42016Mar

2016 Business Bets





Various projections of “hot issues” for 2016 abound.  Looking over the lists published by The Conference Board, Bersin, Forbes, Fast Company, and the CFO Alliance, we should expect to see that business executives are focused on the following trends:

  • Customer relationships/Corporate Brand and reputation.  Top line growth will come from retaining and expanding customer relationships and social selling is seen as critical for customer engagement
  • Human capital:  attracting and retaining top talent
  • Innovation/Digitization — and a move towards team-centric working, which is enabled by technology and important for innovation
  • Data Analytics — to inform customer relationships, human capital management, and innovation
  • Culture — creating environments that enable high levels of customer engagement, employee engagement, and innovation
  • Cost Management — improving processes and operating lean businesses

If these forecasts are correct, we should expect to see companies making investments aligned with these priorities.  So, we conducted an ad hoc survey of executives to see where companies are actually investing.

investment survey 2016 infographic

For the most part, investments seem to be in line with the trends.  There are a couple areas, however, where we’d expect to see more investment and where we’d hope to see shifts in investment dollars.

The vast majority of respondents are upgrading or replacing current technology/systems and less than one-third are investing in new technology/systems.  We know, anecdotally, that companies are moving away from customizing enterprise systems since this means having to build the customization back into the system every time there is an upgrade.  Resources, therefore, are focused on just maintaining what was already built, rather than leveraging new technological capabilities.  If digitization is an important focus, we’d expect to see more investment going to new systems and less to upgrading or replacing old systems.

Despite the focus on customer relationships and brand, just over one-third of respondents are investing in sales and marketing.

While attracting and retaining top talent typically tops executives’ lists, less than one-third of respondents are investing in employee recruitment and less than 20% are investing in technical/functional skills training.  Rather, the focus seems to be on management/leadership development, where over 50% of respondents are investing.

The focus on cost management could be behind the sales/marketing and training investment levels.  CFO’s acknowledge that these are the first places to cut dollars when managing cost.

Over 50% of respondents are investing in product or service innovation, data analytics and cultural transformation — in line with executives’ top priorities for 2016.  Certainly these investments, along with investments in management/leadership development support the achievement of key priorities.

Given what executives claim to be priorities for 2016 would we expect to see more investment in new technology, sales and marketing, and employee recruitment and training?  Are the investment dollars going where needed to execute strategic priorities or are they being used to justify sunk costs of earlier investment decisions?

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