Technology driven strategy or strategy driven technology?

One of the biggest challenges for companies building software is balancing their technical capability with a coherent strategy that is understood and validated by their market.

An increasing number of non technology businesses have started to refer to themselves as ‘technology driven’, ‘technology at heart’ or ‘a technology company’. The risk is that technical possibility alone can be used as justification for product investment. However, assuming commercial success is the ultimate goal, we all know that the ability to build something is irrelevant if nobody buys the product.

If we stay focused on being solution providers we keep the emphasis on markets, people and problems to form strategy.

Whilst customers may not understand what’s possible (think of the famous Henry Ford quote re: customers would have asked for a faster horse) they will always know whether they have the problem to solve and if they can/will pay to solve it. This is, obviously, crucial and our choice is whether we want to identify this before build or afterwards, when the money has been spent and our reputation is on the line! There are always more ideas than resources, so it seems crucial to identify this in advance and good product management makes it possible to do so.

Therefore the image recognises a few key principles that should always apply in relation to evaluating the commercial rationale for new technical possibilities.  It covers 3 perspectives: the market, the business, and the technology team. Obviously the business and technology team are part of the same entity, however these 3 areas are, unfortunately, often disconnected.

First: THE MARKET – strategy must be coherent and compelling to its intended audience and therefore, formed in collaboration with markets. Understanding their business, problems, value of solving them, and a vision for their industry is more important than anything else.

Second: THE ‘BUSINESS’ IS CENTRAL – to the ‘why’ and ‘what’ of product strategy, via executives, product management teams, or preferably both. The business must take responsibility for having a vision and a strategy which enables alignment and commercial objectives to be set for the product investments it makes.

Third: THE TECHNOLOGY TEAM – are often the only people in the business who fully understand the possibilities of how new technology could, potentially, deliver more customer value. Where the healthy input/output relationship in the image exists their ability to proactively feed new technical possibility into strategy is crucial. It does also mean that technology possibility alone doesn’t become the strategy but recognises it can be a crucial differentiator for companies who take the time to validate potential customer benefits and embrace the new technical possibility accordingly.

I’ve indicated how effective product management works across all of these areas, and crucially keeps technology possibility connected with market problems, but the main point of the article is to stress that even if you want to fully embrace technical possibility, the first priority, of making sure your customers want your new solutions before you build them, must be key. 

To achieve this, validated, commercially focused and market driven strategy must be compelling and the most prominent aspect within your product decision making. Having new technical possibility systematically fed into this strategy formation can make a huge difference in outwitting competitors if it’s connected to new, valuable possibilities for your clients.