"I don't understand why people is so afraid of new ideas. i am scared of the old ones’’
-John Cage - American Composer
Written by José M. Vargas – Tecnoandina's General Managment
If you are looking for this concept- digital strategic thinking on google( where else), you may not be able to find it. and if you do find a definition, it wont be the one that im just about to explain in this article. Or maybe yes.
The truth is that is not very important if the concept exists or not, or what it is written on the internet about this; is what comes up to my mind and makes sense to intend to explain about technology from a strategic point of view… and i may be creating a new term.
Strategy In The Digital Era
To start talking about strategy in the Digital Era, I am going to tell you about a couple of things that happened time ago… so long ago when the world was not digitalyzed.
IBM and Smith Corona Underwood:
During the 1950 and 1960 decades, numerous businesses of office equipments, as smith Corona and Underwood, had defined their business as ‘’ The production of machines to write’’. this definition product-focused, ignored the fact they were in fact, making the field of satisfying the needs for the process of information of their clients.
Unfortunately for those companies, when a new technology arrived, served in a better way the information processing capabilities, computers emerged.And the demand for typewriters went down.The last major manufacturer of typewriters, the Smith Corona, went bankrupt in 1996, as a victim of the success of computer-based word processing technology.
In contrast, IBM correctly anticipated what their business would be. In the 1950s, they were a leader in the manufacture of typewriters and mechanical tabulation equipment that used card-punching technology. However, unlike many of its competitors, IBM defined its business as "providing a means for processing and storing information." With this definition the subsequent movements of the company towards computers, softwares, office systems and printers were completely logical.
From the strategy, with the clear objective of satisfying the need of its customers to process and store information, IBM was making the appropriate decisions for the adoption of technology and shaping the future of its company, being able to adapt quickly to the advances and developments of each era, and even being part of them.
Milk at your house door
On this occasion I will not refer to a brand or an actor in particular; otherwise I will refer to the milk business, the distribution of milk to be more specific.
In the same decades of the 1950-60 and even in some countries until not more than 30 years ago, it used to exist distribution of milk at your door: generations of children who left empty bottles in the doorway at night to collect them full in the morning.
There was a time when this was the only way to get fresh milk, except if you had your own cow. The era of refrigerators contributed to the slow disappearance of the commercial model of milk delivery, but there was another fundamental reason: The delivery of milk was a profitable business when each house on the street received milk. As availability increased in local stores, stores and automobiles made owners more mobile, the demand for personal delivery decreased. When the number of deliveries fell on a house in each block, it was no longer a viable business.
Technology and consumer preferences destroyed the business model. Does it sound familiar to you?
Where would you put your money?
According to Richard Koch, consultant and investment guru (he is not only in theory but in practice: he is a multimillionaire thanks to his investments), the recipe that justifies his success is that he only invests his money in projects that comply with Two conditions:
That operates in markets that grow more than 10% per year
To be leaders in your market
As this is not an article for investors, we will not refer to the first of the conditions.
"Today, the Strategy is not understood without technology, and Technology can not be defined without the Strategy"
But we will emphasize the second. To be a leader in your market you must have a competitive advantage: you must be different, you must innovate and generate strategies that allow you to find something that makes you different and that gets the preference of your customers. It can be in the way of delivering your services, in your products, or in a mixture of both. Unless you have the recipe for the "new Coca Cola", it is likely that this competitive advantage that we all yearn for has to do with technology.
There are two ways to find the difference that makes you the only one, and finally to content its only a new category that puts you in the right place as the “only one”: first, focus in your client; second, support yourself with technology to add value on a different dimension that already exist in market.
Today, the Strategy is not understood without technology and Technology can not be defined without the Strategy. Although it sounds like a tongue twister, notice that I wrote Technology the second time with a capital letter.
The first time, without a capital letter, I refer to technology as a relevant factor (probably the most) to take into account in your strategic definitions. If you do not want to be a new typewriter or milk distributor, you should look further and become Jules Verne for a moment, and look at your business into the future by imagining how it will be affected and how your model could be. business with the impact of new technologies.
The second time, with a capital letter, I refer to Technology as the specific tool(s) and concrete ones that will help you achieve your goals, and therefore to materialize your vision. On this occasion I do refer to a specific ERP, a computer or computer, an application, etc., which is selected from the strategic definition.
My experience is that in the Chilean market, sometimes because of ignorance, because of fashion, because of the inertia of how things were done, not to be left behind in the "Digital Transformation", because the tools are more tangible, you usually start the house the roof and tools are defined without leveraging the strategy.
In future articles we will go deeper into the subject and we will tell you how to start your project from the ground up, using technology in the strategic definitions of your company, which will allow you to generate competitive advantages and differentiate yourself.
The possibilities are endless.