Emerging Growth Companies: Technology and Values Can Get You to Scale

As discussed in a previous article, getting to scale is the most important challenge that emerging growth companies face on their path to realizing their full potential and generating real wealth for their investors.

Technology is a key enabler for scaling and an essential driver of value to customers. It is the responsibility of the CEO to lead any technology initiative. Understanding what technologies will facilitate value creation competitive advantage is a business imperative. It cannot be delegated to the CIO or IT consultants. 

How Technology and Values Can Get Emerging Growth Companies to Scale

Consider the central role that technology plays in two major types of business models: 

• “Pipes:” Companies create value in products and services upstream from the customer, via technology-enabled functions like Market Research, R&D and Manufacturing. Value is then pushed out and sold to customers in a linear flow. 

• “Platforms:” Companies co-create value with their customers, for example via a common technology platform that allows customers to work with vendors or each other to fulfill their specific needs. 

In both of these examples companies that deploy technology at scale so as to create more value at lower cost to their customers will be the winners in their markets. 

Let us look at the media industry as an example. Digital media companies like Yahoo, Netflix and LinkedIn leveraging technology have caused major disruption for the traditional media companies like NY Times, Universal Music Group, and CBS. As a defensive measure, the traditional companies are investing heavily in online and mobile presence and adopting social media technologies. For their part, emerging digital media companies are going global and need a good understanding of the opportunities and challenges of conducting business around the world. The winners will be the companies that master both media and technology domains and leverage acquisition for capability building such as the proposed acquisition of Time Warner by Comcast. 

Long-term competitiveness will require greater technology mastery not only for improved functionality but also for building global infrastructures. The crucial first step is developing a high level technology strategy and roadmap consistent with the company’s mission and objectives. It may not be an easy or simple journey, but it is absolutely vital. 

Success Story: Uber Technologies 

A case in point: Uber Technologies, a five year old company, has disrupted the traditional taxi business.  There are many local taxi companies but before Uber none had figured out how to successfully scale. Then Uber applied technology, building a platform to enable customers to find rides quickly and efficiently and in a few years built a national brand and reached a market cap of $3 Billion. The traditional taxi companies are losing significant business to Uber and other taxi companies that are using technology platforms to deliver exceptional value to clients. In the San Francisco Bay Area over one-third of the taxi drivers have moved onto these new “platforms.”

Another critical role for the President/CEO in scaling a company is to ensure that employees stay fully engaged to realize the mission of the corporation. How can they ensure that their company does not have ethical lapses—such as the cheating scandals that happened recently at the government nuclear facility where operators had to take proficiency tests to keep their jobs? Writing and distributing mission and value statements won’t suffice. The leaders of the company need to demonstrate these values in action across all its locations and ensure that incentives do not lead to the wrong behaviors.

Technology can help here but the foundation must be careful selection and promotion of value-centered leaders who will “walk the talk.” This requires humility and courage—human qualities without which even a highly technology-focused company can’t succeed.

In my career as a CEO, I have been fortunate to have been part of organizations that successfully applied technology in diverse ways to create scale that helped us beat the competition. For many companies, the best route to driving growth is to use technology to transform the current business model and create value for customers. That can lead to where you want to go, taking your company to scale while remaining focused on keeping your products/services relevant to your customers’ needs. Technology alone is not enough. But technology combined with values-based leadership can be an unbeatable combination. 

Technology and value based leadership can only get you so far without a plan for No Man's Land. As your company grows it is important to understand where most companies fail. Request your No Man's Land diagnostic below to help you prevent the mistakes other companies have made in the past. 

About the Author

Farhat is a hands-on technology company leader with a successful track record running and turning around hardware, software, services and support operations.

As CEO/COO of several Fujitsu America subsidiaries, he managed profitable operations for 40 consecutive quarters. He turned around  PC and  Server units by revamping the full range of operations, including sales, services, IT and supply chain. In those roles, he was instrumental in launching a number of new businesses in the data center outsourcing, storage and software sectors.  Learn more about Farhat or contact him here.

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