Old-school, non-tech companies in every industry are wondering if they should reinvent themselves as technology companies. Conference presentations and business articles are telling them that there is no other choice considering the pervasive, disruptive presence of technology in every industry.
This is an easy and sexy meme to embrace. It could even help you recruit talented people who want to see themselves working at Alphabet or Facebook.
The truth is, however, that you shouldn’t confuse being a great company that effectively uses technology with being a technology company.
Tech companies invent and/or build new technology. Cisco is a tech company. So are HP, Apple, Microsoft, Oracle, IBM, and Alphabet. Hospitals, banks, manufacturing companies, and even retail companies with an online presence — like Zappos — are not.
Why the Distinction is Important
Jimmy Ling was a bigger-than-life entrepreneur who grew his small electrical business into the conglomerate known as LTV (Ling-Temco-Vaught). In the 1960s, LTV was primarily a defense contractor. Ling had bigger plans and turned the company into a conglomerate that owned companies ranging from Wilson Sporting Goods to Braniff Airways and National Car Rental.
In 1968, LTV purchased Jones and Laughlin Steel, and Ling was called to appear before an anti-trust committee in Washington. During the testimony, Ling put up a chart that said, “How many people in LTV know the steel business?”
Ling’s next chart was a zero … in big red letters.
A few years later, Ling lost control of the company he founded after the bottom fell out of the U.S. steel industry and the LTV stock price plummeted. LTV filed for bankruptcy in 2000, and its pieces were purchased by others.
The purpose of Ling’s antitrust hearing was to determine if conglomerates were in restraint of trade. On the surface, it has nothing to do with technological disruption.
Nevertheless, Ling’s testimony remains important for every company in every industry. Trying to become something that you aren’t isn’t usually the key to building and sustaining a great company. It has a great potential to divert your focus from being the best company you can be.
Tom Peters and Bob Waterman said it well — stick to the knitting.
Henry Schein Dental didn’t become the world’s largest provider of health care products and services to office-based dental practitioners because they became a technology company. They did so by doing the same thing they have done every day for over 80 years — adopting and leveraging every piece of technology that makes sense to deliver incredible value to their customers.
A Better Transformation
Technology has always disrupted how work was done, and in the process, created winners and losers in the marketplace. It is easy to imagine a local Chamber of Commerce meeting debating the ROI of investing in a telephone. There were, no doubt, secret meetings about how to survive against the efficiencies of the cotton gin. Pony Express riders probably sat in the bar and laughed at the thought of being replaced by a telegraph.
The appropriate and effective use of technology is absolutely a crucial tool to flourish in the marketplace, but don’t confuse the tool with the goal. Unless you are a true tech company, your customers don’t purchase the technology. They purchase a result that matters to them.
The disruptor’s advantage isn’t usually the technology. Uber and Airbnb didn’t invent new technology that wasn’t available to their competitors. They were entrepreneurial, collaborative, empowering, and flexible. They created a team of fanatics on a mission to create raving fans in the marketplace.
Staying competitive requires you to continually be faster, better, cheaper and friendlier. Your challenge isn’t to become a technology company. It is reclaiming the nimble, adaptable culture that defines every successful start-up.
Every growing business — regardless of its age — utilizes technology to advance it’s strategy. Your goal is to become a nimble, adaptable company that utilizes every available tool to stay relevant to your customers and make your business more successful.
Embracing and leveraging new technology doesn’t make you a technology company. It makes you a sustainably successful business. As my grandmother once told me, “A cat can have kittens in the oven, but that doesn’t mean that you call them biscuits.”