Why the Only Successful Companies in the Future Will Be Software Companies

Imagine you’re Lego. You make cool toys—toys that exist in the physical world, a place where kids touch and feel and connect and create something cool and amazing and real. If you’re Lego, making toys may be what you do … but it is not what you are. What you are is a software company—at least, that is, if you want to survive.

Don’t get me wrong. I’m not saying Ford needs to stop building cars or that Domino’s needs to stop making pizzas. Your products and services—what you do—are the foundation of your business. Without your products and services, you have no business.

But everything else—how you attract and touch customers, how you partner with suppliers, how your employees interact both internally and externally—everything else is software.

THE PROOF IS IN THE HISTORY…

Imagine you were running a company 20 years ago. One day an employee knocked on your door and said, “Boss, the Internet is the next big thing. That’s where customers will find us. We need a website.” So you build one. You don’t have a plan for what purpose it would serve (other than to be an online brochure)… but you don’t want to be left behind. And now you rarely think about it. Like dozens of other functions that receive cursory attention, your website just is.

Years later, another employee knocks on your door. “Boss, social media is hot,” she says. “That’s how we can really engage customers. We need a social media presence.” So you create one. You don’t have a plan for what purpose it would serve (other than as a subset of your current marketing efforts) … but you don’t want to be left behind. And now you rarely think about it. Like dozens of other functions you occasionally evaluate, your social media marketing just is.

Software—programs, systems, apps, and any other digital tools—is like that, too. Software has become part of the business landscape. You don’t think about it. Besides, software is some other company’s gig. You make stuff. Your focus, every day, is on making and distributing that stuff a little bit faster and a little bit cheaper.

And that’s too bad… because software is the only true competitive advantage every business— regardless of size—can possess. Why? Because it not only informs but transforms the entire spectrum of business activity. Software can turn communication into collaboration and incremental into exponential. It’s the great leveler, because it isn’t limited by capital or infrastructure requirements but only by imagination and creativity, which means the smallest companies can compete.