Uncertainty, longer sales cycles, shifts in talent expectations, and capital constraints are challenging tech CEOs to lead through change.

Mark Petty, Senior Director Analyst, Gartner Inc.

May 3, 2023

5 Min Read
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Zoonar GmbH via Alamy Stock

CEOs at companies selling technology products and services must lead through change. This year presents an environment of continued uncertainty, yet the need for tech CEOs’ continued growth has never been more prominent.

Tech CEOs must look to understand market dynamics through the perspective of their buyers and customers; however, doing so will present new challenges. Amidst shifts in economic, sales, talent, and investment dynamics, tech CEOs will be tasked with making key decisions to continue driving growth. Here are four key trends that tech CEOs should be watching for this year, and the actions to take to lead through the uncertainty ahead.

Trend No. 1: Uncertainty Abounds

Uncertainty is the most significant trend impacting the decisions of tech CEOs in 2023. Macroeconomic risks caused by disruptions such as war, inflation, and supply chain troubles are impacting market investments. The sudden collapse of Silicon Valley Bank and other bank failures also created additional uncertainty, particularly in the startup world. Tech CEOs must be prepared for an economic crisis and take measures that keep their organization alive during those times. Simultaneously, tech CEOs who are financially prepared for an economic crisis must not miss opportunities to advance market share, make acquisitions or expand into new markets.

Tech CEOs need to prioritize product market fit and be mindful of not misreading uncertainty.For example, tech CEOs must consider what will happen to products that are in the late stages of their life cycles. Products that reach a revenue plateau are seen as failing and have reached their end of life (EOL), but uncertain times can precipitate a false plateau. Tech CEOs must be able to identify the differences between true EOL and false EOL plateaus to make a positive product strategy decision. Prioritize products and services to achieve product growth after the uncertainty has subsided.

Trend No. 2: Uncertainty Is Creating Longer Sales Cycles and Changing Buyers’ Behaviors

Macroeconomic uncertainty has caused buying groups to see more employee turnover. This has created a situation where stakeholders are regularly changing and those completing the purchase are different from those who started it. Customers’ priorities have also been affected by the recent macroeconomic uncertainty. As a result, companies are adjusting their growth strategies and expectations to reflect the new economic environment. Purchases are under increased scrutiny to ensure they align to updated priorities.

Buyers often experience greater challenges in the buying process and when deploying solutions bought from startups. Buyers frequently make large technology and service purchases from well-known brands and market leaders, while only a small amount make purchases from startups. Additionally, buying teams face more conflict when selecting a startup over established providers. Recent bank failures may further increase scrutiny from financial leaders and procurement, who are often influential in high-tech, high-consideration sales.

Amidst uncertainty, these challenges increase and lead to more difficult buying cycles for startups. Startup tech CEOs who are scaling up their business must understand buyer challenges and address them proactively in their go-to-market strategy. Be prepared to discuss the company’s financial position and engage stakeholder champions to build confidence and consensus.

Trend No. 3: Shifts in Talent Expectations and the Future of Work

Compensation is the most important attribute to employees when looking for a new job, as well as the top attribute driving the decision to leave a previous employer. Tech talent will continue to cost more in the future. In 2022, tech role salaries significantly increased in the US, UK, and Canada. The average salary for those in tech roles is expected to continue growing in 2023.

Tech layoffs will continue, but overall demand for tech talent will not relent. While tech layoffs have increased substantially, tech job openings have remained high.

As talent expectations shift, tech CEOs need to understand that hybrid work has now become a baseline expectation for most employees. Flexible work policies impact an employee’s decision to stay at their organization. Organizations have already seen an increased turnover when employees are required to come back into the office full-time. Tech CEOs need to develop an employee value proposition that focuses on flexibility.

Retaining top talent will remain a pressing priority for all tech CEOs. One of the primary reasons employees leave startup tech organizations is a desire to join a larger tech company. Larger technology companies are considered a safe haven for employees and become even more attractive during uncertain times. However, employees at larger tech companies are also facing layoffs.

Regardless of the size of the company, employees will still face challenges in uncertain times. Tech CEOs must drive a purpose-oriented culture to sustain high performance and employee morale. Offer flexibility, while providing benefits and opportunities to hold on to top talent.

Trend No. 4: Uncertainty Has Led to Capital Constraints and Negative Sentiment From Investors and Tech CEOs

The last year has seen a change in sentiment related to fundraising environments for technology startups. Constraints in capital are not only impacting tech CEOs seeking capital for growth but are also changing the competitive landscape for those who are already well capitalized. There was a decrease in positive sentiment during 2022 by both investors and founders.

Global slowdown, decrease in tech stock valuations, inflation, and geopolitical instability are the primary drivers of fundraising negativity. Recent bank failures added additional pressure to an already challenging fundraising environment. Tech CEOs now must look for alternatives to venture capital funds, such as government grants. Additionally, startups with low product-market fit have been rejected and need to make pivots and other changes before receiving investments.

Tech CEOs should focus on creating new revenue streams and developing strategies to build market share in existing markets. Have a clearly defined strategy based on new-market creation, market adjacency, improving competitive advantage and protecting core business. For those currently pursuing fundraising, focus efforts on investors with the newest funds and prepare for more conservative valuations and a slower process.

Tech CEOs who successfully lead their business through uncertainty will take actions to improve their business while competitors falter. Tech CEOs must be prepared to pivot through headwinds by focusing on retaining top talent, investing in growth, and executing plans to expand into new markets.

Mark Petty is a Sr Director Analyst at Gartner, Inc. where he provides advice and analysis to CEOs and founders of technology startups. Mark and other Gartner analysts will be presenting additional insights for technology executives at Gartner Tech Growth & Innovation Conference, taking place June 14-15 in San Diego, CA.

About the Author(s)

Mark Petty

Senior Director Analyst, Gartner Inc.

Mark Petty is a Sr Director Analyst at Gartner, Inc. where he provides advice and analysis to CEOs and founders of technology startups.

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