January 7, 2021 at 9:00 pm #3885
Why Technology Strategies Always Fail & How To Make Them Succeed With Incremental Steps & Reaction Management
Companies spend millions trying to forecast an unpredictable future. But no one knows which technologies will be ready, which will be inadequate, too expensive, over-hyped or even a threat to a company’s survival. No one knows when market demand will rise or fall or what the next huge market trends will be or when they will occur. So how can companies develop business models and processes that will work? They can’t so they should (1) move incrementally and (2) improve their ability to react to unpredictable changing technologies and markets through constant preparation. Real strategic leverage lies in caution and reactionary prowess – not in disruption.
The State of the Practice
Everyone I know has developed a technology strategy. Consultants sell them for buckets of money. Companies are only too eager to pay huge fees to understand how technology will – and should – impact their businesses over the next three-to-five years, or maybe longer if there’s enough money to peer further into the future. Then there’s the conversion phase when forecasts are converted into action plans, where value propositions are identified for everyone to see and where “digital transformation” and other acceptable goals are shouted from competitive rooftops. But do technology strategies work? Of course not. At best, they’re a flashlight or two in the darkness of business-technology uncertainty, a necessary tribute to the Board of Directors, a box for the CEO to check, or, when public companies are challenged about their future, something the analysts who cover the stock can chew on. Sometimes supply chain partners want to know what their partners plan to do with technology. Even bored employees with friends at competitors always talking about what they’re doing with AI, IOT and blockchain (which is usually very little) want technology strategies. But actionable? Hardly any of them are, and the ones that receive all the attention can cost a company millions if not billions of dollars. Just ask Sears, JC Penny and K-Mart about digital transformation driven by a business technology strategy. As Edward Cone notes, “the profound failure of Kmart’s ever-vacillating technology strategy was both a cause and a symptom of the problems that drove the retailer to bankruptcy.”
Making matters worse, McKinsey tells us that technology strategies fail because of process and purpose. Insightfully, they tell us that technology strategies are different from conventional business strategies because technology moves so fast! They state that while incumbent business models are under constant threat, the “majority of companies do not respond and ultimately fail.” In fact, “only 8% of companies believe that their business model will remain economically viable through digitalization.” Outcomes? We’re told that over 70% of digital transformation projects fail. So while companies know they’re ultimately doomed by digital, they cannot respond to the most important challenges their business models and processes face.
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