Introduction: Be Like a Tech Company
I’ve been in IT for 23 years, plucked from high school as cheap labor to make an online banking system. For as long as I can remember, we’ve been trying to “align” IT with the business. Make IT as useful, responsive, and business focused as possible. It works here and there, and ended up being a lot of cost management and outsourcing at the start of my career.
In the 2000s, through ecommerce and later “tech companies” like Uber, Facebook, Google, Amazon, and Netflix, we saw a new type of business operating model emerge. This model assimilated lessons from software companies (like Microsoft, IBM, Sun, and Oracle) and applied them to traditional industries: transportation, advertising, retail, and entertainment. These companies experienced huge growth because they had fast time to market and could continually innovate to refine their product to chase and create opportunities.
Now, mainstream companies are transforming to this “tech company” model. The Home Depot and Dick’s Sporting Goods have shifted to an omnichannel model: 50% of items purchased online are picked up in-store at The Home Depot. Car companies like Ford and Daimler are adding new services to their existing products with continually innovating apps that evolve their businesses. Every insurance company is responding to the need to improve customer experience by speeding up the claims process.
These companies are taking the tech company approach to business: they develop their businesses by focusing on product development and management. Software is at the center of how they operate their business, how customers interact with businesses, and, most important, how these companies innovate. Gone are the days of multiyear strategy market analysis and planning. Organizations that shift to a product approach instead use 90-day, even weekly, innovation cycles to experiment with how they grow their businesses.
With this closeness to customers—“the market”—these companies have a better chance of catching “inflection points,” those shifts in business-as-usual that present opportunities to those that notice, and threats to those that don’t.
For example, John Mitchell at Duke Energy described an oncoming inflection point in the energy business: when cars switch over from gas to electric, the entire system of refueling cars will create massive changes to the power-grid. Imagine when every “gas station” is actually an electric car station—or whether stations will even exist! Either way, power companies like Duke Energy need to begin exploring and innovating now.
If you want to be like a tech company, you should...well, be like a tech company.
This report is the second part of my effort to help explain what that means. My previous book, Monolithic Transformation was written for IT executives, managers, and staff as a quick manifesto and manual for changing how they build and run software. I began writing notes for this report as I encountered a new problem: The Business. This report is addressed to people outside of the IT department who want to understand and help move along digital transformation at their organization. As ever, what I mean by “digital transformation” is improving the way you do software to improve your business. Of course, this report should also be useful for IT people who want to understand and work with their business counterpoints. Ideally, there would be no, or very little, distinction between the two as you’ll read in the following text.
This report has four sections:
I explain a way of thinking about software and how it’s built that’s more accurate to the true nature of software. This model of software informs how the rest of the enterprise should adapt to benefit from software’s inherent agility.
I look at how the finance department should change to align better with the true nature of software.
I do the same with the strategy department.
The last section lays out tasks that the corporate leaders in business and IT should prioritize and tackle.
Each section is supported by small and larger case studies to illustrate the thinking and tactics.
Unless you’ve chosen to live off the grid (in which case, how did you even get a copy of this report?), you use software every day. Much of it is software created and run by large organizations like banks, retailers, and governments. This software is not always...good. My hope is that over time this software improves and thus all of our lives improve. Everyone has a stake in improving how software is done at large organizations, and I hope this report will help those of you working in those organizations improve how you do software and make my life a little better.