Technology can bring positive disruption to your business, even though it doesn't always trump old-fashioned tools. Whether social media, e-commerce, 3D printing, robotics, cloud computing, or something barely dreamed of yet, using technology for your business can put you ahead of the competition.
That is, when you use it correctly. Do it wrong and you can spend time and money in an arms race that doesn't give you the boost you could get.
The issue is how you consider technology. To invest more intelligently and get a bigger ROI, you need to place your bets with more care. Here are five ways to get smarter about using technology to improve your business.
Go for the right kind of innovation
Technology can be an enabler of innovation. But there are multiple types of innovation. For example, you can have massive breakthrough ideas or perform refinements on something that already exists. Harvard Business School Professor Clay Christensen and Senior Lecturer Derek van Bever have mentioned the concept of the Capitalist's Dilemma. Entrepreneurs can choose to invest in innovation that expands the possibilities of the company, or they can focus on cutting costs to save capital. In saving pennies, you may pass on the opportunity to generate significant dollars.
Factor in your competitive advantage
Your competitive advantage is what enables your business to really take off. All of your strategy should take the competitive advantage into account. Will your technology investment help or hurt it? There's nothing wrong in supporting other aspects of the business, of course, but you're on the wrong track if you aren't considering the deeper strategic issues in choosing what to implement.
Look at the true price
A classic mistake in technology is to not consider the full cost of implementation. Have you calculated the necessary additional hardware, software and infrastructure? Training? The cost of reengineering business processes? The investment that a larger market would have to undertake for compatibility? If your company developed a new type of payment system that worked with phones, you'd have to consider whether the market had the equipment to be compatible and, if not, whether it would be on average willing to invest. One investment that might seem more expensive in the short view could turn out to be cheaper, offering a higher ROI.
See what your rivals do
Technology strategy is more than looking at what you want to do internally. Implementing something new should let you offer more value to customers in one way or another. Otherwise, you're back to the concept of cost cutting your way to greatness, which rarely happens. To decide where to invest, keep an eye on competitors or companies that are similar to yours but not directly competitive to see what value they've been providing to customers. The analysis might suggest some paths you could take.
Do you need a trampoline or a ladder?
Location is everything in real estate. It's also important in making strategic decisions because it shows context. Deciding on a technical investment should depend heavily on where you are. If you're behind competitors and the market in general, you need to put your money into ladders that can get you out of the pit you're in. If you're already on level ground, build a trampoline to propel yourself ahead of others.
Technology will always be important in various ways to your company. Think through your relationship to it and choose where to invest, so you can get the most benefit for the price.