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The seventh principle should affect every technological investment you make — and with luck , it will prevent you from making some outdated ones . Embrace digital technology ’ s potential to transform your company : to create fundamentally new experiences and interactions for your customers , your employees , and every other constituent . Until you use technology this way , many of your IT investments will be wasted ; you won ’ t realize their potential in forming powerful new capabilities .
Complete digitization will inevitably broaden your range of strategic options , enabling you to pursue products , services , and innovations that weren ’ t feasible before . For example , Under Armour began as a technologically enabled sports apparel company , specializing in microfiber-based synthetic fabrics that felt comfortable under all conditions . To keep its value proposition as an innovator , it aggressively expanded into fitness trackers and the development of smart apparel . The company is now developing clothing that will provide data that can both help athletes raise their game and point the way to design improvements .
Adopting digital technology may mean abandoning expensive legacy IT systems , perhaps more rapidly than you had planned . Customers and employees have come to expect the companies they deal with to be digitally sophisticated . They now take instant access , seamless interoperability , smartphone connectivity , and an intuitively obvious user experience for granted . To be sure , it is expensive and risky to shift digital systems wholesale , and therefore you need to be judicious ; some companies are applying the Fit for Growth approach to IT , in which they reconsider every expense , investing more only in those that are directly linked to their most important capabilities . ( See “ Building Trust while Cutting Costs ,” by Vinay Couto , Deniz Caglar , and John Plansky .)
Fortunately , cloud-based technologies provide many more options than were available before . To boost agility and reduce costs , you can outsource some tech activities , while keeping others that are distinctive to your business . You also can use embedded sensors and analytics to share data across your value chain and collaborate more productively ( an approach known as “ Industry 4.0 ” and the “ Industrial Internet of Things ”). The biggest constraint is no longer the cost and difficulty of implementation . It ’ s your ability to combine business strategy , user experience , and technological prowess in your own distinctive way .
8 . Keep It Simple , Sometimes
Many company leaders wish for more simplicity : just a few products , a clear and simple value chain , and not too many projects on the schedule . Unfortunately , it rarely works out that way . In a large , mainstream company , execution is by nature complex . Capabilities are multifaceted . Different customers want different things . Internal groups design new products or processes without consulting one another . Mergers and acquisitions add entirely new ways of doing things . Although you might clean house every so often , incoherence and complexity creep back in , along with the associated costs and bureaucracy .
Many company leaders wish for more simplicity . Unfortunately , it rarely works out that way .
The answer is to constantly seek simplicity , but in a selective way . Don ’ t take a machete to your product lineup or org chart . Remember that not all complexity is alike . One advantage of aligning your strategy with your capabilities is that it helps you see your operations more clearly . You can distinguish the complexity that truly adds value ( for example , a supply chain tailored to your most important customers ) from the complexity that gets in your way ( for example , a plethora of suppliers when only one or two are needed ).
As Vinay Couto , Deniz Caglar , and John Plansky explain in Fit for Growth : A Guide to Strategic Cost Cutting , Restructuring , and Renewal ( Wiley , 2017 ), effective cost management depends on the ability to ruthlessly cut the investments that don ’ t drive value . Customer-facing activities can be among the worst offenders . Some customers need more tailored offerings or elaborate processes , but many do not .
For example , Lenovo , a leading computer hardware company with twin headquarters in China and the U . S . ( Lenovo ’ s ThinkPad computer business was acquired with its purchase of IBM ’ s personal computer business ), has a strategy based on cross-pollination of innovation between two entirely different markets . The first is “ relationship ” customers ( large enterprises , government agencies , and educational institutions ), which purchase in large volume , need customized software , and are often legacy IBM customers . The second is “ transactional ” customers ( individuals and smaller
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