“Metaverse”, “Cloud Computing”, “Datafication”; these days, it feels like every other news article about business is trying to use as many technology keywords as possible. We hear about innovation and disruption in the entertainment, medicine, and transportation fields everyday. I’d say that half of the people using these buzzwords have no idea what they are talking about, but they feel they have to use them to sound smart. It is easy to get a sense of technology being important for businesses and entrepreneurs, including those operating online. A huge part of top companies are tech for certain reasons. Technologies and technical processes can create opportunities and improve operations. After all, the internet is the reason ecommerce exists in the first place. But technology can also kill businesses unwilling to adapt to the ever-changing environment. Let’s see how.
There are two main ways of creating businesses enabled by new technology: 1 – exploit an existing technology to create a new product that provides value to customers, or 2 – identify a need in the marketplace and develop the corresponding technology to address that need.
New business opportunities created by new technologies
In 1995, a company named RealNetworks developed RealPlayer, the first media player capable of live streaming. Have you heard of them? Probably not, unless you were already tech-savvy in the late nineties. But have you heard of Netflix or Twitch? These two giants are generating billions in revenue after successfully exploiting an existing technology (streaming) to provide value to their customers (allowing them to watch movies from their homes or create live content over the internet).
On the other hand, sometimes companies need to create or improve technology to have something to sell. You’ve probably heard of the Walkman. Sony co-founder, Masaru Ibuka, thought it would be nice to listen to music on a flight. He asked his team to work on a product that could be taken anywhere with lightweight headphones. Years later, the Sony Walkman became a huge hit, and millions of units were sold across the world.
How technology improves business practices
But new technologies don’t only help entrepreneurs start new businesses, they also help existing businesses in several ways. I can see four areas where technology helps businesses: opportunities creation, productivity improvements, cost reductions, and risk mitigation.
Technology can help businesses reach more customers, be more accurate in marketing, and make sales teams more efficient. For example, social media is a relatively new form of marketing; it is crazy how you can target extremely specific demographics. You can easily display ads to 23 to 29-year-old men who live in Florida, have their birthday in the next 3 months, own a dog, and enjoy scuba diving. This way, you can focus on your target demographic and not waste your marketing dollars on anyone else. Another example is how popular CRM (Customer Relationship Management) software, such as Salesforce, became in the last decade. These help sales teams organize and retrieve data on their leads so they can prioritize the most promising opportunities.
Better equipment and software can make a huge difference in productivity. I am confident that many of us use soft software we couldn’t work without. For me, I use Excel daily, and I thoroughly enjoy the possibilities it offers to create quick and easy-to-use reports. I became an Excel nerd when I realized how much time I saved. While there is a learning curve with every new technology, good tools can help us save tremendous amounts of time. The key here is to use the right tools and software and invest enough in training.
Years ago, I remember a coworker introducing me to a fancy reporting system. He showed me complicated charts detailing how the system works and every piece of software involved. I thought all of it was unnecessary and probably too expensive, until he showed me how it helped the company spot inefficiencies in resource allocation and saved hundreds of thousands of dollars. Technology can help businesses cut costs by helping entrepreneurs identify what can be improved, automate specific tasks, or elaborate better budgets. I think automation will continue to grow in the next few years. We can already see self-checkouts in every large store, but that isn’t enough: retailers are working on checkout-free stores, where sensors and cameras will help invoice the customer directly as they leave the store with their products.
With more and more businesses emerging from the internet and every company being online, cyber security should be a priority for executives and managers. With threats becoming increasingly advanced, companies have to ensure they have the right tools and teams of experts to limit the risks. According to Deloitte, the average business invests between 6% and 14% of its annual IT budget in cybersecurity. But cybersecurity is not the only way technology helps with risk mitigation. For example, good reporting and data can help managers make the best decisions when it comes to investing or launching new products. It also helps them stay away from potentially problematic clients.
Now, we can see how technology can influence and improve business, but it can inherently be a huge threat to companies unwilling to adapt. I mentioned cybersecurity and criminals having more advanced ways to go after businesses. We can also discuss companies that ignored new upcoming technologies and lost ground to their competitors. Kodak did not believe in digital cameras, which caused them to go bankrupt. It is a lot of work to keep up with the latest trends, and it is not easy to know which technologies will have a true impact (despite what all salesmen say about their products), but it is worth it and necessary.