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Why Software Is Eating Up The World

Apr 14 2014, 2:48am CDT | by , in News | Technology News

Why Software Is Eating Up The World

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Why Software Is Eating Up The World

Some interesting responses came in on my article about The Workplace Of The Future: How Etsy Does 30 Upgrades A Day.

“Irrelevant,” was one curious reaction. “You’re talking software development. Our business is very different. That sort of thing just isn’t possible in our field. Everything here moves much more slowly.” This ignores the fact that most firms’ core systems and processes are already run on software. It also overlooks the prospect that within a few years, almost all business will be digitized and run on software. The reality is that most firms today, whether they know it or not, are already software companies and will steadily become more so. Their competence in dealing with software will be a key part of their competitive edge—or lack thereof.

Johnny Herman made the point more pithily: “Software is eating the world.”

The dismissal of the Etsy experience also ignores the fact that the agile management practices developed in software under headings like Agile, Scrum and Continuous Delivery, are now appearing in other sectors, such as auto manufacturing, routers, hydraulics, groceries, retail, and many more.

It’s true that many big old companies are still operating much more slowly. But that’s not because of the inherent nature of the work. It’s because of the obsolete management practices of hierarchical bureaucracy that are in place.

Networked organizations using agile management practices with a culture of trust, delegation and collaboration are able to move and innovate much more rapidly than traditional managements that are saddled with legacy cultures of hierarchical bureaucracy, slow-moving processes with approvals up and down the chain, and the structural barriers of organizational silos.

It’s true that the Agile phenomenon is most obvious in software development. While Microsoft [MSFT] issues an upgrade of its Office program every couple of years, and Salesforce [CRM] issues upgrades several times a year, newer billion-dollar businesses like Etsy are showing that continuous delivery with issue multiple high-quality upgrades every day is not only more productive: it creates a better workplace.

A new strategic necessity: Agile

And after it’s happened, there’s no going back. Capitalism’s process of creative destruction then takes over: knowledge can’t be put back in the bottle. Once it is known that it is possible to operate in this better, faster way, it will inexorably become the new normal. Customers will expect nothing less. Except where government regulation or private monopolies preserve the status quo, firms that don’t adjust over time won’t survive.

Becoming Agile will steadily become a requirement just to stay in business. In effect, for most companies, failure to acquire digital agility will be an existential threat and so, establishing digital agility has become in effect a strategic necessity.

How practical is it?

Richard Straub, President of the Drucker Society Europe wrote that “improving the software in small increments seems to work much better than having a mega update in longer cycles. It seems to work better for all stake-holders – customers, employees and the investors.” He also had a few more practical questions worth exploring:

Richard Straub: Can you really talk about innovations with regard to this continuous updates? Some of them may be incremental innovations (assuming they create new value and the company would know that it is new value), some may just be updates to correct what did not work properly or what customers did not like.

SD: We are talking about improvements to the site, not just fixing 30 bugs per day.

RS.  What are the sources for the changes? Are these just good ideas by employees? Or are they based on studying the usage patterns and customer feedback or analyzing major trends in the marketplace?

SD: As in all good Agile implementations, the changes must be closely focused on improving the customer experience, although many of the changes are what’s known as “dark” changes. They operate in the background without the customer seeing.

RS: What is the overall framework in which the decentralized decisions by individuals or small teams are made? How do they ensure that with these thousands of changes the whole platform does not lose a coherent architecture over an extended period of time?

SD: At Etsy, they are constantly measuring the impact of everything they do and can see immediately whether something is improving things or not.

RS: With a large releases you will know if it has gone right or wrong. How do you know with all these continuous changes? Can you still find out a likely causality for performance improvement or degradation?

SD: Etsy is constantly monitoring the impact at the local level and at the system level. Changes that improve things locally but degrade the overall system don’t pass the automated quality control tests that are in place.

It’s true that with a large releases you know if it has gone right or wrong, but often it’s not clear what is the source of the problem. And a lot of damage can be done while the problem is being fixed, as can be seen with some of Microsoft’s releases over the past few years. With continuous deployment, you can monitor the impact of each one as soon as it happens, so it’s much easier to see what is causing what, and much quicker to fix it or at least reverse it.

If they keep growing and adjusting at the current pace, it may well be that they will have to review the architecture at some point. That would be a separate improvement project, which of course would take more than a day.

RS: What would be the learnings beyond this specific software development process? What can be applied to other fields and how could this be articulated?

SD: There are many. Some key ones:

  • You might say that Etsy is rediscovering what Toyota discovered several decades back, namely, that short cycles of production can be more efficient and effective if they are used for learning. It’s just that Etsy doing it a hundred times faster than in manufacturing.
  • It has lessons in terms of trust and delegation and removal of organizational barriers. One company I know has a backlog of almost a thousand suggested improvements. How many years will it take for those improvements to be approved and implemented? With the hierarchical bureaucracy in place, it will be many.
  • What Etsy is doing is only possible with continuous automated testing and measuring of everything that is done. To emulate this experience fully, other fields will need to upgrade the testing and measuring of what they do.

An instance of integrative thinking

Roger Martin, Academic Director of the Martin Prosperity Institute commented:

This is an interesting example of what I write about as Integrative Thinking.  When you have two seemingly opposing models, the choice isn’t to either choose one or the other or to compromise. It is to come up with a creative resolution of the tensions in such a way as to create a better outcome than either.

So here, option 1 is update very infrequently, which avoids burnout but migrates the site very slowly, which is bad for customer value. Option 2 is do it rapidly, which is better for customer value but burns everyone out.

Integrative solution:  Change the way you think about updates. They don’t have to be perfect if they are very small. Do it continuously and fix the little problems that arise after the fact. That updates the site even faster than Option 2 and makes staff feel better than Option 1. It’s an integrative solution. But it requires changes in the fundamental assumptions around the problem.


Read also:

How Etsy issues 30 software upgrades per day

Another workplace of the future: Sun Hydraulics

The best-kept management secret on the planet: Agile

Is the US in a phase change to the Creative Economy?

Five surprises of radical management


Steve Denning’s (@stevedenning) most recent book is: The Leader’s Guide to Radical Management .

Follow Steve on Twitter at @stevedenning


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