Is your company going to be digital or not?

A month after opening our 2nd office and meeting with people in Los Angeles, CA, one thing is very clear: companies know they need to move into the digital world, and they know they need help getting there.

There is an excellent article by Rana Foroohar on the economic divide between the tech and non-tech wold. This divide rolls all the way down to payrolls of workers within industries but fundamentally lies with the economic advantages that come with being digital:

1. The ability to scale infinitely
2. 0 time to market
3. Access to global markets
4. (Almost) no costs except payroll

There is so much money to be made through exploiting these digital advantages that there is currently a race underway in every sector to provide the digital infrastructure that will underpin that industry. It's a race that not everyone knows about and will involve shedding the notion of technology as a competitive advantage. The companies that prosper most will be the ones who provide the software for the largest portion of their market. A great example of this in the media space is MLBAM - a media solutions provide grown out of Major League Baseball. They are responsible for the streaming software that powers huge chunks of media conglomerates including household name apps like HBO GO and NOW. However as they have achieved more success they are also quietly entering the media licensing market, meaning they are going to be competing with some of their customers.

So why doesn't everyone just build their own software in house? The problem is that technology is hard, and workers are scarce. IT broadly has a project failure rate of 80% which makes pivots into software extremely risky. This has cemented the position of software consulting companies with a proven track record for delivery as key partners. As the CEO of one of those companies I believe it is not only competence is the space that is required, but a commitment to helping customers and a strong ethical foundation. A strong relationship built on trust is the core I look for in all the vendors we work with; anything less is simply transactional and the transition for companies into the digital space is too fraught with roadblocks and landmines to be transactional.

At the end of the day my advice to the CEO of every company is to ask whether is 30 years from now whether they intend to be the leader in their industry or the leading provider of software provider for their industry. One of the two will be a commodity with margins eroded while the other will be the epicenter of wealth and innovation within their space.