Is every market now a technology market?
How many people viewed the book market as a technology market until Amazon came along? Every market will eventually be transformed by technology, and those businesses that think their market is the exception are in for a big surprise.
The hard fact is that every industry has enormous amounts of fat just waiting to be trimmed. In one sense it’s nothing new. The search for leanness has been going on for 70 years. The Japanese were able to find fat where nobody thought there was any, and that’s all companies like Amazon, Uber and Air BNB are doing now; finding inefficiency where nobody thought it existed.
Every market will eventually be transformed by technology
There is so much of the world that continues to be poorly thought through. Airline booking, for example, is something that has been extensively ironed out and yet continues to be a horrible user experience. In fact I just booked tickets to fly to America and I want to change my dates but rather than go straight to the airline I have to go through the travel agents. Presumably that’s to protect the travel agent’s commission but surely it cannot be beyond the will of man to create a system that enables you to deal directly with the airline while still rewarding the travel agent for any additional fees??
That’s just one example but this kind of inefficiency is everywhere, and the person who can find and eliminate it from any given market can take a proportion of the added value for themselves. This kind of problem solving is nothing new, but modern technology is facilitating it on a much bigger scale. In fact one of the major uses of the Raspberry Pi is to sit in factories collecting data so that companies can identify where the remaining pockets of fat are that still need to be trimmed.
No industry is protected from it. Even those that have had significant change in recent years will continue to get leaner and leaner, including hopefully the airline industry!
So should every business try to lead this change in their market by transforming into a technology business?
There are so many challenges involved in becoming a technology business that it simply isn’t realistic to think every business can make that change, or at least not in the short term. However, businesses must keep their eyes open so even if they’re not driving this change then at least they will be quick to embrace it when it comes from elsewhere.
What are some of the challenges of trying to become a technology business?
The biggest challenge is finding the right person to lead that transition. If you’re not experienced in technology then you’re going to need to hire someone to do it for you, but how will you know what skills and experience the person should have?
It’s a generic business challenge. How do you become an expert in something you don’t currently do? A few years ago we needed an injection moulding company, but that was outside our domain so we ended up hiring the completely wrong partner and it cost us a hugely. It’s also a problem I frequently see in EdTech. Schools are not professional technology businesses so some of the things they buy from unscrupulous companies are virtually worthless, sucking vast sums of money out of the education system. It makes me furious but this is the problem that any organisation faces that’s trying to embrace technology without truly understanding it.
My advice would be to take it slow. You will not become a technology business overnight
So what would your advice be to those businesses that are determined to make the leap?
My advice would be to take it slow. You will not become a technology business overnight and if you try to build something perfect from the outset it will be wrong, absorb too much money and you won’t get a second chance. Instead, start with a minimum viable product and launch a prototype that allows you to learn from your mistakes. That way there is less risk financially, less distraction from your current core focus, and hopefully, in the process, you’ll discover the right person to lead this ongoing evolution of your business.
