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  • More Examples of Why Company Strengths Must Guide Technology Adoption,
    spacerEspecially during Transformation Attempts

  • The most recent issue (May 2013) of my newsletter stressed the importance of paying attention to a company's strengths when adopting new technology. That newsletter points out how company strengths should be considered when technology expertise is brought in from the outside. Well after that newsletter came out, additional technology adoption situations that illustrate the importance of strengths have been featured in the media.

    For example, Barnes and Noble's struggles with technology have received considerable media coverage that I had been analyzing for inclusion in this newsletter. In fact, while I was working on writing this newsletter, a July 25, 2013 Bloomberg Businessweek on-line article came out titled The End: Barnes and Noble in Silicon Valley. It offers a good in-depth discussion of Barnes and Noble's ill fated effort at transitioning into a technology company, which I further discuss later in this newsletter.

    As another example, there was an article with a technology adoption lesson in the June 24-30, 2013 issue of Bloomberg Businessweek. The article, titled "A Hunt for J.C. Penney's Missing Cashiers" (the on-line version is titled "In Street Clothes, J.C. Penney's Sales Staff Goes Missing"), essentially ties together the two previous issues of my newsletter. This Bloomberg article points out a technology adoption challenge that not only is of the type mentioned in my most recent newsletter (May 2013 issue), but also is an example of what happened with technology adopted as part of Penney's ill fated transformation. Penney's excessively bold transformation attempt was the subject of the previous issue of my newsletter (March 2013 issue).

    The Bloomberg article reports that Penney's sales associates wear their regular street clothes, not a uniform or branded shirt or any other clothing that readily identifies them as a store employee. According to the article, Penney's sales people were encouraged to wear hipper, more casual attire because that was the vibe intended to be associated with the newly transformed Penney's. But, as Bloomberg reported, Penney's dress code was a problem because shoppers could not tell who the store employees were. This left shoppers with the impression that there were no sales associates available to help them.

    And, the dress code problem was made much worse by Penney's adoption of new technology. This entailed removing all cash registers and instead giving sales associates hand held iPads. So, the lack of obvious cash register locations made it even harder for shoppers to find sales associates for help with the check out process. Furthermore, according to Bloomberg, even if they did find a Penney's associate, many shoppers did not trust the security of those hand held devices.

    Like other aspects of Penney's bold transformation attempt, the way the technology was adopted was a poor fit. The new technology that Penney's adopted had worked quite well in Apple stores. But, it didn't work well for Penney's. Essentially, the same kind of Apple-Penney's strengths differences that stifled other aspects of Penney's attempted transformation also interfered with the successful adoption of technology. Apple stores attract shoppers who are comfortable with a check out process that uses high tech hand held devices instead of cash registers. Penney's shoppers, on the other hand, are not anywhere near as amenable to that hand held technology.

    Thus, the difference in the customer base, as well as the fact that, unlike Apple salespeople, those at Penney's were not identifiable by their clothing, hampered the success of the newly adopted hand-held technology. The result: rather than being the hoped for improvement, the latest check out technology turned out to be a big problem for Penney's.

    What happened at Penney's is a classic example of why companies adopting new technology must pay attention to their strengths, just as the previous issue of my newsletter encourages. As that newsletter explains, when bringing in outsiders with technology expertise--outsiders such as digital directors on corporate boards or executives from tech companies--it is important to evaluate how the strengths of companies the outsiders came from compare with the strengths of the organizations they are brought into.

    This is especially important because an outsider familiar with how well the technology works elsewhere can easily become overly enthusiastic about applying it in the new environment. These outsiders from the tech sector have seen first-hand how beneficial the technology can be. But, they may not have even considered what conditions at their prior companies made the situation so amenable to the successful adoption of the technology. As a result, the technology outsider may be blind to how differences between the two companies might interfere with a successful outcome.

    Furthermore, since technology is such a complex specialized field, there can be an increased tendency to defer to the advice of a technology expert without questioning whether those recommendations are a good fit. This can easily happen because those who do not specialize in technology may not always feel they understand the technology well enough to assess how appropriate it is for the company. So technology adoption issues are often delegated to the person with technology expertise. Yet, someone needs to focus upon whether or not what the technology expert recommends is in fact a fit.

    Besides Penney's, Barnes and Noble is another example of what can go wrong when pursuing new technology without paying adequate attention to the company's strengths. Like Penney's, Barnes and Noble had an outsider CEO who came from the tech sector. And, like at Penney's, the tech outsider at the helm of Barnes and Noble pursued new technology without regard to the company's strengths.

    Nonetheless, Penney's at least was on the right track in intending that its newly adopted technology support the retailing business. Unlike Penney's, however, Barnes and Noble went far beyond its existing business with the technology it adopted. Barnes and Noble lost sight of its bookseller strengths to the extent where it was essentially adopting new technology that put it in head-to head competition with tech companies like Apple. As the last issue of my newsletter explained, it is far better to apply new technology in support of the existing business, rather than attempting to compete with technology vendors. My previous newsletter pointed out the devastation experienced when the toy industry made this mistake. And, Barnes and Noble is suffering from something similar.

    Yet, Barnes and Noble did have some initial success with its Nook ebook reader. But, whether or not there is potential for initial success from a high tech innovation like the Nook, it is still important to remember what happened to tech innovations of the past. It is not unusual for the innovating firm to do well for awhile, later to be surpassed by other companies. This happened with calculators, with video recorders and even with search engines, for example, where the company that pioneered a technological innovation was not able to remain a strong player in the longer term. So, when Nook was thriving, Barnes and Noble should have been paying attention to these historical precedents rather than trying to transform itself into a serious player in the high tech arena. And, instead of emphasizing high tech, Barnes and Noble should have been looking for ways to leverage its bookselling and retailing strengths.

    Thus, it is really important to evaluate whether or not a new technology fits a company's strengths before adopting it. And, this should include determining whether the technology supports the existing business versus whether it sets the company up for unsustainable head--to--head competition with technology vendors. Companies must address these issues, and should not blindly accept the views of a tech outsider without asking ever so critical questions about how the new technology will fit in with the company's strengths.

    Of course, the cautionary tale of this newsletter is not meant to discourage companies from adopting new technology. Nor is it meant to weaken the valuable input that technology veterans can provide. On the contrary, the message of this newsletter is that technology should be pursued in ways that fit with a company's strengths. And, that entails combining technology expertise with a solid understanding of the business.

    Applied in ways that fit well, technology can offer tremendous benefits. But, companies need to give adequate emphasis to appropriate fit when they are considering whether and how to adopt new technology. With technology changing so rapidly, it can offer tremendous opportunity to those who apply it in a manner consistent with company strengths.

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