Companies often perform a SWOT analysis as part of their strategy development in order to assess their Strengths, Weaknesses, Opportunities, and Threats. The proposed actions that result from this analysis are typically centered on future opportunities. This makes sense, as most business leaders are forward-thinking and figuring out where the best opportunities lie is an important part of a company’s growth strategy.
Determining how to address the threats identified during the analysis often receives less attention. Given our current business landscape, I would suggest that needs to change.
Threats to a company’s survival are greater than ever, mostly due to technology disruption. I see it everywhere I look these days. Any company that does not invest time to consider how technology can and will disrupt their industry and business model is making a mistake.
While the internet has existed for about 25 years, it has rapidly evolved in recent years to become the “Internet of Things” thanks to substantially larger bandwidth and data storage combined with continually decreasing costs. We are in an era of big data, making a company’s ability to laser target their marketing and sales efforts more powerful than ever before.
For consumers, there is a greater expectation for on-demand service now that everything is connected and easily accessible in the palm of your hand. Perhaps not coincidentally, the most visible effects of technology disruption are in consumer-facing industries. Consider:
- The “Amazon Effect” is causing more disruption to retailers, grocery stores, and shipping companies than they have ever seen.
- The large cable and telecom companies are experiencing significant disruption as consumers increasingly bypass them to buy content directly from the internet and content providers (e.g. Netflix, HBO GO).
- Car manufacturers are scrambling to figure out how to respond to a disrupter like Tesla in the electric and self-driving car markets.
There are many other examples, but the bottom line is that technology innovations are taking waste and costs out of the system. When I see such disruption at the consumer level, I intuitively believe that those efficiencies have to get pushed down the supply chain to other industries as the demand for technological efficiency is pushed down.
Where all this will go from here is hard to predict, but the one conclusion I can make is that to ignore effects of technology disruption is a mistake. I would suggest that we should all be spending serious time on it in our strategy discussions.
Here are a handful of questions to ask yourself:
- What are the visible effects of technology disruption in our industry? How is it reshaping business models, margins, and the customer experience?
- How technology savvy are we in our business? Do we view technology as a cost we have to deal with or an investment that will make our company more efficient?
- Do we have technology savvy resources who can help us look at our business model and identify the best ways to leverage technology?
- How do we use technology to make it easier for our customers to interact with us?
- Are there companies outside our industry that offer examples, both good and bad, of using technology to their advantage?
I am not a believer that technology replaces the human element of our businesses, but I do believe it is a force that is not going away. The pace of change will only become greater. I don’t have all the answers and these questions are difficult to answer. But the fact is that we may be entering an age where we are all technology companies to some degree. Ignore that trend at your peril.
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