During the pandemic, some mid-market companies were forced into survival mode, feeling like they couldn’t afford to stray from what traditionally worked. But the key to long-term success is steady research and development. Here’s how they can adopt a technology focus.
It’s often said that in the digital age, every business is a technology business. By the same token, it’s time to stop viewing tech as a separate sector. Instead, tech should be seen as a means to an end — a tool or set of tools that can be used to achieve growth, operational efficiency, and other core business objectives.
But isn’t there a difference between the companies that build today’s leading technologies (like Microsoft and Slack, for example) and the companies that use those technologies? Certainly. But today, companies in virtually every industry can build tech that improves internal processes, and many use their in-house tools to create entirely new value chains.
That’s what technology does: It enables companies to overcome obstacles and accelerate value creation for customers, employees, and other stakeholders. As more businesses invest in digital transformation initiatives, a technology focus will pervade every sector of business and determine who comes out on top.
Savvy business leaders know this, which is why mid-market spending on research and development remained largely unchanged throughout the COVID-19 pandemic. Companies that want to ensure their future growth and success need to adapt and become more tech-focused.
The Race Is On
As companies become more specialized, they need software that can meet their individual needs. Many are starting to realize that building custom software yields the best results. After all, relying on off-the-shelf tech that powers core services can be risky in the long run.
For the most part, the businesses starting their own software initiatives are mid-market companies with stable revenues, customer-oriented cultures, operational agility, and a willingness to make strategic long-term investments. They’re guided by visionary leaders who understand the advantages of custom tools.
It’s these companies — not global conglomerates or startups — that are poised to dominate the next era of digital innovation. Within this group, service-based companies in highly regulated or slow-moving sectors (such as law and finance) have the most potential for breakthrough ideas. After all, their industries are underserved because they tend to be more “technology frustrated.”
Unfortunately, many digital transformation initiatives fail to help these companies create value and drive revenue growth because leaders look to traditional tech vendors for off-the-shelf solutions. These leaders don’t consider the long-term implications of integrating standard solutions into their operations. They end up with solutions that can optimize their workflows or improve customer engagement but can’t change their operating model or create new opportunities.
This isn’t good enough. Digital transformation initiatives should provide solutions that solve long-term business objectives and expand what’s possible. Why? Because mid-market companies are poised to dominate the next decade as long as they realize that every business is a technology business.
Transform or Fail
Mid-market companies need to adopt a technology focus. During the pandemic, some leaders were forced into survival mode. They felt like they couldn’t afford to stray from what traditionally worked in case they failed. But the key to long-term success is steady research and development. Here’s how leaders can switch their focus:
- Assess existing value chains.
It’s possible that digital innovation isn’t currently within reach. That’s OK. Start taking steps toward digital transformation by examining existing value chains and identifying roadblocks or obstacles. Then, challenge team members to come up with potential solutions. But don’t stop there. Identify solutions that could be both effective and viable in the presence of existing constraints and begin building them.
- Understand workflows on a granular level.
Leaders’ priorities are usually different from those of employees who are essential to business operations. But to understand how digital transformation can add the most value to a business, leaders need to understand exactly how value is being created.
Try talking to line workers and managers who are critical to building companies’ products or services. They might have already built or obtained tools that allow them to be more productive at work (such as spreadsheets, third-party applications, etc.). These tools can tell leaders what stakeholders really need and help them generate ideas for building technologies that unlock even greater productivity.
- Look for a long-term digital partner.Amid the sea of vendors providing off-the-shelf tools, it can be difficult to decide among prospective digital partners. Unsurprisingly, one-fifth of companies feel they lack a partner that can catalyze transformative success. The reality is that the best technology partners won’t sell specific technologies. Rather, they will be able to help leaders understand their businesses and guide them toward individual, customized solutions. Over time, this can mean the difference between success and failure.
Written by Tim Scott.
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