I’ve said many times in this blog series that every modern business is a technology company. But what does that really mean? How can every modern business be a technology company? Why is technology so important today? Who or what is driving your client or customer experience? How is data informing decision making? What is the glue binding people to the processes that differentiate your organization? How is technology shaping your organization’s strategic planning process? This blog will explore these questions.
What is business strategy? It is the plans, actions, and goals that outline how a business will compete in a particular market, with a product or service. There are classic frameworks that help facilitate strategic planning. The most foundational are corporate statements: Vision, Mission, and Purpose. It is common for the interpretation of these titles to be interchanged, but in short, why does your organization exist and what does it do?
Another layer in the strategic planning process is the examination of both internal and external environments. Two common frameworks are SWOT (strengths, weaknesses, opportunities, and threats), and PESTEL (political, environment, social, technology, economic, and legal). These frameworks help decision makers to contextualize their organization, which then can be communicated to the rest of the organization. The way communication is typically handled is through strategic planning documents or dashboard/canvas style grids. The art of business is the ability to make decisions in the face of ambiguity. Strong business acumen is the ability to make wise decisions (in retrospect) despite the uncertainties involved.
Lastly, there are core competencies; these are the differentiating aspects of the organization that set it apart from the competition. Core competencies are the elements that strategic plans identify for investment and development. Remember, market competition selects winners that master differentiation. It is an organization’s business strategy that lays out the framework to build the core competencies that will ultimately differentiate it from its competitors.
What is important is the need to differentiate between strategy and tactics. For most folks, their day to day is focused on the execution of business tactics, which are the short-term plans that are informed by the business strategy. Tactics are bound procedures, in that whatever is executed has a clear chain (ideally) of reasoning back to the strategic plan’s goals. For many organizations IT decisions are bound by strategic plans, but rarely do the constraints or opportunities provided by technology inform the strategic planning process. For instance, a rapidly growing organization decides to expand into a new region. To meet targets, sales managers adopt a more robust CRM solution to streamline sales and marketing operations. Sounds perfectly rational; however, consider that the chosen CRM solution will likely be under the constraints and mind-space of the moment, which if considered at the strategic level the decision could be different.
What is technology? For this blog, technology is any mechanism created by humans used to enhance the capacity of an individual or group to do useful work. While digital technologies have dominated in the last couple decades, it is important not to forget that digital technologies need to interface with the physical world. There are lost opportunities if innovation effort is purely focused on the digital domain.
Technology and strategy interplay. Leaders must decide if technology is an external environment consideration or a foundational building block to their organization. A business is a mix of people, processes, and technology. There is a tension and interdependence between these three pieces. Any technology investment will have an impact on people and processes. People will need to learn new skills , and processes will need to be adapted to meet any new technology implementation. Questions to assess if technology is a strategic or tactical element for your organization. Should investment in technology be market need driven? Should technology investment be given room for open and unstructured exploration and experimentation? Should priorities target incremental improvements or organization transformation? Does the organization have the internal capacity to foster entrepreneurs to drive change? Does the leadership team have gaps in its technical awareness? If the answers to these questions point to a high technology need, then it is critical to have both the capacity to provide technology leadership and ensure its consideration at the strategic level.
Traditional strategic planning doctrines have classed technology as an external environment consideration in the strategic planning process, but increasingly, technology is being seen as the critical driver of competitive differentiation between firms. Differentiation comes from internally generated competencies; therefore, the strategic planning process for modern businesses must factor in technology as a foundational piece.