Creative Destruction: Why the 2020 enterprise generation needs open platforms, not an ‘app for that’
Mon 6 Apr 2020 | Ed Hill
The dynamics of business today are tough and getting tougher
In 1965, the average company on the S&P 500 could expect a 33-year tenure on the index. By 2026, that’s expected to be 14 years. Or, looked at from another angle, about 250 of the 500 will be gone inside 10 years. The Kodaks, Blockbusters, and Yahoos disappear and are replaced, for a while at least, by the generation of Zoom and the makers of Snapchat and TikTok.
Innosight, the company from which I borrow the above scary numbers, calls this Creative Destruction. Your nemesis comes from richly funded startups or internet royalty such as Amazon, Alibaba, and Google. It’s as likely to come from China or India as the US or Europe. Companies rise and fall faster than Icarus and tomorrow’s largest company in the world is the company you haven’t heard of today. To compete, companies must iterate and constantly reinvent themselves.
A good exercise here is to ask yourself what you would do if Amazon entered your market. You might be in life insurance, telecoms, healthcare, hospitality… it really doesn’t matter; you stand to be disrupted. If you need to make urgent changes to your business model, the way you recognise revenue, how you build products and services, or your channels to market, then you’d better have the data to support decision making and you’d better have an integrated system that’s ready to go. If you’re weighed down by legacy systems or point solutions that prevent you seeing a single version of the truth, then your chances of staying relevant are minuscule.
For real business transformation that can deal with this whirligig and chaos, what’s needed is a liquid enterprise that moves fast and adapts. That means having a technology platform that enables communications regardless of what has been deployed, whether that’s aging, legacy infrastructure, or state of the art. It’s about having an environment where you aren’t replacing technology building blocks, but shining light on data that is hard to surface and making the whole greater than the sum of all the underlying parts. In this way, value is added because systems are joined up and obscured gems are revealed.
The brutal realities of business today are changing the way software is being developed and deployed, at the very same time as companies digitise and compete increasingly on their software capability. “Software is eating the world,” Marc Andreessen said, and it’s still very hungry.
But how do companies deploy and consume software? Apple says, “there’s an app for that,” meaning that for every use case that exists on the planet, a developer has created a self-contained program that conforms to Apple’s design conventions. Apps are convenient, affordable, and useful. Plus, they have their equivalent in the business world, where standalone applications are still common. But apps are no match for open platforms.
Openness is the watchword for the modern technology stack. You need an operating environment that is hot-pluggable, feature-rich, loosely coupled, and federated. The comparison is perhaps overused, but it stands: You need a Lego kit where blocks are reusable and can be assembled and disassembled quickly and painlessly. Business today is a matter of handling constant change; if your IT doesn’t support change, then you have scant chance of staying competitive.
An open and shut case
History tells us that, while apps have their part to play, platforms work better. Time after time, from IBM at its peak, to Cisco and Microsoft today, CIOs have preferred them to specialist offerings. An open platform means there’s no need for ‘rip and replace’ at every change trigger; the platform works with what you have and lets you ride the winds of change via a consistent way of seeing what’s happening and a chance to make changes on the fly.
Platforms are particularly powerful in business transformation. When Aeroporto di Roma (Rome airport) transformed, it used a platform to gain a panoramic view of critical data from passenger booking to departure and extending out to shopping, security, car rental, and other ancillary activities. That level of visibility means you are better able to predict the future. Software was the invisible infrastructure that supported practical changes such as a luxury shopping arcade and the creation of a new space that made it much faster for passengers to board and disembark.
The ability for companies to seamlessly weave in these connected infrastructure fabrics will be critical to their success. The anatomy of a 2020 company is an ability to move fast, displace, and re-engineer. These are not your grandmother’s companies. Firms need to build ecosystems, build new supply chains on the fly, move into new markets and territories, and even partner with sworn enemies. Companies today can no longer rely on brands and customer loyalty. They need to be perpetually reinventing themselves, what they stand for, and how they make money. They need a bedrock that lets them innovate… an open platform.