.
A project ends, but our products and processes should constantly evolve based on customer feedback. There can be no scheduled beginning, middle or end to a product but rather an acknowledgment that we must continuously adapt and evolve as the market and consumer needs change. We must focus on going to market fast, with a minimum set of features, listen to customers through data analytics and evolve quickly with minimum investment, understanding at each step how much closer we are to achieving our business goals.
Digital efficiency requires we prioritize continuous iteration in product development. Treat your products like living organisms — ones that will suffocate if you don’t release them to the market and allow them to grow as soon as possible. The work does not stop just because the project does. It simply moves into the next phase of its life cycle.
Related: Does Your Business Need a Digital Transformation?
Bring your engineering practices into the future
Assuming we’re already pursuing business goals with a product mindset, digital efficiency implies that we will get there quickly and efficiently — meaning that our engineering practices are not only up-to-date but ahead of the curve. Take stock of your practices, including developer velocity, automation and product quality, and measure how they stand against peak performance metrics.
With the abundance of data now available, it is easier than ever to benchmark our processes and improve our DevOps. DORA Metrics has conducted in-depth market research to identify four metrics that measure elite performance: deployment frequency, lead time for changes, change failure rate and time to restore service. And while I won’t go into the minute details of the importance of each right now (you’d be reading for another ten pages), leaders can and should utilize these metrics to analyze their engineering practices and bring them up to the standards of elite performance in the 2022 marketplace.
Related: The Role of Company Culture In Digital Transformation
Lean teams are agile teams
The final element of digital efficiency is creating 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, asking, “can we achieve more with the same level of investment?” There is no more coasting from project to project — give your engineers a reason to have skin in the game and truly invest in the success of each product they release.
Lean teams will be essential as we potentially head toward a recession. With less overhead, we can easily face the upcoming tumult — there is no unnecessary baggage to weigh us down, and we can move through even the stormiest of skies with agility.
Transparency with outsourcing partners
Brick-and-mortar companies leverage a lot of outsourcing, and those they are outsourcing with must keep their practices transparent so the companies can see how well their outsourcing partners are doing. Businesses need to know that their partners understand their initiatives as digital products rather than projects. Ensuring their partners fully understand this mindset is essential 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. Everyone can be an elite performer, but they must have the right mentality, practices and teams to achieve that standard. This standard is not only something the unicorns of the world can achieve. It is something companies should aim to have in their organizations. Once you find partners that demonstrate they can not only achieve the benchmarks set for them but excel, your team will be supported enough to achieve that elite status.
Don’t be caught skinny dipping
It is easy to get comfortable with the status quo when the economy is doing well — the cash is flowing, so how could there be any room for improvement? However, to paraphrase Warren Buffet, when the tide goes down, you can see who’s naked.
With a looming recession, we are all set to determine our company’s effectiveness. Don’t let yourself be 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.
