Digital isn’t software, it’s a mindset
Marc Andreessen, co-founder of Netscape, once said: “software is eating the world”. Now, the most successful businesses of our time (the digital ones) achieve monopoly positions (article in Spanish) using strategies that try to answer this simple question: How can I deliver more value to more people in less time?.
Companies seek out new ways to improve markets, by delivering products and services more efficiently as a result of the combination of technology and collaborations between people. It’s common that digital organizations have a purpose beyond their economic interests, without this being incompatible with a search of profit to create long term sustainable businesses.
Digital companies deliver much more value than they extract.
The digital mindset with which these companies work change drastically two dimensions:
- How they internally organize.
- How they produce and deliver value.
Then, I’m going to detail 7 principles that configure the digital mindset, structured in the two mentioned dimensions.
How digital companies are organized
Michael Porter realised that the biggest concern of C-levels of 20th Century was how to manage their competitive advantages. Before these kind of strategies made sense, because they needed to handle the lack of resources. But the fact is digital companies dedicate practically all of their resources to the constant creation of new competitive advantages.
Today, organizations that are growing transgress the main practices in terms of management and human resources, being the following principles the result of their practices.
1. Chase an ambitious and inspiring purpose
The purpose of any digital company defines its behavior and its raison d’être. Purpose goes beyond making profit, it’s about the ability to deliver more monetary value to the market than they need for survival.
Purpose is ambition. The romantic side of the business.
It’s the way to inspire great professionals who may even work in these organizations despite receiving a lower market wage.
Here is when it’s essential to have good recruitment strategies, in order to hire people that fit with the company’s purpose. If employees don’t share the vision probably they aren’t going to offer the best of themselves.
Surround yourself with dreamers and help them to fulfill their dreams.
2. Agile processes versus linear ones
Processes should aim for results in order to reduce risks. These processes may follow the philosophy ‘fail often, fail fast, fail cheap’, prevalent in all digital companies; always combined with data driven decisions. This value production method optimizes the opportunity cost for organizations, allowing them to face the constant innovation processes required in this dynamic digital environment.
An interesting case study is the methodology used at Spotify to create new products.
There is no ‘right way’. You get to build your future. — @benjaminhardy
3. Doers versus managers
Managers coordinate and this often means that: people don’t know what to do or it’s necessary to control the outcome. In both cases, the problem is the lack of autonomy of the members of the organization.
You must never control the information access, it’s a waste of time. With the right information, your teams will be able to take smart and informed decisions by themselves.
Besides, it’s crucial to hire the right people. Valve and Netflix know it perfectly: the better you hire the less management you’ll need and more productive you’ll be. Also, workers will feel more responsible and fulfilled.
“Thinking outside the box is too passive. You must ACT outside of the box.”
4. The constant learning of the team
A company is as good as its team is. The main competitive advantage of many companies rely in their ability to retain and enhance the talent of the best employees. Therefore, most of the team leaders’ efforts are focused on team development.
Nowadays, we understand better than ever that learning processes need real experimentation and making mistakes. Knowing this, why don’t let employees experiment with the 1% of your customers?
“Failure is an option here. If things are not failing, you are not innovating enough.” — Elon Musk
How companies produce value in a digital environment
The companies with a digital mindset challenge the conventional ones. The biggest movie and television show provider is digital (Netflix); the largest store in the world has only one physical store and is digital (Amazon); the biggest music store is digital (iTunes; however, tomorrow could be Spotify); and even the most innovative car company is digital (Tesla Motors), because they conceive their cars like hardware devices that can upgrade their features with new software releases.
Is the leader of your market a digital company? A) Yes B) Not yet.
Therefore, it’s becoming common among companies to build their value proposition applying these three principles.
5. Products built to evolve
Develop product and services in a fast way, to optimize all the innovation processes and minimize the opportunity cost; digital companies need to focus on solving an unique problem which affects to a large enough audience.
Develop a complex product is easy, the truly difficult is to make it simple.
Work in this frame helps to reduce the product’s time-to-market and allows a fast and real feedback to keep improving the product. Otherwise you will be investing too much resources developing something that doesn’t fit with the market needs.
If you are not embarrassed by the first version of your product, you’ve launched too late. — Reid Hoffman, co-founder of LinkedIn.
All companies that are considered digital know that nothing is certain, and they are constantly finding new ways to quickly adapt their products to market demand, using agile methodologies like scrum.
The only way to have a great product is dedicating a huge amount of resources, knowing that having a good one ensures other efficiencies like more effective marketing or communication actions.
6. Create a platform to collaborate with your extended community
The 99.99% of the most talented people in the world never will work full time in your organization. For this reason you may have to design new ways to collaborate with people outside your organization, as you can do with open innovation, to compite with guarantees of success.
Have a community aligned with your organization purpose is the best way to increase the productive assets, in addition to exponentially increase the speed with which it grows and improves.
However, it is not enough just to have a community; you should also provide them with a platform and tools with which to construct value for your business.
One significant example of how a consumer product became (by accident) into a platform is Microsoft Kinect. Launched in 2011, this device allowed users to control their Xbox with body movements. Once it was in the market, some users hacked it, and as a result, they had access to and advanced device with body recognition features with infinite applications. In this case, Microsoft used this to their advantage, and chose to create a free development toolkit to allow people to create new and amazing features for Kinect.
In such an interconnected environment, being the most connected node makes you resilient to changes, and essential for the network.
Don’t compete with others. Make them compete with you.
7. Investing in the market in which you operate
Digital companies have a long-term vision and they know that they will generate revenue to the extent that the market in which they operate grows and they are able to learn fast, to increase the value delivered to users.
This is the strategic move that made Tesla Motors, they removed all their patents and made them accessible to everybody, to create a more favorable environment for electric cars, instead of competing against other electric car brands. The underlying idea behind all of this is to enable their technology becomes the industry standard, which will likely generate future monetization opportunities.
Contributing in a ecosystem generating more value than you need to capture to be profitable to attract business partners.
Contributing in a market reinforces your position as a strong node in a ecosystem. — javi creus
The emerging digital mindset
Information is no longer a control tool to become an essential element to enhance self-management. That’s the reason why organizations are becoming networks themselves, helping their employees to create new ideas and solutions through the knowledge spreading.
In this scenario where little organizations work with a digital mindset, every company that doesn’t embrace this structural change could be beaten.
Chris Anderson, editor of Wired Magazine, posed a brilliant reflexion in which he highlights the way that the Internet has forever changed the way we live.
The past decade was about finding new collaboration and innovation models on the web. The next decade will be about applying them to the real world. — Chris Anderson, editor of Wired Magazine.
Digital Transformation is the biggest challenge for most of the organizations born in the past century. They must change their internal operating system to adapt to this new ecosystem.
Based on the video of Aaron Dignan.
