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Is every company becoming a technology company?

By Mark P. McDonald | October 19, 2020 | 0 Comments

StrategyInnovationGenerative TechnologyFuture of High TechDigital Edge

Yes, every company increasingly employs technology with customers, employees, processes and partners.  In this sense every company is becoming more technology intensive. Does technology intensity alone make a company a technology company?  That is the subject of discussion and gets to the nature of a technology company.

You are what you sell

Those with a background in the high technology industry categorize companies based on what they sell.  A restaurant sells food, so it is a food company, a car company sells cars, etc.  What you sell, regardless of how you sell it or how it works dominates your industry classification. According to this way of thinking, a company can be technology-intensive but must sell technology to be considered a technology company.

This is a conservative view of industries.  The increasing use of technology defeats this view as customers and companies blur the lines between traditional industries. A conservative view considers Amazon a retailer, Netflix is a media company, Google and advertiser, Facebook likewise.  This is the view taken by the S&P 500 and its classifications.  It is an increasingly irrelevant view as technology becomes pervasive in experiences, products, services, society, operations etc.

You are what you work with and how you work

Others classify companies by what they do, their methods and approaches. Applying this view, technology companies use technology.  It’s a plain and simple description, with an evolutionary or maturity-based view of companies.  Every company will become a technology company, using this logic.   This view is consistent with a redefinition of digital transformation.

This is a broad view of a technology company.  One that encompasses a broader range of companies and extends the idea of being a technology company back farther than others. Companies that adopt and center around technology qualify, even if that technology was mainframes back in the 1970’s. Companies before technology companies through its transformation efforts.  If tech is a big part of the way you do business, then you are a tech company.

You are where you started

Technology companies are those who are ‘born digital’ in another view.  These companies are founded and contextualized in terms of their technology.  Others may use technology, but its technologies in support of prior ways of thinking, prior strategies, etc.  These are technology adapters, important but different from technology first companies oriented around technology.

This is the most restrictive view of what it means to be a technology company.  It excludes most companies founded before the late 1990’s. Excludes but it does not repudiate pre digital companies, the distinction points to the company’s founding ethos.  In this way of thinking, there are technology companies and not based on technology companies.

Being one or the other has nothing to say about being a great company. There are great companies and not every great company has to start as a technology company.  A recent book Beyond Great, offers a view on business strategies for companies that did not start as technology companies.

Every company can be a technology company

Of these three options, I believe that the middle one – what you do and how you do it – represents the best view of a technology company.  Best in the sense that it reflects reality, is not immutably exclusive and recognizes the value of leadership, change and innovation.

Every company can and probably will become a technology company.  A technology company is therefore one that orients and re-orients itself, its experiences, its operations and value creation around new technology intensive capabilities.  You do not have to sell your technology.  You may buy your technology from suppliers.  You may build your technology on your own or on top of others.  Either way, the business exists and its performance is bounded by the effectiveness of its technology. Its your choice.

The distinctions may seem esoteric or academic.  But it sets the stage for the next question.

If every company is becoming a technology company, then

what is the role of high-tech companies?

More about that in a subsequent post.

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