The necessity of tech intensity in today’s digital world

This week, we announced a partnership with Walgreens Boots Alliance to put people at the center of their health and wellness. The collaboration combines the power of Azure cloud, AI technology and Microsoft 365 with Walgreens Boots Alliance’s deep industry expertise. As part of our collaboration, Walgreens Boots Alliance will introduce new healthcare solutions, built on our platforms and tools.

The aim is to address one of our most pressing challenges – improving healthcare outcomes, while lowering costs – and it’s an emblematic example of what I refer to as tech intensity, the potential for companies and countries to jump-start their growth by not just adopting technology, but by building their own technology too.

In a world where every company is becoming a digital company, we see examples of organizations in every industry embracing tech intensity to thrive and maximize their impact, and I’ve shared many of their stories here on LinkedIn over the past year. In agriculture, Bühler, which processes nearly two-thirds of the world’s grain in its machines, has built its own solution to identify deadly toxins in grain – differentiating its equipment and keeping the world’s food supply safe at the same time. In food retail, Kroger is using digital technology to redefine the customer experience at its stores and provide its employees with greater insight. In automotive, Volkswagen is harnessing technology to deliver new, differentiated connected car experiences. In transportation, Grab is using AI to improve passenger and driver safety. And, in financial services, Blackrock is applying digital technology to reimagine retirement, aiming to help millions of Americans with their retirement planning needs, from saving to spending.

There are two aspects to tech intensity: First, every organization will need to be a fast adopter of best-in- class technology, and equally important, they will need to build their own unique digital capabilities, which starts with workers who are deeply knowledgeable about the latest technology. I think of tech intensity as being an equation – (tech adoption) ^ tech capabilities = tech intensity – and as a company Microsoft is focused on providing the inputs to help our customers solve it.

To speed tech adoption, organizations need to be able to access the latest platforms, tools and training, so that they don’t have to re-create technology that already has been commoditized. It’s the first step to building tech intensity, but it’s not sufficient.

To exponentially increase their impact by building their own tech capabilities, companies need to invest in their human capital, so that they have a workplace culture that encourages capability-building and collaboration to spawn new, breakthrough concepts. For example, an organization may have a conceptual vision, but they also need to have the capabilities to bring it to life, as well as employees with the engineering and design skills required to build the concept.

Foundational to both adopting and building technology is trust, both trust in technology and trust that partners’ business models are aligned to their success. It may sound trite, but companies will never be able to use technology to build competitive advantage if their technology partners compete with them.

Researchers have shown that tech intensity is a driver of organizational success. James Bessen at Boston University has studied extensively what has made top companies leapfrog their competitors and has concluded that building proprietary technology is a determining factor, contributing to significantly higher productivity.

The concept of tech intensity also applies more broadly to the fate of entire countries, with significant implications on policymaking.

Over the past 200 years, a vast income gap has emerged between the richest and poorest nations. Economists, especially Diego Comin at Dartmouth College, have shown that it can be partly explained by a country’s “intensity of use” in putting new technologies to work. To be clear, Professor Comin defines “intensity of use” as how intensely a technology penetrates a population after it arrives in a country, but the definition is closely connected to our own definition of organizational “tech intensity.” Over time, countries with higher tech penetration rates, or “intensity of use,” are much better positioned to build their own technology. That enables governments to provide better services to citizens, large businesses in those countries to be more competitive, and small businesses and entrepreneurs to be more productive.

The equation explains how countries can foster this. To encourage tech adoption, countries need to prioritize table stakes, like broad access to connectivity. After all, without connectivity, adoption of the latest state-of-the-art technology is moot. Today, connectivity remains variable across nations, and at current rates of adoption, universal internet access in low-income nations won’t be achieved until 2042.

To hone their tech capabilities, countries will need a workforce trained to use technology productively. The jobs of today will not be the jobs of tomorrow, and already we have seen demand for software engineering roles expand rapidly beyond just the tech sector. Job openings for developers in non-tech industries are growing faster than in the tech industry itself, according to LinkedIn data. Countries must ensure their populations and future generations have the digital skills that will increasingly be needed to thrive. They must also work in concert with industry to ensure the technology that is built is always trusted. That means action by both governments and the tech sector to guard against the unintended consequences of advances in technology.

And, of course, countries can lead by example in building their own tech capabilities that enable them to be more efficient and provide better service to their citizens. Examples abound. In Australia’s Northern Territory, the government is building its own technology to ensure fisheries resources are sustainably managed for future generations. The U.S. Department of Veterans Affairs has launched an online tool for veterans to make more informed decisions about their health care, enabling them to compare facilities by factors like wait times and patient satisfaction. And the Inter-American Development Bank has built an online platform already adopted by Colombia, Costa Rica, Paraguay, and Peru that allows citizens to track government spending, bringing new levels of transparency to the public sector.

The stakes for countries and companies could not be higher. In this digital era, tech intensity is vital to economic growth, and because every sector is affected, it is an opportunity to promote greater economic equality both within a country and globally. The broad surplus it creates will enable both the private and public sectors to take action in addressing society’s most pressing challenges. At Microsoft, for example, we are investing in AI for Good initiatives that put the latest advances in technology into the hands of change-makers so they can build their own digital capabilities and apply them to maximize impact. AI for Accessibility, for instance, provides developers with AI tools to accelerate development of solutions that help the 1 billion-plus people with disabilities, while AI for Earth does the same for those working to solve global climate issues, and AI for Humanitarian Action supports disaster recovery and protects displaced people around the world.

Tech intensity is what underlies our mission at Microsoft to empower every person and every organization on the planet to achieve more. We are committed to helping our customers unlock the power of technology across everything they do, and over the coming months I look forward to sharing many examples of how organizations are embracing and fostering tech intensity to benefit society and thrive in a digital world.