How Technology Leaders Can Manage Economic Uncertainty

CTO at HealthKey Technologies. IT executive, imagined chief and contributing writer with a enthusiasm for progressive systems.

At a new Forbes Technology Council conference, a single colleague introduced up this extremely fantastic query: What ought to we do, as technological innovation leaders, to be organized for a achievable economic downturn?

This concern is not technological innovation-distinct, but it underlines the point that know-how leaders need to be engaged in conversations about economic, money and normal organization challenges. It also highlights that technology, the overall economy, adjust and hazards are interrelated and entangled. So how should really we react to a achievable recession?

Sorts Of Improve Struggling with Technology Leaders

The previous couple of decades proved that we dwell in an unprecedented era of three-dimensional (3D) alter—exponential change, perpetual adjust and pervasive adjust currently being the a few proportions. We stay in an period the place improve is coming at us in an serious and accelerating rate induced by political, economic, social, technological, environmental and legal (PESTEL) forces.

PESTEL is a approach that is used to detect threats, weaknesses and prospects that can be utilized in a SWOT analysis. On the other hand, the PESTEL evaluation doesn’t explicitly take into account general public wellbeing threats this sort of as the Covid-19 pandemic. Clearly, Covid-19 is just one of those people Black Swan pitfalls that are quite tricky, if not extremely hard, to forecast. Nevertheless, the Covid-19 pandemic necessitates PESTEL be up-to-date and to incorporate a particular letter for general public well being threats these types of as pandemics, endemics or basic health crises. Possibly including the letter H to it to become PESTEL-H.

So, in this local weather of 3D improvements, it is not just about working with an economic downturn or a achievable economic downturn. It is about taking care of and navigating alterations and threats in the context of these 7 forces of PESTEL-H.

Moreover, businesses and society are considerably impacted by technological innovation in spots these as AI/ML, quantum and cloud computing, IoT, artificial biology and CRISPR-CAS9 kind improvements, just to title a couple of. Technological improvements are bringing about a dizzying amount of adjust. Know-how could be the greatest drive of adjust currently.

Why Technological know-how Leaders Should Embrace Change

While transform can be an unanticipated and undesirable function, it is unavoidable. Nonetheless, planned adjustments are remarkably appealing, particularly in the face of important dangers.

For organizations with organization risk management (ERM) practices, challenges are possible very well managed and optimized. But what about 3D modifications that can develop unanticipated and unplanned risks that can destabilize businesses? These kinds of risks can guide to incidents that can direct to disasters and disruptions to the business. A sudden modify can provide about some unanticipated and harmful hazards to the ideal of corporations.

So, what is the romance between possibility and change, and how to deal with both of those simultaneously?

Adjust and possibility have a cause-and-result symbiotic connection. Adjust can induce threat, and possibility will cause transform. Chance and change are two sides of the very same coin of an at any time-evolving entire world. Effective corporations appear to be managing 3D improvements and risks nicely. They are proactively optimizing threats and introducing actions that convey about major alterations.

Knowledge this suggests that businesses will need to master two unique still intertwined critical competencies: alter and possibility management. Equally have their effectively-described and known frameworks, standards and methodologies. Beneath are illustrations of methodologies and applications that can assist in addressing the dichotomy of possibility and change.

A single of the legendary textbooks and methodologies on alter administration is John Kotter’s book Foremost Modify. Kotter provides an eight-move, perfectly-analyzed and structured methodology to navigate change by creating a perception of urgency, making a guiding coalition, vision, speaking the eyesight, getting rid of obstacles, making fast wins, accelerating the modify and last but not least anchoring the adjust.

To fully grasp risk management, technological know-how leaders need to review The Essentials of Possibility Administration. The reserve handles ERM, and it is especially practical for financial establishments. As the book points out, “Risk management is about how firms actively pick out the style and amount of possibility that is proper for them to assume” as very well as that “risk administration and chance taking are not opposites, but two sides of the similar coin.”

Another practical book on risk administration is Company Hazard Administration Equipment and Templates, which offers terrific means for incorporating possibility into company governance and presents a methodology with strategies, resources and templates on how to determine, evaluate and enhance hazards.

A unified company governance framework is critical to properly handle adjust and danger. Some companies could possibly have hazard governance that is different from transform management. On the other hand, an overarching governance framework is instrumental to the achievement of any firm. The COBIT 2019 framework, for case in point, offers an powerful company governance of information and technologies throughout the organization. COBIT reinforces the theory of “staying relevant in a altering environment” with emphasis on value delivery and threat optimization.

A few Strategies For Taking care of Risk And Modify

Back again to the authentic dilemma: How need to a know-how chief react to a doable economic downturn? Here are some thoughts:

1. Take into account the doable economic downturn as a main possibility that may involve main adjust. Interact executives to develop strategies to optimize this threat. It is probable that such a threat will need changes to the business enterprise method.

2. In instances of economic uncertainty, monetary advisors would propose rebalancing the monetary portfolio and cutting shelling out. You may well want to comply with the same information. But it will be various for distinct firms due to the fact an financial downturn may current fantastic investment prospects for certain companies who foresee a more powerful aggressive posture when far better moments arrive.

3. Think about rebalancing the organization’s technology portfolio (solutions, tasks, investments) with a focus on maximizing its value. This can be done by linking the portfolio to the business method that may possibly have altered to cope with the financial pitfalls.

In these instances of 3D transform, engineering leaders require a 3D reaction to handle the dangers connected with these alterations. We need to have a solid transform management methodology, a potent possibility management framework and, earlier mentioned all, an organization governance framework to cope with these alterations and the pitfalls that are coming at us continuously, relentlessly, exponentially and from all instructions.

Forbes Technological know-how Council is an invitation-only local community for environment-class CIOs, CTOs and technological know-how executives. Do I qualify?