Technology, talent, and trust are top priorities for the coming year.
Executives are rethinking how they operate all along the value chain. They’re finding ways to increase flexibility, strengthen cybersecurity, and reduce environmental impact each step of the way. They’re also redefining how humans and technology work together—and creating organizational cultures that put people first.
Recently, the IBM Institute for Business Value (IBV) surveyed and published the report on how consumer, employee, and investor demands are shifting, what high-performing organizations are doing differently, and where executives are making the biggest bets. Taken together, these findings bring the business landscape of 2022 into focus—and highlight where it’s been permanently altered.
Here are 5 trends that executives can use to prepare for a future that is characterized—still—by disruption and change.
Digital transformation has become a way of life
60% of organizations sped up their investments in digital technologies due to COVID-19 and more than half (55%) permanently course-corrected their organizational strategies.
Executives have realized that transformation is here to stay, and they’re focused on making their organizations more responsive. For the next 2 to 3 years, CEOs agreed that they needed to aggressively pursue operational agility and flexibility (56%) than any other action.
Internet of Things (IoT, 79%), cloud computing (74%), and artificial intelligence (52%) are the top technologies executives expect to deliver business results.
These technologies, especially cloud, will also enable faster, more effective collaboration, which will be another driving force for growth in the new year. Executives say they plan to participate in business ecosystems 332% more in 2022 than they did in 2018.
Human capital is precious and scarce
The “Great Resignation” is picking up pace. A record-breaking 4.4 million Americans quit their jobs in September 2021, surpassing the previous record of 4.3 million in August.
And while the talent shortfall started in the US, it’s now being felt globally as well. According to Korn Ferry, more than 85 million jobs could go unfilled globally by 2030 due to a lack of skilled talent—resulting in as much as $8.5 trillion in unrealized revenues. In the US tech sector alone, the talent shortage could lead to $162 billion in lost revenues each year.
While the virtualization of work has given companies greater access to global talent, this extended reach can only take them so far. Ultimately, talent management is a zero-sum game. That means companies will need to look within and make changes that will attract potential employees. That starts with showing people their contributions are valued—and prioritizing their wellbeing.
Companies that don’t meet employee needs may find themselves with positions to fill. Nearly 1 in 3 (30%) employees have already changed employers in 2021 or plan to do so before the end of the year. Another 15% plan to voluntarily change employers in 2022.
More than half (56%) of those who voluntarily changed companies this year cited the need for more flexibility as a key reason for making the switch, while nearly one-third said they wanted to work for a company that better fits their values. And those not planning to make moves are not necessarily content. Roughly 1 in 4 say they don’t believe their employer looks out for their mental and physical well-being and nearly 1 in 3 don’t believe their employer looks out for their financial well-being.
COVID-19 reminded people what was important to them—and exposed whether they were important to their employers or not.
Sustainability and transparency are urgent priorities
Regarding sustainability specifically, pandemic influenced 93% of global consumers’ views.
While sustainability has historically been seen as a luxury good, about 54% says they’re willing to pay higher prices—or even take a pay cut (48%)—for a sustainable future. And approximately 7 in 10 say they’re more likely to apply for and accept jobs with organizations they consider to be environmentally sustainable and socially responsible.
However, what consumers claim they’re willing to do is largely aspirational. 31% say that sustainable or environmentally responsible products made up most or all of their last purchase.
That means companies need to provide transparent and detailed information about their initiatives if they want to connect with purpose-driven consumers. But many companies have a sizable information gap they need to bridge. This disconnect will need to be addressed in 2022.
Tech adoption should reshape business operations
Taking a piecemeal approach to technology is no longer enough. Businesses need to holistically reinvent their operations to realize the full benefits of digital transformation. Research found that companies that don’t penalize failure see a 10% revenue growth bump in the context of tech adoption and digital transformation.
In response to COVID-19, almost 64% organizations shifted to more cloud-based business activities.
Now, 97% are employing cloud and 78% have at least piloted AI. Since 2019, there have been monumental increases in the number of CIOs whose organizations have advanced hybrid cloud operations (700%) and intelligent workflows (560%).
One more study found that high adopters of technology across 13 industries benefit from a revenue premium of 7 percentage points, with the Internet of Things (IoT), artificial intelligence (AI), and cloud yielding the greatest benefit. And those that invested in ecosystems and open innovation saw an average revenue premium of 40%.
Trust and security underpin sustained innovation
While cloud-based technologies, platforms, and ecosystems expand an organization’s reach and create new opportunities for innovation, they also introduce new threats. In fact, the research further revealed that 7 in 10 organizations are unable to secure data that moves across multiple cloud and on-premises environments.
It’s no surprise then, that the same report found that more than 90% of cyber-related incidents originated in cloud environments. This vulnerability is borne from an inability to adapt security practices to a more open environment, as a full 92% of organizations lack the ability to securely enable and extend new cloud-native capabilities to their internal and external partners.
Open, secure cloud networks can create a virtuous cycle that drives innovation and collaboration. For example, 3 in 5 zero trust leaders say their security approach has enabled digital transformation, compared to 35% of all others. And more than half (54%) say they’ve increased trust and secure connections to external partners, compared to roughly 1 in 3 other companies.
Evolving security practices for the cloud era also positions organizations to deliver better business results. Organizations with the most mature cloud security practices— those that integrate their cloud and security strategies more intentionally— outperformed peers by more than 2x, both in terms of revenue growth and profitability.