A recent article in Bloomberg Businessweek focused on Carol Tome’,Home Depot’s C.F.O. As a contender to be the company’s next chief executive, Tome’ is focused on the company’s infrastructure to restore profitability and stock price (value). As Home Depot lost market share to Lowe’s in recent years, it shifted strategies from growing through building more stores to increasing profits at the existing stores. As this transformation took place, it became apparent that Home Depot had fallen behind in the use of technology. From stocking shelves to online ordering, Tome’ is driving the change to updated technology for increased efficiency and sales.
Take Away: Neglecting the technology element of your infrastructure may cause you to fall behind your competition, lose customers, and force your company to be in “catch up” mode. All of these will put substantial strain on the free cash flow of your business. Chapter 13 of “The Danger Zone” address‘s this through the acknowledgement of Moore’s Law. Gordon Moore, co-founder of Intel, predicted that the number of transistors on a chip would double every two years. This was in 1965. Fast Forward to present day, and the increase has slowed to doubling every 18 months. This creates the following B2B truism:
Computers 4.5 years from now will be three times faster than computers you purchase today, which means you must have an active computer replacement plan.
Why? Your competition is, and they will actively seek to serve your market using the newer technology.
Just ask Home Depot.