There is a direct correlation between the early adoption of new technology and better business outcomes, according to a new report from Harvard Business Review Analytic Services.
This has not always been the case. In fact, in the early years of the information revolution, the common thinking amongst the most senior ranks of management in large enterprises held that being an early adopter of new technology was too risky.
“We want to be leading edge, not bleeding edge,” was the common management refrain.
The Harvard Business Review numbers debunk this technology management philosophy. There are indeed great rewards to be enjoyed by being a “digital first-mover”. The report, called “The Digital Dividend: First Mover Advantage”, documents for the first time a deep correlation between the early adoption of new technology and broader company performance.
In an age where the so-called “Big Five” disruptive technologies of mobility, social, cloud, data analytics and the Internet of Things (IoT) are enabling business models to be dramatically, and quickly, transformed , we have found that companies that get out in front of emerging technology tools benefit far more than those that wait.
The HBR Analytic Services surveyed 672 business and technology leaders from around the world. Based on early responses, the respondents were categorised as “Pioneers” for early adopters, “Followers” for the next group, or “Cautious” for technology laggards.
In clear terms, the results found that Pioneers were growing faster than other companies and were beating their competition. Twenty per cent of these companies grew by more than 30 per cent – twice that of Followers and more than three times that of the Cautious. And firms that had identified themselves as Cautious were most likely to report no growth at all.
For many in the business technology sector, we see early adoption of new technology as a no-brainer. This is doubly true of the “Big Five”, because these are low cost (relative to previous generations of business technologies) component technologies that can drive huge business changes in a short amount of time.
This survey, which was sponsored by Verizon, contains some information gems at a more granular level. Pioneers are more likely to be launching new products – and more new products – than the Followers and the Cautious. They are also more likely to be expanding into new markets. In other words, these companies are transforming their operations, products and business models faster than other companies are, and are more likely to be taking risks where doing so will benefit the business. This is why boards of directors are so keen to get business technology skills into the heart of their senior management ranks.
The advantage provided by new technologies can be fleeting, and it is no surprise that many of the executives interviewed for the Harvard Business Review research described the need for constant innovation and a culture of change in order to stay one step ahead.
The research found that one of the biggest inhibitors to adopting new technology is culture. It has been assumed by many that it is legacy technology inside large companies that gets in the way of new technology. But the research shows that entrenched ideas about how the organisation works (that is, the culture of the organisation) is an equally problematic inhibitor.
So why is this research important? Because it offers easy and graphic trend lines for successful businesses. This is not a road map, but it does offer pointers: If you are the CEO of a company and you are not taking a personal and direct interest in the technology that is driving and/or disrupting the industry in which you operate, then this should be required reading!
Because while it might be hard to know where we are sometimes, on the continuum of technology development, it is fair to say that we are closer to the start than the finish. The information revolution is perhaps 40 years old. And yet the pace of technology change is speeding up, not slowing down.
There is a fascinating finding in the Harvard Business Review Analytic Services survey about the maturity of the current big five technologies: in essence, none of them are even close to mature, and all of them are changing rapidly.
Even mobility, which is so entrenched in businesses now that it is hard to believe that the first smartphones are less than a decade old, continues to evolve rapidly. And for all the deep changes wrought by Social, this is a technology-marketing genre that is a long way from reaching its potential impact.
Cloud and Data Analytics are transforming whole industries already, but in reality are also still in their infancy. And of course the Internet of Things is just now making beginning to make a mark.
Companies that adopt new technologies earlier enjoy better business outcomes compared to companies that come behind. The HBR Analytic Services survey provides some empirical evidence of what we have long known intuitively.
Australian consumers are known as early and voracious adopters of new technologies. Australian businesses have been less enthusiastic about being at the front of the technology curve. But now that all of our collective customers are armed with smartphones, maybe it is time for Australian businesses to rethink that strategy.
David Kim is the managing director, Australia and New Zealand, Verizon Enterprise Solutions.