This week’s blog post is going to sound a bit tech blasphemous, in that I am suggesting that companies need to focus more about what their products do, then the sexy and interesting technology used to do it. To survive the ever evolving world of innovative technology, a company needs to focus on their core capabilities and adapt and adjust the methods they use to do it. Unless the core competency is in fact the technology, in which case the only means of survival is to be an innovative leader. But there are truly few companies that fit into that description.
In the language of the Pragmatic Marketing framework, Buy, Build or Partner is a business decision point where a company determines the best action to take to fill a gap in their market solution. Within this model, a company will develop a solution and core competencies around identified market problems. The build decision is based on the parts of the solution that aligns with their strengths, the buy decision on utilities and add-ons, and partner decision for anything else.
As a real world example, consider a company whose core competency is knowledge of accounting best practices that wants to provide a cloud based accounting service. They might hire an agency to help them build an app user interface and partner with a carrier that can make this app available in a small business app marketplace. In this way they can focus their workforce on development of compliant accounting features in the backend product.
Taking this a further step, I would like to also talk about an HBR webinar I attended last month, Innovating Over the Horizon: How to Survive Disruption and Thrive, with Clayton Christensen and Maxwell Wessel.
The focus of the webinar is on how companies can identify and defend themselves against disruptive innovation. I found Clay Christensen a fascinating person to listen to because he is able to discuss relatively complex ideas in simple language. As part of the discussion, he spoke about the same concept of building to your core capabilities as a way to protect against threats of innovative disruption.
Disruption is now an overused word. Clay defines this as when a competitor comes along and is able to do what you do, at a cheaper cost base, often using changes in technology in a way that is extendable while keeping costs low.
He suggests that companies need to identify the customer jobs that their product or service does better than anyone else, and protect and defend around those jobs. The more correlated jobs that you do well, the more that you can retain customer loyalty. As well, a company can defend by disrupting themselves and adapt how they do these jobs to changes in technology.
Using the same example as above, 10 years ago our fictitious company may have packaged their product into a client/server model, selling the product by partnering with system integrators. By still focusing on their strengths and knowledge of accounting practices, they have adapted their product and chose different partners for distribution. Looking forward to the future, they may need to integrate their systems with NFC devices and partner with the companies that sell or install these.
