September 16, 2014, A new study from Harvard Business Review Analytic Services “The Digital Dividend – First Mover Advantage” – demonstrates that early adoption of new technologies leads to better business outcomes.
The study’s results show that IT “Pioneers” – companies the study identified as believing strongly in the benefits of adopting new technologies and that pursue “first-mover advantage” — are more likely to lead in both revenue growth and market position than their peers. Twenty percent of these companies experienced more than 30 percent revenue growth. This is more than twice the growth experienced by companies identified as technology “Followers” (those that watch and invest once benefits are proven) and three times the growth experienced by “Cautious” technology adopters (those that wait until a technology is well-established).
Sponsored by Verizon Enterprise Solutions, the study surveyed 672 business and technology leaders from around the world on the impact of what HBR Analytic Services calls the Big Five technologies – mobile, social, cloud computing, advanced analytics and machine to machine communications. The aim of the study was to understand how these tools are transforming organizations and helping them innovate to derive shareholder value.
(Note: The full report, “The Digital Dividend: First-Mover Advantage,” http://www.verizonenterprise.com/resources/insights/hbr/ and supporting materials, are now available for download.)
“Organizations need to be constantly innovating in order to stay ahead of the curve, and this study shows that technology is a key enabler of business growth,” said Tony Recine, chief marketing officer of Verizon Enterprise Solutions. “The HBR-Analytic Services research demonstrates that the Big 5 technologies are now viewed as powering growth, creating new business models and ultimately changing how companies can interact with their customers. Most importantly, the value of these new technologies lies not in what they can achieve on their own, but in their combined power as a holistic solution.”
The ‘First-Mover’ Advantage
The study defined three attitudes towards technology adoption: IT Pioneers (34 percent of those surveyed); Followers (35 percent) and Cautious (30 percent). Fifty seven percent of all respondents viewed IT as an investment that drives innovation and growth. Fifty-four percent of IT Pioneers identified technology as leading to a significant change to their business models, with 52 percent seeing it as leading to a significant change in the products and services they sell. By contrast, only 29 percent of the companies in the Followers category and 10 percent of those in the Cautious category saw technology leading to changes in business models.
However, the survey found significant adoption of various forms of technology among all of the survey’s respondents. For example, 73 percent use cloud computing, 61 percent have extensively adopted mobility, 83 percent use social media and collaboration tools for business and 20 percent use M2M extensively.
The survey also identified obstacles to adopting new technologies, with 34 percent of the respondents saying legacy technologies get in the way of innovation, and 44 percent saying they need more cultural flexibility to adapt and take advantage of new technologies to drive new ways of doing business.
The research shows that interdepartmental collaboration is critical and that segregating IT from business operations or operating in functional silos can be a significant disadvantage to a business. On the positive side, an increasing number of people state that they are now involved in technology decisions – 25 percent the survey’s respondents saw themselves as “very involved,” while 48 percent thought they were “somewhat involved.”. Of these, 42 percent were defined as executive leaders; 30 percent as senior managers and 14 percent as other managers. Less than 10 percent of survey respondents worked in IT functions, demonstrating that IT is now becoming firmly integrated in the overall business ecosystem.
“New technologies can provide a genuine competitive edge, but the organization has to make the commitment to use technology to build new processes and business models,” commented Angelia Herrin, research and special projects editor of Harvard Business Review. “Companies need to become more flexible in terms of technology implementation and make innovation part of their culture in order to realize the real business value.”
Geographical and Vertical Variations
The study also showed variations of new technology adoption across verticals and geographies. For example, despite being heavy technology users, financial service organizations are more likely to be Followers and risk-averse due to a combination of strict industry regulations and sensitivity toward the management of financial data.
But varied industries still saw significant benefit from new technology adoption. For example:
- Energy & Utilities: Forty-three percent of industry respondents said they believed in the benefits of technology and aim to obtain first-mover advantage in adopting it. . On the effects new technologies have on business, 67 percent of the respondents saw improved customer responsiveness and 72 percent reported a positive improvement on internal collaboration.*
- Financial services: Sixty-six percent of the respondents said changing customer expectations are the primary driver behind the technology transformation in this sector, and 78 percent reported experiencing improved customer responsive as a result of new technologies.
- Manufacturing: This sector is restrained in adopting new technologies compared with other verticals, as a result of industry consolidation. Thirty-nine percent of the companies call themselves cautious, compared with 26 percent that call themselves first movers. Achieving customer expectations is the main driver, with 74 percent identifying improved responsiveness as a result of adopting new technologies.
- Healthcare organizations: While healthcare providers tend to delay adoption of new technologies until proven, 90 percent found that technology had changed their products and services; and 72percent used cloud computing.*
- Public sector: Sixty-four percent of respondents saw IT as an investment driving innovation, although just 18 percent said their organizations looked to get first-mover advantage, compared with the survey average of 34 percent. Asked what would be needed to drive greater adoption, the respondents identified the need for better cultural flexibility (51 percent) and the ability to envision a new way of doing things (46 percent). Sixty-eight percent said the adoption of new technologies would result in increased responsiveness to customers.
- Business services/consultancies: Forty-five percent believe strongly in the benefits of new technology in seeking first-mover advantage (compared with the survey average of 34 percent). New technologies enabled 71 percent of the respondents to change their core business strategy over the past three years, and 49 percent saw advanced analytics as boosting product development.
- Technology firms: Sixty-two percent believe in the first- mover advantage, with 30 percent of the respondents stating that technology had significantly increased their competitive differentiation, compared with the survey average of 15 percent.
Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers. Verizon Wireless operates America’s most reliable wireless network, with 104.6 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries. A Dow 30 company with more than $120 billion in 2013 revenues, Verizon employs a diverse workforce of 177,800. For more information, visit www.verizon.com.