Why You Need to Be a Software Company
No matter what you make, no matter what you provide, if you want to succeed, you also need to be a software company. Here's another in my series of interviews in which I pick a topic and connect with someone a lot smarter than me. This time I talked to Joel Basgall, co-founder and CEO of Geneca, a Chicago-based custom software development firm and six-time Inc. 5000 honoree.
I've heard you say, "The only successful companies will be software companies." My friends in manufacturing would take exception.
As industries, the economy, and the world evolve, there's only so much you can do in the field you're born into: manufacturing widgets, providing a service, selling DVDs, whatever it is you do. The only thing that does not have limits is software. With software, the only limit is the imagination of the people who develop the ideas. That means you can pile software on top of every industry. Software will make or break your organization. Do it well and you can win your market. Don't do it well and you will lose.
And to take it a step further: Anyone thinking about starting a company should make sure software is a part of the go-to-market strategy. Don't wait until it's too late.
Most organizations will say, "Wait. That's not my core competency."
That's what they should say.
But. Say I'm a manufacturer. Here's my problem. Someone else will eventually catch me on speed. Someone else will eventually catch me on price. I have to find a true differentiator, and that differentiator is software: allowing customers to use widgets, giving customers design tools, providing easy customization...
The only way to stay ahead is to innovate, and how much innovation is possible in the real world where the rules of physics apply to everyone? You need a differentiator that doesn't have to follow rules, and that differentiator is software.
So I still do what I do, but I change my operating perspective.
Say you're a service company. The people you bring to the table are your product. Unfortunately, that model is expensive for your customers and expensive for you, because it's difficult to leverage. But if you use software to create new services, enable greater efficiency, enable self-service--then it's cheaper for the customer and ultimately for you, especially as you grow.
It's infinitely easier to deploy software than it is to deploy people. Software lets you bake your intellectual property in and then scale it.
But what is groundbreaking to customers today is ho-hum tomorrow.
Absolutely. That's why you use your people to deal with exceptions, to deal with the unusual, and to work on what you'll provide next.
Generally speaking, a competitive advantage only lasts about 18 months. The top of the pyramid quickly moves to the middle, then the bottom, so you constantly have to keep moving up. That's where the skills and talent and ideas of your people really come into play--innovating so you can continue to differentiate.
So what about my budget? Most companies have an IT budget, but that money tends to be spent on infrastructure and support, not "new."
The average company sees IT and software kind of like maintenance. It's a cost. Smart companies view software as a way to generate revenue. They see it as investment, one with a measurable return.
When you think of software as a way to generate revenue, suddenly it becomes a "cost" you want to increase, because it's a way to increase sales, increase margins, and create greater differentiation. Suddenly, software is a way to be proactive, to harness ideas, to lead the market--not a burden or a distraction.
But what if I didn't go into business hoping to be a software company?
Entrepreneurs start a business because they love what they do, but as they get bigger they spend less time doing what they love and more time running the company. Leveraging software actually lets you get back to doing more of what you love, because not only does it streamline and automate your processes, it streamlines and automates processes for your customers--and frees you up to think of creative ways that doing what you love can better serve your customers.
Check out other articles in this series: