By Paul Herring, Global Chief Innovation Officer, RSM  

As 2020 dawned, businesses around the world were launching into what they hoped would be the ‘Roaring 20s’, a period of continued profitable growth on the heels of the longest bull market in history. However, the blow dealt by the Covid-19 pandemic put many of these plans on hold, forcing businesses to pivot fast and hard in order to survive. A world of new opportunities beckons for those businesses resilient enough to survive this challenging transition.

Over the past 18 months, digital transformation, including the accelerated adoption of automation and analytics, has been an important ingredient of success for agile businesses redefining their operating models. The catch is that applying technology innovations is not the only ingredient for success. As we look ahead to a period of recovery it is important to remember that when it comes to innovation, people are just as important as technology. In business and personal spheres, people have embraced technology in order to streamline their busy lives in a world where face-to-face interactions are now the exception rather than the rule. Innovation has been the driving force behind increasing business optimisation and efficiency. One of the key roles of a Chief Innovation Officer (CIO) is to ask the human question and remind organisations that it is their people, not technology, that drive change.

The evolution of the CIO

This has been at the heart of the CIO role over the last year and a half. CIOs are pivotal to balancing the human element of business with the necessary acceleration of digital transformation. CIOs have had to adapt and change their tactics to reflect their new environments but, in some ways, the pandemic has made the task of the CIO easier. Innovation goes hand in hand with change. Driving change in any organisation is inherently challenging as it is only human nature is to resist change. Before the pandemic, naysayers would argue that while technology was disrupting other industries, they were different, and that there was no prospect of technology disrupting their business in the foreseeable future. The pandemic changed this, lowering the water for all boats. According to Forrester, U.S. tech budgets are set to expand by 6% in 2021, highlighting how Covid-19  has created an environment where transformational change is not only considered an option, for many it is seen as a necessity. In fact, when asked what IT initiatives they were prioritising over the next 12 months, 32% of the IT organisations surveyed wanted to increase innovation and 31% wanted to invest in tech that helps employees perform better.

On the other hand, the pandemic has made a CIOs job harder. Business disruption has led business owners and managers to focus more acutely on preserving liquidity. Innovations rarely generate new net cashflows immediately, so CIOs are faced with making the business case for investments that now compete with other, more immediate priorities. There has always been a trade-off between short-term performance and investment for the long term. The volatility ushered in with the pandemic has made this trade-off more acute.    

The prioritisation of transformation

There is no doubt that the events of the past year have changed what it means to transform. Initially, between March and September 2020, many of the solutions businesses put in place were temporary and only intended to last until teams had adjusted to their ‘new normal’. They were implemented as swift resolutions to minimise disruption. Loans were taken out, investments deferred, and strategies put on hold. However, as it became clear the changes would be permanent fixtures, businesses have switched tack and accelerated their plans, innovating to survive the pressures of the ongoing pandemic. 

As leaders looked to mitigate risk in order to survive the financial impacts of the pandemic, many turned to technologies that would help them to tackle the challenge of moving all operations to a remote environment, virtually overnight. Be it converting a shop into an online marketplace or moving client meetings to online video platforms, change previously considered impossible has quickly become the norm. The pandemic has brought about a permanent change in mindsets – the impossible now seems possible. For example, during the first lockdown, the entire Italian government moved to online servicing within the space of a few weeks. No one would have dared suggest this before the pandemic, even in the most extreme of scenarios. 

Progressive business leaders now recognise that curiosity and a culture of change through innovation is vital to future-proofing their ventures, in any and every form – a message that lies at the heart of every CIO’s ethos. 

The CIO’s challenge of balancing people and tech to build an inclusive workplace 

Businesses of all sizes are now adjusting to a shift in employee expectations regarding their workplace and remote working. Some businesses, notably investment banks, have announced a full return to the office, while others, including tech firms, have announced that remote working or a hybrid, is here to stay. Many businesses have come to appreciate that the old daily commute is not ideal. Technology has already shown that it can enable remote working for many businesses, quite effectively. 

Businesses are accelerating their investments in automation solutions to reduce their exposure to future lockdowns, to reduce their operating costs and improve process quality.  As a result, businesses have been provided with more reasons to invest in autonomous solutions as the demands of employees and clients alike have been transformed by the pandemic. However, its important businesses do not discount the value of human interactions and relationships in their search to meet current demands.  

While a change in mindsets has moved the bar in favour of digital transformation, CIOs continue to face numerous challenges as businesses emerge from a ‘survival’ state and into recovery. One risk is that the burning platform for change evaporates as the impact of the pandemic recedes. Multi-year innovation projects that were funded in late 2020 may find support evaporating if management’s perception of the value-add also evaporates. 

Another challenge for CIOs is the shift in timescale for innovation. In 2020, the focus was on short term solutions. Restaurants, unable to serve customers indoors, quickly erected temporary seating in parking lots and beefed up their online ordering options. Doctors quickly adopted video consultations. Car rental firms sold off their fleets and airlines furloughed tens of thousands of employees. Now that demand for these services is increasing rapidly, businesses are having to scramble to re-assess how to scale back up. Do we do this with investments in long term resources like plant and equipment, vehicle fleets and airline employees, or do we explore alternative models including hiring resources from the gig-economy, and lease models vs. purchase? Innovating business models this way demands casting a vision further out.

As we move into the second half of 2021, we have two trends emerging. Firstly, there has been a huge spike in economic activity as businesses emerge from the pandemic and government stimulus funding is renewed. Recent U.S. economic data shows the fastest growth since the 1940s. The other trend is the growing number of COVID cases from delta and other variants, especially among those who have not been vaccinated.

These two trends are on collision course, leaving significant uncertainty about the outlook for economic activity over the next few years. This backdrop means that smart businesses are now innovating for a new normal where uncertainty rules. Analysis from Forrester sheds further light on this, highlighting that accelerating their shift to digital business is amongst the top priorities for organisations looking ahead to the next 12 months. The volatility in economics conditions is likely to continue for years to come. For car rental companies, the dilemma is how to rethink their business models to provide a response to a surge in demand given the depleted fleets, while recognising that a return to the fleet levels of 18 months ago may not be prudent. Similarly, for airlines, the speed at which staff should be re-hired and aircraft brought back online requires careful planning.

CIOs are a vital bridge between workforces and innovation 

As we emerge into a new era of transformation, not only in business but also in society at large. CIOs have an important role to play, continuing to provide a bridge between people and technology, inspire creativity and push leaders to go that extra step further. Businesses and their leaders will need to look beyond the immediate future and instead start making changes for three, five or even ten years down the line in order to truly innovate and improve.