Predictions
2018
A year of
reckoning
Economies are growing. Stock markets are climbing. Employment is
healthy. These are all positive signs of the marketplace as a whole.
But the fate of individual companies has never been more uncertain,
and the window of opportunity is closing for many companies
unprepared or unable to adapt to new market realities.
Many factors are combining to defne the fate of companies: Unmet
customer expectations are resulting in churn; the lack of digital
transformation gains is translating to loss of market share; industry
lines that protected some are crumbling; and longstanding, durable
business models are failing.
For some, it feels like a burning platform mandating bold action;
for others, it will be the quiet but real deterioration of their business.
Forrester’s 2018 predictions describe the market dynamics that favor
those taking aggressive action and create existential risk for those
still holding on to what has worked before. 2018 will force decisive
action for frms looking to:
1. Take control of their destiny as platforms like Amazon and Google
drive up disintermediation risk and make some companies
unintentional utilities.
2. Shift spend away from acquisition to confront escalating churn.
3. Revitalize customer experience in a market where rewards and
punishments are doled out experience by experience.
4. Transition to digital companies while maintaining their corporate
identity and soul.
We hope our 2018 predictions provide new insights and help
catalyze action.
A year of reckoning
FORRESTER/PREDICTIONSCX hits a wall
Customer experience (CX) became the centerpiece of business strategy
as companies adjusted to the experience economy.
But according to Forrester’s 2017 CX Index, CX quality plateaued or
declined for most industries and companies. Why CX initiatives tackled
low-hanging fruit to put early points on the board, and most CX initiatives
had too little clout to force meaningful operational change.
Customers’ expectations will outpace companies’ ability to evolve or
invent experiences, and the deferred transformation in 2017 means that
companies can’t adjust fast enough or well enough.
In 2018, 30% of companies will see further declines in CX performance,
and those declines will translate into a net loss of a point of growth.
Smart executives will intervene to make CX an internal disruptive force,
one that is underpinned by the fundamentals of CX management with
customer trust at the core; too many executives will continue to ignore
evidence of market disruption and procrastinate until the evidence is
overwhelming, putting their frms at risk as we enter 2019.
30% of companies
will see further
declines in CX
quality and lose a
point of growth.
FORRESTER/PREDICTIONSThe digital crisis
20% of CEOs
will fail to act
on digital
transformation
and put their
frms at risk.
Digital transformation is not elective surgery. It is the critical response
needed to meet rising customer expectations, deliver individualized
experiences at scale, and operate at the speed of the market.
The results are sobering: Over 60% of executives believe they are
behind in their digital transformation.
Lagging results have created a loss of confdence in the CIO, driving
up the number of chief digital offcers and business units creating their
own digital strategies. But that misses the point.
Digital transformation is a CEO issue and an economic question.
Digital transformation is expensive; CEOs can’t drive operational savings
fast enough to fund it and are cautious about destroying margins.
In 2018, CEOs must show the political will and, with the CIO and CMO,
orchestrate digital transformation across the enterprise.
Some CEOs will use their balance sheet to acquire digital assets and
buy time. But 20% of CEOs will fail to act: As a result, those frms
will be acquired or begin to perish.
FORRESTER/PREDICTIONSTalent widens
the digital
divide
The news reports of a digital talent crisis are overblown. Continued use
of H-1B, the gig economy bench, and technical training for the existing
workforce have strengthened supply for commodity technical skills.
The 2% to 4% growth in wages suggests a relatively balanced market.
The real story is the lack of specialized roles like data scientists,
information security analysts, high-end software developers, and
experience designers that are critical to CX and digital transformation.
These professionals want to work for frms further along in their digital
transformation effort and with more ambitious strategies. They will work
for laggards as a last resort or due to geographic necessity. Executives
at digital leaders have 90% of the talent they need, while those at
self-described digital laggards have only 19% of the talent they need.
In 2018, talent issues will widen the divide between digital predator and
prey; laggards will need to more aggressively set up digital incubation
centers in talent hotspots and pay up to 20% above the market rate to
change the game.
Those struggling
to attract scarce
talent will spend
up to 20% above
market.
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