Are all companies becoming technology companies and is that trend accelerating?
Most will at least agree that the methods of production and distribution of product and services – whether media, financial, healthcare, professional information services or even manufacturing – are being transformed by new technologies.
Firms need to be constantly ready to revise their business models. This disruption is in turn altering industries and driving M&A activity and investment in R&D as businesses buy to grow their services knowing they need to evolve or risk becoming simply managers of decline.
Examining the lists of the largest companies by either market capitalization or revenue demonstrates the importance of technology to both success and survival; half sell technology in the broader sense and the other half is being fundamentally transformed by technology.
The larger point is that each and every non-technology company now operates – whether consciously or unconsciously – under constantly shifting technology paradigms. They need to become-and remain-technology experts and investors fully expect them to convey their technology vision, initiate innovation, generate new projects, identify and create new market opportunities, guard against adverse market trends and react swiftly and decisively to aggressive competitor moves.
The risks are very significant when executives can’t. For example, new fracking technologies mean shale oil firms can produce unconventional crude oil that can be readily upgraded to refinery levels and compete with state oil firms at much lower prices than previously thought, which has accelerated many oil-dependent states’ plans to diversify their economies and wealth.
But, just as oil prices fall, regulators around the world mandate low emission quotas, and car giants are forced to become experts at producing electric powered cars, driving searches for different raw materials and enablers. Simultaneously, technology is also removing capital investment barriers into transport markets enabling technology firms to move aggressively to innovate with both petrol-less (and autonomous) cars.
The result is that every company is expanding its technology and data management functions.
Goldman Sachs employs more software engineers than Facebook has total employees
We can observe the general direction of travel which has powerful direct and indirect structural implications. When it is has strategic importance, firms will want to build their own flexible but scalable capabilities. As firms strengthen their technology departments, these individuals will be more important within the firm.
The CTO and CIO will be more influential and also more vital to the CEO
That reliance is ongoing: last year’s blockbuster features are quickly copied by competitors leaving customers simply expecting more at a faster rate. A firm’s reputation depends on all the customer experiences to work seamlessly and the underlying engines to work reliably – they must just work, whenever they are needed. Sales functions and CMOs know these “back-end” and “design things” are an increasingly greater part of the value added component of price.
Their development and design efforts will generate different types of projects which will seek to create different kinds of value, requiring different expertise and approaches to effectively support them. Here are some examples.
Cloud services are accelerating innovation possibilities and the development of leaner business models as firms to seek to avoid significant capital costs in data centres. These can be sophisticated arrangements to entrust with third parties but the opportunities are simply too great to ignore and strength in depth is required to manage the execution risks.
In order to reduce capital investment many firms are adopting more collaborative models entering into innovative but more complex multi-party partnerships including with agile startups in order to better ensure more efficient and stable paths to market. Learn how corporations can form beautiful partnerships with startups.
Organizations are producing lakes of data and are also increasingly looking outwards to combine with others’ data to produce the most useful applications. Much of it will be of a sensitive nature or contain personally identifiable data and as such must be very carefully managed within the organisation and across jurisdictions given the trends of more regulation and higher fines. See how we’re exploring the whole data spectrum.
The constant stream of reports of almost industrials levels of hacking has led to governments mandating rigorous controls and systems upon any firms doing business with them. These requirements are daunting but like all new customer requirements need to be operationalised with systems-based approaches but which can often benefit those firms that use it as a positive selling point to other customers.
Supply Chain Management
Pressure on costs likely means more outsourcing but firms need to effectively cascade regulatory compliance and third party security requirements down their supply chain as they will be held morally and in some cases, legally responsible for third party practices in low or unregulated countries.
Many executives know social media is increasingly driving new business, informing how they should do business and helping them redefine what is their business. Check out this study by FindLaw on the influence of social media on consumers of legal services. Executives may not personally use such services themselves but doing so is as ever the most straightforward way to understand the opportunities and risks.
While not all companies may become technology companies per se what is clear is that the traditional boundaries between tech and non-tech companies and others are eroding and the internal technology function is no longer a separate entity from the rest of the enterprise.
Business leaders are much more aware of non-traditional competitors, are challenging internal inefficiencies and preparing their firms to able to readily adapt to rapid change.
Non-tech workers whether in sales, marketing, operations, finance or compliance must – somehow in their own way – become technology literate because their tech colleagues and enterprises need them to be.
As businesses race to keep up with all these new developments, non-tech workers must understand well these new technologies, and still be experts in their core functions as well.