Technology is now so pervasive that it has become integral to the business strategy of any corporation. From retail stores to health-care companies, everyone is setting aside large sums to invest in technology because of the innovations it will engender.
Technology is rewriting history. Recent business trends show how traditional industry bigwigs have been outpaced by technology-powered enterprises that have zipped past these heavyweights and dwarfed them in terms of market share and profitability.
Amazon is a sterling example. Amazon’s e-commerce technology-driven business has ripped apart the traditional upper hand enjoyed by many brick-and-mortar retailers, including Walmart. And even though Walmart is still the largest brick-and-mortar retailer, it has made a major decision to invest in technology (for example buying jet.com) because it knows its future depends on its online business.
A number of the current top brass in many companies that have a strong technology-centric business model are from technical backgrounds.
They have specialized in science or engineering, even earned Ph.Ds. and worked in the technical side of the business before they moved into the top management positions. Even head honchos in the legal and finance departments may have basic degrees in science or engineering.
In comparison, a business that depends upon its pool of nontechnical-oriented professionals in traditional administrative and finance domains to fill top jobs may find itself out of sync with the ground realities of businesses today. The only managers who make it to the top in so many of these types of companies are those with administrative experience, rather than those with technical expertise.
According to industry research, in today’s marketplace, top management plays an active role in formulating the on-ground business strategy.
Businesses with a higher number of engineers in the decision-making roles naturally favor technology-driven strategic solutions much more than others, so they are eager to invest in technology. On the other hand, companies which lay little emphasis on technology have to contend with communication issues between the business and technical ends of the organization.
Having said that, technology-driven companies should strive to avoid two critical mistakes:
A potential risk due to a primary focus on technology is that the company might inadvertently shift its attention from the customer to the technology.
If this happens, then the organization may end up offering a product or service that the customer doesn’t want to buy. Every company must take action to protect itself against such overdependence on technology as well.
With these caveats in place, any business can command a major competitive advantage in the marketplace today when it decides to invest in technology.
Blindly funneling more funds into technology can only backfire. Organizations need to prioritize their technology requirements and operate accordingly. They should allocate funds based on the relevance of the technology to the business in the immediate, short, medium, and long term.
The scientists and technical professionals in the company can guide management in these matters. They frequently interact with experts from the fields of academia and research.
Through these interactions, they can discern the ideal technology mix they need for their own company and determine the scale of investment needed to create and run the technology mix.
Top management, through their periodic reviews of budgets, can take stock of the recommendations made by the technicians and revise the company’s financial disbursement appropriately. This can minimize the wastage of funds while optimizing productivity.
Customers also play an important role in determining the allocation of company funds. In an effort to customize services, companies vary their budgets for each client.
As technical staffs explain product features and service highlights to customers, they learn more about the customer’s needs. When they return, they pass on this information to the R&D team, which then makes the necessary updates in their development process.
Both strategies, when used in isolation could prove ineffective. Operating solely based on trends in research can alienate the technical strategy from the business ones. At the other end, if technicians base their projections purely on industry trends, then only short-term goals will be met.
The right mix of both strategies, which allow the company to retain its competitive advantage as well as forge ahead in the short term, is preferable.
Competitive organizations launch technology projects based on:
Other criteria that affect the selection of a project could include:
Businesses favor those criteria that help it remain a market leader. At different stages of the product lifecycle, these criteria will change. A project to improve product performance may be chosen for a new product whereas a mature product may require process enhancement projects or cost-optimization projects to support its existence.
The company’s decision-making processes and frameworks affect the technology strategy twofold.
Forging the technology business bond
In market leaders, the collaboration between top management and technology managers at every stage of the decision-making process fortifies the connection between the tech and business teams of the business.
Top brass accountability
In tech-driven companies, the top management holds itself accountable for all technology decisions. Planning, budgeting, and reviewing of progress — all come under their purview.
The opposite may be true of companies where technology is left under the able care of technicians.
The organizations that enjoy a tech advantage spend more on technology and publicize their accomplishments in the field. Here, the technology plan forms a part of the business plan.
In this information age, companies that aggressively invest in technology can outperform traditional competitors in any industry by miles, provided they apply technology in a strategic way.
Featured image: Shutterstock
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