From our year-end check-ins with our clients, these four trends will shape their business in 2023;
- Renewable energy will be in high demand due to state and federal regulations. However, distribution infrastructure is seen as a bottleneck to mainstream adoption.
- Artificial Intelligence (AI) will continue to increase its displacement of low-skill, high-repetition tasks, and the looming recession is reframing this technology as a cost-saving strategy.
- Remote work will become more common, with a three-day, Tuesday, Wednesday, and Thursday (TWTh) in-person week seen as the sweet spot of productivity, culture, and morale.
- Companies that were late to digital transformation are now struggling to catch up. The looming recession makes it harder for them to take the inevitable leap.
Is Your Renewable Energy Strategy Ready To Remove Bottleneck?
The growing demand for renewable energy is driven by federal and state regulations, such as tax incentives and emissions regulations, creating a more favorable environment for the industry. However, corporations are concerned about the infrastructure to deliver this electricity to the end user and regulations and permitting processes creating a bottleneck in developing the distribution infrastructure. To remove this bottleneck, some innovations are being considered to improve efficiency and increase supply’s resilience and reliability, such as;
- Distributed Generation: shortcutting the grid and generating electricity at the demand site. Think solar installations atop commercial buildings.
- Grid modernization: incorporates advanced technologies such as smart meters, load sensors, and automated control systems to route supply efficiently.
- Energy storage: Using batteries and pumped hydro storage makes it easier to integrate storage into the grid, ensuring adequate supply.
- Microgrids: They may continue to gain popularity to increase the electricity supply's resilience and reliability. This is the path for governments and organizations seeking energy resilience.
How Do You Plan To Integrate AI Into Your Organization?
During a recession, business leaders will shift their perspective on artificial intelligence (AI) and view it as a cost-saving strategy rather than a technological disruption. Clients will approach four specific applications for reducing costs:
- Automation: Lowering labor costs by reducing duplicated tasks and automating repetitive tasks.
- Improved efficiency: Machine learning algorithms can analyze larger data sets identifying inefficiencies, reducing costs, and improving efficiency.
- Predictive maintenance: Proactively alert engineers to mechanical issues, thus avoiding costly downtime through preventative maintenance
- Personalization: Increased customer satisfaction and loyalty through customized messaging. Direct customer relationships are a differentiator during economic downturns.
Similar to how the Covid-19 pandemic resulted in many companies accelerating their digital transformations, this recession will lead businesses to see AI as a valuable tool for cutting costs and improving efficiency.
Why Digitalize? To Grow Revenue? To Optimize Costs?
Companies often focus on reducing labor costs during a recession to maintain profitability. However, with corresponding efficiency gains, profitability can improve.
One of our clients asked for help in increasing profitability. During the discovery process, we realized that employees manually reconcile numbers in various Excel spreadsheets. Initially, leadership was hesitant about the cost of a cloud-based system to automate the process, but the labor savings paid for the investment within a year.
Focusing on basic business processes rather than advanced technologies can be a more profitable strategy during a recession. Furthermore, IT departments, which often face reduced budgets and delayed implementations during a recession, should consider making investments that will bear greater returns when the market inevitably returns to growth.
The New Normal
Companies may adopt a "TWTh in-person work week" as the new normal, which strikes a balance between the flexibility of remote work and the benefits of in-person collaboration. However, companies with unionized, blue-collar, or hourly workers may face push back on this policy, especially if there is an existing "us vs. them" mentality.
One of our clients tried rolling out a software solution to drive efficiency, but the hourly workers viewed it as a double standard not applied to the office staff. When implementing digital transformation, it is essential to consider all stakeholders and potential friction points and address underlying issues before issuing a blanket policy. This will lead to a more robust culture and a more engaged workforce.
The shift to remote work has allowed companies to tap into a global talent pool, increase productivity, and reduce overhead costs. Still, it presents new challenges, such as maintaining team cohesion and combating isolation. To address these challenges, companies must provide the necessary tools and resources for remote employees to succeed and feel connected to the company culture, such as collaboration platforms, virtual whiteboards, and VR/AR environments.
As we adapt to this new way of working, we should embrace the opportunities and innovations that remote jobs bring.
How are you managing your corporate culture amidst the disruption?
The Key Takeaways
- Remember to include a renewable energy strategy in your strategic plan, as distribution infrastructure challenges will be addressed by emerging high-tech solutions that will become widespread in the coming year.
- Turn artificial intelligence into an opportunity. In this recession, developments in AI will be a valuable tool to reduce costs and increase efficiency.
- Focusing on core business processes rather than advanced technologies may be a more profitable strategy in a recession.
- Consider all stakeholders and existing and potential frictions when planning the new normal for a more robust culture and a more engaged workforce. Address the underlying issues before issuing an overall policy.
- Companies need to provide the tools and resources for remote workers to succeed and feel connected to the company culture. There are many emerging tools on the market, such as virtual meeting platforms and project management software. Remember to integrate them into your organization.
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