The impact of the ongoing transformation of software and the software industry is — and will continue to be — significant and widespread. Those that fail to pay attention to the next frontiers in software are putting themselves at risk. Thus, organizations and software developers alike should ready themselves for this new world of software. Understanding and adapting to the new software landscape, collaborating with major global partners as well as startups and “crowds,” and being continuously innovative have become ever more important. Being prepared to navigate the new software landscape requires awareness of its ongoing changes and an understanding of their implications.
So what do changes and developments in the software industry mean for senior leaders and managers? In this Advisor, we discuss several steps they need to take to avoid the curse of ignoring the need for transformation that afflicted incumbents like Borders and Blockbuster.
First, all managers must develop a vision that embraces software-driven strategies, recognizing that, increasingly, it is software that powers their business processes and provides competitive advantage. Following on from that, managers need to articulate their software strategy as part of their business strategy by questioning and abandoning conventional strategy concepts based on the logic of “tradeoffs” in favor of newer ways of thinking based on the logic of “tradeons,” because software can allow firms to pursue seemingly paradoxical objectives such as revenue growth and cost reduction at the same time.
Second, managers should continuously transform their organizations by scanning for and intelligently deploying new technologies. They should avoid handicapping themselves by making imprudent use of outsourcing when what is being outsourced involves skills critical for the organization’s future. Moreover, they should use configurational logic,1 which supports multidimensionality in thinking about strategies and governance processes, because it is not just one lever that provides competitive advantage, it is simultaneously pulling multiple levers that allows organizations to occupy profitable and sustainable niches.
Third, managers should pay attention to governance processes to ensure successful deployment of their strategies and should become involved in the careful consideration of IT decision rights (i.e., who decides what), the structure and role of the IT department, how much to spend on IT, and how to deliver IT services internally and externally. Furthermore, they should think of their governance system as a platform for integrating strategic initiatives, similar to an operating system, which allows a variety of applications to be built on a common platform.
Fourth, managers must become involved in executing IT projects, which requires (1) being aware of technology evolution; (2) making informed decisions regarding technology upgrades; and (3) helping to adopt, diffuse, and exploit IT systems.
Fifth, managers need to adopt, where needed, software that can run anywhere, can be accessed from anywhere, and can be scaled limitlessly. Managers need to use newer technologies, such as AI and the cloud, to achieve these requirements.
Sixth, managers need to determine how to reach the mass of end users with AI and cloud-based software leveraging mobile devices. Managers must integrate that software with other devices (e.g., smart devices and IoT devices) by means of AI, the cloud, and a high-bandwidth network and make the software self-manageable (i.e., autonomous) so that it can adapt itself to a given context and repair itself.
Finally, managers must realize that no one technology or software by itself provides a competitive advantage. Managers must empower their organization to ask critical questions related to newer technologies and their business relevance amid changing customer tastes that leads to creating a data-driven, decision-making culture that will foster organizational survival.
1Configurational logic relies on the notions of conjunctural causality (as opposed to the effect of just one focal variable), equifinality (multiple pathways to achieve an outcome), and asymmetric causality (if the presence of a factor is necessary for success, that by itself does not mean that absence of that factor will necessarily lead to failure). These notions are sharply distinct from dominant conventional notions that rely on singular focus on one variable, unifinal outcomes (only one way to achieve an outcome), and symmetric causality.
[For more from the authors on this topic, see “Software as the Ouroboros: Implications for Software Developers and Business Leaders.”]