Too many people are treating technology as an end. Technology, unfortunately, is just a means. We need to use technology to drive outcomes. This is why Amazon doesn’t call itself an AI company even though Amazon probably has invested more in AI than anyone else.
One of the clients that I have been working with is a NEO bank start up in US. I have been helping the client develop their technology plan to support the launch of the bank. In one of our weekly check-ins with the CEO, he told me a comment that he had received from a potential investor. The comment was “your bank is very fin, and not very tech”. The CEO was alarmed by the comment and wanted to see what he can do to address the concern. When I told him that I think it’s okay to be just fin and no tech, the CEO was of course surprised.
My rationale on the answer was actually simple. Financial services companies have been some of highest spends on IT in years. HSBC and JPMorgan Chase both spend over $10B a year on IT. Technology is always one of the key pillars in enabling the business strategy for FS companies. A number of sub-sectors in financial services such as payments and capital markets are at the forefront of deploying technologies to be able to provide the 24×7 instant processing of transactions. Without tech, most of the financial services cannot even function.
Granted that there are still whitespaces where technology can help FS companies find the blue ocean and launch innovative products. This is where fintechs have come into play, such as SoFi, Moven, etc. But in reality, these new fintech attackers are no different from the past innovators in financial services such as Capital One and GEICO. Capital One became a credit card giant because of its data analytical capabilities. GEICO became an auto insurance leader because of its direct-to-consumer distribution model. Progressive Insurance was one of the first ones that experimented with telematics based pricing model. Even though none of these innovative companies were never called fintechs, they were the “fintechs”, the financial services who truly embraced the technology and created new innovative business models.
This is why I was telling my CEO client that it’s okay not to be called a fintech or “only fin with no tech”, because there is no way that he can launch a NEO Bank today without tech. Technology is going to play an essential role in his bank, from products to customer acquisition to ongoing operations. His whole business model is 100% reliant on the tech. Tech is a given.
The discussion brought up another point of frustration for me. Technology transformation is one of the most popular terms today. For example, we have AI transformation, Big Data transformation, Cloud transformation, and Blockchain transformation. But are they really transformation? Are they really the objectives of transformations? All these technologies are just various means to an end. By naming each of the technology terms (e.g., AI and Blockchain) transformation, we are effectively making the means into an end. So what if we are an AI company? Being an AI company doesn’t mean anything to a customer or to a shareholder. The customers care more about the pain points that we can eliminate in their lives. Shareholders care more about the profit that we can generate, both short term and long term. Just deploying a technology doesn’t mean anything to the customers and shareholders.
Furthermore, while technology is definitely a CEO topic now, CEOs don’t need to know everything about technology. Some of the recent articles from technology companies and consulting firms are pushing for CEO to learn more about technology. CEOs must learn the concepts of the technology. There is no question about it. But CEOs don’t need to know all the nuances and intricacies. For example, with the way the cloud is going, IT infrastructure is going to be a utility that doesn’t matter. IT infrastructure will be just like electricity where it should always be there. So why should a CEO learn about the intricacies of cloud? CEOs don’t need to learn about electricity. They know it exists and they should use it. Same with cloud technology. CEOs do need to make sure that they have a contingency plan when there is a power outage. And the same applies to cloud technology.
When we think of technology companies, Amazon is going to be one of the top choices for most people. But Amazon actually doesn’t brand itself as a technology. Amazon’s mission is to be Earth’s most customer-centric companies. Its four guiding principles are: customer obsession rather than competitor focus, passion of invention, commitment to operational excellence, and long-term thinking. Technology for Amazon is just a tool that enables it to achieve its strategic goals.
Just like Amazon, companies should stop thinking about technology on its own. Technology is critical. But technology is just a means to an end. Technology is not the end itself. Instead, companies should be thinking about what outcomes they want to achieve out of technology. This is why many companies are starting to create the so-called business-technology strategy or biztech strategy where business and technology strategies are intertwined. Business strategy must consider technology to be able to predict the future. Technology strategy must be anchored on the business outcomes that technology will create. Using terms such as AI transformation or Blockchain transformation will only lead companies down a path of deploying technology for the sake of doing it.