‘Nobody ever got fired for buying IBM’ has been the mantra for de-risking technology investment since the 1970s. There’s a reason the phrase has endured in IT circles for more than 50 years. It epitomises the safety blanket that comes with backing a market leader, where choosing the biggest name often feels like the safest route.
But the safest decision is not always necessarily the smartest one, says Danny Rappaport, Director of Consulting at PMC.
Stopping risk avoidance from defining innovation strategy
Choosing the market leader is easy to defend. It appeases the board, builds confidence across the business and demonstrates due diligence. On paper, it’s the sensible choice, but in reality, as transformation programmes become larger, more complex and more dependent on interoperability, the very decisions designed to reduce risk can often end up creating more of it – a paradox we explore in our latest ‘When Safe Decisions Create Risk’ whitepaper.
What was once scoped around ROI delivery becomes a question of avoidance, with decision-makers who should be embodying ‘fail fast, learn faster’ innovation strategies erring on the side of caution.
Instead of evaluating technology investment through the lens of value creation, ROI and customer experience, the decision-making prism becomes ‘how do we avoid getting this wrong?’ – a short-termist mindset that will struggle to deliver the long-term performance needed from transformation.
Bigger isn’t always better
Research we conducted with Retail Economics in our Race To Unified Commerce report found that the retailers with the most mature transformation journeys were not necessarily those running the largest programmes.
Brilliant basics account for a lot, with those accelerating their transformation programmes more likely to have focused on integrating core systems, simplifying technology estates and improving operational visibility. Proof that progress doesn’t necessarily come from doing more, but from removing complexity.
Retailers rarely struggle because they lack technology – more often than not, their challenges are tangled up in years of incremental investment which has left them with fragmented systems, duplicated processes and disconnected data. And that’s where adding more tech on top of broken tech or investing in quick fixes risks throwing good money after bad.
Perceived safety comes at a price
This is where the false economies of transformation start to stack up. Choosing the biggest programme or the most established player may feel safer than modernising existing capabilities. But perceived safety comes at a price.
Each additional layer can add cost, complexity and dependency, extending timescales and making successful execution harder. What starts as an attempt to de-risk transformation can ultimately leave retailers spending more to achieve less, especially when investment decisions become socially validated before they are strategically challenged.
The result leaves organisations with decisions that are institutionally defensible, but not necessarily commercially optimal.
The confidence to challenge consensus
To avoid the false economies of transformation, retailers need to resist jumping straight to the technology answer. Rather than defaulting to the position where the predetermined outcome is a new platform, a major programme change or another layer added to the tech stack, retailers must be clear on the business problem they are trying to solve and what success looks like. That means interrogating the economics of the decision, not just the technology itself.
Choosing the right transformation partner is critical to creating the space to challenge the consensus and ask the questions needed to drive value. Retailers need partners with the experience to understand the complexity of their existing estates, but also the independence to challenge assumptions and recommend the right-sized solution – whether that means replacing, rebuilding, simplifying or preserving what already works.
Equally, the right partner should not arrive with the answer already decided. Sometimes the best commercial outcome will be a major transformation programme. In other cases, it may mean reducing scope, modernising existing capabilities or delaying a technology decision until there is enough evidence to make the right call. What matters is that the solution follows the business problem, rather than the business being forced to fit a predetermined solution.
And that requires the confidence to challenge the assumption that the biggest or most established option is automatically the safest. It means creating room for scrutiny before committing capital and being prepared to back the decision that delivers the strongest long-term outcome, even when it is not the most conventional.
A commitment to problem-solving, rigorous value creation and a willingness to challenge whether the safest-looking decision is really the smartest investment will be the key factors defining long-term success.
