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January 4, 2020

You Don’t Need to Be a Tech Company to Be innovative

The promises of mile-wide margins, sky-high valuations and lightning-fast, limitless growth are enticing to founders, investors and every executive in between. Startups use the tech moniker to capture the eyes of consumers and the ears of top-tier talent. Incumbents looking to rebrand themselves and protect their market share often see the tech label as aspirational, as something to strive toward.

Amir M
Amir M

In a lot of ways, I suppose it’s not surprising that everyone wants to be a tech company. 


The promises of mile-wide margins, sky-high valuations and lightning-fast, limitless growth are enticing to founders, investors and every executive in between. Startups use the tech moniker to capture the eyes of consumers and the ears of top-tier talent. Incumbents looking to rebrand themselves and protect their market share often see the tech label as aspirational, as something to strive toward. 


And, of course, the bright lights, buzzwords and big paydays have also predictably pulled in the unscrupulous, the under-informed and the opportunistic. Case in point, WeWork’s IPO paperwork mentioned the word technology 110 times (not to be outdone, Adam Neumann got his name in there 169 times). 


So we shouldn’t be surprised to learn that all that glitters is not gold. It turns out using digital technology doesn’t make you a tech company any more than using electricity makes you an electric company or using telephones and computer networks means you’re in telecommunications. 


Indeed, despite CEO Patrick Doyle’s campaign to rebrand Domino’s as a tech company that happens to sell pizzas, ultimately they’re still in the pizza delivery game. Peloton sells exercise equipment and classes, not software-as-a-service. Uber, though perhaps not exactly a cab company, isn’t a pure tech player either. It's still more grounded in real-world transportation than digital software. 


Tesla, though innovative, is still in the capital-intensive, low-margin business of making cars. Amazon, as Benedict Evans has argued, is mostly a boring retailer (though AWS, the cloud division that makes most of the money, is indeed a tech company). And, as everyone seems to have suddenly realized, WeWork is of course in real estate


It should go without saying, but if your primary product isn’t software, you’re not a tech company. 


The real reason I get concerned when I hear, “We want to be a tech company!” 


Misdirection, deliberate deceit, and irrational exuberance aside, the real problem with this constant obsession with being a tech company is that it distracts people’s attention and distorts their thinking. 


Executives and employees end up putting too much focus on technology and too little emphasis on customers. They get pulled toward technology-first thinking, and away from customer centricity. They end up confusing the problem space, what customers actually need, with the solution space, what technology can do. They put the cart before the horse. 


When we run discovery sessions with our clients at Blackcreek, we start with the customer. The initial discussions always revolve around what problem is being solved, who it’s being solved for, and why the company is uniquely positioned to solve it. Technical solutions come later.


The most innovative companies today know that customer needs are at the core of innovation, not technological capabilities. 


Uber gained traction because they made the experience of hailing a cab so seamless that people told their friends about it. Amazon surpassed Walmart by being obsessed with offering a better retail experience. More selection. Lower prices. Faster delivery. 


Tesla made electric cars cool by making a Roadster that went zero to sixty in under four seconds. Peloton makes it possible to roll out of bed, hop on an exercise bike, and get a class-like exercise experience without the hassle of going to a gym. 


And Domino’s, despite all its talk of tech, has been so successful because it hasn’t lost sight of its core competency of delivering pizzas. The Pizza Tracker is amazing because of course you want to know exactly what’s happening with your pizza at all times. Hot Spots are amazing because of course you want pizza delivered directly to the park. 


What makes these companies admirable is their obsession with delivering valuable customer experiences. Have they used digital technology to do that in new ways? Of course. Have they used data to get closer to their customers? You bet. Have they disrupted and evolved traditional business models? Irreversibly. 


But the goal, at the end of the day, never was and should never be to be a tech company for its own sake. The goal should always be to create great experiences and valuable products for customers. 


Technology can help you do that. In fact, it's essential. But you don’t have to be a tech company to make good use of technology, and you certainly don’t have to be a tech company to be innovative. 


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