When technology changes faster than the business model

A business can install new technology and carry on behaving much as it did before.

Imagine the software works, people complete the training and a launch presentation explains the benefits. Six months later, the commercial results remain difficult to identify.

Sometimes the technology was a poor choice. Sometimes the organisation adopted the tool while leaving the surrounding business model untouched.

Pricing, sales incentives, service obligations and customer expectations deserve attention from the beginning. I would want the investment discussion to include those decisions alongside the technical specification.

Identify which commercial assumptions have changed

Start with the existing model. How does the business acquire customers, charge them, deliver value and retain them?

Then ask which assumptions the new technology changes.

A service that can be delivered continuously may create an opportunity for recurring revenue. It also creates continuing obligations. The business needs to decide what customers can expect throughout that relationship.

Microsoft’s 2025 annual report offers a historical illustration through its cloud and Microsoft 365 subscription businesses. I would use that example to examine the relationship between delivery and revenue, while recognising that another organisation’s economics may be very different.

Changing a billing interval is straightforward compared with building a service people want to keep buying.

Align incentives with the promised relationship

A subscription strategy deserves a close look at what people are rewarded for doing.

A business might reward salespeople primarily for the initial contract while promising customers continuing value. It might allocate nearly all its resources to acquisition, with little responsibility assigned to helping customers use the service.

Review who owns adoption, service quality, renewal and expansion. Make the handovers explicit. Consider whether someone is rewarded for signing a customer whose needs the service cannot economically meet.

Here is a hypothetical example. A consultancy introduces a subscription research service. Its sales team continues to sell heavily customised promises to secure contracts. Delivery costs rise and customers receive inconsistent experiences. The business narrows the standard offer, prices additional work separately and assigns responsibility for helping customers use the service.

The technology was available throughout. The commercial arrangement needed work.

Change at a pace the organisation can support

A new model can be attractive on paper and difficult to finance during the transition.

Consider the possibility that recurring revenue builds gradually while existing revenue still funds the organisation. Teams may need to support both arrangements for a period. Those assumptions belong in the transition plan.

Choose a bounded customer group or offer where the assumptions can be tested. Follow the economics through delivery and retention, rather than judging success solely by early demand.

Can the business serve another customer without recreating the service? Are customers using what they bought? Can staff explain the offer consistently?

Someone has to decide what the business will standardise, which promises it will stop making and where it will invest. Technology creates possibilities. Commercial progress depends on the choices that turn those possibilities into a viable way of operating.

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