2017 Trends: Technology Commoditization
Bruce Greenwald, the Columbia Business School professor whose course on value investing is recommended even by Warren Buffett, said, “In the long run, everything is a toaster.” By that, he meant, all great innovations eventually become commodities, bought on the basis of price and nothing else. Sooner or later, Microsoft software programs, Intel microprocessors, Dell computers, and Cisco routers will all be toasters.
Tech products become commodities when companies are no longer creative enough to make their offers more appealing. You’re no doubt familiar with this turn of events. A startup will make an innovative breakthrough and stand out as unique in the field. Yet, due to the rapid pace of development in the tech field, soon, everyone else in the space is offering those same features. A feature that was once special quickly becomes standard.
As a technology firm, how can you remain relevant to your consumers? How can you avoid going the way of the toaster? Perhaps the most important thing to do is to shift your mindset from a vendor to a strategic partner. Consider the following guidelines to shape your transition:
- Be strategic. Know your customers and their markets. Think about your customer’s business as if you’re running it. Learn about their sales cycles, their distribution challenges, even their brand strategy, which often drives their business strategy. Strategic partners don’t appear only when there’s a problem. They are active, engaged, and market savvy advisors who understand their customer’s issues and provide thoughtful, actionable, consultative guidance.
- Communicate well. Communication is the foundation of any strategic partnership and it is the key to success. While it’s easy to tell customers what they want to hear, true partners tell them what they need to hear. Be honest and act with integrity through all interactions. Moreover, meet with your customers face to face as often as possible. Regularly ask your clients for feedback on how you’re doing and what you could be doing better.
- Be responsive. In a 2016 study conducted by the CIO Executive Council and the IDC Strategic Partner Index, respondents were asked to rate the relative importance of a number of categories including responsiveness, collaboration, and communication from 1 to 10, with 10 being the most important. Unsurprisingly, every category was seen as mission-critical, with no less than 75 percent of respondents reporting a score of 7 or above for any given category. It was, however, the responsiveness category that received the most 10 scores by a two-digit margin, indicating that, in the fast-paced world of IT, technologists view highly responsive strategic partners as more equal than others.
- Be transparent. To gain trust among your customers and position yourself to be a top of mind partner, ensure that your process and results are readily available. Market yourself as a thought leader in the space by publishing reports and analysis that are relevant to your clients. Share your data, metrics, trends, and analysis frequently. This will also require you to share information about your own challenges as well as your successes. Which leads to the importance of owning your mistakes. Customers will be forgiving if you acknowledge your errors, do everything you can to fix them, and figure out new processes or tools to ensure that they will never happen again. Unlike a vendor, as a trusted partner, your customers will want you to succeed.
Transforming your status as a vendor to a partner can benefit your business by helping you grow and generate referrals. Partnerships are built over time. By understanding your customers’ businesses, helping them do their jobs better, and listening well, you can forge relationships of trust and collaboration. Failure to partner puts you in peril of becoming a toaster.
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Most experts agree that there is a provable connection between powerful brands and pricing power. This week, we look at how determining the actual value of your organization’s brand can be a first step to more strategically leveraging price.