A report issued by The Conference Board, a 501 non-profit business membership and research group, suggests Digital CxOs will need to invest more in automation at all levels to make up for an inability to hire and retain workers.
For the first time in the history of the U.S. the overall size of the population that are of working age decreased in 2021, said Gad Levenson, chief economist for North America at The Conference Board. More than three million workers also opted to retire during the pandemic as the value of the stocks they owned increased alongside the value of their homes.
Overall, the Conference Board predicts the global economy will continue to steadily improve as the COVID-19 pandemic continues to wane. Worldwide economic growth for 2022 is forecasted to grow at 3.9%. However, many organizations may struggle to meet the demand for their goods and services because they simply don’t have enough people. In addition, organizations should expect salaries for both new and existing employees that might otherwise jump ship, as part of what has become known as the Great Resignation phenomenon, to steadily increase.
In addition, inflationary pressures on the cost of raw materials will also increase as, for example, semiconductors and other components remain scarce, noted Levenson. In fact, supply chain issues are accelerating a de-globalization trend that is resulting in more manufacturing capacity being shifted closer to the point where goods and services are consumed, he added.
The unknown variable in the economic equation is what impact digital business transformation initiative might have on increasing overall productivity. In theory, investments in IT are supposed to drive gains in productivity. However, Levenson noted that productivity gains declined over most of the past decade. The pressure is now clearly on Digital CxOs to reverse that trend at a time when organizations clearly need to become more efficient than ever.
One of the primary areas of focus where those gains might be made is in the realm of customer service, where Levenson noted advances in IT made during the pandemic has changed the way many organizations now directly engage end customers at a lower total cost.
Economic theory, of course, is one thing. In practice, Digital CxOs need to drive much deeper levels of collaboration across organizations that have historically consisted of multiple department silos that are usually not especially well integrated. The Digital CxOs that bridge that divide will have a sustainable competitive advantage that most rivals will find difficult to match unless, of course, they unleash their own torrent of digital business transformation initiatives.
That doesn’t mean organizations should begin re-engineering processes just for the sake of it. Any business shift toward digitization needs to be well vetted. Customers these days can easily distinguish between a so-called innovation that only results in them filling out more forms versus an actual streamlining of a process that results in a better customer experience. The latter approach results in increased customer loyalty that results in a greater share of wallet. The former is just a veiled attempt to reduce costs in a way that leaves most customers feeling the value of their time is being dis-respected by an organization that clearly cares a little too much about its profits at the expense of the customer relationship. Savvy Digital CxOs will know what side of that customer service equation they should ultimately land on, given the strategic goals of the organization.