This is from 2012 | 3 minute read
All companies are going to become software companies.
It's a provocative statement, one that I've heard before a number of times. Like other provocations, it's intended to... provoke, to force a reaction and get someone's blood pumping. It references the implicit low cost of producing software-based products (as compared to the initial investments necessary in tooling, manufacturing, shipping, and production necessary to make a physical item), the imagined ease of updating a product after it has been sold, the ability for products to talk to one another seamlessly, and a way to tap into and leverage network effects easily.
I heard this last night, in the context of creativity: Luke Wroblewski, Bill DeRouchey and I were chatting about various American figureheads that are idealized as having a powerful creative impact on our country (they claimed Jobs, Disney and Edison; I proposed adding George Eastman, and then we discussed the demise of Kodak). I've also heard this in the context of our large-scale telecom infrastructure; one of my clients was a major Fortune phone service provider, and we were helping them reimagine their organization as a software company. And I've heard the phrase in the context of post-industrial American society, described as one of the ways we can compete with offshore manufacturing and cheap production and assembly labor laws.
My original gut reaction to the statement is to disagree: surely there will be companies that don't make software in the future. But a second read, a reframe of the statement, is to state that all companies are going to have to build an organizational culture focused on software. That's slightly different, implying organizations will need the ability to produce digital products on their own. And I agree with that completely. That's no easy task, and it's arguably why Eastman wasn't part of Luke and Bill's list. Kodak has failed to develop a software culture to support their core business, and while they made some attempts with Easyshare, the results aren't great.
Here are some other provocative statements I'm considering this morning:
"All products are going to become services." A service recognizes how interaction occurs over time, and across multiple touchpoints (including human touchpoints). What would Kodak be like if it had the service qualities of a Starbucks? Does that mean Kodak would have stores, or would it manifest as something else? What if it had the service qualities of Dropbox? Would that mean something we used every day?
"All companies will be forced to cannibalize their core business, or disappear." The business lingo aside, the idea that a company will have to kill a money-making arm of their business with a new series of capabilities is fairly inevitable. It's happening before our eyes with voice data plans in the telecom sector and with sitcoms in the media space. It wasn't until 2005 that Kodak was really acknowledging a need to go all-in on software, essentially killing (or at least acknowledging the death of) the print film business that they literally invented.
"All companies will need to do meaningful work, or find themselves with an inability to hire quality employees." There's a lack of great design and technology talent, and the top of the talent pool can be tremendously selective. It's not enough that you offer a good and competitive salary; the work actually has to have personal and social impact, too. This will force a change in the actual content of business.
I like this form of provocation, because it forces me to reflect on outliers. To say "All companies will..." means examining businesses with wildly different qualities. Try it: compare your own company with the statements above, and see how (and if) they fit.
Originally posted on Wed, 18 Apr 2012