Gartner Research

Pivot Forward: Accelerating Opportunities, Phase 4

Published: 20 January 2021

ID: G00742252

Analyst(s): Mark McDonald , Paul Saunders

Summary

Phase 4 of the pivot forward framework reflects a return of technology demand. Technology general managers must move the company forward as demand returns. This starts with matching their strategies with their Phase 4 starting position.

Overview

Key Findings
  • The growth opportunities in 2021 are real; 2021 global IT spending is forecast to be $3.4 trillion, representing a net inflow of $141 billion (see ). However, these opportunities will be unevenly distributed across technology markets.

  • The COVID-19 pandemic tilted the playing field in favor of technology companies that successfully navigated the crisis. This creates four distinct starting points for Phase 4. Without knowing where they stand, it is more likely that general managers will pursue the wrong moves, even at the right time in the recovery.

  • Customers and markets cannot be expected to return to their pre-COVID-19 ways. Technology company product and portfolio strategies can easily overlook new customer values and needs in hopes of returning to past performance.

  • Company responses to the crisis transformed the technology landscape by accelerating digital adoption in support of remote work, customer engagement and greater adoption of cloud infrastructures.

  • Customers and markets will enter Phase 4 at their own pace and with their own context. Individual Industries and specific companies need to be the primary focus of sales and marketing.

  • Industries and markets are likely to be in two phases at once, driven by both a return of deferred IT investment (Phase 3) and new investments for the future (Phase 4).

Recommendations

As a technology general manager leading your organization to an environment of accelerating opportunities, you should:

  • Know where you stand in terms of your peers and the broader recovery by using the pivot forward and effectiveness models presented in this document.

  • Accelerate progress toward your ambition and Phase 4 through incorporating Phase 4 recommendations to focus on new products and customers into your go-to-market strategies and plans.

  • Embrace customers and markets for what they are now and will be in the future by understanding their desired outcomes and starting points.

  • Lean into acceleration by reorienting growth plans toward capturing product market share rather than just meeting finite revenue targets.

Introduction

Leaders recognize the need to pull away from past strategies and position their company for the market to come, rather than wait for markets to return. In Phase 3, organizations focused on capturing growth opportunities as investment returned to the market. In Phase 4, customers and markets continue to move forward using new products and services that better fit future needs and realities. Both phases are active at the start of the postcrisis world, creating linked opportunities for growth. One is driven by companies reengaging in restarting investment deferred during the crisis. The other is driven by increased investment in new solutions and services based on future imperatives. See for the complete model. The model, illustrated in Figure 1, highlights Phase 4.

Figure 1: Accelerating Opportunities — Phase 4

Accelerating opportunities requires technology general managers to anticipate more than a return of IT spending. It requires growing beyond dusted-off past plans and assumptions, moving to where customers and the markets are going, and setting new measures and targets.

Analysis

In Phase 3, we recommended leaders rebound by being proactive in the market and with customers. Phase 4 is different. Where the first three phases had start and stop conditions, Phase 4 has a start but no end. It is less of a phase and more of a recognition of change in outlook, investment and values.

While building on the prior phases, leading in Phase 4 is more about moving onward, past the crisis and into new opportunities. The specific opportunities will be based on your products, services and starting position. Use that starting point in considering the following imperatives, outcomes and actions illustrated in Table 1.

Capturing accelerating opportunities requires insightful and bold moves as you break away from the past and into the postpandemic world.

A disruptive crisis changes customer expectations, values and needs. Customers and markets are not fully returning to their pre-COVID-19 ways. Technology companies can easily overlook new customer values and needs in hopes of returning to past performance. It is too easy to fall back into precrisis patterns and priorities and fall out of step with customer realities. If you are going to translate the empathy and customer equity built up during the crisis into market access and engagement, then treat every customer as a new customer with new value.

Every customer becomes a new customer in Phase 4 as markets turn from navigating a crisis to winning in a postcrisis world. Do not presume that your customers will be the same people or have the same view of their future, values and priorities in a postcrisis context.

The powerful way to build on the empathy shown in the crisis is to treat every customer, no matter how long you have known them, as a new customer:

  • How have the customers’ businesses fared in the crisis? Ask about their experiences, their plans for the future and what they see as important for their success. Acknowledge their achievements in order to get to their ambition and aspiration.

  • Who matters now, and how have relationships within the company changed? A crisis changes the distribution of authority and responsibility; what are the new structures and who are the players as your customers move beyond the crisis?

  • What have your customers learned through the crisis? Consider their views of their own customers and their priorities. Identify what is important to them in moving forward in order to help them see you as part of that future.

  • What have they learned to do without? Remember the “minor miracles” that customers pulled off in response to the crisis and their desire to work in those ways going forward. Think of the cost-cutting steps they took, their deferred investments and the new vendors they engaged during the crisis. Understand how they look at themselves and your relationship going forward.

  • What do they need more than ever? Recognize their needs and priorities for their own growth as being the source of your growth. Explore their “must do” actions and priorities as input to crafting the next customer value proposition.

Every customer faces the future individually, particularly in a disruptive crisis. Consider holding working meetings with sales teams to review these new profiles as if each customer is a newly acquired relationship. Identify information gaps and incorporate them into future relationships and sales interactions. Also incorporate the information and understanding generated into individual account development and broader marketing plans. See for additional insights on CIO priorities.

A strategic brand review evaluates the fit between brand, marketing, sales and overall go-to-market plans with customers and the market. Effective strategic brand reviews occur whenever there is a significant change in market or competition context. The move into a market based on accelerating opportunities is a significant context change.

A Phase 4 strategic brand review concentrates on revisiting strategic brand assumptions in light of new customer and market priorities and positions. Leverage the information gathered from building new customer profiles, mentioned above, to build new market profiles. Extend the brand review to include actions of traditional and nontraditional competitors and substitute solutions. This is particularly critical in Phase 4 as:

  • Customer values and needs change. Pay particular attention to things customers no longer value or can live without. These represent revenue and marketing potholes and blindspots.

  • Customer technology profiles evolve. An example would be increased adoption and appetite for cloud-service-based products and services.

  • Customers see their own growth prospects, strategies and plans as the lens through which they view your messages and brand promise. Pay particular attention to how you accelerate their growth opportunities by amplifying new capabilities that empower customers in the new normal.

Expanding the aperture for the brand review to beyond current customers and markets in order to engage market opportunities outside of the box of current customers and products. Conduct the strategic brand review in the context of your company’s ambition and plans to grow market share. Use the review as an event to improve alignment between market growth opportunities, product plans and sales motions. Involve all players in demand generation activities: marketing, sales, product marketing, product development and so forth. Use the brand review to mobilize the organization and how it goes to market. See for more details.

An ambition expresses what a company wants to become in the future to itself, its customers and the broader community. It is an essential part of a pivot in a disruptive crisis. Ambition defines what it means to move forward. Ambition helps technology general managers to avoid lurching from one ad hoc decision to the next. See for an example and more details.

Realizing your ambition is the “North Star” for Phase 4. It is essential in a recovery as the company can confuse improved year-over-year performance with success. Such complacency (and the resulting backsliding) compromises a company’s market share and limits future opportunities at the very time the market is expanding.

Ambition defines your destination without a starting point. Starting position level sets the organization and influences the next steps required to realize the ambition. In a stable market, successful companies think that they are all alike. In a disruptive crisis, each company struggles in its own way. Those struggles give each company its own starting point in Phase 4. Analysis of Gartner’s second annual technology product leader survey for 2021 identified four different starting points based on two factors:

  • Externally — assessed by their effectiveness in navigating the COVID-19 crisis in terms of meeting their revenue goals

  • Internally — assessed by their effectiveness in mobilizing the organization internally to achieve their objectives and goals

The combination of the two identify four distinct starting points for technology companies in Phase 4. Figure 2 provides a description of each starting point. The Appendix contains an assessment tool to help determine your starting position.

Figure 2: Effectiveness Determines the Starting Point for 2021

Where you stand at the start of Phase 4 influences the actions required to achieve your ambition. Table 2 highlights challenges and actions associated with each of these starting points for Phase 4.

Every company starts Phase 4 in a unique position. Planning for Phase 4 requires understanding both the ambition and that starting point. Use these tools to create a shared context from which to mobilize the organization for accelerating opportunity.

Achieving your ambition requires accelerating your strategy, its execution and your operations in ways that create new opportunity. It is hard to grow market share by following others. The opportunities inherent in Phase 4 provide an incentive to get in front of customers and competitors. This requires leaning into your ambition in distinctive ways from plans and yearly strategies through the following actions:

  • Deploy your ambition in leadership, product, investment and go-to-market decisions. Remind the organization of the ambition. Raise the visibility of your ambition prior to making decisions, budgets and other actions. Always ask, “How does this advance what we want to be to our customers, in the market and to ourselves?”

  • Move product and company strategies forward by targeting to new customers and new products or services. Prior to the crisis, technology leaders planned for 64% of their revenue to come from selling existing products and services to existing customers (see ). That ambition reflected a relatively stale precrisis market. That market no longer exists. Treat every customer as a new customer. Concentrate product, marketing and sales efforts in ways attractive to new customers to accelerate every customer’s adoption of your product plans and path.

  • Target incumbents who are out of step with new customer values, opportunities and technology preferences. These incumbents can see their own growth as masking deteriorating market position and customer experience. Incorporate a “whole customer” view in developing new opportunities, targeting incumbent technologies and players. Pursue this strategy where incumbents are either in the Fortunate or Challenged starting positions.

Phase 4 is a time of accelerating opportunities that require accelerating your strategies, plans, products and plays. It is a time to become a profitable market share taker by continuing to shape demand in your favor. That comes from recognizing that, in the postcrisis world, every customer is a new customer and the more new customers you have, the greater your future growth potential. See for additional insights.

Phase 4 represents the start of postcrisis realities, not a return to prior positions. Companies create the conditions for Phase 4 by incorporating new strategies, technologies and actions that give them confidence in their future revenue and success. Technology general managers need to build in alignment with those values through considering the following:

  • Being the “best value” for the future by striking a new balance between cost, capability and experience. Cost does not come off the table in a recovery, particularly costs that companies learned to live without during the crisis. Cash may have been demoted from emperor to king in Phase 4, but solutions that offer the greatest cash, capital and benefits realization performance are best-positioned in the market. This can include exploring new pricing, customer monetizations and business models, such as shifting to as-a-service or platform models.

  • Making resilience part of the product or service and its value proposition. Incorporate product capability and your operational resilience into product marketing and messaging. Discuss how you helped customers through the recent crisis and the lessons applied to the portfolio.

  • Reorienting product positions and value around information-intensive solutions and an as-a-service delivery model. The COVID-19 crisis highlighted business exposure to the human element as people fell ill, cared for others or were required to adopt new work arrangements. This required leaders to make decisions based on information and enact decisions through processes and systems. This has created demand for analytics and automation-based solutions delivered on a cloud infrastructure or consumption model.

  • Considering strategic acquisitions and alliances to gain market access and product capabilities to enhance comparative advantage. Highly internal effective companies have better capacity to absorb acquisitions. Review opportunities from a customer perspective, with an eye toward how they benefit customers before how they benefit your company’s revenue.

  • Recognizing the changing market landscape due to recent M&A activities accelerated by the pandemic and financial sentiment. Entire industries are transformed as leading companies reposition their product portfolios and accelerate investments in certain areas. Examples include the spinoff by IBM to focus on cloud services and recent mergers in the semiconductor industry to better meet customer needs.

  • Partnering based on longer-term customer needs more than filling gaps in product strategies. Customers know that most partnerships have limited impact on their future and value. Customers see these partnerships padding marketing literature and product websites with new logos more than increasing the value of their relationship with your company. Tactical partnerships are inevitable; concentrate partnerships in the direction of the next logical set of customer needs. Concentrate on creating these in ways that let customers see the benefits first.

Accelerating opportunity presents a potential trap for technology general managers. Increased demand will raise revenue creating positive revenue trends, particularly when compared against those during the crisis. Such year-over-year performance improvement may satisfy the financial plan, but it often undermines product market share and position. That is the trap: Things look good compared to last year, yet there are signs of deterioration when performance is compared “year over peers.”

Setting new measures, targets and ways of working in Phase 4 should correct this situation through taking the following actions:

  • Reorient management and sales reporting around customer needs and value for cost, time, experience and so forth. Measure and manage customer engagement as the leading indicator for revenue. Keep attention focused both on quote-to-close cycle times as well as updates to target close dates in the pipeline.

  • Manage progress by comparing your performance against competitors’ rather than against prior plans. Identify the key pack of competitors in your industry. Include market leaders as well as at least two disruptors. Follow their progress in terms of customers, revenue and market consideration to determine your peer competitiveness. Employ tools like Gartner’s Peer Index Performance (see for an example).

  • Eliminate measures, processes and governance structures that do not directly connect to growing revenue, market share and earnings. Leadership and management clarity is critical in capturing accelerating opportunity. Metrics, meetings, rules and policies put in place to manage cost in the crisis need to be revisited in a Phase 4 context. Take a bias toward retiring practices that no longer fit. Keep the focus on customers, new solutions and the competition.

Regardless of the actions above, evolve the organization and how it works based on your achievements during the crisis. During the crisis, firms reported achieving record change in record amounts of time with record success. Leaders report accomplishing more in a few months than they thought possible, and they want to continue that level of performance into the future.

Most of those achievements relate to adopting the following organizational principles or ways of working:

  • Mobilizing teams based on outcomes rather than organization or function. Continue to put the right people together in the right place with a clear target and shared responsibility. Keep these teams flexible, while returning their achievements and lessons learned to the organization.

  • Moving toward greater customer and product orientation across marketing, sales, service, product leadership and engineering. Use customer needs to guide decisions based on what they value and keep products and services aligned with that value.

  • Building new skills and experiences across the workforce by giving people the incentive time and opportunity to grow. The crisis put everyone in a stretch role. The demands of accelerating opportunity create similar stretch opportunities.

Phase 4 represents two milestones in the pivot forward framework. It is both the beginning of the end of the crisis as customer and market performance improves and technology spending returns. It is also the start of the beginning in terms of the postcrisis world. The combination represents a true inflection point. How technology general managers position themselves, achieve their ambition and build new sources of competitive advantage will determine how well they capture the accelerating opportunities of recovery.

Determine your starting point by assessing the organization by completing two assessments to produce numerical measures of the effectiveness of your COVID-19 response and internal effectiveness. Apply each score to determine your starting point for Phase 4.

The assessment can be conducted by a single person or distributed to a group. If distributed, please average the individual assessment scores before establishing your starting point.

See Table 3.

See Table 4.

See Table 5.

Evidence

The 2021 Gartner Second Annual Product Leaders Survey was conducted in October and November 2020. The survey covered 203 technology general managers mainly in North America and Europe.

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