How can businesses survive and thrive in this new age that is defined by the whims of Amazon and the other tech giants.
We can no longer think of Amazon as an online retailer or a cloud services provider. What Amazon has created is a disruption machine. By fusing the company’s business model with a software platform, there are few markets that Amazon cannot disrupt. How did this happen, and what can your business do to survive and thrive in this new age that is defined by the whims of Amazon and the other tech giants?
We first need to examine what has given Amazon such a competitive advantage, a story closely related to Amazon’s unique approach to software. It is Jeff Bezos’ unique brilliance in understanding the intersection of business and technology that has allowed Amazon to reshape both the retail and the cloud computing landscape.
A decade ago, Amazon was struggling to scale its online businesses. Like so many other companies that were created out of an initial set of software systems and digital offerings, Amazon was buckling due to its inability to scale the software platforms that had brought its initial success.
From a technologist point of view, this was caused by an insurmountable amount of “Technical Debtâ€Opens a new window . This debt had accumulated to the point where it could no longer be resolved in a way that supported the time-to-market needs that Amazon had for its growing offerings. Just as Nokia hit a technological dead end with its Symbian operating system, as summarized by Stephen Elop’s infamous “burning platform†memoOpens a new window in 2013, Amazon was standing on a similar precipice.
Imagine a meeting held at your own company during which a technologist starts ranting about the impending doom coming from a “technical debt backlog†to the CEO. We can expect the CEO’s eyes to either glaze over at hearing a yet more technical jargon, wonder why they’re not hearing about this urgent issue directly from an SVP, and then delegate the investigation of the problem to the CIO. That is not what Jeff Bezos did.
Starting at an executive retreat in 2003, Jeff Bezos made the re-platforming of Amazon a strategic business priority. Bezos understood how software architecture impacts business strategy and did not delegate the understanding of how the organizational structure, the software architecture, and the digital product offerings needed to be aligned. He then bet the company on the re-platforming.
But not just at the software and technology level, he did it at the organizational level too. Even a seemingly trivial initiative, such as the edict to structure everything around “two pizza teams†was pushed by him. Bezos understood that if a team wasn’t small enough to be fed with two pizzas, the software it produced would not be compartmentalized sufficiently to support the scalable software architecture needed by Amazon’s growing suite of digital products.
The software platform that met Amazon’s business needs was so successful that the web-based IT infrastructure service is now available to the world as Amazon Web Services (AWS). But a technology platform alone is not enough for a business to become a software innovator. It’s the management practices that led to the development of the platform that today’s businesses leaders need to understand.
The hyper-growth of Amazon is not a common business scenario. However, the businesses who understand what worked in that scenario, and then applied it to their own transformations, will have an advantage over those who continue to run their companies the way that Nokia did when it lost the mobile market it helped create.
Unlike the leadership of Nokia, Bezos’ software engineering background gave him an advantage in understanding architecture and platforms. For other business leaders to apply the same principles that guided his decisions, we need a decision-making framework that captures the idiosyncrasies of software delivery as they apply to digital business strategy.
I have spent the past two years studying the difference between the approach taken by tech giants and startups, with that of entrenched business and enterprise IT leaders. This very different view on software products, architecture and organizational structure is precisely where I saw the biggest and most critical gap in decision-making.
How is it that when faced with a nine or ten figure “re-platforming†cost, and no clear certainty that it would work, Bezos was able to pull the trigger effectively, while the likes of Nokia’s leadership were not? While those are some of the most dramatic and consequential examples, similar decisions are made by leaders on a daily basis. If these decisions are made on the wrong foundation, they lead to dead end architectures and organizational structures that make it impossible for a company to thrive in the Age of Software.
Today’s business leaders need a new framework. One that does away with inadequate managerial paradigms, such as project management, and one that directly connects software investment with business strategy and results. Business leaders need the framework that can be used to make predictions about when a software offering will hit a wall in terms of technological choices or technical debt, and one that enables them to allocate resources and investment accordingly.
This new framework needs to align the entire organization to a digital product-oriented architecture and a focus on flow through software product value streams. Managing the company to this kind of framework will be the minimum requirement to have a shot at competing in the presence of Amazon and the growing number of startups who are harnessing both its technology platform and its approach to delivery.
Technology and business leaders need a common language and set of paradigms that allow them to direct and to protect their business through the onslaught of digital disruption that is accelerating in the Age of Software.