This letter introduces Bain’s global Technology Report 2020. Explore the contents of the report here or download the PDF to read the full report.

Dear Colleague:

Whenever we gather Bain & Company’s Technology practice team, we take every opportunity to have clients join us as guests, speakers and advisers. No surprise, keeping our customers’ voices as a steady presence in our partner meetings is highly motivating. Over time, however, those clients have remarked that they also benefit. They’ve encouraged us to find a way to package some of the experience of a Bain Technology practice meeting. In particular, they’ve highlighted several unique features they cherished in the discussions, content and relationships:

• A sharp focus on shareholder value
• A CEO’s or general manager’s view of strategy—demanding clear articulation of competition, advantage and executable simplicity to get results
• An unrelenting focus on operational improvement as a source of advantage
• A global mindset

So, after a discussion at our partner meeting in January, we committed to create the first in a series of Bain global Technology Reports. Our hope is to fill an unmet appetite among our client leadership and further enrich the partnerships we have with clients.

Then, in February, the world changed. As the pandemic disrupted our clients, we directed all of our attention outward to client-facing support. We were prepared to deprioritize this report. However, amid the uncertainty, our clients were turning to us more than ever for signposts, discussion and decision making. In the end, we kept the report and added a chapter on Covid-19 at the beginning. We’re struck by our clients’ resilience. Yes, the crisis laid bare overlooked and underestimated weaknesses among technology companies. But it also accelerated existing plans and created new, unexpected growth as people around the world scrambled to replicate their lives in virtual format with the help of technology.

The report is conceived to respond to our clients’ interest. The first section, value evolution, takes an analytic view of how equity values and profit pools develop. While equity valuations are often short term, their long-term evolution holds important reminders of the rate of flux and direction of technology markets.

The second section offers a general manager’s view of major competitive battlegrounds in the technology sector. We think of the general manager’s view of strategy as that of a P&L owner: consumed with finding the match between market opportunities and the competencies of their organization. This is inherently forward-looking, focused on growth and earnings, and with a sharp view of the available profit pool, competitive advantage and the simplicity required for an organization to take action. Our clients find this approach more valuable than unverifiable market forecasts, complex frameworks and broad declarations about equity returns that don’t always take into account the capacity to win or mobilizing an organization.

The third and last section contains examples of leadership innovation that creates advantage through the operations of the enterprise itself. Most great organizations ultimately outcompete their foes through disciplined execution, leading to speed and efficiency. Execution includes talent, culture, process and infrastructure. Here again, we endeavor to take the general manager’s view, rooted in the specific strategy, as opposed to boilerplate methodologies and IT systems implementations.

I have no doubt that 2021 will be another busy and exciting year for the technology industry. CEOs and general managers will grapple with the Covid-19 disruption while trying to keep their organizations focused on efficiency, growth, innovation and ever-shifting product boundaries. We at Bain look forward to continuing the discussion with our friends across the industry’s ecosystem.