I was recently asked to speak on technology at our company town-hall, and since our company is in the middle of a transformation to a “Technology Company”, I decided to make that the anchor-point of my talk. Why? Because I have found that most companies and their employees do not really “get” this concept, leading to many interpretations and confusions and hence resulting in lost opportunities. I wanted to make sure our employees got it right.
As I thought through my talking points, I came up with a small list of misconceptions about what a Technology Company really is. I decided to share all the thoughts I had gathered here, in anticipation of an interesting discussion and feedback from a larger forum…
So what is a “Technology Company”? The most common explanation I have heard is - a Technology Company is one that effectively uses technology to be successful in business. If you let yourself believe that, you are in deep trouble, in my humble opinion. Merely “using” technology may have been a good strategy in the 70s and 80s, but today, being technology-enabled is just “table stakes”. Can you name any business today that has not adopted technology? You can’t, right? Even local mom-and-pop shops now use mobile-payments and take delivery orders on Whatsapp. So, would you call all of them Technology Companies? I am sure you wouldn’t. So, what is it that Technology Companies do differently?
Well, to answer that, let me borrow a term coined by Tom Peters. The term he uses is “Re-Imagine”, which I think perfectly captures the essence of what I am attempting to convey. Technology Companies are companies that use Technology to Re-imagine business, rather than to just automate or enable existing business. They use technology to find completely new ways of doing business, they even invent new kinds of business on the strength of technology. At a Technology Company, technology defines business, rather than the other way around. Ask the big banks, and they will tell you how they thought interconnecting their branches and installing billion-dollar “core-banking” systems to centralize their operations would be all the technology play that was needed, only to be left gaping at upstarts like Atom (UK) and Ally (US), the new “online-only” or “direct” banks, that have redefined (Re-Imagined!) what the banking business is. This quote from an article in Wired magazine (http://www.wired.co.uk/article/digital-only-banks) sums it up nicely – “I could make a compelling argument to say that Atom is actually a data company that happens to have a banking license”. Well, there you have it. I could not have put it any better myself. But wait, it gets even better – “Atom's competitor, Mondo, is perhaps best known in the tech world because it has run a series of hackathons to imagine new banking functions”. See what I mean?
The second common fallacy I find is the idea that Technology Companies are about the latest and greatest technologies. I have seen companies become a veritable museum of new technologies, in an effort to embrace all that is new and shiny, thinking that just being on the latest technology will give them a business advantage. They keep building “Next-gen” versions of their existing products using new technologies, thinking that will automatically make the product better. No. Technology is just a tool, it is how you use it that counts. Yes, the latest technologies may have capabilities that could give you advantages, but only if you apply those capabilities to business in innovative ways. Try this exercise. List out the top 50 companies by R&D spend. Next list out the top 50 innovative companies. See how many names in the two lists match. Surprised at the lack of co-relation? You shouldn’t be. Re-Imagination happens when business ideas and technology capabilities come together in previously un-conceived ways to result in completely unforeseen outcomes. That is why it is so difficult. That is why it so often blind-sides established players. And, that is why it is so valuable.
As I was finishing up my preparations for my talk, I tried to anticipate counter-points that would come up, so that I could go in prepared. One of the top questions I knew folks would have was – “Hey, we have been in this industry for decades, and have unique knowledge and expertise in the domain, and that is our biggest competitive advantage. Why do we need to become a Technology Company”? Very good question, and many companies think along these same lines and go – “Oh yeah, that’s right! So, if I use technology to automate or enable these unique business strengths I have, I should be a winner on all counts, right”? Umm…hold on. I know that logic sounds very reasonable. But don’t jump to conclusions yet, follow me closely here. The problem is that your “unique business knowledge and expertise” is competitive in the context of how business is done today! It is tuned to the way the business works today. What if the context changes to a “Re-Imagined” way of doing business? Would your well-practiced orchestra go completely out of tune? Would your years of in-grained processes and culture make it all the more difficult to turn the ship and catch a new prevailing wind? You bet it will! Tell me, did Amazon have decades of experience as a book-seller? Or was Uber a taxi-fleet operator for a century? They are true examples of how Technology Companies change the game.
Well, that brings us to one final interesting question – if you are a true Technology Company, do you always remain so? Can you rest on your laurels and be assured of continuing success? Aha! Life is never that simple. Remember, you rose to ascendancy because you were the first to use technology to “change” how business was done, so if you stop changing, what happens? Yes, you are right; your competitors will soon catch on. What was unique to you will soon become established business process! Your days ahead of the pack will be numbered, and soon the herd will be all around you. And now, you will be as susceptible as the others to a new upstart who changes the game again. So you see, to retain your Technology Company badge, you will have to continue using technology to change the game. Look at Facebook, the guys who wrote the rule-book on social media. They are now trying their best to catch up to the new brats in town – Snapchat and Instagram! The only company (that I can think of) that has relentlessly held on to the Technology Company badge is Apple. No wonder both their customers and their shareholders love them so much.
Hope I was able to get you to think differently about this topic. So, what do you think? Do you agree? Which of the fallacies listed above have you encountered? Do you have some more examples? What are your examples of great Technology Companies? I would love to know. Or, do you disagree? If so, please enlighten me with your point of view through your comments.