7. Add social issues to a growing list of drivers of long-term value
Technology companies have traditionally played a leading role in environmental sustainability, which is reflected in solid reporting standards and zero carbon emission pledges. When COVID-19 struck, tech companies stepped up and showed their social engagement. However, the eruption of social and racial issues during 2020 was a reminder to many tech companies that they are increasingly expected to weigh in where previously they could have stayed silent. In the next years, particularly with the rise of AI, neural algorithms and facial recognition, it’s likely that companies will find themselves taking positions on an increasing number of issues. Having a long-term value framework to approaching these will be helpful in guiding companies as they look to build trust, credibility and engagement with customers, employees and other stakeholders.
8. Embrace your changing ecosystem
Technology adoption in every industry is increasing sharply. IDC expects 65% of global GDP to be digitalized by 2022. The development and deployment of modern industry applications, like remote patient monitoring in healthcare or advanced driving assistance systems in automotive, require industry inputs and technology stacks coming together. Tech companies will play a leading role in these new ecosystems, not just as enablers but can be at the vanguard of shaping and designing solutions. To do so, they must develop a common go-to-market approach with industry partners. Tech vendors need to actively manage and shape the adjacent industry ecosystem and encourage collaboration and co-innovation.
9. Boost R&D effectiveness
Innovation is the lifeblood of the technology sector, but technological advancement is becoming harder and more expensive. For example, in semiconductors, design costs rise exponentially with every next generation of technology. In software and solutions, innovation costs rise due to increased data density and complex algorithms. Companies need to make sure they spend their investments in research and development (R&D) effectively and efficiently, implementing enabling tools, leveraging open-source technologies and taking into account the attractiveness of different jurisdictions. They need a clear mechanism to invest in projects that generate returns.
10. Jump-start growth through M&A
While the tech sector has been a leader in growth, its revenue momentum has faded slightly over the last few years. At the same time, stock valuations have soared for the technology sector as a whole. This juxtaposition is placing even more emphasis on continuing to show growth. However, as growing organically is getting harder for many tech companies, M&A activity will become increasingly tempting as a lever for growth. Acquisitions will help jump-start revenue increases through new products, markets or solutions, while divesting of non-core business will help reshape portfolios out of declining or slower-growth businesses.