According to the definition, a company is technology-driven when its business is based on technology, giving it a competitive advantage and a large capacity to adapt. Its mindset is geared toward generating value based on the constant flow of information. However, there are some aspects that may be misleading: many organizations, particularly mid-sized companies, consider that, by just adding new software or incorporating some new IT infrastructure element, they are already headed toward the technology-driven model. Technology indeed is a necessary condition, but it is not enough.
To begin with, we must draw a line. A technology company is not the same as a technology-driven company. The difference is that the former could not exist without technology, which is the core of its business and the basis for the services it provides. The latter, instead, benefits from tools, platforms, frameworks, and developments so that the products and services it provides are more efficient and effective.
Innovation as a roadmap
Companies that are truly driven by technology have innovation as their roadmap, and they anticipate the needs of users. They have a medium-term business strategy underpinned by technology, a roadmap to implement it, a culture of building with the help of the huge, fast-growing volume of data available, and the awareness that there is no end to this road: each step is a new opportunity for transformation. There is no room for stagnation in an agile, ever-changing world.
Very often, companies in this segment are headed in the opposite direction. They upgrade their platforms at a leisurely pace, at the demand of users, or when obsolescence forces them to do it. Thus, they jump from process to process, not because they pursue a strategic vision, but, rather, because they need to “put out fires,” to guarantee that the business will continue to exist, or to react to any negative changes in the market: for instance, a drop in sales, or in the number of clients, that could be associated with an “old-fashioned” way of doing things. Migrating from an old system to a new one only to continue to do things the same way as before is very different from entering the universe of technology-driven companies.
Is it possible to convert a “traditional” organization into a new model?
To do it, it is necessary to take a cultural leap. The role of technology must no longer be operational. It must be at the service of the business and must take up strategic space. The IT department, viewed as an area limited to finding a server whenever one is needed, infringes upon this new vision. Innovation must be embraced by the team that leads decision-making and discussion. Rather than focusing on whether the technology works or does not work, the goal must be finding business opportunities and resorting to the correct methodologies to deliver products and services in a relatively quick manner. An important point is that without the support or guidance of top management, transformation is impossible.
Managing data as raw material for generating value is also necessary. The tools to capture, categorize and process information to be delivered to all areas of the company –from marketing to finance and from operations to human resources– contribute to a high level of strategic decision-making. Middle-segment companies are often sold at very high prices. That is because they have accumulated many years’ worth of analysis data – enough to understand the market and compete in it with ample knowledge to succeed.
How do you balance a period of transition… a period when the IT department is overflowing with reactive orders every day, and, at the same time, is consolidating the change of mindset to embrace the new technology-driven culture? In these cases, the role of the technology partner is fundamental.
It is not a question of kicking the playing board and investing double the amount. Rather, it has to do with analyzing if it is possible to optimize costs and resources –chasing after problems often results in significant waste–, rearranging operations and moving smartly ahead, trying to solve both issues at the same time. This will require a team to manage day-to-day operations and additional teams to chart a course for the future. At a given point, if the cultural change has happened, the organization will break out of its prior inertia, provided there is a clear vision of where the company is headed, and the capacity to convey it to the whole organization.
Another transformation model happens when investors –particularly private equity investors– buy a company that is not technology-driven, at a lower cost, and restructure it to increase its market value: a strategy that goes hand-in-hand with a change in leadership to facilitate the transition. Anyway, companies should ideally undertake this process in an organic manner, at their own pace.
In general, this is not something that will happen overnight. It requires time, consistency, and firm leadership. However, once the change is underway, it can only lead in one direction: the future.