Doing More with Less: A Model for Growth in An Impending Recession

Of course we all view impending economic recession with dread. Economic crises are felt across all aspects of our businesses and our lives. At the same time, the prospect of a recession creates an opportunity, especially for our software and technology industries. As leaders in this industry, we now have the strategic imperative to shift our models of operation because we have the opportunity to lead our businesses into new, unprecedented forms of growth. We have a sage duty to take the lead in bringing our colleagues out of the recession itself, by finding better ways to do what mankind needs doing.

During economic boom periods, all of our high-margin industries are incentivized to grow through speed: to move as quickly as possible. In the most recent boom that started in 2010, capital was more widely available and cheaper than any other period before it. In particular, leaders at scaling tech companies burned through capital fast to grow adoption of new technologies with all due speed. Their businesses were rewarded for doing so, and even punished by the Venture Capital industry for doing differently. As a result, a lot of platforms over the last decade grew fast and capital-inefficiently. 

When faced with the prospect of an economic recession, it is now more necessary than ever to transition our businesses into a different model for growth. A recession certainly means that growth will slow. Therefore, the opportunity is to shift our mode of operation towards moving more efficiently–doing more with less. 

How We’ve Changed in the Last Decade 

During the Great Recession of 2008, business leaders invariably looked for new ways to do more things with fewer resources. The past ten years of boom have lasted so long that a lot of our current generation of leaders have not experienced the software industry outside of a mode of constant growth and capital availability. We are not used to having conversations about margin and profitability, simply because we have operated under the impulse of growing quickly and inefficiently for the majority of our careers.

As a result, we have seen little value in developing more efficiently. We have not challenged our methods of building infrastructure or testing software, because moving fast has worked very well for us. Speed has been safe, so we have only looked for ways to innovate in places that enabled our businesses to move even faster. DevOps brought products to market faster. Application Performance Management (APM) came to the fore. Canary builds and feature flagging tools like LaunchDarkly all helped us ship code faster and grow as quickly as possible. 

Meanwhile, over this ten-year period, we have seen two major technological shifts happen largely under the economic radar. The first has been the growth of technologies that have enabled companies to deploy human capital more efficiently. Since 2008, compelling offshoring and outsourcing options have developed to help businesses to grow their teams without paying Silicon Valley-level prices. As certain businesses have shifted their operations to adopt these options, they have begun to take leaps forward in efficiency, but only a few did so in the boom years. The second major shift has been toward Machine Learning (ML) and Robotic Process Automation (RPA) software. These two technological tool sets have replaced humans in performing rote and repeatable functions to unburden teams’ time, energy, and talent. Despite their wide availability, ML and RPA are beginning to be seriously adopted only as businesses slowly shift their modes of operation towards greater efficiency. These categories weren’t geared to help with speed, so they were ignored during the boom years. But they’re new tools that leaders can use that didn’t exist 11 years ago.

Today, our generation of leaders is facing the prospect of an economic recession, many of whom for the very first time. We are suddenly operating in a mode of capital scarcity: Venture Capital markets are beginning to freeze up. There is limited growth potential as customers are becoming more conscious about spend. They are trying to do more with less. The idea of having to make similarly difficult changes to your business is hard. But now more than ever, an impending recession signals us as industry leaders to seek more efficient growth models through utilizing these existing technological tool sets to our advantage. 

Implementing Efficient Growth with Short Capital

Shifting from growth with lots of capital to efficiency with short capital means not just cost-cutting, but interrogating your entire operation. It means understanding where you’re spending most and the functions that are being performed in each of these areas. Then, it requires interrogating each function and determining if it is something that ML or RPA can do. It requires asking: Is this function fairly repeatable? Are the decisions it makes driven by conditions that are associated with strong data? If the answer is yes, there is likely an appropriate ML or RPA alternative. 

At ProdPerfect, we saw the rote and repetitive nature of maintaining end-to-end (E2E) tests as an opportunity in the marketplace for greater efficiency and cost-effectiveness. We have seen over the past decade that the software industry has been willing to spend a large percentage of its budget on Quality Assurance (QA) testing. Today, we see our business as a live example that attests to the emerging shift toward more affordable, efficient machine-led technologies to replace inefficient, costly human functions.

You must look to the rest of your business in the same way. Identify opportunities to perform the same functions more cost-effectively by acquiring the right technologies in ML and RPA relevant to what your business builds. What are the rote and repetitive functions that are being performed that don’t require human effort? This planning is essential because regardless of what position you are in, all parts of your business will be forced to find ways to continue performing critical operations with fewer human resources than anticipated. Therefore, whether you’re freezing hiring, slowing hiring, or laying people off, determine what your mode of redeploying current resources is today.

The Incentive for Efficiency: Roaring Out of Recession

In the last decade, the deep technology software industry has evolved to such an extent that we are now in the next phase of operational automation. This is good news for our businesses, because it means we do not need to build any technologies for ourselves. Rather, transitioning effectively towards more efficient models for growth simply requires that we do the work of acquiring the right tools to help us through this time.

If your business is able to successfully shift your modes of operation towards efficiency, you will come out of any potential recession roaring. Leaders who are able to dramatically improve the efficiency of their business operations will come out on the other side of an economic crisis in a much lonelier marketplace. They will have a lot less competition around them. And they will be much more attractive to investors who have fewer options to deploy their capital. If your business is able to weather the impending storm of recession and come out the other end, it will be your great opportunity to shine. You will show that you can indeed be profitable, and that you are monetizing and spending well. You will do more with less.