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A world where time is not patient with people.More than ever, software products companies must accept that pro-active innovation is the only strategy for success on long term

The peculiarity of software products: the continuous need of adapting to change. A peculiarity of the software products companies such as Microsoft (with Windows, Office or Internet Explorer), Google (with Android, Google Apps or Chrome) or Salesforce.com is their need to continuously adapt their offer to the changes in the market.  For many companies (see Nokia vs Apple, IBM vs “Wintel”) this challenge can be anything ranging from dangerous to deadly.
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IT industry is specialized from many points of view, but when it comes to the speed at which change takes place, we are speaking of the champion en-titre with indisputable chances at a title for the coming decade and a half. Software products have gone from development cycles of several years (in the 70s and 80s) to iterations of only two weeks. The speed of adoption of new technologies has reached maximum levels (see the speed at which radios have been adopted, vs. the one for tablets). The competitive space is increasingly fierce, new software products companies could be set up by two students in a dorm starting with a negligible capital and a box of open-source software components.

In short, we are talking of the three needs that create strategic urgency in software products companies:

  1. The need to adapt quickly to the change in the client’s/market’s demands.
  2. The need to adapt quickly to the development of technology.
  3. The need to adapt quickly to new competitors or to new offers coming from the existing ones.

Innovation: adaptation to change through new solutions

The typical story of software products companies is the following: an entrepreneur identifies a need on the market, coagulates a technical team around a product idea which would answer that particular need and, if the stars align the right way, the product is a success, generates income that would continue the development of the product and would ensure enough profit so that the entrepreneur (and then the investors) could find the effort as profitable in the long term as well.

In a world in which change of any nature (i.e. of the clients’ requests, the development of technology or of the competitional space) occurs slowly, or, in the words of Marin Preda, in a world in which time is patient with people, the company would not feel any need of changing the recipe for success discovered in the beginning. The product would evolve following the same cycle of development, the technical team would programme using the same architecture, and the lack of competition would have the effect of a sedative on all these habits, slowing even further with once-sharp reflexes of the young company. And it would be absolutely perfect. This, if such a world existed.

The problem is that we live in a world where time is not patient with people, and more than ever the software products companies must come to terms with the fact that the only successful strategy in the long run is the pro-active innovation or, more bluntly put, the adaptation to change through new solutions (as opposed to the adaptation to change as a must).

Innovation starts by continuously assuming risks

I will go back briefly to the typical story of the software products companies. A critical aspect which is most times overlooked is the fact that that particular entrepreneur has taken on a high risk (most of the times from the all-in category) attempting a new concept. Success stories start once that moment is overcome and the concept is working, but before the first client, before the first paid bill and before the first press coverage there is a concept that is defined, tested and, if there is enough proof to validate it, it is launched into production.

The majority of the software products companies abandon their entrepreneurial spirit or at least the product teams do, which leads them towards a type of thinking in which the need for certainty eliminates the risk-taking. And why should they be blamed? Why should you take on risks when you can get things done without a triple toe loop?

I would say that there is no point in doing this, if the company does not plan to remain in the economic landscape for more than 5 years. For everyone else, taking on risks is like oxygen is for the aerobic micro-organisms, namely vital. Just like the oxygen, taking on risks had better come in a continuous flow, in a controlled manner, and not on the brink of cerebral hypoxia (when we are talking about taking on risks as a must or recreational innovation).

The pro-active innovation team

If the success strategy is pro-active innovation, then the tactics comes in the shape of a team of proactive innovation, attached to a product and directly subordinated to a person interested in the long-term performance of the company. This team would be busy experimenting with new concepts, taking on risks with the aim of transforming assumptions into knowledge. This team would be characterized by creativity, passion for problem-solving and tolerance for failure. This team would explore Continuous Delivery, Behaviour Driven Development, Mobile-Centric User Applications, User Experience Design or Big Data and would develop plans for the implementation of these concepts into the commercial product. This team would be evaluated by the speed at which it turns assumptions into knowledge, and its members would be motivated to be leaders in the industry in which their product is active, and not the followers of others.

In short, this would be the team that would maintain the spirit that made possible the success of the product in the first place – taking on risks in introducing new concepts, a critical need for long-term success of any software product company.

Short-term optimization inhibits long-term potential

Working with many software products companies from Europe, I have noticed that these understand the need for pro-active innovation, but act in the spirit of optimization of costs on in the short-term.

Of course, a pro-active innovation team is expensive, and the short-term advantages are limited. Nevertheless, the same companies end up investing millions of Euros in modernization projects determined by changes in the market that have an impact on the product’s technical architecture, when such changes would have been significantly cheaper had the oxygen reached the patient before he required a transplant.

In conclusion, now, on the verge of the budgetary planning for 2014, software products companies should assign budget for a pro-active innovation team which would start with an evaluation of the existing product and would develop a continuous innovation programme which would maintain the blade of competitiveness forever sharp.

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