Covid-19 has shined a spotlight on the need for organizations to embrace new technology – not only to maintain or improve day-to-day operations but to ensure a competitive advantage in the market. While the pandemic pushed companies to think differently about technology to support both employees and customers, we’ve been in the midst of a digital revolution for the last few decades. The need to keep up with the digital revolution is directly tied to the increased speed and complexity of our world today. Those organizations that embrace new technology – and avoid the common adoption pitfalls – will inevitably set themselves up to better meet the need of employees, customers, and shareholders.
Common Pitfalls in New Technology Adoption
- Making Reactive Moves
- Incomplete or Unclear Business Objectives
- Focusing Purely on the Technology
We all experience the evolution of digital tools every day. Think about how often your phone or computer runs a software update, compared to five or ten years ago. Or how many video calls you have each day – something that may have been completely unfamiliar to you before the pandemic hit. Or how frustrated you get when you can’t order a specific item with a quick scroll through Amazon. If you are convinced that now is the time to rethink your business’s digital offerings and tools, you are not alone. Here are three pitfalls to avoid as you embark on your transformation effort to integrate new technology into your business.
PITFALL 1: MAKING REACTIVE MOVES
Every single industry, and business, is facing pressure to keep up with a constantly evolving digital world, particularly during a time when so many products and services can only be delivered through the use of digital tools. It’s far too easy to find yourself behind your competition. But, merely making reactive moves – in response to competitors, the market, or new technologies – will not give your organization a competitive advantage. With the speed and complexity of today’s world, by the time you’ve “caught up” the market will most likely have already moved on. This is exacerbated when decisions about how to capitalize on new (or new to you) technology are not integrated with the broader business strategy. Companies that are able to make proactive decisions, grounded in their broader business strategy, are able to leapfrog competitors and set the standard for what great looks like.
PITFALL 2: INCOMPLETE OR UNCLEAR BUSINESS OBJECTIVES
Organizations that are able to articulate what business opportunities will be unlocked through new technology adoption are far more likely to gain a competitive advantage. Too often, companies embark on a technology transformation journey without clear business objectives beyond the integration or deployment of a new tool. Without clarity about how digital tools are set to better equip employees to do their jobs or enable customer insights or drive new lines of business, you’re likely to end up with just another “tool” (that likely costs quite a lot) – without the requisite adoption to make it truly useful or worthwhile.
PITFALL 3: FOCUSING PURELY ON THE TECHNOLOGY
Technology alone is rarely enough. If your employees, customers, and vendors aren’t leveraging your digital assets to optimize ways of working, then it doesn’t matter how “great” these assets are or how well they’re designed. Organizations that are seeking to gain a true competitive advantage through technology need to focus on behaviours, mindsets, and engagement in addition to tools, technology, and training. It’s critical to understand how each of your stakeholder groups need to interact with the technology to get the most out of it, and to create an environment that cultivates those behaviours.
A CASE EXAMPLE: SOULCYCLE + PELOTON
For years, SoulCycle was known as one of the preeminent fitness brands, creating a devoted following of loyal customers. Known for their high energy spin classes, riders were willing to pay top prices at studios across the United States. And while their business was built on the in-person, studio experience, they were positioned (theoretically) to capitalize on the growing at-home fitness market when they announced their at-home bike in August of 2019 – well in advance of Covid-19. Unfortunately, SoulCycle fell into all of the pitfalls outlined above, losing any competitive advantage they may have gained over rival Peloton.
When SoulCycle – and its parent company, Equinox – embarked on developing the at-home bike, it was clearly in reaction to the growing popularity of Peloton. (And, perhaps too, trying to combat recent negative publicity surrounding one of their Board members). Rather than integrating the at-home bike into the broader business strategy and goals, Equinox spun off all their digital content to a separate business unit – Variis. Additionally, tensions arose internally, jeopardizing marketing strategy, customer outreach, and speed-to-market. By the time Covid-19 hit, manufacturing and distribution were significantly behind schedule, delaying the official launch until May 2020 – two months into a lockdown that shuttered their 99 brick and mortar studios. While SoulCycle enthusiasts tout the similarity of the at-home bike to the in-studio experience, Peloton has been able to develop significantly more features to meet growing customer demands, helping them dominate the market as Covid-19 rages on.
Compared to SoulCycle, Peloton has taken a drastically different approach, deftly avoiding the pitfalls outlined above. From the outset, Peloton recognized the value of being a digitally-focused company in today’s evermore technology-enabled world and built their business model around this notion – understanding they would need to constantly pursue new technology adoption amid trends and customer demands. This certainly gave them a leg up when quarantine-adaptable fitness solutions became top of mind for many. With that said, they’ve also done a variety of things that have allowed them to maintain this competitive advantage.
As outlined in their September 2020 Investor Relations and Analyst Sessions deck, Peloton has identified their main competitors as other disruptors in the digital space, such as Amazon, Netflix and Spotify, rather than other fitness brands. Therefore, their approach to technology has been intentionally intertwined with their broader business strategy and decision-making. Putting technology, alongside customer adoption and satisfaction, at the heart of their approach, Peloton has been able to create a virtual community that easily rivals the in-person community of SoulCycle.
Through the Peloton app, riders can send each other high-fives (nearly 250 million high-fives were sent in FY20), add hashtags to their profiles (such as #BlackLivesMatter and #PelotonMoms), and “favourite” music played during class, so it saves directly to their personal Spotify accounts. They’ve created themed classes, such as Artists Series (more than 5 million classes taken) and Afro Beats rides, all based on rider feedback. Beyond their own devices, Peloton has leveraged the power of social media to build their own brand and the personal brands of their instructors. Peloton has over 1 million Instagram followers, while some of their instructors have more than 600 thousand followers.
In addition to capitalizing on the technology itself, Peloton has been intentionally responsive to the changing demands of their customer base – and the broader market. When Covid-19 became a household concern, they provided free access to their digital app for 90-days, resulting in a 400% increase in app downloads. With a 3-year customer retention rate over 80%, their short-term investment is bound to pay dividends in the long-term. What’s more, they continue to adapt their offerings outside of cycling. In 2017, 94% of classes taken were spin classes. In 2020, only 64% of classes taken were spin classes. For digital-only members (i.e. those that don’t own a Peloton bike), only 36% were spin classes. To meet this shift, Peloton continues to invest in other disciplines, such as yoga, meditation, strength, and family workouts.
All-in-all, Peloton sees technology as a critical enabler to meet their goal of helping their customers thrive. They have integrated their overall business strategy and put end-users at the centre – not the technology itself. They have been able to maintain a competitive advantage throughout the pandemic, resulting in a 66% increase in revenues as of May 2020. Of course, the question remains: can they hold onto that market share, particularly when Covid-19 is under control? To so do would mean capitalizing on the foundation they’ve built, continuing to innovate around their use of technology to compete in an ever-more (but no longer solely) digital world.
Even for organizations that aren’t built upon a specific technology, employees and customers are demanding digital solutions. Utility customers want easy access, not only to their bills, but information about work outages, their energy consumption, ways to conserve/save, etc. Patients want telemedicine options, without losing the personal element of in-person interactions with a nurse or doctor. Many consumers are asking to adopt technology that they experience in one part of their lives and wish would translate to another. This catalyst can create a powerful, aligning “why” for a business that may be in what feels like the messy middle of a technology implementation roll-out. When feeling burdened by unanticipated barriers or overwhelmed with the uptick of work involved in migration logistics, intentionally stay anchored in what it’s all for – be it, increasing ease of use for customers, or being able to quickly capture market insights to drive decisions for managers, etc. Whatever the strategic case may be, pointing back to it repeatedly helps to maintain momentum, rather than falling into the very natural, human side of any change that tends to slow down (or stop) when it encounters an obstacle.
Companies that want to win today and into the future need to think about new technology adoption as a critical driver of the broader business strategy. They must tie any subsequent digital transformation efforts that fall out of that broader strategy to clear business objectives. Paying close attention to the selection of the technology itself is table stakes. Paying equal attention to mindsets and behaviours of users and stakeholders meant to use that technology to enhance their lives and benefit the business is where the true competitive advantage lies.