August 2, 2017

Nimble enterprises foster innovation

You start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to try to sell it - Steve Jobs

The mass-market economy is turning extinct and so is its make-and-sell business model. On-demand chain is topical: it starts from the customer and ends with the delivery of an on-demand solution.

On-demand chain is driven by a fickle market and it means continuous change, which is not achievable without digital transformation. Hence, software needs to drive value. They become the managers who coordinate work and manage it. Human management becomes a liability. According to a McKinsey report, by 2025, automation innovations will replace 250 million knowledge workers worldwide.

Following Conway’s law

Conway’s law states that the information systems of an enterprise reflect its communication structure. In such a situation, a company’s org chart is best not left rigid and unbending. Static business models don’t create market leaders anymore. Programmable businesses do. Programmable businesses are a result of digital transformation. They survive with relevance and lead to innovation.

If enterprises are not dynamic, dispersed, and de-siloed, we can only expect the IT systems to be based on legacy infrastructure. In short, in no time, they will get pushed out of the market.

Branching out and going micro

The shift is from a firm organizational set-up to a de-siloed working model. Projects are broken down into smaller pieces, each operated and managed by a small group of people. These pieces of work are easier to manage and deploy, but not at the cost of rigid communication flow. Communication, decision-making, and social capital are at their best within dynamic branches.

The IT system mirrors this shift--from monolithic apps to nimble microservices. Just like a de-siloed enterprise, microservices are broken down into multiple component services. Each of these services can be deployed, tweaked, and redeployed independently without compromising the backend service architecture. A change made to a small part of a monolith app needs the entire monolith to be rebuilt and deployed. Microservices are independently deployable and scalable.

Today, brands are embracing a fluid org chart and evolving from monolithic to microservices architecture. eBay’s central application comprises various autonomous applications, and each functions in different areas. Amazon has also migrated to microservices. They get countless calls from a variety of applications—something that would have been unachievable with their old, two-tiered architecture. Netflix receives more than a billion calls every day, from multiple devices to its streaming-video API. Each API call leads to around five additional calls to the backend service. Twitter, PayPal, Soundcloud, and The Guardian are other companies that have showcased their innovation and struck gold with microservices. All these points at their flexible and programmable organization structures.

Decentralizing control

The movement is also from central management in an enterprise to a more dispersed share of control. Decentralizing control deters bureaucracy in an organization. IT systems follow these footsteps and open their APIs to make handpicked resources available to developers/ customers/ competitors/ employees and also leverage shared APIs to build their own apps. Disaggregation of business functions optimizes productivity and leads to contribution to the API economy. Today, companies like Apple, Google, and Amazon are leveraging the strength of APIs to build their businesses, which are programmable in nature. This leads to innovation.

Final destination: innovation

Innovation is the present and will determine the future. Programmable businesses will lead to smart machines communicating with one another without human intervention. Vending machines can become their own profit and loss centers, autonomous cars can drop you to work, and so on. Companies like Citi and NASA are participating in hackathons to generate new prototypes.‍

Everything ties back to how agile one’s org chart is and how programmable one’s business is. Google Maps shows us the fastest route to a destination, but it also shows an alternate route... just in case.