Many companies respond to digital competition by embracing methodologies like agile, building “innovation centers,” acquiring startups, or outsourcing app development to consulting firms. But the true disruptors know that in the digital economy, whoever builds the best software wins. Companies that want to compete need to empower their developers and adopt a “software mindset”: Assign problems to your team, rather than tasks; run a lot of experiments — and tolerate failures; become obsessed with speed; and keep your developers close to your customers.
Fifteen years ago, when I worked as a product manager at Amazon, Jeff Bezos declared at an all-hands meeting that Amazon was not a retailer — it was a software company.
“Our business is not what’s in the brown boxes. It’s the software that sends the brown boxes on their way,” he told us. “Our ability to win is based on our ability to arrange magnetic particles on hard drives better than our competition.”
Not long afterward I left Amazon to found my own company, Twilio. But Jeff’s lesson has stuck with me ever since, especially when I visit our customers, many of whom are engaged in digital transformation. Those companies hope to emulate disruptors like Uber, Lyft, Airbnb, and Spotify, and to compete against giants like Amazon and Salesforce. But many fail to realize what Bezos knew long ago: in the digital economy, whoever builds the best software wins.
Unfortunately, many companies have never viewed software development as a core competency. They rely on packaged programs sold by independent software vendors and hire consultants to write custom code. The problem is that packaged programs are one-size-fits-all and can’t be customized very much. That might be okay for back-end systems like HR and financials, but for customer-facing parts of the business, using off-the-shelf software no longer cuts it. How can you differentiate and gain competitive advantage if you’re using th