Why Should Companies From Every Industry Become Tech Companies?

You arrive at the parking lot of the event hall where one of your old friends, a schoolmate, and now also a colleague from the food industry, will give the keynote speech. Coincidentally, he is up at the same time as you, which gives the opportunity to park his vehicle next to yours. You remember that a few years ago your friend was about to sell his company because the food market in which it competed is considered of low added value and the segment market for the main product had turned into a price war. So, now, running into him after 10 years, you will not miss the opportunity to satisfy your curiosity. After greeting him warmly and asking about his family, you also ask how he managed to turnaround his company.

Mario has always been a happy, confident, and polite character, and he doesn't hesitate to share his secret: “I have a technology company.” You are stunned and can only stammer, while smiling: “What the heck, Mario! You’re joking. What do you mean you have a technology company? You were selling birds’ eggs and their derivatives. At what point did you acquire a technology company?”

Mario looks into your eyes and gives you that look that you know, like when you were still in school, and you knew that he would take you by surprise with one of his ideas. Your friend laughs for a moment and says, “I haven't bought a technology company. We have become one.” You think, now he has really gone crazy, but you maintain your calm and say to him in amazement: “Explain that!"

Mario patiently begins his explanation: “We have integrated foodtech, biotech, commercialtech, fintech, logtech and supply chain solutions, including robotics, as well as advanced analytics into our company.”

You stare at him and laugh. “Well, I can be a technology company too and now sell chickentech.” You both laugh and Mario tells you to pay attention to his speech.  “I will reveal more details about our effort.”

Mario has always been a good speaker, so at the conference, he begins by describing how his company had gone from being the leader in the market to losing competitiveness on a daily basis, due to the appearance of new players, not only local, but foreign. The competition was so ruthless that they had invested millions of dollars in methodologies and certifications to be more efficient and be able to compete on price.

In addition, their IT area had been strengthened with CRM and ERP solutions that were not enough to achieve the long-awaited maximum efficiency that would allow them to sustain themselves. Tired of his profit margins being increasingly reduced and that his flagship product had competition on both sides of the value proposition, both in low-cost solutions and in the premium segment, he made a bold decision. At that point, he thought it was time to sell his company, so he hired an investment firm to estimate the value of his company.

During the process, the group of experts told him that the company had good numbers and, therefore, it would not be difficult to sell it, but they were concerned about the reason for selling. Mario told them his concerns and the group of experts responded that, “What you need is a strategic renewal through a corporate venturing model based on innovation and emerging technologies, where eventually you can create an investment fund to grow strategically and financially.” To Mario, that sounded like they wanted to fool him in an elegant way.” He decided to delve deeper into the topic, engaging in increasingly advanced conversations that would allow him to understand the importance and impact of the decision to be made. 

After a while, he structured, together with his work team and his new advisers, a corporate venturing and corporate venture capital model that would allow him to:

• Define a growth strategy.
• Identify trends in business models and emerging technologies.
• Map technologies and evaluate their contribution to the company's growth.
• Select those technologies and business models that make sense to the strategy.
• Validate and integrate solutions to the company's processes.
• Invest in innovative and scalable solutions.
• Establish metrics aligned to growth.

By establishing clear goals in the short, medium, and long term, the effort did not take long. The company began to grow again, soon surpassing what it had achieved in its best years. In addition, the company incorporated new business models and new technologies that enabled entry into new market segments and even new industries. Also, the core business was strengthened, achieving key differentiators, and increasing entry barriers.

After the conference, you decide to continue talking with your friend and learn more about his experience on this topic. You invite him to have a glass of wine and ask him: “What are the benefits that new technologies provide to established companies?”

To which Mario kindly responded: “There are several challenges for companies that have been in the market for years, particularly if we compare them with recently created technology-based companies, since these companies are based on knowledge that is constantly incorporated, have greater proximity to the customer and greater understanding of their needs, methodologies and cultures based on agility, and technologies that can scale faster due to the ease of adoption by the consumer. I am not only talking about digital technologies, but those that provide the development of new products at a low cost and facilitate their widespread use and even take advantage of what we previously wasted.”

Then you must have a good IT director, you reply. To which he says: “This does not have to do exclusively with IT. It has to do with R&D, business areas, finance, strategy, markets and investments. You require interdisciplinary teams, aligned around a purpose, making joint decisions and establishing clear goals and objectives. Even integrating new areas of knowledge that you didn't have in the company before.”

After all this conversation, you reflect and think that chickentech had only been a joke, but without a doubt, incorporating new technologies and business models that make it easier to take products to the next technological cycle, as well as integrating several solutions provided by new business partners and investment portfolio companies, makes it easier to create your own ecosystem and gain an unfair advantage. In this way, you develop your own white spaces and scale your business to the next level, generating new sources of income.

Finally, before saying goodbye to your friend, you ask him: “Is what you have achieved applicable to any company?” Without any trace of doubt, Mario tells you: “Companies from every industry must become technology companies.”

As you both say goodbye, you think, “I have a great challenge for my company. It’s time to wake up.”