A company can look efficient until you look at the technology underneath it.

Consider Southwest Airlines. In December 2022, a severe winter storm disrupted its network, but the storm was only the trigger. As cancellations mounted, a real constraint started surfacing inside the company. The volume of changes overwhelmed its crew operations and the technology meant to support them. Crew assignments could not be kept current, and the airline lost its ability to recover the schedule. More than two million passengers were affected, and thousands of flights were cancelled.

Southwest responded by accelerating work on its crew-recovery and scheduling systems, planning roughly $1.3 billion in technology investment, upgrades, and maintenance for 2023. The disruption also drew a $140 million fine from the U.S. Department of Transportation, the largest it had ever issued against an airline.

The uncomfortable lesson for leaders is that the weakness didn't show up in the numbers the company tracked, even though the risk was understood in principle. It became visible only when the system met a level of disruption it could not absorb. Companies can look healthy and hit all of their targets as a technology problem is building in the background. These problems can be overlooked because they haven't affected the results, but one day they can surface and cause real damage.

This example is to reframe the question management teams and investors may want to consider asking. Questions like: "What is that efficiency resting on, and how much pressure can the underlying systems take before performance starts to break?"

Southwest found its limit by hitting it. The alternative is to go looking on purpose.

When Movile invested in Zoop, Avalia assessed whether Zoop's technology could support the scale the investment assumed. Within the Movile group, iFood was already processing millions of orders every month, so it was not enough to know that the platform worked at its current size. The technology had to be able to support what the business wanted to do next.

That is part of the value of technology due diligence. You are not only looking for a problem that exists today but one that could happen tomorrow. And this does not only apply when buying a company.

A software or technology assessment can be done at any point to understand where the limits are before growth, a major transformation or an unexpected disruption exposes them for you.

The better time to find a hidden technology risk is before the business depends on it.