The world’s enthusiasm for tech companies is at a turning point, and we shouldn’t be surprised. For an industry that has grown dramatically by capturing personal data and being an integral part of our lives, it was only a matter of time until tech experienced some blowback.
Firms that were once the darlings of the digital age now find themselves playing defense regarding the protection of personal data, maintaining privacy protections and accusations of anticompetitive behaviors. Regulators are issuing fines and increasing regulations. Stakeholders are demanding greater social responsibility. And employees are staging walkouts to protest company practices or the use of products.
As if all that weren’t enough, the usual market threats continue on. Game-changing innovation, which has always been a disruptive force in the industry, is now intensifying as emerging technologies such as artificial intelligence (AI) and machine learning (ML) come into their own.
Adding to this challenging environment, attracting and retaining a first-rate talent base has become much more difficult given low unemployment rates and the supply of emerging tech-trained resources. The World Economic Forum report 5 Things to Know About the Future of Jobs estimates that 133 million new job roles may emerge as early as 2022. Most of these positions will require skills that are not widely available in the current workforce.
Clearly, the famous tech model-for-success catchphrase — “Move fast and break things” — is due for a reassessment. Tech companies must take a more balanced approach if they are to thrive today and in the future.
We call that approach tech balance, and it consists of three pillars: innovation, talent and responsibility.
Pillar One – Innovation
Disruptive innovation is what enables a tech firm to establish a market in the first place. But the speed of innovation also threatens a company’s ability to compete, especially in the face of “born digital” startups. Without the encumbrance of older operations and IT systems, startups often have the nimbleness and the fresh thinking to seize market niches.
To stay ahead of the innovation curve, tech companies must assess their digital maturity and determine where they stand vis-à-vis the competition. Once they’ve made this assessment, they will be better able to drive transformation across their own organizations and drive down costs.
Additionally, tech firms must rethink how they develop products and bring them to market. In both of these challenges — internal assessment and product development — the deployment of next-generation technologies can help core business functions be as efficient and effective as possible. Through intelligent automation, data mining, analytics and AI, a company can hone its capabilities and zero in on the functions and offerings that provide it best with a competitive edge.
Pillar Two – Talent Strategies
To generate innovation, a company needs great talent, but as noted in a previous blog, fielding top people from a tight labor market is only part of the problem. Talent retention is also a major factor. In this highly competitive industry, standout employees tend to be hired away like professional baseball stars before the trading deadline.
Given these constraints of a tight labor market, a tech company must take a number of measures to bolster its talent resources. These include outsourcing routine functions to focus on sought-after talent, shoring up the company’s diversity profile and developing retraining programs for the legions who will be displaced by automation. In the Responsible Technology Firm of the Future series we produced last summer, we reported that women account for fully half of the U.S. college-educated workforce but only 29% of science and engineering employees. There is an opportunity to tap into this underutilized talent base by creating the right conditions to meet its particular needs and by promoting the participation of women and girls in science and engineering studies. The key, however, is for a tech firm to make securing a robust talent base a defining part of its enterprise.
Pillar Three – Responsibility
We launched our Responsible Technology Firm of the Future series because corporate responsibility is one area where tech companies have taken some well-deserved hits in market perception. Time and again, tech firms have made headlines over issues that could have been prevented with a more comprehensive and proactive approach.
In order to close this responsibility gap, tech firms need to recast their growth efforts within the framework of compliance and risk assessment. They also need to establish monitoring systems that can quickly elevate stakeholder concerns to the highest levels. These are not easy tasks, as they require both operational and cultural changes. But from our experience, they are quite achievable. In fact, failure to do so will almost certainly risk damage to brand reputation, as government scrutiny and public demand for corporate responsibility are definitely on the upswing.
Interplay of the Pillars
None of these three pillars can or should stand by itself. All three are necessary and interdependent. A tech firm that has a strong reputation for corporate responsibility will attract and retain more high-quality talent. A flourishing talent base will go the extra mile toward developing cutting-edge technology. And cutting-edge technology will, in turn, build the brand, which will attract the talent, and so on.
It’s a virtuous cycle that any company would desire. More than that, it is quickly becoming essential. As public scrutiny grows and the labor force tightens, tech balance will become the touchstone of success in the industry. Those companies that can build and strengthen all three pillars will thrive, while those that fail to achieve a healthy balance stand the risk of losing sizeable market share or being absorbed by their more successful competitors.