Why accelerate?
The expected lifespan of companies is decreasing rapidly. According to Richard Foster from the Yale School of Management, the average lifespan of a Standard & Poor's (S&P) 500-listed company 100 years ago was 67 years. Today, it is 15 years. Every 2 weeks, an S&P-listed company goes out of the market, and by 2027, it is expected that 75% of the top 500 companies will be replaced by new companies. Another study from the Santa Fe Institute (The Mortality of Companies) concludes that the average lifespan of a United States (US) company across all industries is about 10 years.
To remain competitive, companies must not only solve a customer problem; they also need to deliver products and services that delight their customers, and they must be able to engage with the market and respond quickly to changing demands. Time to market is the most important driver for business agility.
Software is at the heart of every product and service in every industry, not only because the digital experience has become as important as (or maybe even more important than) the physical experience. Software touches every part of a product life cycle, for example:
- Production:
- Supply chain management
- Cost optimization/predictive maintenance/robotics
- Product individualization (lot size 1)
- Sales, after-sales, and service:
- Webshop
- Customer service and support
- Social media
- Digital assistant
- Digital product:
- Companion app
- Integrations
- Mobile experience
- New business models (pay-by-use, rent, and so on)
These are just examples to illustrate that most interactions your customers have with your company are digital. You do not just buy a car today—you are already aware of the brand from social media and the press. You buy and configure a car on a website or in a store with a salesperson, but also by looking at the screen of a tablet. The price of the car is influenced by the optimization of your assembly line by robotics and artificial intelligence (AI). The first thing you do with the car is to connect your phone. While driving you listen to music, make a phone call, or respond to a text message using your voice. The driving assistant keeps you safe by braking for you if something is in your way and by making sure you stay in your lane; and soon, cars will do most of the driving autonomously. If you have a problem with a car or an app, the chances that you'll use the app or email to contact after-sales are high, especially for the younger generations. A car is mainly a digital product. Not only are there millions of lines of code that run in a car, but there are also millions of lines of code that power cars' apps, websites, and the assembly line, (see Figure 1.1).
Figure 1.1 – Software and data at the heart of the customer experience
The good thing is that software can be changed much faster than hardware can. To accelerate your time to market and your business agility, software is the key driver. It is much more flexible than hardware components and can be changed in days or weeks, not months or years. It also allows a much better connection to your customers. A customer that is using your app is more likely to respond to a survey than one in a physical shop. Also, hardware does not provide you with telemetry of how your products are being used.
To be one of the companies that stay in business for longer than 10 years, your company must leverage the power of software to accelerate its market response and delight customers with a great digital experience.