In the modern Western world, we turn to software as the solution to most business problems — and rightly so. Software can be a fantastic tool to bring efficiency, consistency, and predictability to business processes.
However, I often see business leaders misunderstanding what technology can and can’t do for them. They look at the tough problems in their organization and assume that sprinkling on some technological magic will bring solutions. Although technology (and, by extension, software) is a fantastic tool, it isn’t a panacea.
Technology is a high-risk, high-reward option. Many thousands of technology companies and startups go out of business every year across the world. The risk of failure on any software or technology project is very real.
To help you avoid following suit, I’d like to share some areas of risk and some mitigation strategies that help to minimize those risks.
Three Kinds of Technology Project Risk
The key to succeeding in this arena is mitigating existing risk. There are many reasons a software or technology project can fail, but they all come down to feasibility, viability, and desirability.
Is the project technically feasible? Is it even possible to do what is necessary? Do the technology and data exist in a way that allows the project to move forward?
Many times, we see business stakeholders who are disconnected from the technical reality of their internal systems. They haven’t investigated thoroughly to see if what they want to do can be done. Sometimes, they don’t have internal personnel who have the necessary breadth and depth of experience to advise them.
New technology solutions that deliver value are often very expensive to implement. Will yours create enough return to justify the investment? Will it be financially viable?
We speak to more than 300 new companies every year who are looking for technical solutions to business problems. It’s surprising how many haven’t calculated what ROI they need to make a risky, expensive software venture worthwhile. This is essential work that must be done for a project to find success.
If a technical solution for a problem could be developed efficiently, but no one wanted to use it, it would have no value. Each technology project must find the intersection of business value and human interest.
Even enterprise solutions (whose users have no choice) need to worry about desirability. If people aren’t happy, they will find a better solution. As soon as humans aren’t interested in using a solution, that solution is now a target for market disruption.
How to Mitigate Technology Risk
There are many ways to mitigate these risks. Some of them are obvious, and some are specific to each business environment.
Short Term – Don’t Use Technology
An easy and, perhaps, non-obvious mitigation strategy is to not use technology at all. I’ve seen many businesses try to use technology to solve a people problem. The inefficiencies in their business process were actually being introduced by inefficient, disengaged people.
In that situation, the cheapest and least risky solution is to solve the people problem directly. Leaders should be immediately empowered to find a people-focused solution.
Medium Term – Don’t Use New Technology
Another way to mitigate these risks is to use off-the-shelf (OTS) technology. This is a great medium-term solution because you avoid the large capital expense of a novel invention and get most of what you need from an existing product. Someone else has already absorbed most of the risk by building the system and offering it to the market.
Using OTS tech will come with some compromises in your business processes, but in exchange, you get financial predictability. You know how much the solution costs to use, and you can incorporate that cost into your business plan and account for it with a high degree of reliability.
For example, you could use an OTS accounting system like Quickbooks instead of creating your own system from scratch. Quickbooks would cost you a monthly fee forever, but the cost is so low (compared to creating a new, custom accounting system) that it makes sense, over the medium term, to use the existing solution.
Long Term – Build the Right Amount of Technology
There are times when the ROI on new technology is adequate; building something new is financially viable. In these situations, you also want to make sure you build just enough technology to meet your needs — not more. Don’t fall in love with the idea of technology. Fall in love with what it can do for your business when used correctly.
You also need to be sure that you have the right team — one made up of proactive problem solvers who are experts in their field. They’ll make sure you don’t fail because of technical or human interest reasons. They’ll want to prove themselves a reliable ally and actually minimize the amount of technology used to accomplish your goals.
I saw a great example of this concept in the movie Ford v. Ferrari. It’s 1965, and a racing team sponsored by the Ford Motor Company is building a new car to race in the famed 24 Hours of Le Mans. They’re hoping to beat arch-rival Ferrari, the perennial champions.
During development, Ford engineers install sensors and a massive computer in the test cars to understand airflow and drag across the body of the car. They’re using technology to solve a problem, and they estimate it will take several weeks of test runs to gather enough data.
The racing team quickly gets fed up with the computer (extra weight) and the cables running to sensors on the car (impeding usability) and rip it all out. Instead, they tape short pieces of yarn all over the car to show how air is moving across the car as it circles the test track. Using their own expertise and smarts, they find the car’s design flaws in only a day. The Ford GT40 MkII goes on to place first, second, and third at the 1966 running of Le Mans.
Technology Is an Answer
Business leaders need to use technology in the right way at the right time, and they also need the right team to build and support it. Imagine if that racing team hadn’t had the right team of people to eyeball the yarn displaying airflow and drag on the Ford GT. They would never have created the solution they needed to win.
At Atomic, we aren’t in love with technology. We are in love with leveraging the right amount of technology to solve problems that result in business success. As part of our sales process, we will tell you if we believe you don’t need technology. We will point you toward an OTS solution if we believe it represents better value to your organization than custom software.
If it turns out that you really do need custom software, we’ll deploy a smart, curious team of experts on your project very akin to that racing team. They will make you aware of the feasibility and desirability risks associated with your technology project. They’ll come up with solutions to mitigate those risks. They’ll find ways to use less technology if it means the need can be met another way. (If that means ripping the computer out and replacing it with yarn and tape, they’ll do that too.)
If you suspect the right amount of technology and the right team can help your business, don’t hesitate to contact Atomic today. We’d love to help.
Love this! Jim Collins has a great take on this in Good to Great, where he says Technology is a lever that amplifies, not a driver. So technology can accelerate or augment changes, but it is not a creator of positive change.
I love how you talk about risk here. I think Collins would probably say the risk of technology is high because it can quickly take you in the wrong direction, just as it can accelerate your progress if pointed in the right direction. Thanks for sharing!!!
Thanks Jimmy! I agree with Collins. Technology can’t create positive change in and of itself. At its most base level, it’s a complex set of switches. It simply doesn’t follow that technology would make anything better. It really matters what we do with the power of the switches.
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