You Need to Become a Software Company... or Die
Every business -- no matter what you produce -- should also be in the software business
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Obviously software is an integral component -- in fact the primary component -- of every digital company. These companies use software to make money and keep their customers loyal and engaged.
But, you run a "non-digital" company. You produce widgets or provide services. Could you better serve your customers with software -- and even acquire new customers?
Do you see software as an essential way to provide more value with your products and services to keep your customers happy and loyal? You probably don't. And that's a huge problem, because your competition does.
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Soon every company will service their customers using software … or their customers will leave.
The software product paradox.
You may not realize it but there's a shift taking place in your industry and even inside your organization. The role of software, in businesses of every size, has changed forever -- and will continue to change at an even faster pace. This movement is fueled by your customers, and how they get services. At first the only companies that used software products were software product companies.
Then software crept into enterprises -- often grudgingly -- that sought to make internal improvements that made their business more efficient. Those companies were looking inward, not outward; they used software to help run the business.
Today, because customer behaviors have been changed so dramatically, software has started to be the business, even for non-digital companies. Every company's ability to make money lies at the intersection of customer needs and desires and the company's own products and services. Customer desires have changed and will continue to change at an ever-increasing pace -- and that's what drives the software paradox. Software has evolved from being no part of your business to becoming a way to run your business… and now, increasingly, will be your business.
That's why every company must have software products. Every company must think like a software company, plan like a software company, and behave like a software company -- because every company will need to put software products in the hands of its customers and clients.
If your company doesn't your company will die because your competitors definitely will. In fact, smart competitors already are.
The customer paradox.
You run your business. You're in charge. Self-evident, right? Not any more. That's another paradox.
Your customers run your business -- even if you don't realize it.
Their desires have changed. Their means of interaction has changed. Mobile devices have proliferated to the extent they are now ubiquitous. That proliferation has changed user and consumer expectations forever. Customers expect a direction connection, and they expect to make that connection the way they want -- not the way you decide they should.
Unfortunately, that creates a dichotomy few leaders appreciate. As a consumer you want what you want, when you want it, the way you want it… but as an executive you create systems to deliver to your customers what you want to deliver, when you want to deliver it, and the way you want to deliver it so you can be efficient.
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You can't have it both ways, at least not for long -- because customer app-xpectations have permanently shifted. Customers want a product made just for them. That requires a two-way, personalized conversation that changes everything.
- Know them specifically.
- Respond to them individually.
- Connect with them on their terms.
Say you're a book publisher in the business of printing books. But your readers went mobile and took their books with them. Successful book publishers have transformed themselves into software companies offering digital content and branded applications.
Does transforming your company in a way that lets the customer be in charge sound like an incredible challenge? It can be -- but it can also be an incredible opportunity. Thinking and behaving like a software company will allow you to:
- Create new markets and find new customers
- Develop new revenue streams with existing markets and customers
- Establish new ways to create long-term, genuinely loyal customer relationships
- Steal customers away from competitors by inventing value that didn't exist before
The customer is now in charge.
The disruption paradox.
Disruption changes industries. The DVD rental industry was completely disrupted by video on demand. Records were disrupted by CDs which were disrupted by digital audio files. Peer-to-peer services like Uber have disrupted the taxi industry. The list goes on and on.
But each example of disruptive innovation is industry-specific. We tend to think of disruption only affecting specific industries or markets.
That's yet another paradox: Software is a totally disruptive force, impacting every business in every industry in every market. What happens in one industry now affects other industries --- the same way the automobile assembly line revolutionized the way all products were assembled, and the same way the telephone revolutionized communication for companies of every kind. That makes software not just a great leveler but also a great opportunity. As products and services mature they become understood and commoditized. Software provides the usability, connectivity, and features that allow companies to continue to provide what their customers value.
How do you begin to think like a software company? Start building the right capabilities. Invest in product management, product strategy, product development… start recognizing the tools and skillsets you already have that you can put into software products. Start to create a portfolio of ideas you can turn into a pipeline of software products. Free your mind from your old ways of doing things. Discard the old rules!
Accept and embrace the paradox; understand who you ultimately serve. You currently use software to serve operational efficiency… but to be successful, you must use software to serve your customers.
Meeting their needs creates a massive opportunity for your business to grow.
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The delivery paradox.
You build exceptional products. You provide exceptional services. You rightly followed the old adage, "Find the one thing you do better than anyone in the world… and do it."
But that approach to building a great business is no longer sufficient. The final paradox is that to survive your organization must learn to excel in a new way. You need to become great at creating software that transforms your products and services into the total experience your customers desire.
What does that mean? Your goal is to find a way to build the organizational capability to create and deploy features that keep customers consuming. Of course that process starts with truly understanding your customers.
Many organizations simply don't know their customers very well, and don't know the right questions to ask. A consulting firm might have smart consultants who possess amazing intellectual property, but may struggle to create software that will be meaningful to clients… in the same way the typical IT department has limited experience blending customers needs with business objectives to create a software product that elegantly accomplishes both goals.
Entrepreneurs see software products as an opportunity, so they build companies that disrupt markets through software. Even so, mature companies are often the best positioned – because they have resources, staffs, and existing customers -- but they are also the least likely to seize the opportunity because of their need to maintain their current revenue streams. This allows the start-up to leapfrog over the incumbent -- until the incumbent wakes up and changes.
Of course many mature companies don't know how to respond because they don't know the questions to ask. But you do. And you also know the answer. The answer is software -- and thinking like a software company.