Why You Need to Run Your Business Like a Service

Having established, apparently, that technology companies have everything all figured out, companies from all the world’s industries are now mirroring Google and Apple in the hope that something will rub off on them.  There’s nothing demonstrably dumb about modeling your organizational processes and business strategies after some of the most successfulit takes more than a black turtleneck corporations in the history of the universe.  But it takes more than a black turtleneck and New Balance sneakers to be a visionary, and achieving such lofty aspirations often means saying goodbye to many of the core philosophies and machinations of commerce that made these companies successful in the first place.

Doesn’t really matter what your product or service is. At a certain size and scale, all organizations inevitably find themselves at a crossroads where they’re forced to confront their inefficiencies and embark on the painful journey to whatever comes next. The other option is extinction.

One of the many elixirs proffered these days is the notion of flexible and independent IT platforms that don’t so much replace but rather reorganize disparate business units and processes with technology as the lynchpin. This so-called “platform play” detailed in a recent McKinsey report posits that banks and automobile manufacturers and just about anyone else can eventually realize the competitive advantage that Big Tech currently enjoys by emulating their modular approach to innovation.

What does this look like?

A platform-centric company could have five or 10 or even 40 different platforms, each of them large enough to provide an “important and discrete” service but small enough to be manageable.

The report said that each of these platforms are formed and defined by logical clusters of activities and associated technology that delivers on a specific business goal or process. The idea is that each of these individual platforms is operated as an individual business or, more aptly, a “service” within the overall organization.

They can be managed individually with the usual roles and responsibilities clearly articulated for whatever the purpose of the platform may be. Individually, these service groups are flexible enough to respond quickly to changing business conditions – a surge in demand for solar panels in a particular city or region, for example – without the hindrance and lethargy of the mothership’s bureaucracy and complex entanglements.

These service platforms live to serve clients – internal or external – and to supply “product” to other platforms in the organization. The product could be an actual physical product or, more likely, a technology-based tool – a database or a complimentary application, for example.

“They operate as independent entities that bring together business, technology, governance, process and people management and are empowered to move quickly,” the authors wrote.

In practice, these teams get the freedom and responsibility to experiment with ways to better provide their service. They’re managed by a platform owner who takes end-to-end responsibility for delivering the service to the clients.

“These platforms are each managed individually, can be swapped in and out and when assembled, form the backbone of a company’s technology capability,” the authors wrote. “Just as important is that the business and tech sides of the company work closely together and have the decision-making authority to move quickly.”

Building a flexible platform team takes some doing.

Generally, teams of 20 to 30 people are formed for each platform. The head honcho can be an executive from either the business or IT “tribe.” The rank and file of the team is comprised of business members who share responsibility with the technical team for all the design and ongoing management as a business. The technical members manage all the various IT applications associated with the platform and handle the day-to-day operations and ongoing feature development.

This approach is quite a departure from the mindset that permeated some organizations – tech and otherwise – over the past few decades. More than a few CEOs would often lament how much IT was “costing” as new hardware, software and services were added rather than appreciating how much money was being saved or generated by improved productivity and streamlined efficiency. Those days are long over.

Walmart, after watching Amazon eat its lunch for about a decade, now understands both the necessity and challenge of transitioning your organization to a tech-first mentality.

Recently, Jeremy King, the company’s chief technology officer, resigned after spending more than eight years overseeing the retailing giant’s IT overhaul to better compete with Amazon. The other shoe fell a few days later when Pinterest hired King to be its new head of engineering where, among other things, he’ll be spearheading the soon-to-be public firm’s efforts to streamline in-app purchases.

Whether you’re an old-school, brick-and-mortar operation from before the Mayflower or a decade-old visual search engine birthed and functioning exclusively online, winners and losers will be determined not just by what technology is implemented but how that technology is managed and leveraged within the company.

“Becoming a platform-based company is ultimately a question of mindset,” the report concludes. “It requires both the determination to stay the course and the flexibility to change and adjust based on what the platform teams learn.”