No Product is an Island

As I left Reuters (now Thomson Reuters) at the tail end of 1998, grand dreams about the kind of business I was going to build soon gave way to cold harsh reality – that in fact I didn’t have a clue what I was doing. Compared with the present, 1999 was a very different time to start a business. The internet was in its relative infancy, with little more than 40% of Americans on-line (probably even less people in the UK). Although invented some ten years earlier, xDSL was still a way from becoming mainstream and most people were getting by on V.34 dial-up modems running at 28.8 kbps. Although it was the height of the dot-com era, unless you were in a cool start-up venue like Silicon Valley, you were largely on your own. The first Joel on Software article wasn’t due for another twelve months and In Search of Excellence was the only business book I owned – given its follow-up publicity, it was perhaps fortuitous that I never got round to reading it. Any success we subsequently enjoyed in my business was largely due to a combination of good luck and the presence of some genuinely bright, hard-working people around me.

Things are very different these days, in great part because the Internet has made everything so much more accessible. Through the magic of the web, I’ve been able to learn from dozens of blog authors who, in terms of founding companies, have been there, done that, and got the T-shirt. (There is even a place to go and ask questions of many of these founders.) Since my last firm was acquired roughly four years ago, I’ve also had the opportunity to read more books about entrepreneurship (many of which have been written in the last decade) – again the Internet has made the process of identifying and buying good business books so much easier. One book I was challenged by last year was Geoff Moore’s Dealing with Darwin – How Great Companies Innovate at Every Phase of Their Evolution – it was this book that convinced me initially to propose a spin-off business to my then current employers, and subsequently to leave and start another business. (Prior to Darwin, Moore wrote the seminal technology marketing book Crossing the Chasm). So you can imagine how pleasantly surprised I was to be sitting at breakfast with the author himself at the Business of Software conference in San Francisco last November, and hear about some of his ideas close-up.

My point is that as one of this current generation of entrepreneurs, I feel incredibly privileged to be able to learn from other people’s successes and failures at close hand – this really wasn’t possible ten years ago.

Lessons learnt from recent research

Another well-respected speaker at Business of Software 2009 was Don Norman, famous for his insightful classic The Design of Everyday Things. Norman, despite turning 75 this year, is highly active in the field of user experience as both university professor and independent consultant. (I hope I have his energy as/when I make it to his age.) In his talk ‘Ten rules for successful products‘, he introduced the audience to the concept of “Systems Thinking” in terms of delivering product. He discusses these ideas some more in an article entitled Systems Thinking: A Product Is More Than the Product he wrote for interactions magazine. My takeaway from all this is that we so often think of a software product in terms of the bits that get installed onto the user’s machine (or that are hosted in the case of SaaS), but his point was that successful companies take a much more holistic view.

Take Apple, for example. It’s quite instructive to watch the first iPod launch video. At the point that Apple released iPod, there were plenty of MP3 players in the market, but in pretty much all cases, the big issue was getting music onto the device. Recognising this, Apple didn’t just launch an MP3 player, they provided the customer with a complete portable music solution, tying together the purchase and download of music through iTunes to its subsequent enjoyment on the device. The Amazon Kindle story is very similar – there are plenty of e-book readers out there, some arguably better, but Amazon have delivered a complete electronic book solution for their customers, one which is designed to work world-wide.

Coming to grips with this concept, I started to wonder how it could have hypothetically been applied to my previous business, to see what we could have done differently (i.e., better). We provided business to business connectivity software to the financial market community and we took a decision very early on that as product businesses scale much better than service businesses, we would get out of the consulting space and focus on product development. On the face of it, this makes sense – if you have three developers that can either consult or build product, then long-term, you get much better leverage from them building products that can be sold to dozens of customers than you do from them working on specific customer projects. However, the logic is slightly flawed, as we found out as we attempted to grow the business.

In our business, it was all too often the case that prospects needed some small tweak or some little piece of integration undertaken in order to make use of our product. (Generally they were willing to pay for this.) Had we taken a more holistic view of our business, we would have seen that providing such a service alongside the product would have strengthened the overall offering, as customers would have got a complete solution to their specific problem, rather than a piece of software and a whole new set of problems.

Going forward, what have I learned for my new business? The key lesson is that providing a piece of software, even if it is reliable, easy to use and comes with great customer service, is still not enough. We need to look beyond the raw bits to the heart of the customer’s business problem, and by taking a holistic approach, find ways to add value by gnawing away at those same problems. This could be through an accompanying integration service or perhaps finding some way of helping them with their customer’s problems. I have no doubt that seeing the solutions we provide as a form of eco-system rather than a raw product is a sure-fire way to build a more successful business. To quote Don Norman, “No product is an island“.

Have you come across other examples where “systems thinking” has really made a difference to business? Is this something you’ve experienced yourself? Please leave a comment and let me know.

Tagged as: systems-thinking