While Netflix was originally founded as a company designed to change the viewing behavior of consumers by sending them DVD’s via mail. Over time, the company began streaming content via the internet using a combination of data & analytics to drive high levels of customer engagement. In order to satisfy the growing demand for content and insulate itself against the competition, Netflix began investing in producing and acquiring it’s own content and now spends billions of dollars each year to have an industry leading content library. Recently, Netflix was moved from the traditional basket of technology stocks that it had been in since being founded into that of a media company
While it is surprising that a company that has ‘net’ as part of its name moved over to being tracked as a media company, the reality is that Netflix spends billions of dollars developing their own content and has a market capitalization larger than all other media companies. In fact, their efforts have earned them numerous academy awards and a growing user base.
Going forward, we will see the companies that have traditionally been considered technology stocks like Facebook, Amazon, and Tesla move into categories that are more representative of their actual industry - advertising, retail and automotive respectively.
Along with this category re-alignment, it is also about time that we realize that every company is now a technology company. While some have been grouped into the technology company category, every company has or is in the process of fully integrating technology into their business model.
As we continue to progress along this continuum, companies will move beyond just integration to have technology as the foundation. The main reason for this change is that without significant technology investment, established companies will be overtaken by the next generation of startups that put technology first.
Over the past several weeks, ‘technology’ companies have been fighting a negative perception about how their business models are executed.
However, that ignores the fact that each and every company that we interact with on a daily basis is now a technology company.
Technical leadership - CIO/CTO
One of the clearest signals of how companies value technology is within the executive leadership team. For many years, only technology-based companies had a chief technology officer or a chief information officer.
In contrast, many technology accelerators and incubators have been reluctant to accept startups that do not have a technical co-founder. Companies like Uber, AirBnB & Stripe now have market capitalizations that exceed those in the transportation, hospitality and financial services industry.
Sensing the growing competitive threat, it would be hard to find a company, independent of industry and size, that doesn’t have a technology-based leader in the executive ranks.
Initially, most companies may have thought that technical leadership was only necessary on a consultative basis and they could rely on skilled vendors to help select technology services/tools.
As time went on, companies came to realize that they needed ongoing technical leadership to successfully compete in a technology-first environment.
From product roadmaps underpinned by technology, to building a best-in-class technical team, and the optimum mix of purchased and internally developed tools, technical leadership has been an essential element of the economic growth across industry sectors that we have seen the past decade.
While the largest gains have been seen by companies within ‘technology’, going forward we will see an increase in companies that build their foundations upon a technology-first framework. The companies that are able to fully integrate technology into their strategy and execution will see huge gains which will create a virtuous cycle for their direct competitors to improve their technical leadership.
Utilizes technology services/tools for competitive advantage
As technology has started to play a more prominent role, companies have begun to utilize technology-based services and tools to gain a competitive advantage.
What started off as being able to calculate data using Microsoft Excel has now advanced to being able to ingest and analyze large quantities of data with Python programs.
From creating content using the Wordpress platform to modifying the underlying HTML & CSS code to improve technical SEO, marketers have built an increasingly sophisticated set of technical skills.
By using Salesforce, many sales professionals were able to better manage customer relationships. Those who are best-in-class are now able to query their customer databases to find powerful relationships between data sets to increase their closure and retention rates.
Throughout the organization, we are seeing not just engineering and developer talent using technology to drive business results. We are seeing marketers, sales professionals, and operations leaders leveling up their skills in order to create increased value for their function along with the broader corporation.
As companies have seen this shift, they have started to increase their budget to purchase tailored solutions that increase the efficiency of team members throughout the organization.
Since a group of employees have gained an understanding of how these tools can add value by initially trying a cobbled together solution, they have been best positioned to select and work with emerging service and tool providers to develop an increasingly useful set of technology-based tools for their organizations.
Within this group, there are a core and non-core set of tools. Those that have been deemed integral or proprietary are being developed internally while those that are essential but non-core are being purchased off the shelf.
Independent of the source, the trend towards a greater spend on technology based tools whether externally sourced or internally developed will continue to increase.
Hire talent with technology skills
We often highlight the skills gap - there are estimated to be 1,000,000 more jobs in technology based fields by 2020 than there are employees to fill them.
However, of equal importance, is companies of all sizes and across all industries are currently demanding employees with technology skills.
From engineers to developers to marketing and sales, employers are expecting talent to have technology skills.
Those will extremely specialized skills like data science and artificial intelligence are able to command premium compensation and game-changing impact within the competitive marketplace.
And those who are willing to learn technical skills are able to reinvent careers that may have faltered due to lack of technology acumen.
This large appetite for technology skills at employers is going to continue to grow. Those employees who prioritize developing their technical skills will continue to be in demand especially in those functions were these skills have not traditionally been required.
With technology as a foundational aspect of business moving forward, it is increasingly important to not only recognize how significant this change is but also realize that this trend will continue to accelerate.
For many years, technology has been viewed in isolation as either a group of technology companies or of the near term impact technology might have on a specific set of jobs. In this framing, only certain companies required using technology in order to compete with their competitors and only a certain class of workers had to guard their skills against the coming automation onslaught.
The last several years have shown us that our view of technology was far too narrow. Companies have been bulking up their technical capabilities through the hiring of executive leadership roles, utilizing technology based services and tools to better compete, and hiring talent with technology skills.
By blurring the lines between what a technology company is and what a technical worker is, we can finally see how all consuming technology is within the modern day economy.
For the current generation, technology was initially considered periphery and only necessary for those who were technically oriented. The next generation will require an understanding of technical skills in order to be successful in the workplace regardless of function and role.
This is not to suggest that everyone will need to write code or build killer user interfaces. Instead, it is a realization that technology is fundamental to the competitive advantage of the modern company and future employees who embrace this reality will be best positioned for success.