Technology is not optional

What to do, and not to do, to becoming a technology company.

Last Thursday, I received word of a prior employer (traditional construction) purchasing a technology company. My first thought - it’s about darn time. My second thought was, if they would have read my content two years ago, they could probably have gotten it much cheaper. That’s some serious ROI for paying for my newsletter!

For anyone who has followed me and my content, this has been something that I have often predicted for a couple of years. In fact, as a guest on a podcast in 2020, I spoke directly on this topic. Admittedly I may have underappreciated the lasting impact of Covid and I thought you would start to see this happen faster, but it’s common for people to greatly overestimate what can happen in ten months, and greatly underestimate what can happen in ten years.

The bottom line is that in 2021 and beyond, every company of any size, in every meaningful industry, is going to become a tech company. It’s not optional anymore. It’s like the internet, or maybe electricity.

Don’t get me wrong, I do see some companies making a half-hearted attempt trying to figure this out. They usually try to hire this out or promote within, but this will rarely work and mostly just waste time and money. Technology, particularly its use in the industrial space, is accelerating so rapidly that the traditional approaches do not make sense.

Execution + Pivot > Having an idea

The go-to strategy for businesses usually consists of hiring someone who is in the industry and has good ideas for adding technology. The thought (hope) is that these ideas are the missing link. They overvalue the idea and we all know hope is not exactly a winning strategy in business.

First off, today’s ideas are only 5% of the problem, the other 95% is execution, funding, managing people, and being able to recognize the critical moments to pivot. If you are simply hiring someone with ideas, the company is left to adopt a contractor model where they will pay companies (hopefully GCS - shameless plug) to build their visions. This is expensive and does not account for changing trends. Anyone on Twitter can tell you that how big the NFT and DAO futures are, but few can do something with that.

If you are considering building your own technology team, ask yourself these questions.

  • Does this person you are planning to hire really know how to leverage technology effectively so you can get the ROI needed?

  • Does this person have the ability to find emerging trends and put technologies in place to stay competitive in 5, or 10 years? More importantly, can they pivot fast enough when things eventually go sideways?

  • Does this person have any ideas that are more than a derivative of what you are doing today? Adding a few more buttons or notifications is not an impact decision.

  • Who is this person going to lean on when things go sideways? Who does he truly have in his corner that is vested in your company and has the knowledge to help?

  • How wide can they go? Today’s tech landscape is much larger than simply servers and software. Make sure they understand tech but also understand the role it can play in business. After all, you are not simply playing Legos…you are trying to get results.

  • Avoid tinkerers and hobbyists at all costs. These people never actually produce anything and are too busy hopping around.

Becoming a technology company is a lot more than simply iterating over existing processes and making them more efficient. Sure, those are important, but it’s doubtful that the future startups in your business who will take valuable market share are worried about making their employee tracking module more efficient. Instead, they are going to try to skip ahead and find a new niche to market, and technology will lead that effort.

It’s not a side gig, it’s a lifestyle choice

A decade or two ago, keeping up with technology was fairly easy and as an owner, you often could get by simply by putting someone you trusted over the group and hiring it out. Today, things have changed.

I’ve spent my entire life trying to learn, understand, execute, and adapt to new technologies. I have spent thousands of hours reading and creating pilot projects to attempt to figure out the signal from the noise. I have an entire team behind me to support me, along with a network of people who I can lean on for help. All of this took a lot of heartaches, a lot of time, and in some cases, a lot of money.

I have been doing this on a consistent basis for 20+ years and despite the tens of thousands of hours I have put into it, and the hundreds of mistakes and successes I have to learn from, it is still, very, VERY hard.

Unless you truly believe you have found a wunderkind (It’s not a wonder kid Nathan), you will likely be disappointed.

And if you have found one, do you think you will be able to keep him for long given that you are not a technology company?

So, what do you do?

There are a couple of choices that can make sense.

If you can afford to, your best bet is to purchase a technology team. My recommendation is to find a team or company that meets the following criteria

  • 5+ years of success stories in tech AND business. Find proof.

  • Ability to utilize onshore and offshore resources when the time is right. You need both, no matter what anyone tells you.

  • 8-15 employees to ensure they are big enough to be serious, but small enough to be flexible.

Keep in mind that in this model, you will pay a premium because EVERYONE is trying to gobble up tech talent. In this model, you will have to pay what their team is worth to you in addition to what their P&L/Multiplier says they are worth.

While your cost may be more initially, that premium is buying you the most important thing going forward, time & speed-to-market.

What if you cannot afford to buy a team?

A second option is to hire a tech leader in a strategic role. This can be a board of director position, or simply a virtual executive role. This model will be more affordable, but will not provide you the team that you need. It may be a good stop-gap measure however that you can execute today. A couple of words of caution.

Word of caution #1: Avoid trying to hire this out in a traditional consulting or hourly role. While this may appear to be a valid option, it’s going to be difficult to find a person who is capable of playing that role, that is willing to be an hourly consultant. What you need is a dynamic leader who is fully bought into your success and more often than not, a consultant’s primary objective is billing hours for their own benefit, not your measured success.

Word of caution #2: Just because you are hiring this person in a limited, part-time role, does not mean you will get away with paying them a part-time salary. For someone to truly be vested, you may need an executive-level salary AND future incentive in the form of equity, profit sharing, or revenue splitting. It’s just the market we have right now and that will not cool off anytime soon. In the tech industry, experienced vets can earn six figures in their sleep. Keep that in mind with your compensation offer and remember, compensation comes in a variety of ways, not just money. Be creative and set up a true win-win for you and your new partner.

Win or lose, you must play

It is an absolutely incredible time to be in business today. Despite all the noise (and there is a bunch), there is more opportunity (money, impact, disruption) ahead than ever before. Most of the big gains will go to those who effectively harness technology while avoiding the costly pitfalls that come with trying. However, the young guns know this too, and every day startups are emerging across all industries, led by big pocketbooks (private equity) and hungry newcomers. They are gunning for you and your market share and the bullets they are using is new, emerging technology.

You are either preparing to fight the good fight or preparing to lose. The choice is yours and time is ticking.

Photo by Shahadat Rahman on Unsplash