Technology Strategy Development: A Guide to Business Management Consulting
Technology strategy
In today's business world, technology strategy development is an essential component of staying competitive and relevant.
What is technology strategy development?
Technology strategy development, also known as digital strategy, is the process of defining and executing the technology changes needed to achieve business goals. This may involve adopting new technologies, improving existing ones, or redefining how technologies are used in the organization .
The importance of technology strategy
Technology strategy is essential to maintain competitiveness in today's market. Companies must be able to adapt quickly to new technologies and trends to stay ahead of the curve. Companies must adopt a Transformation in all directions for its technological strategy, which implies constant change and in all areas of the company.
Digital strategy cannot be incremental. Given the speed of technological change and the disruption it can cause to existing business models, companies need to be bold and creative in their strategic plans. There are four "fights" that companies must win in their digital strategy: fighting ignorance, fear, assumptions, and spreading effort.
Technology strategy development is an essential component of business management consulting in today's business world. By taking a transformational approach in all directions, being bold and creative, fighting ignorance and fear, and maintaining focus, companies can use technology to stay competitive and relevant in the ever-changing marketplace.
Taking a transformational approach in all directions is critical in an environment where technology impacts every aspect of the business. Companies like Microsoft have exemplified this approach. By transforming from a desktop software provider to a cloud leader with Azure, Microsoft has achieved significant growth in revenue and market share. In fact, in 2023, its Azure and cloud services division generated more than $60 billion, driving 27% growth year-over-year. This change was not limited to a single function, but encompassed sales, marketing, product development, and customer service, achieving total technological integration.
Being bold and creative in adopting new technologies can be the difference between leading the market or being left behind. Tesla is a paradigmatic example. The company not only revolutionized the automotive industry with electric vehicles, but also took a disruptive approach in its distribution and manufacturing model. Instead of following the traditional path, Tesla opted for a direct-to-consumer sales model and the construction of smart factories such as the Gigafactory, which optimizes production through advanced automation. This allowed Tesla to scale rapidly, reaching a market capitalization of $800 billion in 2023.
Fighting ignorance is crucial in a world where digital is redefining the rules of the game. A recent study showed that 70% of digital strategies fail due to a lack of understanding by senior management about what digitalization really entails. Without a clear understanding of how emerging technologies such as artificial intelligence, big data, or automation are transforming industries, strategic decisions can fall short or be completely wrong. For example, Kodak underestimated the impact of digital photography, leading to the bankruptcy of a company that was a leader in its industry for decades.
Fighting the fear of change is essential, especially in traditional industries that often resist the adoption of new technologies. In banking, where innovation can be seen as a risk, those who have overcome this aversion have managed to differentiate themselves. JPMorgan Chase, for example, has invested $12 billion in technology in 2022, including the adoption of blockchain and artificial intelligence to improve security and customer experience. This investment has allowed JPMorgan to stay competitive and pave the way for new opportunities in the digital financial future.
Fighting assumptions and basing strategy on rigorous data and analytics is more important than ever in today's digital environment. Companies like Netflix have shown how data can guide successful strategic decisions. Using advanced analytics, Netflix has been able to personalize content for its users, resulting in a 93% retention rate in the United States. In a market where customer attention is increasingly difficult to capture, using accurate data to make decisions is a critical differentiator.
Fighting the dispersion of effort is vital to maintaining a clear strategic focus. Google is a good example of how focusing on key areas can lead to long-term success. Despite having nearly unlimited resources, Google has maintained a strategic focus on products that reinforce its core mission of organizing the world's information, such as the continued development of its search engine and the expansion of its digital advertising ecosystem. This has resulted in Google generating over $280 billion in revenue in 2023, with a large portion coming from its advertising business, demonstrating the value of maintaining a focused strategy.