The Technology EffectFor the past 25 years, we have become combined the concept of disruptive innovation, the rapid technological change, and the constantly changing ascent and descent of organizations from the pinnacle of industry leadership into into a pre-occupation with assigning technological innovation the central role in determining a company’s success or failure. The result is that 41% of CEOs now think of themselves as “innovation pioneers,” a self-assessment that is now 52% higher than it was in 2013. Tellingly, another 37% see themselves as “fast followers” who are quick to adopt innovation new innovation. Technological innovation is no longer the differentiator it once was percieved to be.
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Excerpt from Transformative
The technology effect stems from our own personal interactions with technology and our positive association with successful technology companies. The largest five companies in the world by market capitalization are now tech companies, and we frequently use their products! Enhanced by a survivor bias that results in our tendency to forget company failures, we only become aware of successful organizations when they emerge as rapidly growing or dominant companies in a market (e.g. Uber, Airbnb, Facebook). Using this small data set of successful technology companies, we form positive biases towards them, forgetting about the thousands of companies that failed before them or ascribing “bad technology” as the reason for their failure.
The danger of the technology effect is that it produces an overly simplistic, one-dimensional view of how companies succeed and fail. It proscribes overinvestment in technological innovation and an under-investment in other factors that becomes limiting at best. Academic research on the technology effect shows that given a choice between investing in technology or non-technology options, our bias is towards investing in technology. Interestingly, research shows that the less familiar we are with the technology, the higher our positive bias. This means that we believe more in the ability of technology to lead to success when we understand it less. |
Explore this and other topics in the upcoming book Transformative.
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