How the inevitable cycle of industrialization can be used to form a technology strategy

Don’t get left behind

It’s generally accepted that we live in a society where innovation is a constant, fast-paced force. It’s unstoppable and inevitable. We’re either the people at the forefront of driving it forwards or we’re trying to keep up so we don’t get left behind.

When we think of innovation, we think of the brand new technology on the left of the Gartner Hype Cycle. We know that next year will bring new ideas that we hadn’t conceived of yet and the year after will bring even greater ideas still. In the past this was things like the light bulb, the smartphone and WiFi. Today, we don’t think of those things as innovative.

Gartner Hype Cycle

As businesses, we look for new markets and new things we can sell and we expect our competition to do the same.

This is all exciting stuff: tech blogs and social media give us a constant stream of innovation and novel things to spend money on.

Industrialisation

What also happens all the time is technological advances in the stuff that isn’t new. This doesn’t hit tech blogs or cause excitement in the same way as new technology but it’s just as important. Technology evolves well after the hype is all gone. This evolution is a maturing of the technology: industrialisation.

Industrialisation allows new ideas to turn into things that every day consumers can consume. It turns the niche into commonplace. The special into the expected.

Economies of scale lead to these organisations often being large enterprises but we also see industrialisation from smaller companies that have adopted new processes.

Continuum of evolution

This industrialisation process is more of a continuum than a definitive changing point in a product’s lifecycle.

Take something like WiFi: over a few years it went from something almost bespoke in the top of the range laptop to something that’s so commonplace that it’s common for people to have more than one device that uses WiFi each. User needs have changed inline with this, with WiFi starting off as a perk that you’re happy if you get it working once, to a need so prevalent it’s worked its way into Maslow’s Hierarchy of Needs. This technology change didn’t happen overnight. Innovation gradually brought down cost year after year and markets gradually shifted.

WiFi is now a basic human need

There are key points in this lifecycle that are common across any type of product, including hardware and software:

  1. Breakthrough. This is what we get excited about in the news. Something brand new that people haven’t seen before. This is called “genesis" on a Wardley map. You half expect the tech to fail.
  2. Bespoke. At this point it might be possible to buy the tech. It’s not clear how to buy it and the customer will probably need to work out exactly what they want with the supplier.
  3. Off the shelf products. Now it’s getting easy to buy. There’s lots of predefined products to pick from and consumers can compare one to another. Marketing the product as a whole package is important here.
  4. Fully industrialised. Now all the excitement and risk has gone. The consumer has boiled down the purchase to the fastest, largest or most efficient for their budget. The product is ubiquitous, with no defining features and will get swapped for a competitor’s without a second thought.

In reality these aren’t 4 discrete steps either and there’s different stages along each one.

Knowing where you are

If you’re a business then it’s critical that you know what stage of technological evolution you’re operating in. There are tools to help you with knowing where you are, like the Ansoff Matrix or the more advanced Wardley Mapping, which give a set of criteria to look for in different stages of evolution.

Example Wardley Map from learnwardleymapping.com

You can see from the map above that these stages apply to the underlying value chain — the components — of what we sell, as well as the product itself.

Assuming that you’re in a different stage of technological evolution to where you really are means that expensive investments will be made without a good return. For example if your product is still being defined and isn’t available to users then you probably don’t want to hire a Six Sigma team that focuses on getting defects down to one in a million. In the inverse situation, you also wouldn’t want to use Agile methodologies — that favour making change easier — in a fully industrialised environment where you don’t want any deviation at all.

Once you know where you are, it’s much easier to create a strategy to get you to where you want to be.

Standing on the shoulders of giants

What I’ve come to realise more and more is that there’s a symbiotic relationship between the industrialised and the innovative new products.

On one side of things, it’s clear to see that every industrialised product started out as an innovation long ago.

On the other side, the corollary is that every new innovation was built on the solid platform of industrialisation. Ideas we come up with today are only imaginable because of the foundations. Some examples should show what I mean by this:

  • PaaS built on existing IaaS
  • Household appliances built on household electricity supply
  • Smart assistants built on existing voice recognition and machine learning
  • WiFi built on networking protocols like TCP/IP

Without the solid foundation, any innovation is too much of a leap. Imagine trying to invent a smartphone without phone networks or inventing a space shuttle without factories producing nuts and bolts.

Cropped photo of Isaac Newton, standing on the shoulder of a giant

This paradigm isn’t anything new: back in the Enlightenment period, Newton said he could see further by “standing on the shoulders of giants”. This is the Great Conversation, where philosophers and scientists built new ideas on top of established work of predecessors.

Back to technology, this is an ongoing cycle, where the new gets industrialised and then breeds more new. We need this industrialization to happen for new tech to be born.

In software development we have the concept of encapsulation. This is where one bit of code doesn’t have to worry about how something else is implemented because there’s a contract that promises it’ll be handled elsewhere. This paradigm works in layers: as you go further out you get further away from the details.

Encapsulation, demonstrated with a red onion

This encapsulation facilitates 2 things: making it easier to change the implementation and reducing the knowledge required to build new things.

“I don’t care how you do it, just get it done.”

This innovation cycle operates in the same way too. For example, if you invent a new IoT device today, you don’t have to worry about the user not having a WiFi device to set it up.

The need for solid foundations of industrialisation and good encapsulation means that we have to move things along in their evolution if we want to come up with great ideas.

Inevitability of industrialisation

Industrialisation happened with the light bulb, WiFi, smartphones and everything in-between. Given enough time you can guarantee that it will happen with any innovation that has a big enough market. We know this will happen but somehow it alway comes as a surprise.

What we should expect:

  1. Some day your new idea will be something that other suppliers can custom build.
  2. Some day your custom built solution will be turned into an off the shelf product.
  3. Some day your off-the-shelf product will be turned into a utility.

This is a matter of “when”, not “if”.

Agent Smith, coaching on technology strategy

Help! What do we do if technology is always advancing? Knowing this is half the battle. I mentioned above that knowing where you are is important. Once you’re clear on that, you can see where your market is inevitably headed and build a strategy to get there before your competition.

Just like the inevitable innovation in new ideas — remember: stay ahead or fall behind — the shift through the different stages is inevitable too.

If you’re already at step 3 then there’s 1 more stage you can expect: some day your utility will be exploited for brand new ideas. Maybe that’s your organisation building on it or maybe it’s an opportunity to sell access to your platform.

Traditional business frameworks like the Business Model Canvas are limiting as they aren’t built around this inevitable movement in a changing landscape but instead are a static picture of where things are right now.

Organisational inertia

As much as some may try, we can’t stop technological advancement.

Instead of thinking about speeding up or slowing down technological advancement, it’s more apt to think about the ability for organisations and markets to adapt to the change that’s coming.

All organisations have some inertia: the propensity to carry on in the same direction and reluctance to change. A market as a whole may have inertia too. More inertia means companies can’t make use of new technology so quickly, so the industrialisation process is slower. Some more wisdom from Newton to contemplate: things with more mass have more inertia.

Generally it’s a good idea to decrease inertia, so you can move into an evolving market more quickly. Agile techniques and generative cultures result in reducing inertia and making it easier to keep up with technological advancement.

Considering others

By default when we talk about strategy, we only consider where our organisation is and the direction in which we want to go. The playing field is much bigger than just us and the other players aren’t staying still either.

Wardley Mapping makes this abundantly clear, by forcing you to place the other players on the same map. This can include your competitors, your supply chain and your users.

Supply chains evolve too, and over time you can expect your competitors to adopt more industrialised components. This is another thing to stay ahead of.

If you can’t adapt fast enough then another option is to slow competitors down. There are a few ways to do this, such as increasing regulation or encouraging others to increase their commitment.

We may also have some influence over the evolution of our supply chains. Driving forward the evolution of a supplier can turn the supply chain into something high volume and low cost, in turn reducing our costs. The flip side to this is that a fully industrialised supply chain can make it easier for new competitors to enter the market.

Building a technology strategy

Strategy involves time, so as Doc Brown said in Back to the Future III, we need to be “thinking fourth dimensionally”.

Don’t be like Marty when building a strategy

When building strategy, it’s tempting to start with an objective — a picture of a better future — and then describe how it’s created. If the better future is the destination you’re trying to get to then there’s a few things you need to understand before you start your journey.

When I’m not writing about technology then I love going on night hikes. On a hike, the darkness creates a challenge in that the way to the destination is not obvious. Allow me to use a night hike as a metaphor…

The origin and destination are the key but I need more context if I don’t want to be lost in the woods. A map of my surroundings is essential as the path is never a straight line. Next, I have to understand the environment around me: for example hills are difficult and streams are even more challenging. The environment isn’t static and a winter hike may be very different from a summer one. Understanding and predicting how the climate changes the landscape makes navigation possible.

A recent night hike where I had not taken account of the heavy rain from the last few days

Finally, before I plan a route for a night hike, I need to understand my capabilities and tools at my disposal. I know I can walk quickly for a couple of hours, then need to pause for a snack. Wellies will allow me to traverse shallow streams but reduce my speed.

A technology strategy is the same.

  1. Understanding your purpose. I like this word better than objective or goal. It describes the why, instead of the what or where of the destination. It puts the user first and gives a reason to get out of bed in the morning.
  2. Understanding where you are now. Even Google Maps can’t give good directions until it has a GPS lock on your current location. A good strategy is the same. Where you are includes the products and services you sell and also your whole value chain, right down to the components behind the scenes that no one sees.
  3. Understand how you move. In a SWOT analysis, this is the strengths and weaknesses of your organisation. In a changing landscape you need to have strengths across each stage of evolution. There’s core strengths like communication, training, continual improvement and designing for change that can span the whole continuum.
  4. Understand what forces are acting on you and others. Technology is evolving; organisations have inertia; competitors and supply chains don’t stay still. Frameworks like PESTLE help you evaluate the different factors at play but ultimately they all either work for or against technological evolution.

All these things put together paint a picture of a changing landscape, with an understanding of where things are now and where we want them to end up. From this picture we can start to put together a plan that covers:

  • More effectively operating where we are now. Using the right techniques, processes and tools for our current stage of evolution, to ensure we have a high-performing team. One size doesn’t fit all here.
  • The path from our current position to where we want to end up. This is a series of smaller steps, rather than a gut feel jump to the far future, and accounts for how we know the market will change and obstacles along the way.
  • What we can do to accelerate. Even with a clear path, any change can take a long time. A series of strategic investments in the right areas can speed this up and allow us to outmanoeuvre our competitors. By being aware of the change and preparing for it, we can also take advantage of the external forces that we now know about.

Technology is advancing at great pace. A successful strategy needs to not only expect the world to change but to have change as its centre.

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CTO at Passenger @passengerteam

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Dave Hulbert

Dave Hulbert

CTO at Passenger @passengerteam

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