- The technology industry has grown by bending rules, acting fast and pushing to the top.
- As technology itself becomes more sophisticated, so does its risks and the industry must change to address them.
- A well-intentioned, trustworthy company will address risk and gain the loyalty of appreciative customers.
Can tech companies keep up? According to PwC’s Technology Trends 2018-19 report by Strategy&, “the risks and disruptive potential of technology may, for the first time in its history, be outrunning the industry’s ability to manage them”.
Customers, and thus the media, are clamouring for accountability when it comes to the unintended consequences of tech products. Government, regulators and investors aren’t far behind. The industry faces a day of reckoning when it comes to risk maturity, but it doesn’t have much time to address concerns.
Many companies’ risk management practices are not up to facing these challenges in a short-term business sense, but also inadequate to do the job when it comes to longer-term societal risks. There is a need, therefore, for a strategic response to manage technological disruption.
While strategies will vary between companies, the report suggests six key elements that should be part of any risk framework:
1. Address problems before they become visible to others.
Instead of dealing with the fallout of a problem after the public has discovered it, companies must be proactive in dealing with consequences of their technology as they build it. This means building in high levels of security and transparency to build trust, and embedding integrity into their business models and practice to ensure ethics – in products and the culture that creates those products.
2. Reflect and improve with agility.
Responsibility doesn’t become optional even in a fast-moving business environment. Famous for developing product at speed, tech companies also need to spread this agile culture to the whole business, and rapidly respond to internal issues, mishaps and unintended consequences. Paying attention – consciously – to the well-being of employees, customers and other stakeholders will be key.
3. Rethink incentives to promote responsibility.
While the technology industry is one built on innovative leaps of faith, bent rules and large amounts of money, its foundations are not necessarily solid because of it. The rush to market means that often products are released too early without proper testing. And, as the headlines have shown us, such impatience to break through as the next big thing has led to many companies developing hypercompetitive, aggressive and often toxic cultures. Staff incentives and consequences – such as granting of forfeiting company stock – should reward the responsible management of these risks to counter the negative of the system.
4. Work with regulators, not against them.
Tech companies often feel superior to regulators, and regulators often can’t keep up with the speed of technological change. Neither of these statements make for good customer safety. Instead of flouted constraints or overly reactive and restrictive regulations, technology companies and regulators need to work together to reduce potential negative consequences. Understanding on both sides is required – from the start.
5. Build common standards openly and collaboratively.
As technology gets more complex and its potential risks more dangerous (think autonomous vehicles), companies pursuing their goals need to work together for the greater good. This will require a change in proprietary thinking to some extent, as companies negotiate the line between intellectual property and the need for common standards. The price is too high to pay not to do so.
6. Seek competitive advantage through integrity.
The world technology companies are playing in has changed. The risks are greater and the backlash for getting risk wrong, a higher price than can often be paid. But this is not a doom and gloom story. The same risks that must be addressed as potential negatives can lead to positives in their implementation. This demonstration of competency and good intentions will prove an effective opportunity for differentiation.
The change facing technology companies is one, ironically, brought about by its own success. While the transformation may be vast, encompassing many cultural issues that will not be easily cast aside, it will be a positive one in the long run. Not only will these companies pose less of a threat to society as a whole – an undeniably attractive end goal in and of itself – they will benefit from the intention and transparency that such efforts bring when it comes to the approval and patronage of their customers, stakeholders and media as well.
For a detailed understanding of how these six elements must be addressed, visit the full Strategy& report.