Riding the Wave of Digital Disruption: 5 Tips to Help Legacy Businesses Operate Like Startups

Startups often face significant challenges. At a bare minimum, they need to define their value proposition, build a service, get funding, define a business model, drive sales, and recruit talent—all with a severely constrained staff. Many startups fail because of their inability to address any number of those challenges.

However, despite these potential hurdles, many startups possess a number of advantages over long-established competitors. Startups are often digitally native, for example, which means they don’t have to integrate with legacy business models, legacy processes, and legacy infrastructure. These integration processes can be enormously complicated and expensive—one reason that even though enterprises are spending trillions each year on digital transformation initiatives, many of them feel stymied.

Additionally, because startups usually don’t have a large product and services portfolio, they can generally take more significant risks with new services, partners, or features. In fact, in many cases, failure is expected because the strategy is to place many small bets instead of a few large ones, secure in the knowledge that at internet scale, a single success can erase countless failed experiments. Looking at it from this angle, the challenges startups face might actually be less daunting those those faced by incumbents.

On the other hand, established companies may have advantages in the short term—but how do they remain competitive over the long run? Drawing from my experience working with large enterprises, here are five key enablers to help established companies overcome disadvantages they may face compared to digital natives. 

  1. Build a culture of experimentation.  If failure results in negative consequences, most employees will feel incented to take the safe route. A culture of innovation requires room for experimentation—which means failing should be seen as part of the innovation process. By defining digital goals, aligning metrics and key performance indicators (KPIs) with those goals, and embracing the idea that one significant success may outweigh many failures, businesses are more likely to inspire developers to reach for new heights. Constraining developer KPIs to sales target-style metrics, for instance, is likely to constrain creative development juices to the project level—or worse, to the backend infrastructure level. To help unlock “10x opportunities,” enterprises should use KPIs aligned with demand aggregation strategies, such as the number of active developer registrations, the number of applications that leverage the organization’s application programming interfaces (APIs), and the amount of data exchanged through the business’s platform.
  2. Build “two-pizza teams” to focus on digital product delivery.  As Amazon CEO Jeff Bezos famously stated, if a digital product team cannot be fed with two pizzas, it’s probably too big! Efficient and creative product delivery can only happen with consistent, frequent, and open communication. Gone is the time when the development team waited for days or weeks to get a response to a blocking question. In the new paradigm, the developer turns to the API product owner, a relatively new and increasingly important IT position responsible for empowering developers to quickly leverage technologies and digital assets to experiment and build new things. API products are mechanisms that allow software systems to talk to one another and enable developers to quickly and easily work with digital assets without being burdened by underlying IT complexity. Other responsibilities—rolling out deprecation with developer relations teams, test environment challenges, changes to the developer journey, inability to get consistent data from southbound infrastructure—are all generally handled by the two-pizza team, with key players attending daily standups.
  3. Get iterative with the API product mindset.  In my work consulting with customers, I am often asked, “What happens after we deliver our first API?  How do we choose the next one?” While this is not a bad strategy in some regards, it risks normalizing a process in which the business builds APIs and moves on from them, as though the APIs are simply aspects of integration projects rather than products crucial to empowering developers. In order to drive platform engagement, APIs should be constantly updated, with API product owners looking at usage and analytics across the digital value chain in order to devise strategies to drive new developers and users to the platform, develop product features backlogs, and drive greater and stickier engagement from existing developers and users.  
  4. Treat API security as an enabler.  APIs can reframe the concept of network borders, enabling innovation and interactivity to occur outside of the traditional core locus of enterprise control. Many companies are used to security allowing (and, more frequently, disallowing) activity and behavior, but typically, this oversight has been conducted without a full picture of how many data egress or ingress points actually exist—and who is doing what with corporate digital assets. An API facade can help bolster security without hamstringing developers. Because API management can generate granular insights into how these digital assets are used, security professionals have more visibility and auditability to monitor behavior across new network boundaries and even to proactively participate in the development process by implementing data strategy, authentication, and authorization paradigms as well as other security mechanisms such as multiple layers of threat protection in every API call. It's in this manner that security becomes a part of the digital enablement conversation—and less a figurehead suppressing innovation. If all companies had the visibility and control gained through a well-managed API platform, perhaps many of them wouldn't feel like Biggie Smalls did when he famously sang: “Even in my home I ain't safe as I should be / things always missing / maybe it could be my friends / but they ain't friends if they’re robbing me / stopping me from making a profit, see.”
  5. Leverage the API facade design pattern to build a best-in-breed stack for applications.  Startups may have the pick of the litter when building a technology stack, seemingly able to pick and choose SaaS, PaaS, and infrastructure providers at whim based on cost and features. Established companies, saddled with legacy monolithic infrastructure, frequently feel tied to that infrastructure, as it reflects many established applications, businesses, teams, and cultures. By introducing an API facade between applications and infrastructure, established corporations can more easily gain the infrastructure independence more typical of startups and engineer a lightweight stack that leverages best-in-breed cloud technology to deliver on customer expectations.

There is no single roadmap for solving the challenges of the modern digital economy, and different enterprises have different advantages, challenges, and expectations that need to be accomodated. As market forces and barriers continue to evolve, corporations will need to find new ways to innovate and navigate between rising business expectations and the pressure to deliver more value, with fewer resources, in less time. Enterprise leaders should use the guidelines above to define their own paths and develop a culture that uses digital disruption to their advantage.

 

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