CIO upfront: The secret to how enterprises can outcompete startups
- 26 July, 2016 07:22
The key is to focus on smaller developments, each providing notable value to users.
You may think it is a pretty bold statement to say that an enterprise can easily compete with a new disruptive startup, but the key to outcompeting them is not a problem of reality, it's a problem of outdated thinking!
It's funny how perceptions define our reality, putting imaginary but immovable boundaries in our way; this is nothing new and many great minds have given us quotes that make this point; Einstein, Muhammad Ali and Henry Ford, to name just a few.
The naysayers will bring up the legacy constraints and assets that tie up the enterprise or the governance structures that startups don't have to contend with. There are many excuses - I call them excuses even though they are very valid points, because excuses only serve to prevent us from innovating.
The reality is there are two important obstacles that need to be overcome, in order for an enterprise to be competitive against anyone in this digital era.
The first obstacle is an outdated notion regarding the concept of a software application. Many of us grew up in a world where they were large and self-contained, so we built our mental models around our experiences with software applications that were monolithic in nature.
The second obstacle is a gross under appreciation of the role that the user experience plays in determining the success of a product or application; from the user’s perspective the user experience is the product and it's the means by which users derive value i.e. your competitive advantage starts and ends with the user experience, everything else is secondary to this experience.
Sadly, many well-known brands will disappear through their own complacency, lack of vision or mismanagement or some will just suffocate underneath their own inertia.
You may yawn, but I really need to cover the technical side of this and why an outdated notion of an application creates a dangerous barrier.
If we get back to basics about what a software application actually is, in order to make sure we start from a common place of understanding; business applications are essentially a permanent data store (a database that can also be called a system of record), with the application providing the means and methods to either display (read) or change (add, update or delete) the data.
Since systems were historically built around functional areas (CRM, finance, asset management etc) we traditionally built large monolithic user interfaces from a functional perspective; which is why this view of what an application is, became so entrenched. If we make a shift to designing applications where the user interfaces (and their associated business rules) are completely independent of any system or data, then we can create a new mental model for software applications that is incredibly potent.
What disrupted enterprises need is to move from the traditional application model, to a composition based model, where the user interfaces and systems of record are completely decoupled both technically and in purpose.
The key conceptual change is that applications are no longer self-contained; they now consist of two core aspects. The first is a data-store and all associated business and data rules, which provides the necessary integrity needed for it to completely fulfil its purpose as a system of record. All functions (along with security and rules) needed for it to fulfil its purpose, are then exposed through application programming interfaces (APIs).
Secondly, one or more completely independent user interfaces, provide users a way to interact with and change the data in this system of record and any other system of record - it's also important to realise that the user interfaces cannot circumvent security or access the data in a way that is non-compliant. This is a crucial distinction from a governance and risk management perspective and allows us to build user experiences under a different set of rules.
Once an application model has been implemented that consists of these two independent aspects, each part can be treated separately - applying the normal governance and risk mitigation practices to systems of record, but building and testing user interfaces independently and with speed. This allows the enterprise to work at the same pace as a startup when designing or changing enterprise applications from the outside in.
There are many subtleties provided by this model that may not be obvious; such as the ambiguity around the different ways the user experience can work, not polluting the system of record programming work, or the complexity of change being isolated within the two areas, or the ability to switch in and switch out any parts independently.
Another subtlety is one which provides the enterprise the ability to outcompete the startup; the existing enterprise knowhow is applied to just the systems of record layer. An area which is a major weakness with any startup as it takes time to mature this aspect, whereas speed is applied to the user interface layer the same as if they were a new startup.
Finally, I’ll turn my attention to the importance of the user experience; especially now we have an application model that allows us to create it independently and get it right, before any new programming work, often on core systems. There are two essential ingredients to ensure user experiences will delight customers.
First, what’s needed is a process that allows the business stakeholders and users to see and validate the user interfaces, as they are evolving in response to clarifying the business requirements and goals. This process is crucial because it not only ensures you build something the users will desire, more importantly it helps the business come up with the right business model that is also going to be competitive.
This process should involve various ideation techniques, along with full functionality prototyping that interacts with simulated or real data (not wireframing) and should use lean (or minimally viable product) principles.
The key to competing with startups is a focus on smaller developments, each providing notable value to users (it also ensures you learn and change quickly).
Secondly, user experience designers need to ensure they have the expertise required to craft quality applications in line with the business objectives and design ideas should be tested on real users to make sure they're going to love the final outcome.
In this period of disruption and rising user discontent, many sleeping enterprises will ultimately fail; some at the hands of the nimble startups, however some will just become obsolete. It’s already happening as household names consolidate or drop like flies.
Sadly, many well-known brands will disappear through their own complacency, lack of vision or mismanagement or some will just suffocate underneath their own inertia. The opportunity as I see it is for enterprises to build on the goldmine of assets, data and resources they already have and put user centric innovation at the heart of everything they do.
This is the key not only to survival today, but the key to delighting customers and keeping them loyal.
Shane Mercer is the digital business solutions partner at Certus, and is responsible for building one of the major digital business portfolios in Australia and New Zealand. He was formerly the CEO of Core Technology, which Certus acquired in January.
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