November 19, 2020 | Business Strategy
by José A. Miranda, Luz María Ávila
Technology enables companies to increase efficiency; data does allow to change their business model.
Technological transformation has an important impact on improving efficiency, however, those companies that do not see the process as a data generator will have a limited growth potential.
Over the past twelve months we were developing business strategies for clients and asked them in detail who their competitors were. Generally, managers named companies that did the same thing as they did, in the same way.
There is no doubt that as technology moves into companies, it generates important transformations in the way things are done, particularly among other things:
Increased operational efficiency. The comparatively fast and tangible impact it has on the standardization of processes leads to significant increases in operational efficiency and employee productivity.
Creation of secure information environments. It improves communication processes, both internally among employees, and externally with customers and suppliers, generating secure environments in the management of information.
Opening to new companies. Understanding the impact of technology leads to a greater openness in collaborating with other companies, also generating an effect on the culture and on the relationships within the company.
Therefore, the benefits of implementing technology are of tremendous value to the sustainability of the company.
But if there is a change that generates a differential shift within the organization, often not very tangible, is the continuous generation of data, which in turn allows the creation of extensive databases, which, well managed and analyzed, are the basis for detecting new business opportunities. Because these databases contain, among other things, information about customers or potential customers who have some kind of interest in the company.
Once companies begin to increase the volume of records and enrich the quality of databases with the behavior and transactions of customers, the role of technology changes from being a pure factor of cost reduction and increased efficiency, to becoming a key element in the development of the organization’s strategy, increasing its importance within the hierarchy of the organization.
This is the moment that determines that a company has managed to take the most important step of its technological transformation: Datalization, in other words, the use of data to expand the business.
Having traditional competitors as a reference exposes the inherent limitations of understanding potential strategic paths of business growth, which puts the sustainability of the business at risk over the medium and long term.
New products, new services, and new categories or industries begin to be part of the strategic process of growth, because the fact of placing value on the information they have within their organization, allows them to identify new needs of their clients in a simpler and faster way, therefore, reaction to their demands will be more agile and precise. If your company does not do it, another one will.
Innovation through alliances with third parties, joint ventures, or the development of operational innovation centers among several companies are beginning to be collaborative figures with a long history that try to address new market demands, thus limiting the risk involved in entering new areas of growth.
This is the opportunity that large technology companies began to take advantage of years ago, shaking up and breaking the value chain of different industries and forever changing the way they generate income and capture new customers.
The competition of traditional banking, anywhere in the world, is no longer the same as traditional banking; instead, it is the big technology companies, the Fintech companies that take advantage of the slow movements of traditional banking, and other corporations that have a large volume of clients and the capacity to finance them.
Energy companies, in addition to electricity or gas, began to sell more efficient light bulbs, solar panels or safety, which helped to strengthen customer loyalty by understanding their needs.
Traditional media have never contacted more people as they do now; however, as years go by, they see their bottom lines repeatedly deteriorating.
The advertising industry suffers the impact of the big technological players, who take advantage of their huge scale of users in their databases to address them directly, without intermediaries.
Urban mobility underwent a radical change when ordering a cab service from a smartphone took just two simple steps; in addition, they took advantage of the development of their technology and databases to offer other services to their customers such as food or gift delivery.
Technological transformation is not only about implementing technology to save costs; it is about generating data and putting it at the service of the organization’s business strategy. It is then that you understand that your competitors are no longer those who do the same thing and in the same way as your company.
José A. Miranda is Managing Partner at Naawa, Luz María Ávila is Marketing Solutions Partner at Naawa.
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