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The “Everything You Need to Know” Guide to Demand Generation in 2021 – ReadWrite

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demand generation marketing


Ask any startup what their biggest challenges are and “demand generation” will probably make the list. It’s not a new company problem, though. Established organizations also need to answer the question, “how do we get people to care about us?”

In this article we’ll cover everything you need to know about demand generation, from its definition to the tactics companies use to create and measure it.

What is Demand Generation Marketing?

Demand Generation Marketing is Holistic Marketing

Let’s start with a definition, just to make sure we’re on the same page:

Demand generation is a holistic marketing and sales approach that aims to build interest in a product or service, educate potential customers on its benefits, nurture them until they’re ready to buy, and, ultimately, convince them to make a purchase.

The field of demand generation spans many different disciplines including content creation, paid advertising, conversion techniques, and customer success strategies.

Demand Generation vs. Lead Generation

Demand generation vs. lead generation — What’s the difference? While these two terms are often used interchangeably, the truth is they’re *not* the same. Understanding the differences between them is key to building a successful demand generation strategy.

As discussed above, demand generation is a full marketing and sales framework that guides prospects from complete strangers to paying customers. In other words, it creates demand for a product, then works to turn said demand into company revenue.

Lead generation, on the other hand, is the practice of identifying potential customers and acquiring their contact information so that they can be marketed and sold to in the future.

So the main difference between demand generation and lead generation is that lead gen is just one component of demand gen. Is it important? Absolutely! But without a complete demand generation strategy in place, it’s more difficult to convert leads into paying customers.

Make sense? Cool. Now if we just knew how to generate demand for a product or service.

How Do You Create Demand Generation?

Two people creating a demand generation strategy.
Demand generation strategies

Or, put another way, “What are demand generation activities?” Great questions! In this section we’ll outline how you can create demand for your products and/or services usings specific, proven activities. Let’s take a look…

1. Clarify Your Goals

As with most things in the world of business, a successful demand generation strategy should start with clear goals and objectives. What do you hope to achieve? Make sure every goal you set is SMART: specific, measurable, attainable, relevant, and time-based.

  • Specific: Be as specific as possible about what you’re trying to do. You don’t want to “Improve sales,” you want to “Boost sales of Product X by 17% in Q1 of this year.”
  • Measurable: Make sure you’ve chosen specific metrics to measure while working towards your goals. That way you can track progress and make needed adjustments.
  • Attainable: We’d all love to “boost sales by 1,000%”. But for most companies, that’s not realistic. Only set goals you and your team are actually equipped to achieve.
  • Relevant: When choosing your goals, stick to ones that align with overall company objectives. You don’t want to be at cross purposes with other departments.
  • Time-Based: Lastly, ensure every objective you put in place has a practical deadline. This will make your chances of accomplishing much higher.

We also suggest setting milestones for each goal, AKA short-term objectives you can focus on to help keep you inspired while working towards bigger aims.

The last thing we’ll say in regard to demand generation goals is that they should be set and worked on by both marketing and sales teams. This will ensure alignment between departments and help your company avoid erroneous and unproductive aims.

2. Define Your Audience

Who are you trying to reach with your demand generation strategy? If you don’t know the answer to that question, it’s highly unlikely that you’ll find success.

You need to know exactly who your ideal customers are, their goals,the challenges they face on a regular basis, and where they hang out online. That way you can create content and messaging that resonates with them.

If you’re completely lost when it comes to defining your audience — either because you’re a brand new start up or you’ve just never taken the time to assess your target market — don’t worry. All you have to do is study the data and use it to build buyer personas.

A buyer persona is a fictional character that’s created to represent a subset of real-world consumers. Ideally, the buyer personas you create will have a gender, age (a range is fine), occupation, income level, motivations, goals, challenges, and interests.

Here’s a really good example:

An example of what information you need to know your customer at the level of a lead gen.

To find the kind of information shown above, dig into your current customer data, which can be found in website and social media analytics dashboards and by talking to experienced sales reps and customer success professionals.

For companies without a well of data to mine, we suggest researching your industry as a whole by reading websites, engaging in forums, and viewing social media content. While this kind of information won’t be as helpful as your own data, it’s still valuable.

3. Map the Customer Journey

At this point you should have clear goals and a well-defined audience. Now it’s time to map your customer journey. Ask yourself, “what’s the logical path my prospects will take from complete stranger to paying customer?” This journey is vitally important to demand gen!

Take a look at the graphic from Resourceful Selling below. It does a great job of illustrating typical journey stages, as well as desired customer actions and content ideas for each.

A graphic depicting a sales funnel for demand generation.
Image Credit: Resourceful Selling

The first funnel shows the general stages that each lead goes through on their journey from stranger to customer. The second shows the actions each lead needs to take to move from one stage to the next. And the third funnel shows various marketing and sales materials you can use at each stage to keep prospects flowing through and revenue coming in.

We’ll talk more about content types in the next section. But before we get there, take a look at your own funnel and answer these four questions:

  1. What action does a lead need to take to move to another stage in the funnel?
  2. What qualities do I want my leads to possess to move to subsequent funnel stages?
  3. What actions does a lead need to take to be removed from my funnel altogether?
  4. What conversion rate do I hope to achieve for each funnel stage?

By answering these four questions, you’ll be able to map a customer journey that works for your company’s unique demand generation strategy.

4. Create Your Content

Now that your customer journey is mapped out, you need to create (or assign) content to each stage of your funnel. The tactics below have been separated into suggested stages. But that’s all they are: suggestions. Feel free to add content as you see fit.

Top of the Funnel Content

Content at this stage of the funnel should be designed to attract your ideal audience and make them interested to learn more about your offerings. It also needs to be highly engaging, which is why we always recommend including visual elements.

    • Paid Advertising: From Facebook ads to Google Adword campaigns, paid advertising can expose your brand to a lot of potential customers. Just make sure you have a solid strategy in place and keep an eye on ROI so you don’t lose money.
    • Blogging: Long-form blog articles (like this post!) are a great way to improve your company’s SEO efforts, build a relationship with your target audience, and educate them on the latest happenings and inner-workings of your industry.
    • Social Media: In all likelihood, your ideal customers spend a lot of time on sites like Facebook, Instagram, and Twitter. Meet them there! Just remember, social media should be a conversation, not a one-way announcement platform for your company.
    • Video Content: Video is one of the most engaging marketing platforms. Fortunately, there are plenty of easy to use and affordable tools to help you capture quality footage. For example, CloudApp will allow you to quickly record your screen, free of charge.

Remember, your audience might not even know they have a problem at this stage of the funnel. If they do, they certainly don’t know how to solve it yet. Make sure your top of the funnel content is highly educational and *not* overly sales focused.

Middle of the Funnel Content

Once your prospects reach the middle of your funnel, they understand they have a problem and know there are solutions available to help them. Your content at this stage should work to build relationships and begin to explain why your company’s solution is the best option.

  • Email Marketing: It’s been around for over four decades, but email marketing is still one of the best ways to nurture leads. Use this channel to keep your company top of mind, promote specific pieces of content, and deliver targeted offers.
  • Downloadables: A downloadable is any piece of content that requires an email address and/or some other contact details to access. eBooks, white papers, guides, and even some high-end webinars fall into this category.

Middle of the funnel content should be highly educational, persuasive, and targeted directly at potential customers in this specific stage of the buyer’s journey.

Bottom of the Funnel Content

Customers at the bottom of the funnel are ready to buy. They just need one last push to get them over the edge. This is usually done via current customer review and testimonials, and content that expounds upon the features of a particular product or service.

  • In-Depth Research: Take time to dig into customer data to see how your offerings help them. Or do an honest comparison of your’s and a competitor’s tool. Then publish the results so that almost-buyers have the details they need to complete a purchase.
  • Case Studies: Case studies, AKA customer success stories, show potential buyers what others have achieved with a specific product. They should be very inspirational. If possible, include screenshots of customers using your tool so that its value is clear.

Do your best to ensure your bottom of the funnel content is concise, promotional (but not at the expense of bashing your competitors), and data driven. Your customers want the facts and they want them quickly when they reach this stage.

How Do You Measure Demand Generation?

a screenshot of a digital analytics dashboard.
Do you know how to measure your demand gen analytics?

You’ve created a demand generation strategy, complete with buyer personas, a customer journey map, and relevant content for each stage of your funnel. Congratulations, you’ve come a long way. But we’re not done yet.

How do you know your strategy is effective and helping you achieve the goals we talked about earlier? You learn to measure your demand generation efforts. Here’s how:

1. Define Your Metrics

First things first, decide which demand generation metrics you’ll track. The ones you choose should correlate with the goals you’re trying to achieve.

For example, if one of your goals is to increase your conversion rate from stage one to stage two, you might want to track lead magnet downloads. If you want to increase brand awareness, website traffic could be a KPI worth monitoring.

2. Track Metrics Over Time

Have you chosen a few important metrics? Great, start tracking them. Doing so will help you better understand your audience and how to adjust your strategy to better meet their needs.

Just remember to give yourself time. You need to acquire a bit of data before you make any drastic changes. That way you know you’re reacting to solid trends and not just momentary blips on an analytics dashboard.

3. Adjust as Needed

Finally, take what your data tells you and act on it. There’s no point in tracking downloads, website traffic, conversion rates, or anything else if you don’t use the information to improve your business. Look for patterns, make adjustments, repeat.

Pro Tip: Use a tool like CloudApp to make GIFs of your analytics. That way you can easily share them with colleagues and enhance understanding across your organization.

In Conclusion

Demand generation is an important marketing and sales approach. By educating your target audience on the problems they have, how to solve them, and why your company’s products and/or services are essential to their success, you’ll boost sales. You’ll also improve brand authority, develop deeper blonds with your customers, and score more referrals.

Follow the steps we outlined above and you’ll be able to create and distribute the right content at the right time and guide your prospects through the sales funnel.

Image Credit: ekaterina bolovtsova; pexels

Joe Martin

Joe Martin

VP of Marketing

Joe Martin is currently the GM and VP of Marketing at CloudApp, a visual collaboration tool. He has more than 13 years of experience of marketing in the tech industry. Prior to his role at CloudApp, Martin was the Head of Social Analytics at Adobe where he led paid social strategy and a research team providing strategic guidance to organizations within the company. He has an M.B.A. from the University of Utah’s David Eccles School of Business, Executive education in Entrepreneurship from Stanford Graduate School of Business, a B.S. in Finance from the University of Utah and a digital marketing certificate from The Wharton School of Business at the University of Pennsylvania. His work has been published in the Associated Press, Wall Street Journal, NY Times, and other top tier outlets.

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The Power of Human Touch in Software Development and AI Environments

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Igor Bergman


Necessity is the mother of invention — a principle that has defined technological advancement and design for generations. We innovate and create new products, services, and processes based on human needs that arise. Just as these needs evolve with each generation, so too must the way we approach the innovation required to address them, and that requires a human touch in software development.

Digitalization Driving Productivity and Collaboration

In today’s era of digitalization, companies are turning to new technologies, specifically software applications, to drive efficiency, productivity, lowered costs, and smarter collaboration. As the adoption of digital transformation has increased, so has the number of software solutions enabling and supporting it.

Companies are looking to software developers for new ways to integrate technology. Operations demand process automation, improved communications, and the delivery of more value to their customers.

Artificial Intelligence (AI) has been an influential part of this progression and an enabler for many capabilities today; however, we must exercise restraint in relying too much on technology alone to reach business goals.

Restraint With AI Makes Better Sense Today

There’s power in the human touch that can set the stage for meaningful transformation when embraced during the software development process. As we continue to integrate digital technology into nearly every facet of work and life, we need intelligent software design to incorporate more of the human experience to thrive.

The key is finding a measured balance between purpose-driven software design and human touch and understanding how to execute this collaboration successfully and ethically.

AI’s Role in the Consumerization of Software

Historically, enterprise software was initially designed with a particular persona and a very specific set of requirements in mind. As a result, it was built to serve simply as a tool with no focus on the user’s experience, behavior, or even the potential ability of the user to change behaviors.

For example, if a person were using a software program to search for fruit, that software would need to be coded to show each specific fruit. Then, if a user searched for a peach, the software would display a peach. If they wanted to search for an orange instead, the software would need to be hard-coded to show an orange. This is a very cut-and-dry process leaves little room for interpretation.

Software Designed to Consider User’s Behavior

Today, AI-powered software is designed with realistic human values in mind, defining a set of user stories and use cases that proactively adjust to potential user behavior, with a strict focus on providing and maximizing end-user value and experience. Explained differently, rather than designing software around who a user is or what they do, the software is designed to consider the user’s behavior and the value the product can provide for an optimum user experience.

Revisiting the example above, if a user in Florida is seeking “fruit,” the initial result the software is likely to show them would be an orange. Alternatively, if the user lives in Georgia, it would likely show them a peach — since these fruits are indigenous to their respective regions.

Software Built With Human Touch Provides an Experience

In this example, the software was built to look for an outcome and design an experience that considers several factors to present the most likely desired result. This is how AI algorithms are used to design an environment meant to improve the customer experience by anticipating needs based on trends. This is also how software developers automate an experience.

Several different inputs are analyzed to the point where an assumption can be made based on a person’s behavior over time. Content is then populated, or an action taken that the program deems would be most useful for that person, all in the name of improving the user experience. But what if the person in Florida doesn’t like oranges and the person in Georgia doesn’t like peaches? This is where the human touch comes into play

Finding the Ethical Balance Between Smart Personalization and Human Privacy

AI algorithms require and collect personal user data to customize the experience in a unique and valuable way for a specific user. However, they can sometimes be too rigid when analyzing only the data without considering personal preference, free will, or choice.

AI alone, without any oversight, can also go too far, as there’s a fine line between personalization and privacy, and AI can’t make the distinction on its own. A human developer addresses this issue by providing the guardrails necessary to ensure ethical design and desired behavior while also incorporating the flexibility needed to give users a greater sense of choice.

How Do You Protect Your Customers?

Software must be built so the user can determine what data they want to provide to improve their life or minimize evasiveness. On the front end, as software is being designed, developers can build flexible architecture with certain constraints in mind to provide an ethical and secure framework around how the AI algorithm works. This allows users to define where the line is or how much personal data they allow into the architecture or the cloud.

Ultimately, users want AI to optimize the tasks they need to perform but don’t want the AI to make decisions for them without approval. This idea of choice is another critical element of why the human touch is so imperative in the development process, even as the industry has sought faster and more efficient ways of writing software programs.

The Artistry of Software Engineering From the Human Touch

As a means of automating code writing, code generators were introduced several decades ago to quickly write new code and get applications to market faster. Requiring minimal human intervention, the developer would simply set what it needed the app to do, and then code was generated for that specific purpose. It was easy to write code that would solve a particular problem and take the user from point A to point B in the most efficient way possible.

However, the lack of human touch is the issue with this model. There’s no consideration for the user experience or innovation that excites and delights; the software is simply working to solve the problem without room for interpretation. Alternatively, the human coder can push boundaries and determine how to interpret the user requirements to decide the best path between the two points.

Flexible Code Environments Make Efficient Programming

For example, if a program were coded to simply draw a tree, a code generator would produce the same tree over and over with no differentiation in color, leaf type, size, etc. There would be no artistry behind it, and users wouldn’t have the ability to choose from various tree designs. Instead, they’d have to accept the tree the generator produced. But when an engineer has the ability to integrate their personal touch, the artistry of software design is unveiled, and the experience becomes something very different.

Today, our industry has evolved even further, and low-code/no-code environments have emerged as the next generation of modern and efficient programming. Developers can now quickly build the foundation of a program from existing services and functions that have already been written by other coders, easily defining the path the user takes to get from point A to B.

This type of coding is a much more flexible way of designing software that allows engineers to adopt the preferences of the end-user and change functions as the end user changes. However, the various functions are still being coded by an individual and, thus, are constrained to the preferences of that person.

Reusable Templates Boost Productivity

So, to revisit the previous “tree” example, software developer A designs a single tree which developer B can now take and, in about the same amount of time as it took to create just one original tree, reuses as a copy over and over but in different ways.

Several copies can be placed side by side to depict a forest, or a single copy can be placed in front of an abandoned building or on a deserted island to create different applications entirely. However, because they’re all using the same original tree design, all of the trees in each environment still look the same — the artistry is limited to that of the person who originally designed the tree.

Decide and Improve the End Product to Customize

Where the human element comes into play is when the software engineer can have the ability to decide how they want their tree to look and can add features along the entire design process to augment it.

Then, the next engineer can come in and change or improve it to meet the needs of their users, and so on. Now, instead of one tree that everyone has to use repeatedly in different ways, there are hundreds of different trees that all came from the same initial version but have been customized and improved upon.

How Does AI Build a Tree?

If we relied on AI to build the perfect tree, it would calculate only one way to do so, but what if you don’t like it? It’s no longer perfect for you. So, rather than relying on AI completely, developers can choose how to embed AI capabilities into their programs to drive the best customer experience.

These AI integrations have to be customized to fit the environment, however, and this requires an actual engineer to be part of the process, which ensures the human element is preserved.

Ultimately, software engineers have to find the right balance of enabling smarter technology that can proactively anticipate and solve our problems while also ensuring end users have the ability to exercise their right to choose and decide what’s right for them based on the facts presented.

Human Touch at the Heart of Modern Software Design

No longer are software solutions built for a single defined purpose. Instead, they are built to learn and evolve based on the creativity, artistry, and ethics of the human touch. As emerging technologies have helped enable modern innovation with unprecedented speed, and invention can now be born out of demand and pursuit of progress rather than out of necessity.

As AI continues to be integrated into the software development process, the human touch will play an integral role in teaching the software how to adapt to each user’s needs, values, behavior, and privacy priorities.

Featured Image Credit: Photo by Andrea Piacquadio; Pexels; Thank you!

Igor Bergman

A Software and Cloud transformation engineering and product leader, Igor Bergman has extensive experience in software businesses, product management, startups, and business development. He is currently heading Lenovo’s $750M Global Software and Cloud business unit.

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5 Ways to Find Balance at a Startup

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Startup founders and employees find that achieving work-life balance can be challenging. 43% of entrepreneurs agree that work-life balance is one of their biggest challenges. As the start-up grows, demands will also grow. Founders and employees need constant motivation and fresh ideas to keep up.

As challenging as a good work-life balance is to achieve, it is very important for your personal and professional lives. It can be as important as a business plan for your startup. This article gives a better understanding of work-life balance, what it means, and why it is important. It also highlights a few ways to find work-life balance at a startup.

work life balance office setting

Work-life balance meaning

So what is work-life balance all about? In simple words, the term work-life balance is about how you manage your time between work and outside of work. It gives you the flexibility to get things done in your professional life while still having time and energy to enjoy your personal life.

There is no perfect work-life balance template to follow. We are all different, and so what a healthy work-life balance looks like will differ between us. However, the primary goal of a better balance is that you should have a greater sense of well-being and lead a better quality of life.

Why work-life balance is important

Work-life balance is important for many reasons. Some people are willing to give up money for a better work-life balance. This is a true testament to the stress levels of the modern workplace. In a 2020 Deloitte survey, it was found that 44% of millennials say they are stressed all or most of the time. Companies that help their employees have a good work-life balance in their professional and personal lives have higher retention rates.

A good work-life balance has many perks. Some of these include:

  • Fewer health issues
  • Higher productivity levels
  • Fewer burnouts
  • More mindfulness

Poor work-life balance has some dire consequences. It can wreak havoc on your health, home life, and personal relationships. Some of the drawbacks include:

  • High-stress levels
  • Feelings of dissatisfaction with life
  • Increased rates of family issues and divorces
  • Escalation of substance abuse
  • Low productivity levels
  • Dissatisfaction at work
  • Lower levels of motivation, commitment, and loyalty.

work life balance girl outdoor

5 ways to find balance at a startup

To create a better work-life balance, think about how you can achieve balance in your personal and professional life. What works for someone else may not work for you. However, here are some tips you can try to improve your work-life balance.

Develop some time management skills

Many entrepreneurs struggle to manage their time correctly. This is because they spend most of their time working long hours to complete their to-do list. There are only 24 hours in a day, so prioritizing may be the best way to manage your time better.

Create a daily, weekly, and monthly to-do list. Try focusing on the most important tasks on your priority list. Doing so can increase the chances of things being done with greater care and focus.

Another thing you can try to do is to say no to the less important stuff. You can simplify your work and delegate the less important stuff. Also, turn off your phone and email notifications. Set a scheduled time to respond to emails and make phone calls. Replying to emails and checking messages as they come in can be distracting. It can make you lose focus and mess with your productivity.

Try to leave work at work

How often do you find yourself taking work home and working remotely from home? The answer is probably too often. You may find yourself working on weekends and holidays. This leaves you with little to no time to relax or spend with loved ones. Try to do work during work hours and stop once those hours are up.

It is important to have a strict policy when it comes to work and other areas of your life. You can try having a no-work-on-the-weekend rule. Having the rule is one thing, but sticking to it can be hard. Try your best to follow this rule and make no exceptions. The weekend can help to reduce stress from all the issues you dealt with during the week. It can even give you time for ideas and solutions to emerge. It is vital to give your body and mind a chance to rest and recover.

Set aside family time

Making time for your family with a busy schedule can be hard. However, you need to remember that your family is your main support system. When things aren’t going smoothly at the startup, your need for support is greater. This is where your family comes in.

Work decisions and responsibilities become easier to manage with your family’s support. Spending quality time with family members can relieve stress, nurture positive behaviors and promote a healthy lifestyle. Time spent with family can improve both your professional and personal life. Plan family trips, game nights, and other activities. These can help build quality relationships with your family.

Schedule personal time

In today’s fast-paced world, it can be hard to find time to indulge in personal interests. However, one’s personal life is as important as one’s professional life. When you unplug and take a step back, you will experience a whole new perspective.

If you feel overwhelmed with everyday life, it may be time to take some time off work. Take your vacation time to rest and recover. Choose an activity that you love and one that relaxes and rejuvenates you.

You can try to make time to meditate, travel and do things you love. Personal time is best for self-reflection and setting goals. Self-care is also essential for your mental health.

If you cannot get much time off, simply ensuring you sleep and eat well can help. The American Academy of Sleep Medicine (AASM) and the Sleep Research Society (SRS) say to aim for at least six to seven hours of sleep. You should also be mindful of what you’re putting into your body. Constantly chugging coffee and eating junk food will eventually affect your health. Try to eat at least one or two healthy meals a day.

Outsource when possible

Technology has come a long way. It has gone to great lengths that we can now replace much of the work necessary to run a business. Try to outsource repetitive tasks that take up too much of your time. This can allow you to focus on your goals and have more time to deal with personal matters. For your personal reading, here are 10 reasons you should be outsourcing your marketing.

Bonus Tips

SET FLEXIBLE HOURS

A flexible work environment can lead to a healthier work-life balance. Flexible hours, telecommuting opportunities, and other systems can relieve stress. They also allow you to attend to personal matters and spend time with your family. At the same time, it can also help to increase your productivity levels and effectiveness.

EXERCISE

Exercise can improve your physical health and mental health. It can also help to improve your productivity. Exercising for just 30 minutes a day can keep your body and mind active and fresh. This can lead to higher energy levels, increased focus, and completion of tasks faster. Exercise can also help with creativity, so when you’re faced with a challenge, exercise. It doesn’t have to be anything too intense; a simple 30-minute walk may help.

MAKE WORK FUN

The only way to make an 80-hour work week bearable is to integrate some fun. Play is crucial when it comes to working. It can improve employees’ work-life balance as well as founders. Some fun can make you both more productive and lead to a more engaged workforce. It can keep everybody motivated and happier. Try to keep the happy spirit alive as much as possible. You can do this by promoting play, encouraging hobbies at work, etc.

TRAVEL

A change in scenery can work wonders. It is great for your mental and emotional well-being. Traveling to new places can free your mind, body, and soul from stress. It can help you reflect on personal goals and interests. Aside from these, it can enrich and transform your perspective on life. Traveling can also improve productivity, sharpen problem-solving skills and increase creativity.

STAY POSITIVE

Staying positive when dealing with entrepreneurial failures and threats can be hard. However, a positive mindset may be able to help you pull through. It allows you to focus on the positives of the situation and help you visualize your goals. Focusing on the positives and having a clear idea of your goals can result in you meeting them. A positive attitude is awesome, even though it can be tough to maintain.

Inner Image and Featured Image Credits: Provided by the Author; Pexels; Thank you!

Joe Martin

Joe Martin

VP of Marketing

Joe Martin is currently the VP of marketing at Scorpion, a leading provider of technology and marketing to help small businesses grow. Formerly he was CloudApp’s GM and CMO and a Head of Marketing at Adobe. With over 15 years of experience in the industry and tech that makes it run, he provides strategic guidance on how to build and use the right stack and marketing for businesses to grow. Joe believes marketers need smart training and leadership to scale company growth. Connect with Joe on LinkedIn and follow him on Twitter @joeDmarti.

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The Impact of AI as Companies Address the Skilled Labor Shortage

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The Impact of AI as Companies Address the Skilled Labor Shortage


Due to a combination of Baby Boomer retirements and a declining birthrate leading to smaller subsequent generations like Gen Z — employment firms predict that the talent shortage we’re experiencing now is likely to last for years to come. While this has the potential to be disastrous news for the economy, it doesn’t have to be, thanks to another growing trend in business: AI acceleration.

We’re currently seeing an increase in the application of AI in the workplace that moves beyond typical machines and into areas of law, medicine, software, and even art. While many have predicted that the acceleration of AI would lead to the demise of human labor, it may very well be this technology that solves the labor problem — at least for those willing to work in tandem with these AI solutions.

Taking Advantage of AI

So what does working with these AI solutions look like? What challenges are businesses facing due to this labor shortage, and how can AI help solve them? I’ll answer these questions and offer some strategies on how organizations can best position themselves to take advantage of AI and combat the continued labor shortage.

Bridging the Gap

The growing skilled labor shortage is already baked into the next 15 to 20 years, thanks to existing and continuing demographic trends. However, the opportunities to innovate within the labor shortage space are massive in the areas of cloud computing, AI, and robotics. Investment in these areas can help U.S. companies compete in a world that’s increasingly fractured and regional.

Robotics and AI systems have already proven reliable in repetitive, precise, and dangerous tasks. Businesses transitioning their supply chain away from globalization and toward more regional approaches can use AI to automate many of the tasks necessary in warehouse and factory environments.

Plenty of Use Cases

In construction, AI is being adopted to complete tasks such as drywall installation and painting, allowing humans to focus on more complex jobs such as plumbing and electrical installation.

In industrial projects, remote-controlled machines handle the more dangerous duties, like demolition and movement of heavy materials. For office environments, artificial intelligence and automation are handling repetitive occupations — taking over tasks like data gathering, clean up, and prep.

More Than Mundane

However, repetitive tasks aren’t the only places in which AI prioritization is making a difference. It is being employed to help existing workers do their jobs more effectively and efficiently.

A great example of this is OpenAI’s Codex. Codex is an AI solution that scans and analyzes petabytes of code, questions, and answers from websites like Stack Overflow. With this tool, developers no longer need to search for answers or examples of code. Instead, Codex is directly integrated into the code completion of their IDE, saving them hundreds of hours of searching and increasing their productivity.

Creating More Creative AI

Meanwhile, systems such as Stable Diffusion and ChatGPT show how AI can take over, creating more derivative works and freeing employees up to tackle creative tasks that are still well out of reach of AI.

This isn’t to suggest that AI is an eternal solution to the skilled labor shortage. But it is a critical stop-gap that can be leaned on until the workforce grows again — something that’s projected to happen sometime in the early 2040s.

In the meantime, for organizations to maintain competitiveness as the talent shortage continues, it will be necessary to strategically integrate AI into the labor force wherever possible.

1. Don’t build your entire strategy on top of a third-party AI platform.

While there are speed-to-market benefits to third-party solutions, using the same platforms as your competitors means you’re relying on the same data and, consequently, will wind up with the same business model as everyone else.

By developing your own platform — at least in some use cases — and focusing on the data within your niche instead, you can create a cone of differentiation that protects your business and creates long-term opportunities within your niche market. This will also ensure you don’t get trapped within the vision of a third-party company rather than following your own.

2. Invest in skills acquisition over education.

To combat the skilled labor shortage, you don’t need more employees with general education. Instead, you need candidates with specific skills who can help you close the widening skills gap. Technology certifications such as AWS, Azure, and GCP are great examples of the skills required to build the necessary cloud solutions and AI platforms you’ll need to compete.

This focus on skills isn’t just about hiring. It’s also about changing your focus on internal employee training. Apprentice and licensing approaches like those used for electricians and plumbers are great models for training people in new skills as they’re needed.

3. Align your investments with global shifts in geopolitics, economy, supply chain, and demographics.

As the U.S. and the rest of the world move toward more regionalized supply chains and manufacturing, the combination of human creativity and advanced technology, such as AI and robotics, will be critical. But that will only be true if this combination is pointed in the right direction.

Make sure that your investments in AI and skills acquisition are guided by your environment rather than a desire to invest in technology for technology’s sake.

The Necessary Human Touch

In summary, labor shortages, the current supply chain crisis, and inflation that organizations and leaders face will continue to impact their operations over the next few years. The rise of AI-based solutions could be a key technology to help organizations combat those challenges and maintain a competitive edge if they adopt AI solutions and integrate them effectively with their greatest assets: human creativity and problem-solving.

The strategies I outlined will help leaders prioritize as they begin selecting and adopting those AI solutions and navigate the current and growing issues associated with the shift from globalization to regionalized supply chains and labor.

Realizing AI’s Vast Potential

It’s important to remember that today’s artificial intelligence and automation solutions are designed to enhance human capabilities and improve their potential to solve problems and create explainable knowledge. They aren’t meant to replace humans in the workforce.

Leaders who remember this and focus on the symbiosis of human creativity and AI rather than on using AI to replace people will have a strategic advantage in the decades to come.

Featured Image Credit: Provided by the Author; Unsplash; Thank you!

Daniel Williams

Principal with Pariveda Solutions

Daniel Williams is a principal with Pariveda Solutions, specializing in digital strategy, implementation, and analytics. With B.S. and M.S. degrees in Computer Science and Technology Management, he has become an expert in digital transformation and AI/ML.

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