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"We’re a technology company." Yeah right.

Mon 13 Jun 2016
FYI, this story is more than a year old

It's become very popular lately to declare yourself as a technology company. It doesn't seem to matter what industry you are in; the growing popular view is that every company is a technology company. Here are some examples of company/executive pronouncements:

  • Lloyd Blankfein, Chairman and CEO of Goldman Sachs said "We are a technology company. We are a platform."
  • David Smoley, CIO of AstraZeneca said "In the past, we’ve said we’re a drugs company ...... but the reality is we are a technology company."

and locally

  • Barbara Chapman, CEO of ASB Bank said “We used to be called a bank. Now, we are a tech company that is trusted and licensed to operate in financial services."

As someone who has spent their whole career working in technology and obsessing about helping organisations to get value from technology it is awesome to see the general management population begin to get the power of technology and recognise the impact it is having. But I have some issue with the rush of non technology companies to become technology companies.  

I can see some logic behind the declarations, particularly from an internal perspective.  If your industry is under attack and being disrupted by technology or if you wish to become digitally enabled, or perhaps even become a digital leader, such a declaration may help create, as John Kotter advises, a burning platform perhaps even a sense of vision.  As a tactic within a change management programme for an organisation the "we're a technology company" declaration may be quite effective. Of course the declaration needs to be supported by an appropriate investment in digital capability. Capability includes all aspects of being digital including investing in the skills of all team members, a fundamental rethink of organisational processes as you digitise and a major revamp of the organisation to support digital. Oh, and then there is the actual technology you will seek to leverage. And while there are a lot of declarations of we are a technology company there aren't many fundamental rethinks about what that means.

Without the fundamental rethink and redesign of the organisation "we're a technology company" is simply executive rhetoric. The latest fad, the initiative of the month that all employees know must be survived. As with most fads this one will likely be badly implemented, and quietly left to die when the first signs of trouble emerge. Ultimately, like most fads it will deliver little or no value.  In most companies the most likely outcome for many will be the further denting of IT's ability to deliver value when really the issue lies in leadership, who are hunting for the last silver bullet rather than doing the hard unromantic work of defining and implementing a real strategy.  

While this is a major issue, it isn't the real problem. The real problem with the "we're a technology company" declaration is that people might actually believe it! The real problem is that they might actually act on it. This in my view is a mistake. It is a classic case of confusing ends and means.

Make no mistake, in the 21st century leveraging technology and going digital is incredibly important. Doing this well may the difference between staying in business and bankruptcy, or the only slightly better selling out to your competitor. More importantly the very best are, and will continue to, leverage technology to deliver superior products and services and win in the marketplace. But it is unlikely that you will achieve superior performance by obsessing about technology, because while technology is the means to the end it is not the end, it is not the purpose of being in business. Not only is technology not the end typically it is not even the differentiator, at least not on it's own. The differentiator is more often a combination of unique activities and processes supported by appropriately skilled people who are enabled by technology that supports them to deliver superior products and services to the market place. As PWC observed in their recent Strategy & report on maximising value from technology investments.

"Simply put, spending more does not lead to better performance. However, we found a strong correlation to profitable growth when the investments aligned with a company’s targeted capabilities and were supported by the right operating model and implementation skills."

My interpretation of this is that organisations should start by defining their distinctive targeted capabilities and an appropriate operating model. Then look to how technology can bring them to life. This is a great start but I think we should go back even further in our thinking and consider why are we in business. Peter Drucker says “the purpose of business is to create and keep a customer.” More recently in the Innovators Solution, Christensen and Raynor advise organisations to think from the point of view of the customer's "job to be done" and having understood the job the customer is hiring you to help with, you can then look at what is the best way to support them and design your services, products and business capabilities to support the customer the way you can. That is you can begin to build distinctive capabilities.  

When the customer is at the centre organisations will tend to obsess about how they can help the customer. From there you can look at what role technology plays in supporting the customer. Better yet if you obsess about the customer and meeting their needs then new technology presents as opportunities to excel rather than threats to be concerned about or neutralised. If however technology is the focus you are much more likely to look for cool technology tools and then ask how can I use them? This is not all bad, but it raises the risk that we either simply deploy the same tools as everyone else or try and force the customer into our cool tool. This is the technological equivalent of follow the leader and to a man with a hammer everything looks like a nail.

You take your eye off helping the customer complete their jobs at your peril. Many businesses over hundreds of years demonstrate what happens when you remove the customer from the centre of the organisation and replace it with something other than the customer. You fade into irrelevance and probably bankruptcy. The outcome of replacing customer focus with technology focus will be the same. A loss of focus on the customer which will lead to under performance of the business.

So, yes technology is important but in the end it is a tool we use to support our customers to meet their needs and not the purpose of business. Very few of us are actually in the technology tool business.

Article by Owen McCall, consultant, www.owenmccall.com

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