I recently wrote a blog on the importance of starting our thinking about technology based innovation from the perspective of purpose or as Simon Sinek urges start with why. To me the power of purpose as a starting point for thinking about technology is twofold. Firstly, purpose tends to be everlasting. How you fulfill on your purpose may change over time, as technology changes, but your purpose itself changes rarely. The second is that purpose gives a powerful context for understanding the role of technology. When you start with purpose technology transforms from a negative disruptive force to a positive opportunity to enable the organisation’s purpose.
This change in perspective is a game breaker. Fulfillment of purpose inspires our people rather than have them act out of fear of being disrupted. There is plenty of research that shows that people who connect to and are inspired by purpose outperform those who aren’t. In addition, there is ample research that shows that those acting out of fear tend to under perform especially when complex cognitive processes are required. Secondly, a focus on purpose fulfillment is much more likely to support expressed uniqueness than fear based copycat innovation. Copycat innovation sets you up to compete based on features and functions and in the end you have to ask are your features and functions truly unique? The answer is usually no. There is almost always a competitor out there who has the same or very similar features and functions. Competing on features and functions is where commoditisation begins. Expressed uniqueness however sets you up as Simon Sinek says to sell to people who “believe what you believe” and many people will pay a premium to be able to effectively express who they are.
Besides, the research is clear it is not digital capability per se that adds value to an organisation, it is their ability to express their own uniqueness. Don’t take my word for it, take Mckinsey’s, PWCs and Deloitte MIT.
“Following the leader is a dangerous game. It’s better to focus on building an organization and culture that can realize the strategy that’s right for you.” – McKinsey, Raising your Digital Quotient.
“The results clearly show no direct correlation between technology investments and profitable growth; spending more on technology does not necessarily lead to better financial performance. This by itself is not a new revelation, but our research further shows a strong correlation between technology and profitable growth if the investments are focused on targeted capabilities, augmented with the right operating model and implementation skills.” PWC
Deloitte / MIT so believe this to be true they entitled their research report “Strategy, Not Technology, Drives Digital Transformation.” They go on to reference Nicholas Carr:
“The trap to avoid, according to Carr, is focusing on technology as an end in itself. Instead, technology should be a means to strategically potent ends.”
It’s all very well to know that this is true but many organisations struggle to define and actively live their purpose. While this is true and problematic, if you want to harvest the rewards of being a digital leader you need to be clear on what your purpose is and make this the centre piece of all decision making. That’s great, but what do you do if your organisation doesn’t have a clearly defined purpose?
A good starting point for what is always true comes from Peter Drucker, one of the most respected leadership thinkers of all time. Drucker said that “the purpose of business is to create and keep a customer.” Nearly every executive would agree with this as a basic proposition, a persistent need. Adopt this as a starting point and ask yourself “how does this proposed action help us to attract and retain customers?” and use this to test all proposals and decisions.
To make it even more powerful take this general statement and begin to tailor it to your specific circumstances and your targeted market positioning. Michael Porter defined what he considered to be three archetype market positions that are capable of generating unique positioning and therefore competitive advantage. The three archetypes are:
Product Leadership which is characterised by products that are the best in their market and highly valued by customers (think Apple).
Operational Excellence which is characterised by low or lowest price and hassle free service (think Amazon or Dell).
Customer Intimacy which is characterised by occupying only one (or a few) high-value customer niches and being obsessive about understanding the individual customers in detail (think Zappos or Nordstrom).
If you can identify what archetype your company is pursuing then you can begin to tailor your statement to be a very tight fit to this positioning. An example of this is Amazon and it’s positioning as an operational excellence company. The story goes that Bezos was asked what do you think is going to change most in the next 10 years?. He replied a better question is: What’s not going to change in the next 10-20 years? Bezos went on to explain that for Amazon he believed that what won’t change is that people will always want lower prices and faster deliver. That is, these things are their persistent needs and as a result you can invest heavily in making these things happen and that is what he and Amazon does. They have tailored to create and keep a customer to their specific positioning and created a powerful context for decision making. Why invest in drones? Not because they are cool or disruptive but because they have huge potential to speed up delivery and reduce costs!!
Once you know your organisations positioning and the persistent needs that you are trying to meet you can use these insights to test what technologies can support you to fulfill on your purpose, to meet your persistent needs. In this context technology is an opportunity, not a disruptive threat.
So what is your organisations positioning? What are the persistent needs you seek to fulfill for your customers? How are you using this insight to guide all your decisions including your decisions around what technology to invest in?