You are in the software business. Whether you like it or not.

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In recent months I’ve begun a new executive coaching engagement with a large financial institution. The work has been intense and fascinating and has taught me as much as I hope I’ve managed to convey to my clients so far. In thinking about the two biggest takeaways to date with that engagement, I keep coming back to the foundational principles in our new book, Sense and Respond

  1. You are in the software business — Regardless of what your actual industry or domain is, if you are an organization at scale or one that seeks to scale, you are first and foremost in the software business. This is the only way to grow and compete on a global level in the 21st century. What’s fascinating to me is how many executives still don’t truly believe this statement. It’s easy to think that because you produce a non-digital service (e.g., selling cars) or are in a “traditional” industry (e.g., insurance) software is secondary to the core product and can be relegated to an “IT department.”
  2. Managing a software business is different than traditional “industrial era” management — When the production of your service is low risk, well understood and consumer needs and expectations don’t fluctuate you can optimize production efforts. Unfortunately, software has none of those qualities. It is, by its nature, complex and unpredictable — not just in scope but also in how it will look, function and perhaps most importantly what your customers will do with it. Managing this type of work requires a holistic, collaborative, agile approach that leverages technology’s unique capability to provide your organization with a constant stream of real-time insight about those unknowns. It is then, of course, up to you and your team to use that insight to adjust course towards the best possible solution for your customers and your business.

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I’ve witnessed first-hand when an organization truly “gets” this. It’s obvious in their team structures, management practices and most importantly how they charter work for their teams and determine their success. For those organizations not yet on board with these two principles, I urge you to consider them seriously. As Dr. Rita McGrath shared in her book, competitive advantage, barriers to entry and other obstacles that once kept startups out of “traditional industries” have disappeared. These smaller, more nimble competitors now have access to many of the same tools as incumbents. Change is the only way to survive.

Have you seen companies embrace these principles? How?