The Lie At The Heart Of 20 Years Of Digital Transformation

By March 22, 2024 blog No Comments

Every company is a technology company. You know this to be true. You’ve heard it for years, informed by the treatises of people like Marc Andreessen (“Software is eating the world”). We’ve been taught it in business schools and at conferences. McKinsey has told us companies must commit to a software culture, and even though valuing tech companies is notoriously difficult, the financial markets bestow them with valuation multiples much larger than most other industries. The only issue with this seemingly inalienable business truth is, of course, that it is wrong.

 solutions-img-5_tcm114-4507135_tcm114-2750236-32

WeWork, we knew, was not a tech company. But WeWork was only the most egregious example of a trend of “Silicon Valley Pixie Dust”—of companies, ranging from DTC beauty brands to fitness boutiques to whatever it was Juicero was supposed to be—proclaiming themselves to be technology companies.

But let’s look at companies that have driven technology innovation. Since the dawn of video content on the internet, companies like Netflix and YouTube (remember RealPlayer?) have faced an ever-present technical challenge: How do you deliver increasingly high-quality video in suboptimal bandwidth conditions? By 2013, the bulk of internet traffic belonged to YouTube and Netflix. New codecs, used to compress data like videos for transmission, had to be invented. As the demand surged for use cases like streaming on less powerful cellular networks, YouTube’s engineering teams had to lean in, evolving the ecosystem around HTML5 over a series of years to move away from Adobe Flash and enable the critical functionality to dynamically adjust resolution.

These are complex technology challenges, no doubt. But what are Netflix’s and YouTube’s business challenges? The licensing of content as content owners mature their own competitive offerings. The costs of producing original content. The challenges inherent in monetization and commercial strategy, from subscriptions to ads.

The business model of Netflix and YouTube is not technology; it is media, which is why their primary challenges have to do with media, not technology. Yes, it was necessary for them to invest in developing net-new technologies to make streaming media possible. But the philosophy that “every company is a technology company” has led many good businesses to make distorted investment decisions and poor technology choices that are disconnected from their business strategy. These decisions have destroyed capital value, led to failed transformation and implementation programs, and in many ways, only increased the gap between the digital haves and have-nots.

 Insights_Tech_Digital-Innovation

This state leaves many business leaders in a particularly difficult position. As a new wave of AI-driven change has appeared on the horizon, many organizations are still burdened by organizational debt and multiple slow-moving initiatives—with the added challenges of increasing investment and change fatigue coming out of Covid.

In our research, including regular surveys with over 3,600 global executives, we found that 68% of business executives feel behind their competitors on innovation. As part of our yearly CX Imperatives report, 81% of executives told us their business is not ready for the impact of AI. This is a dangerous mixture.

Decisions about digital capabilities have an outsized impact on the long-term performance of any business, and the beliefs and principles that guide them influence the answer to very important questions:

• Will you invest heavily in digital talent and a product development mindset?

• How will you evolve your operating model to account for external, internal and technological shifts?

• What is your technology platform strategy, and where will you lean toward build, buy or borrow?

• What are you going to do about AI? Or, more precisely, what outcomes are you seeking, and where do you intend to apply machine intelligence?

what-business-structure-should-i-choose

These and other questions that relate to running a “modern” digital business can only be answered by harmonizing capability and business strategy. Yet very few companies can draw a straight line between their business strategy and their capability investments (both technology and human capital), leading many to be influenced by trends—trends among pundits, consultants and software providers who are often not transparent or realistic about what it will take to successfully execute against a transformation vision.

Something must change, and in coming articles, I’d like to explore a new paradigm for how to think about digital maturity, and what that means for building future-ready brands. But regardless of any model or approach, one thing to consider: Many of the world’s best-performing brands are laser-focused on the basics, and their investments in innovation reflect that obsession. So, what is your core business model? Where are the blockers you must solve to unlock value, and where do you find competitive advantage? If you can clearly answer those questions, you already have all the foundation you need to define and execute a transformation strategy that’s right for you, not a software company.

In the context of the Industrial Revolution, applying technology to operating mechanisms in each organization is extremely necessary, and is also an inevitable trend to minimize workload while still ensuring efficiency and enhance its competitive position in the market. Furthermore, applying management software into a business will also help build an organization with a clear system, promoting consistency, transparency and accuracy. Tasken eOffice, researched and built by Opus Solution – a business consultant in Vietnam – is an internal work management system as well as the management of automated, online, user-friendly approval processes, allowing businesses to operate more effectively on the path of digital transformation.

Forbes

Leave a Reply