When you want to be a "technology company"

posted by Jeff | Tuesday, January 28, 2020, 8:35 PM | comments: 0

I've had a series of conversations in the last two weeks about the mentality with which companies approach the use and creation of technology. There's an attitude, more a spectrum of attitudes, that companies take toward tech, and it sets a tone and vastly affects outcomes. It ranges from viewing technology as a necessary evil to viewing the company as an entity that creates technology to arrive at some outcome. As you can guess, those companies that live closer to the latter scenario generally get it more right than those at the opposite end.

That doesn't mean that a pure technology player has its collective head in the right place though. There are stereotypical tech companies (that use words like "disruptor" and other nebulous terms) that think the tech itself is the most important thing, above the outcomes. It's a strange and arrogant thing to think that way, but there's an entire culture around it that originates largely from Silicon Valley. But I strongly believe that when a company views itself as a technology company that solves a problem, the outcomes are stronger.

My favorite anecdote about this was the group where I contracted for a short period of time at Progressive. I don't really know if this was a top-down intentional decision, but the leaders I had contact with were very deliberate in their language. They believed the company was a software company that sold insurance. As the first to really embrace online sales, away from the decades-old agency model, I believe that this was the wider intent. It made a difference in how they acted.

Another company that I worked at, or should I say endured for a year, was definitely in the "necessary evil" camp. It doesn't mean that they didn't spend money on technology. In fact, they spent an extraordinary amount, most of it on outside contractors and vendors, with a skeletal staff of B-players internally to try and glue it all together. Had the company viewed itself as a technology company pursuing strong outcomes in their space, I firmly believe that they would have made the creation and use of the technology a core competency, instead of a secondary concern. I'm reasonably certain that they would spend less money, too.

I think that even large companies can and do change when this attitude is taken from the top. Look at Disney... CEO Bob Iger's three high level goals were to invest in the best content (acquisitions of Marvel, Lucasfilm, Fox, etc.), be global and use technology to reach customers. That last part is the top-down direction I'm talking about, and it made Disney+ a thing. Ordinarily, I wouldn't trust a media company to figure that out. You can't phone it in. But there it is, and despite a rough first day or two, it's works pretty well. It took Netflix years to get to that scale. The media company made the decision to be a technology company that served media, instead of a media company that used technology. There is a fundamental difference in thinking there, even if your business itself is technically not the technology thing.

Sometimes I wonder if this is what keeps American business from innovating and winning (aside from the defense of incumbent industry). Think about Tesla's approach to making cars. They relentlessly focused on "the machines that build the machines," which is a different focus from building cars. From that learning process they opened up a plant in China in less than a year. Amazon started by selling books, but the machines that sold the books are now the business segment with the highest margins. The outcomes, the products, are important, but you can't approach getting there in spite of the technological need, you have to get there because of it.

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