*Superior technology strategies with agile digital management*
A contribution by Dr. Andreas Kipp and Dr. Alexander Fuchs (Short Version) --- 06/01/2021
The technological, especially the digital throughput, will be the defining and dominant element of this decade. This ultimately leads to a recognizable and growing dominance of the technology sector. In all industries that are not originally digital, a superior technology strategy - embedded in the overall strategy for a sustainable unique business model - and its successful and efficient implementation should be given top priority on the executive agenda, in particular of the CEO and CFO.
This leads to necessary rebalancing in the organization, with data and digital sovereignty being integral. Companies need to use the strengths of their industrial experience and invest in proprietary, agile digital solutions - e.g. Cloud solutions, Information Technology versus Operational Technology solutions (IT/OT) etc. - with a targeted use of resources. In this way, every company and organization can maintain its own unique identity with regard to the digital impact on its products, services and operations (from Sourcing, R&D to Sales) under competitive aspects.
The strategy approach using the "KF2Strategy Landscape" meets these requirements, taking into account the overall strategic situation of the company.
The experience over the last years in discussion with the top management of various industries shows that especially in Europe companies do rarely rely on their own, valid and sustainable digital strategy, but rather loose valuable time through indecisiveness and procrastination. The focus clearly needs to be more content & implementation driven with less window dressing.
It is important to consider a concept which enables the best starting conditions and growth options that are "in-line" with digital governance & compliance. Many companies already have very good (partial) concepts in use, but for the most part their integration and harmonization with a competitive overall strategy and its successful implementation is pending.
Conflicting interests within the companies - e.g. between functional areas like Sales/Marketing, R&D and Procurement - make it challenging to balance individual needs and coordinate the best solutions. In most cases, this overwhelms global players and medium-sized companies and poses major challenges for ventures that are not originally digital tech companies. It should be emphasized that even technology companies, hyperscalers like Apple, Microsoft, Alphabet, AWS or SAP excluded, move into a "niche", thereby frequently loosing sight of the "big picture". Of course, this also makes their business model vulnerable and creates attractive opportunities for non-original tech companies in the competitive environment with regard to strategic considerations and options for M&A, cooperations, etc. .
The global M&A activities are at an "all time high", especially in the area of technology. The dominance of M&A investments in the technology industry and the dynamic growth of transactions within the last 12 months are unparalleled (see also Refinitiv analysis). This corresponds to the market capitalization of listed technology companies. The dominance of the global technology industry in terms of market capitalization and its average growth of well over 20% over the past 5 years leaves other traditional industries, such as industrials, far behind (see also KF2Strategy Global Macro Analysis 2020 /2021). The forecast 2021 of the relative global industry market share of the global technology industry of over 5 trillion USD has joined the market share leaders consumer staples and automobiles and is growing steadily.
The relevance of the dynamically growing tech dominance is also reflected in its rapidly increasing importance for institutional investors concerning company appraisal and company valuation across all industries. Industries, like mobility or financials are already particularly affected today. But what does this mean for companies navigating in today’s competitive environment?
Non-original tech companies need to consistently develop their own resources and competencies in order to create their own business identity and business sovereignty for an agile sustainable business model with above-average growth. In any case, this topic should be handled as a top priority throughout the organization and get sufficient attention on every CEO agenda.