Germany: Technology: Enhance Your Core Business, Don't Displace It

Companies are facing a technology investment dilemma, invest too little and you fall behind, invest too much and you risk losing your identity, and customers may not recognize the company anymore. You need to move forward without diminishing your core business. While it's necessary for companies to evolve and adopt technology to enable the business and embrace digital transformation, it's not mandatory to revolutionize the identity of the company.

Leveraging technology to enable business results is table stakes. The company website, customer support system, manufacturing, supply chain, and financial systems to name a few, are foundational to be competitive. There's a critical difference between using technology to execute the business and to differentiate the business. Companies must find a balance between using technology and staying focused on their brand and core business focus. It's a challenging line to walk as not enough focus on technology will prevent the business from being competitive and lead to reduced market share, or worse, the end of the business.

The company brand defines the products and services it provides. The 'holy grail' of brand recognition is when the name defines an entire market segment. Kleenex, Band-aid, Coke, are well-known examples. Regardless of whether Pepsi is the second name used when ordering a soda, they're known as a beverage company. When you hear the name Vespa, you know you're talking about the iconic Italian scooter company. If Vespa suddenly started making cars, their brand would be diluted, and their business may suffer.

Why do companies lose sight of their core purpose?

• Underestimating the effort needed to deliver new features and capabilities. This leads to paying less attention to the core business and core customers. When too much emphasis and investment is placed on new products and services, it reduces attention to core products and services, which can bring significant business risk. How the business is viewed by your customers and the market cannot be ignored. A change to that perception can easily lead to customers flocking to competitors and bring on risk to how the company is viewed. Investments and new products and services can be developed but remembering to 'keep at least one foot in your lane' is critical to ensure continued success in your core business.
• Believing that if competitors can leverage technology as a differentiator, so can you. It's easy to confuse between "need to have" and "want to have" when it comes to technology. Predicting technology that becomes mandatory is a challenge. A good rule of thumb to follow is to assess whether the use of technology takes you away from your core business.
• Focusing too much on new leadership and talent within the organization. Bringing in new capabilities and experience may be mandatory as new products and services are developed and brought to market. Don't ignore the existing talent and people, or the risk key leaders and skills will leave increases, and worse, may go to competitors.

The use of technology as a competitive differentiator is becoming more and more common. To better leverage technology, commonly referred to as digital transformation, organizations need to keep in mind their core business, while enabling key aspects of digital transformation including:

• Leveraging cloud services to accelerate innovation: Moving to cloud service (SaaS) models enables use of innovative services without requiring the company to create and maintain its own services. If the company does build its own services, leveraging cloud partners (Azure, Amazon Web Services, Google Cloud Platform, etc.) allows access to cloud vendor services, data, and innovative technologies, accelerating access and creation of differentiating services and products for the company and its customers.
• Accelerated access and analysis of industry & customer trends: Leveraging services enables access to available artificial intelligence (AI) and foundational data, without the company needing to create those data and services. Numerous services and technologies are being created often and access is nearly immediate. This includes access to services, including increased automation, often via AI.

Implementing technology requires balancing a focus on the core business and the advantages of technology. At one end of the spectrum is too much focus on technology and not enough on the core business, at the other end is not enough focus on technology. The corporate landscape is littered with companies who focused too much on technology, losing sight of their core business. Here are a few examples:

• A leading office space leasing company focused on startups and small business at its core but believed it was a technology company. The company over expanded and mismanaged their finances, leading to a failed IPO and a dramatic decline in their value
• A high-tech consumer appliance company created a machine with the goal of changing the industry whose core focus was providing drinks to their customer. They created a complex, expensive machine which ended up being impractical, failing to provide a better experience for their customers
• A startup restaurant chain believed it was a technology company and gave away millions in share-based compensation though was never profitable

Some notable examples of companies who did not focus enough on technology include:

• Blockbuster video: The market leader in video rentals, but failed to move to streaming technology
• Many mall-based anchor stores who are no longer in business at the scale they once were did not embrace e-commerce and on-line technology resulting in the shift of their consumers to other retailers

To ensure a balance between technology and staying focused on the core brand and business, some questions should repeatedly be asked along with key actions:

• What does your company really do? Ask any employee and you'll often get different answers. Company leadership must continue to communicate and champion what and why the company delivers to it's customers. Share data and metrics with employees to compare against market share, competitors, and company targets. Establish and communicate a common vision and elevator pitch everyone can evangelize.
• Ask your customer why they buy your products and services. Using a combination of customer outreach, social media analysis, and focus groups will enable a keen understanding of how you are being perceived in the market by your customers. What is it that makes you great and what do your customers want to see? Keeping the customer's perspective is critical to maintain and grow your brand and business. Continuing to communicate and engage with your customers makes a huge difference in loyalty and brand recognition.
• How are you managing against competitors? Having a common understanding and playbook for how competitors affect your company will enable your company to address market changes and key solutions/offerings based on market demand.
• How will you measure yourself? What are the metrics and KPIs that are critical to ensure an accurate picture of your company. This may be sales, revenue, production, subscriptions, customer growth, market share, and more.
• Refine your products: Eliminate non-profitable lines of business. Eliminate services and products that are not profitable.

When companies focus too much on technology and forget about their core business, they can make their products and services too complex, lose sight of their mission and goals, and become disconnected from their customers, impacting the company's reputation. Constantly asking the right questions about how and why the company is leveraging technology while focusing on the underlying business is critical for success. It is mandatory for companies to involve and adopt technology to enable the business and embrace digital transformation, but you don't have to revolutionize the identity of the company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.