How CIO’s can define the right strategy and time to implement new technologies

A new technology does more than just present more competition for an old technology. It presents a different type of competition whose value proposition does not fully overlap with the old technology offer, and that can disrupt businesses drastically.

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Replacing an old technology or adopting a new technology for your business is a more complex task than it seems. For the past couple of decades, CIO’s have significantly improved their ability to understand the technology shifts that disrupt businesses, industries, and sectors. They understand far more about how to identify those shifts and what risks they may represent to incumbent companies. But the timing of technological change remains a true mystery.

Even as some technologies and companies seem to take off overnight (such as Uber, Snapchat and Twitter), others take decades to unfold (such as HDTV and cloud computing), and this can be a problem for many executives. Still there are too few tools and indicators when such transition should take place and, even knowing that many CIO’s are now more aware whether a new innovation or technology poses a threat, the doubt is still there in the back of their minds: whenever a superior new technology emerges on the horizon should CIO’s simply follow conventional wisdom and strive to make a seamless transition to this new technology?

Many CIO’s do that, although they can’t admit to themselves that they actually don’t have the proper strategy in place, neither the necessary wherewithal and IT ecosystem to perform such transition, and so they fail disastrously and may even jeopardize their companies’ businesses.

A few years ago, someone from NASA said that “an Apollo rocket is actually on course only two or three percent of the time? At least 97% of the time it takes to get from the earth to the moon, it’s off course”. Unfortunately, that’s how most IT executives run their projects to adopt new technologies or to update existing ones, they just start a new project without any previous analysis of market maturity for that technology, IT ecosystems and how soon those technologies will become old, and that goes without mentioning the impact on their current business value proposition, and then just fix it as it evolves, many times causing significant financial loses and negative impact within the time-to-market.

Based on a research by Prof. Ron Adner and Prof. Rahul Kapoor, it’s possible to understand that the number-one concern coming from CIO’s is being ready too late and missing the market momentum (for example, Blockbuster, which has failed due to having ignored the shift from video rentals to streaming). But on the other hand, the number-two concern should probably be getting ready too soon and exhausting resources before the market momentum starts (think of the many dot-com companies that died in the 2001 technology crash, only to see their own ideas and concepts reborn later as a profitable Web 2.0 venture). This prematurely acting concern applies both to established incumbents being threatened by disruptive technologies and to innovating start-ups carrying the flag of disruption.

In order to better understand why some of the new technologies quickly supplant their predecessors while others take much more time, it’s necessary to consider two topics in different ways. First, it’s necessary not only to comprehend the new technology itself, but also the broader ecosystem that is needed in order for it to perform according to the expected. Second, it’s necessary to understand that competition may take place between the new and the old ecosystems, rather than between the technologies themselves, and this perspective enables executives to better foresee the timing of transitions, plan more coherent strategies for mitigating threats and leverage opportunities and, ultimately, make far better decisions about when and where to allocate organizational resources.

A range of complementary items is necessary to deliver the value proposition of both established and disruptive initiatives, such as technologies, service agreements, standards and regulations. The strength and maturity of these elements that compose the ecosystem play a key role in the success of new technologies and the continued relevance of old ones.

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