How does a company decide they need to be in the cloud computing business? For Amazon, AWS was a byproduct of their e-commerce business. How about getting in the microprocessors market? Well, you either have a history of doing this for decades like Intel, or you have intimate knowledge of that market’s expectations, like Apple.
So, if you feel that techology is key to your company’s strategy, what is the framework to decide between becoming a technology business or simply hire these services from a supplier?
Based on the above, you’d assume that this follows naturally: if we invest in tech, and since we understand the target market really well, we might as well go all the way and become a technology business. And in some cases, this reasoning is a good proxy, but it’s often too reductive to be useful for any long-term strategy. AWS was organically developed from years of direct experience with infrastructure and Amazon were established enough in the e-commerce space to test risky ideas. But let’s face it, 99% of businesses don’t have those kind of opportunities.
While every business is different, a first question to help unpack most of these dilemmas is the following: is your end product digital or mostly supported by a digital medium?
The answer is almost always on a spectrum, which is why you can’t make a decision based on this alone. For example, Spotify and TripAdvisor sell music and travel advice, but the medium for those products is 100% the Internet. Axminster sell tools for craft and trade. They have a website and online deliveries, so (strictly from an online retail perspective) technology is crucial but doesn’t constitute most of the product. Lastly, if you’re an accountant, then your investment in technology will probably not go further than licensing something like Xero or QuickBooks.
A second question is: are your company’s processes and cultures (yes, culture is often plural) enablers for technology delivery? There are many things that can trip you in this endeavour, but, in our experience, process and culture always stand out. Technology delivery is often contending with traditional business notions like yearly budgets, steady outputs, or predicting ROI with surgical precision.
It simply isn’t enough to hire a talented leader with a few stints in successful startups and expect them to deliver on some “digital transformation” ambition.
Let’s put it another way: if your boiler needs replacing, do you take months off work to train to be a gas engineer? No, you hire someone that does this for a living and has years of boiler experience under their belt.
So if you’ve been told you should become a technology business and your gut tells you otherwise, or you’re simply evaluating your options for digital investment, then please get in touch. Being successful is not mutually exclusive with sticking to what you’re good at.