Thinking differently

Digital transformation is no joke. To the extent I poo-poohed this buzzphrase before, it wasn’t because I didn’t believe in it, so much as that I distrust the odour of hype. The aroma has vanished”. So said one key ‘enterprise decision maker’, when asked in a recent Twilio survey whether the COVID pandemic had changed the mood music in the mind of top-table management. For a long-time companies have been gradually changing, gradually introducing digital technologies. Consultants would coo over ‘digital road maps’ but the presentations all too often ran into sclerotic minds, distrusting of anything new, anything that brought discomfort. Anything, indeed, that was suggested by someone that looked too young to grow a beard. For many years it was too easy to put off, to allocate budgets elsewhere, or lean on legacy software systems. Easy too, to bend to the will of  grizzled executives and stick with the status quo. No more. Now, the technology trade has long been hot: anything cloud, anything SAAS, e-commerce or web enabled, got chased to a multiple that had value managers, agog, slack jawed in disbelief. Chasing high multiple stocks requires an imagination and glass half-full demeanour, and such stocks may gun higher, but there remains too, huge scope to trade the zeitgeist through identifying companies who are getting on the wagon. Companies where the fast track of new tech stacks is forever changing the modus operandi, to the ultimate benefit of long-term margins and profitability. Companies like Frontdoor, the home warranties provider, which is investing in an Uber-like platform to connect tooled-up contractors and home owners. Or IAA, the leading marketplace for damaged cars, which has moved its auctions online thereby optimising buyer convenience, enhance retention and reducing friction. Such moves can transform businesses, and transform multiples. With the NASDAQ setting off fireworks investors keen to get involved, might do well to look to where there is little or no technology today; but there will be tomorrow.