Strategy ahead of the technological curve

Strategy ahead of the technological curve

Strategy ahead of the technological curve

  • Posted by Dan Toma
  • On 11/12/2020

Most established organizations tend to be a bit more prudent when it comes to new technologies and integrating them in their strategic options, however totally ignoring these is not an option either. Technology developments influence our lives. They bring about disruption by enabling business models that weren’t previously possible. Business models which squeeze out the inefficiencies and those profiteering from lack of transparency, pushing the industry forward and offering more convenient options for the end consumer. 

Take for example the case of instant messaging apps like WhatsApp, WeChat or Telegram. Once the technology was available, the enabled business model (free messaging) totally ravaged the Telcos’ SMS business model. And with new technologies such as cloud computing, blockchain, quantum computing and 5G only to mention a few, corporate leaders have their work cut out for them when it comes to futureproofing their companies. 

No leader can afford to ignore technological breakthroughs and trends, and they need to make them an integral part of their strategy. However in most cases there’s a disconnect between the speed of technological advancement and the ability of companies to strategically benefit from them – most being faced with shrinking market share or even full fledged disruption. But this doesn’t need to be the norm and leading companies from across the globe have proven that doing strategy ahead of the technological curve presents some clear benefits.

To understand the relationship between a company’s strategy and the technological development that prompted the company to create a strategy, we first need to look a bit closer at how technologies come to life and start becoming economically viable. 

Technologies have their own lifecycles, that have 4 clearly visible stages. First is the R&D phase also called the bleeding edge as the income from the inputs being put in making the technology are negative in nature and the chances of failure of technology are quite high too. Following the R&D phase is the assent phase, also called as the leading edge as the technology starts to recover the costs and expenses that have been incurred and plus the technology developed begins to gather strength and goes beyond the initial point of development to get accepted in the market. The third phase in the technology lifecycle is the maturity phase, a phase where technology arrives when the gains from the technology are high and stable but there is also a point of saturation. The technology developed is well accepted by the public but as the competitors are well aware and have caught up with the realms of the technology developed, the market has reached the point of saturation. The revenues start to slow down as the technology developed starts to become yet another commodity in the market. Last stop in a technology lifecycle is the decline phase which is inevitable in nature most of the time and here is when the companies witness the decrease in sales of its products and there is a need for an emergence of the new and replacement of the technology.

Learn more about why we think the traditional way of developing and deploying strategy is flawed. And how we help fix it.

Now that we clarified this let’s turn our attention to strategy. And more specifically how are strategies formulated relative to the development curve of technologies. 

Much like the technologies we spoke about earlier, strategies have their own life cycles. The distinguishable phases in a strategy’s life cycle are: the formulation phase when the strategy is being developed, the rollout phase when the strategy is being communicated and implemented by the various departments of the company and the decline phase when the strategy is no longer yielding any more results and the company is forced to start a new strategic cycle. 

The issues in the relationship the strategy has with the technology starts when we put the two curves on top of each other. Doing so we see there’s a discrepancy between when a certain technology peeks and when a typical strategy peeks. This is primarily due to the way strategies are being formulated and deployed. Long strategy development cycles cumulated with the wrong mindset lead most large organizations to have strategies behind the technological curve

This so called ‘delta’ between the peek of the strategy curve and the peek of the technology curve has some implications for the companies, in terms of the company being seen as lagger, its customers always using dated technologies that typically trigger them to look for other offerings, the company might lose the first mover advantage and it won’t be able to influence that particular technology’s development while not being able to compete with the companies that invented the technology. 

To understand the concept of creating a strategy ahead of the technology curve and the benefits it brings, you don’t need to look further than the automotive industry. Under an increasing threat of disruption brought about my new competitors and changing consumption preferences some leaders realize that it’s time to act. The most progressive ones consider that the age of car-as-a-service is just a few years away. However for car-as-a-service to work the self-driving technology and infrastructure need to be in place first, offering automotive leaders two options: wait and see what happens or start creating their company’s new strategy before the technological wave hits.

Companies like Jaguar Land Rover, Volvo and Mazda have already started piloting car-as-a-service programs for many years now. And they have been followed more recently by the likes of BMW and Porsche, proving that the upcoming change wave is truly brand and geography agnostic. 

we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.’ – Bill Gates

You’re right thinking that self-driving technology will make this disruptive business model come to age and become really convenient. Imagine that you wake up in the morning and want to head to the office. As you get ready you press a button on your smartphone and a car drives itself from the chagrin station to your doorstep. Drive or be driven to the office. Once there press a button and the car goes to either a nearby charging station or another subscriber in the area in need for a ride.

But, doing live experiments with existing technologies on crucial elements of the business model, such as customer behaviour for example, the aforementioned companies can start putting together strategies ahead of the technology curve. This will confer them the ability to understand the driving forces of the new business models, influence technology development and in some cases have first mover advantage in their segment.

So how should you start creating strategies ahead of the technology curve? 

We are not going to look into how a strategy is being developed as this was covered extensively in previous posts. But we are going to look at some basic principles that are required to create strategy ahead of the technological curve.

  1. First of all leaders need to dedicate more time to strategy. A recent HBR study pointed to an interesting irony: 97% of the executives interviewed said that being strategic was the leadership behavior most important to their organization’s success. While at the same time 96% of them said they lacked the time for strategic thinking.
  1. Secondly leaders need to approach strategy with a fresh mindset, specifically they need to start viewing strategy as assumptions to be tested rather than items to be executed on. The goal of the strategy development exercises is not to predict the future with certainty (nobody can), but rather to paint an impressionist painting of the future in detail, enough to build clarity and alignment on what will have to be done to meet its challenges and opportunities.
  1. Third thing that leaders can do in order to create strategies ahead of the technological curve is to adopt a ‘futurist approach’ to strategy. This ‘futurit approach’ can be summed up as the following Socratic dialogue: 
    1. Leaders should ask themselves: What technologies are on the horizon (no more than 5 years away) in your industry? 
    2. With a clear picture of the upcoming technological landscape, leaders can ask themselves next: What will it be possible for your company to do with these technologies once they will be feasible? And what business model can these new technologies enable?
    3. Creating the future scenarios is a great starting point, however these future scenarios need to be translated into actions for today. Therefore the next question should be around: What critical customer behaviours of these new business models can you experiment with existing technologies today? This last question is translating into action a new mind set of treating strategy as a series of assumptions to be tested. 
  1. Synthesize everything in a clear and living document, the Innovation Thesis.

The evolution of technologies and the change of trends are only two of the most important constant of modern business. Their impact on strategy is clear. And in most cases it’s not what leaders think but how they think that can make the critical difference between being shaken by the wave of change or riding it to its full potential.