This article was updated on July 5, 2018.
Finance leaders must stay ahead of technology innovation in order to help their organizations develop and sustain a competitive advantage. According to Harvard Business Review's John Chambers, former executive chairman and former CEO of Cisco Systems, organizations are currently navigating several technology transitions, including cloud computing, mobility and the internet of things, which "force us and our customers to think about data, security, and business models differently."
Finance leaders who want to understand how innovations can help their organizations achieve and sustain a competitive advantage must make a conscious effort to learn about the trends that impact industries. Inspired by advice from Chambers, here are things finance leaders should do regularly to stay ahead of technology innovation.
For starters, finance leaders should read the technology press widely and pay attention to the people, companies, investors and media outlets that are innovating and covering technology. That includes the MIT Technology Review, TechCrunch, VentureBeat, Fast Company — to name a few.
Beyond following the technology press, one of the best ways to learn what's coming in technology innovation is to follow what Silicon Valley venture capitalists are funding. One way to do this is to listen regularly to the a16z Podcast, in which a finance leader will hear directly from Andreessen Horowitz partners, portfolio companies and other technology innovators about where technology is heading.
Challenge Technology Vendors
In addition to following technology news, finance leaders should spend time challenging current technology vendors on better ways to use the products and services their companies have purchased. Organizations may be underutilizing technology already purchased or unaware of what is possible with other products. Moreover, finance leaders should learn from vendors about innovations they have in the road map and, more importantly, learn about what other customers are doing with the technology to the extent not confidential. Talking to vendor customers outside of one's industry to learn how they use a particular technology can produce many new ideas and expand one's perspective about what is possible.
Listen to Customers
Another way to stay ahead of technology innovations is to listen to customers. Chambers tells a story about executives at Ford who told Chambers they were considering switching to a new networking technology called Fast Ethernet. In a subsequent meeting with Boeing managers, Chambers learned they, too, were considering it. Cisco did not have products and services in Fast Ethernet so it acquired a leading company in that new space. Innovative customers are a great place to learn about innovative technologies.
It's not enough to understand the technology landscape. At some point, action is needed to gain deep learning and achieve results. The problem is that trying new technology innovations can be expensive. By taking an experimental approach, finance leaders can fund small projects, review the data and make smarter decisions about what innovations to pursue.
This approach was described in the a16z Podcast episode, The Next Wave of Internet Tools, in which Optimizely co-founder Dan Sirker describes advice he received about how to pitch a new product idea to Google co-founders Sergey Brin and Larry Page. The advice was to pitch an experiment, rather than a new product. A new product pitch assumes that a solution to a problem has been determined and that a sizable investment is needed. An experiment is a lower-risk approach that assumes, "Let's try this, look at the data and use the data to make a decision."
Finance leaders could start approving budgets for experiments rather than full-blown programs, and place investments where the data leads.
Be Deliberately and Continuously Curious
Finance leaders who want to stay ahead of technology innovations in order to help their organization achieve and sustain competitive advantage must review the technology landscape continuously, think about how technology innovation trends may impact their organization and experiment with new technologies to gain further understanding.