Today, there are many who say that all companies are now tech companies, as the distinction between those that make technology and those that use it, is vanishing.
Benedict Evans of Andreessen Horowitz, a recent guest on Masters in Business. Bloomberg said, ‘Stop thinking about technology as something separate and apart from other companies or industries. Today, every company is in the tech business, thanks in part to the huge processing power and ubiquity of the everyone’s always-connected mobile phone. Because of what all that computing power can do, the distinction between companies that make tech and those that use it is becoming irrelevant.’
Many believe Companies that use technology for competitive advantage will win in today’s fast-paced business environment where all companies are becoming tech companies.
The five largest companies in the world by market capitalisation are all software companies. But those companies, Amazon, Apple, Alphabet, Facebook and Microsoft are not the only important large technology companies today.
Companies covering many varied sectors and industries such as Goldman Sachs, Exxon, GE Citi and Walmart in the US are all fast becoming technology companies as well. As new and different technologies become more and more pervasive across many industries and functions and more traditional industries like finance, retail, manufacturing or other sectors are evolving to become technology companies.
So, how is this happening, well today, the distinction between technology and non-technology companies is becoming less relevant. For instance, the question could be ‘Is Tesla a technology company learning to become an automotive organization?’ Or ‘Is Ford an automobile company learning to become a tech company?’
In today’s world Companies will have to change both their outlooks and their industries in order to compete and thrive. Amazon did just that and in the process, became one of the most valuable companies on earth. Leveraging its expertise in logistics, it enabled consumers to order goods and have them on their doorsteps in two days or less. And, by applying those lessons it continued to move into new businesses. Creating the Amazon Web Services computing service. to run massive data centres at scale, was just one.
Similarly, in the financial world Goldman Sachs has known for many years that technology is a key competitive advantage in financial services. The firm’s Chairman and CEO Lloyd Blankfein once said “Goldman Sachs is a technology firm” and pointed to the fact that, at the time, the company employed more engineers than companies such as Facebook, Twitter or Linkedin
There are obvious key opportunities which drive businesses to become technology companies. We live in a 24/7 year-round constantly connected world. The Internet of Everything is what. according to Cisco. will connect 50 billion devices by 2020 and the Internet of Things (which is fast becoming the Internet of Everything) offers companies enormous opportunity as they will be able to collect and understand behaviour and intention data in new and different ways. Innovation is everywhere and many smart companies are opening up to new and exciting startups, speeding up the innovation process and making it more affordable.
Indeed, the race to become the market leader is accelerating among established companies as well as promising, young start-ups across a wide range of technologies, sectors and geographies. And while start-ups can learn from the management and financial practices of incumbents, technology players can learn from start-ups as well. Regardless of age, companies that best use technology to create competitive advantage will win. Businesses that adopt fast growth alongside innovative principles and approaches will become more scalable and open than ever.