How do you use Technology to Build a Sustainable Competitive Advantage?
It’s a jungle out there. Your enterprise is not going to sit on its laurels, taking current achievements for granted and assuming you will always be successful. And the key to your efforts to remain in the lead over rivals will be using technology to build a competitive edge that’s sustainable for the long haul.
Not many companies are taking steps to engage with new technology, though. EY reports that “in the EY Tech Horizon survey, which we conducted shortly before the COVID-19 crisis, the results reinforced that almost every company was on a journey to digitally transform its business. That said, only 4% said the transformation was fully embedded and optimized across their operations.”
That’s unfortunate since there is so much that enterprises can do to improve their standings in the marketplace with technology. “Companies also will need to use data to improve agility and power innovation, accelerate artificial intelligence (AI) to drive growth, and unlock new opportunities through ecosystems and partnerships.”
Technology to Build a Sustainable Competitive Advantage
Early Adopters Using Automation
If your company has the mindset of a fresh, agile startup, you will be more inclined to be early adopters, giving you an advantage over companies that are more conservative in their approach.
After all, as Forbes points out, “In the increasingly cutthroat business world, creating a competitive advantage is a vital part of achieving success. But how can you ensure that any competitive advantages you manage to carve out for your business are sustainable?”
The publication cited competitive advantages including price, how quickly you can deliver, and perhaps most importantly, your ability to quickly get products to the marketplace. But you can still be vulnerable, as these advantages may disappear when competitors step in with better prices or can develop more efficient supply lines than you.
Automation helps you maintain a competitive edge, no matter if you are a small-to-medium company or rank among the largest multinational firms. Forbes cited the case of a rug-cleaning company that was seeing a decline in leads. They didn’t have a customer relationship management system, so retaining customers was becoming a real challenge.
Once the business began to automate its data collection processes, it became easy for them to “engage, update and follow up with order updates and specials. Company technicians are also able to enter customer details and order requests while working off-site,” per Forbes. What’s more, the company’s managers are now able to view reports from multiple branch offices, to help make cross-organizational decisions. The result is better customer retention and a stronger revenue cycle.
Analytics to Beat the Competition
For many organizations, an efficient way to start harnessing technology to put them in a more competitive advantage will revolve around the use of sophisticated analytics.
It’s sustainable in that your enterprise will always have a fresh supply of incoming data from customers and potential customers as you nurture them through the sales journey, or conduct market research into their wants and desires.
As T.T. Herden explained in a report on logistics and supply chain management, “The use of analytics is increasing across industries. It is fueled by trending concepts like big data and data science, innovative technologies such as distributed computing and in-memory databases, as well as the rapid increase of data available for processing.”
Budgeting for Technology
When making a case to harness technology for keeping your company in the lead over rivals, you’re going to address concerns about how to pay for it. Companies that recognize the value of making a big investment in technology now to protect their future are projecting spending increases.
With that in mind, the Wall Street Journal reports that “expected changes in capital budget allocations presage the fundamental change in technology’s strategic value. The percentage of technology budget spent on business operations is predicted to decrease from 56% today to 47% within three years.” Furthermore, the 18% that enterprises now spend on innovation is seen as rising by at least 26% over that same time frame.
An Example of Case Study With IoT Sensor Data
One type of technology that companies are seeing success with has to do with the internet of things or IoT technology. Cognizant reported on a Schindler Group, which provides elevators and escalators. “The company uses an IoT solution to collect data (e.g., temperature and speed) from sensors planted in its installed base of elevators and escalators. The sensor data — as many as 200 million-plus messages — is analyzed, and the relevant information is passed onto the company’s more than 10,000 technicians who install and maintain Schindler’s products.”
Using mobile devices out in the field and analytics to process their set of big data, the company can preemptively take care of equipment problems and is better able to prioritize work. It even updates the maintenance schedules in real-time based on information pouring into its sensors network.
It’s a trivial matter to assign the nearest technician to work as it arises. This shows how applying new technology to data that’s previously been difficult to gather and analyze, a company can create a new competitive advantage.
Machine Learning to Analyze Massive Amounts of Data on Customers
Gauge the Potential for Network Effects
As you contemplate using a technology that’s new to your enterprise, it’s useful to consider it in terms of potential network effects.
Harvard Business Review explains that ideally, data from one user will help you improve the product not just for that single person, but for many others, too. “When data from one user improves the product for that person, the firm can individually customize it, creating switching costs. When data from one user improves the product for other users, this can—but may not—create network effects.”
When you are in a position to harness network effects, you’ll be better positioned than competitors in fighting it out for new customers.
Taking Your Company in Unexpected Directions
Your business plans may have projections for the next five or 10 years, but with the accelerating pace of technology and software developments, it will be hard to predict where things may be a decade from now.
But continuing to engage with novel technology, keeping your ear to the ground for signs of new developments will help you retain your competitive position sustainably. Even as you head off into uncharted territory made possible by new technology, having an attitude of openness and curiosity could lead you to directions previously unimagined.
How is your enterprise using Technology to Build a Sustainable Competitive Advantage?