When I step foot into a company, one of the first questions I ask leadership is, "What does this company do?” Not because I haven't done my research on the background of the company, but because I want to hear from them what they think they're in the business of doing.
The normal ones say, "We’re an ecommerce company" or "We're an apparel company" or "We're a fashion brand" or maybe, "We are a biotechnology company." The smart ones will say something to the effect of, "We're a technology company that happens to sell health insurance." In this article I will outline 4 reasons every company should have this same mindset and consider itself a technology company.
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Customer expectations are different in a digital-first world
Whether your products are consumer products or you operate business to business, customer expectations are different in this new digital first world. One of the reasons for this is the continuing cross-pollination of consumer technology and business technology.
Back in the day, consumer technology would be considered a "toy" by any serious enterprise technologist. These days, most of the leading edge methods and practices being adopted in enterprise technology come from the consumer world. Whether it be mobile, social or advances in design and interaction, there is a lot more crossover between consumer technology and business technology.
This may seem irrelevant; but you have to remember that your strategic partners, your customers and even your employees operate in this consumer world as well. Therefore, customers expect their services and experiences to be customized and personal. This creates a huge opportunity to create value by meeting their needs, but it will require an updated more flexible execution model. Technology systems will need to be more lean and flexible to fully take advantage of new opportunities.
The competitive landscape continues to accelerate
This has been true for years, but the trap companies sometimes fall into is to think that this is a temporary event, and "once this all blows over" they will be able to go back to "business as usual."
Acceleration is business as usual, and this means companies will need to be able to rapidly adopt, integrate and deploy new technologies more quickly than their competitors. Everyone looks at the stories of Kodak, Blockbuster and Research in Motion (RIM). When they see the fates of these companies they think, "That could never happen to us." They said the same thing.
These companies were faced with a changing landscape, but they were so wedded to their current business model they could not see how the changes would affect them. On one hand, they didn't want to cannibalize their existing business model in favor of something that may have been a temporary fad. On the other hand, these companies were so massive, that changing would require a 5-10 year effort. What do you do in this situation? I generally advise companies to make "1 small bet each quarter, and if that turns out to be a winner, put more resources into it."
In this new landscape companies have to not only manage current business but also continually probe new models in a systematic way. This means being able to rapidly develop solutions and infrastructure to explore a problem space, then rapidly ramp up if the opportunity turns out to be significant.
Product lifecycles are shortening
With software and technology continuing to change every aspect of how companies operate, the life cycles of products and services are shortening. Products that used to have decade-long refresh timelines now get updated within 12-24 months.
Services like sales, marketing, legal, product development and merchandising have to be agile enough to react in tandem to emerging opportunities. A big part of creating this agility cross-departmentally is having software and technology systems that enhance everyone's ability to react to change.
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Operational capability is tied to technology capability
A big trend in the last decade was outsourcing whereby a company would outsource large parts of their software development and technology implementation to a third party. CFOs everywhere cheered this as a way to unlock enterprise value.
Unfortunately, the honeymoon does not last long, and companies who have sliced their internal technology capabilities to the bone are finding themselves locked into multi-year outsourcing agreements and unable to react quickly to threats and opportunities in the marketplace. These agreements have a defined scope and any change means you have to revisit the contract process, which no one wants to do.
The most successful and highest performing companies have little separation between their business strategy and their technology strategy. In short, they have technology as part of their DNA, and they would NEVER outsource this significant competitive advantage. Companies who realize they are in the technology business can drive speed and innovation by closely aligning their technology leaders with their line of business leaders to co-create solutions.
I work with a lot of companies across industries and all of them have a few things in common:
- They are in various states of digital transition.
- They are trying to make sense of rapidly changing demographic trends.
- Things that were leading edge just 5 years ago no longer work well.
One of the mindsets I work really hard to change is that their transformation is a destination. In fact it’s a never-ending journey of continuous improvement, continuous innovation, and continuous experimentation. Companies who are able to successfully create internal "engines of innovation" are positioned to continually evolve and stay competitive.
Until Next Time
Stay Agile, My Friends