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.

… AND IN THE PRESENT

The biggest companies are already doing it. Take Domino’s. Domino’s is in the business of pizza. (Or maybe not—you could easily argue that Domino’s is really in the business of delivery. pizza is simply what they deliver.)

Domino’s makes and delivers pizzas, but their success lies in being a software company: developing online ordering tools; developing systems that process orders and predict demand and optimize supply distribution; creating marketing campaigns that reach customers on a variety of devices; implementing financial and performance platforms that better enable franchisees to succeed.

Yes, Domino’s makes and delivers pizzas, but I feel sure Domino’s executives spend the majority of their time looking for ways software can deliver more customers, improve more processes, and increase the value of their company.

Lego makes toys, but am certain Lego’s executives spend the majority of their time looking for ways software can be used to design new products, improve distribution, streamline processes… and in partnership with Google, even let people build virtual Lego worlds.

YOU ARE A SOFTWARE COMPANY

Average companies only react to software. Smart companies—in every industry—stay ahead by viewing themselves as software companies. They actively look for creative ways to better serve their customers and their employees.

No matter what those companies make, their employees come to work every day thinking, “What do our customers need? What do our customers want? What would make our employees more productive, more creative, more engaged?” Most importantly, they think, “How can we use software to make us not just incrementally but exponentially better at servicing our customers?”

Any company can provide your product or service. Any company can compete at that basic level. All the things that go into how you provide, how you improve, and how you enhance that product or service is your competitive advantage…and is the only competitive advantage you can truly count on keeping … as long as you see your company as a software company.

With a passion for translating ideas into actionable strategies, CEO Joel Basgall and his firm Geneca help clients understand and tap the potential of technology to turn ideas and capabilities into market-moving products.