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Technology and the Strategy Ecosystem

By Anthony Taylor - August 13, 2015

Tech CEOs, founders, and management consultants in strategy (like us) have to stay abreast of what's going on in the tech landscape.

This isn't "digital strategy" in the marketing sense. This is the purest form of strategy: deciding where to make strategic investments in your business, taking into account current performance of core business lines, and learning what competitors are doing now (and what they plan on doing on the future).

Over the past two weeks, there were three major strategy decisions that came out of the biggest tech players: Facebook, Microsoft, and Google. These strategic decisions not only will affect their own profitability, but it will also affect the a larger business ecosystem, affecting organizations of all sizes and across a variety of sectors.  

What's interesting is that although these tech giants largely dictate consumer trends in the marketplace, their strategies are being affected by the changes and trends in consumer behaviour as well as the behaviour of other organizations.  

Facebook is adapting its revenue strategy, moving away from declining revenues coming from third parties (i.e money made from games - remember Farmville?) and moving towards direct advertising revenue. This is partly because users aren't playing these types of games on their desktop computers, and because app makers are no longer using the Facebook platform for gaming, instead opting to launch and market the games themselves. 

Microsoft's strategy is around business process improvement and on building a better platform for future growth. They realized that the mobile marketplace was not for them (after Apple kicked their asses) and have decided to stick to personal computing.

Windows 10 was released recently, and people seem to be enjoying it. They are going to continue building on their strengths and further develop their office 365 platform.

Who knows what other strategies they have in the works or what other plans they are working on, but their three priorities of: developing the cloud, personal computing, and business process improvement seem sound to both bring confidence to investors and to align the organization.

Finally and most notably, Google undergoes a massive re-organization to better allocate resources and to more efficiently invest in different business lines and innovation. Under Google, the company had its specific mission and vision tied to the web, advertising and so on. Now with this new company, Alphabet, it can more effectively invest in business lines like life sciences, AI, venture capital, and more. 

For more, read: Why Google became Alphabet on HBR

As you know, technology moves quickly, and having a nimble and clear strategy to take advantage of opportunities are keyAll three of these companies have adapted their strategies to make the most of their core strengths, and minimize waste.

And it's not only the major players paying attention to the marketplace. In Facebook's case, smaller companies have moved away from their platform to create greater revenue for themselves. Will VARs (value added resellers) and developers be more inclined to work with Microsoft as they develop more infrastructure and cloud services for smaller organizations?

As far as Google and their Alphabet soup, it allows them to invest in pretty much anything they want, which includes purchasing any of the companies listed below for pretty much any strategic purpose they want.

That's going to mean some potential windfalls for many scalable tech companies, and bad news for any of the non-acquired competition.

Like all business strategies, only time will tell.


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