Opinion

Adopting a Silicon Valley approach as software eats Continental Europe

7 min read

06 May 2015

We all have the potential to find success in an increasingly digital world. Businesses that disrupt traditional value chains can be built in a matter of days and weeks instead of months and years.

In 2011, Marc Andreessen wrote an article called “Software is eating the world” in which he stated that software would continue to disrupt new industries. Software’s impact is no longer limited to markets for immaterial products – it’s eating up the value chains of many businesses that we see as dealing in physical products.

Just look at the rise of Netflix, LoveFilm (Now Amazon Instant Video), iTunes and the demise of Blockbuster. Or the changes the taxi industry has undergone since the advent of Uber. Three and a half years after the article was published, we’re all familiar with company’s business model, based on bringing together existing resources and needs. Uber doesn’t own a single taxi.

More recently we’ve seen people like Keith Rabois, a partner at Khosla Ventures and former executive at LinkedIn, PayPal and Square say that ‘software will eventually replace doctors and lawyers’. We’re perhaps still a little way from this, but it’s an interesting concept that software could disrupt such established and personal professions.

As software becomes an integral part of the business for a growing number of companies, operational models in a variety of industries start to resemble those of the software industry. Product cycles will be shorter and the need for faster decisions will grow.

Read more on Silicon Valley:

New winds on the old continent

Dutch bank ABN Amro is working to create a fast lane for innovation. In September 2013, it opened an innovation centre that uses lean startup thinking in its operations. As a part of its private banking operations, ABN Amro has applied the methodology to develop service concepts to a prototype level in a mere five days, with senior private bankers flown in from around the world to work together. In the banking and finance world, this sort of fluidity and quick execution would have previously been almost unheard of.

The media industry is changing fast and companies are looking for clues of how to build their own future. Leading Nordic media group Sanoma Corporation’s internal innovation accelerator Sanoma Labs uses the same methodology. The goal is to build international digital products in a variety of domains ranging from consumer learning and content distribution to kids’ games and more. Initiatives originate from promising concepts of local origin or selected from separately run accelerator programmes.

”It all depends on the people in the organisation,” Don Norman, the grand old man of user-centred design, recently told me. He sees the fact that corporate employees’ time is spent in meetings and waiting for meetings as a major challenge.

Continue reading on the next page for Calonius’ thoughts on changing the way we think – it’s in line with Hassle.com co-founder Jules Coleman’s comments on changing the mindset when it comes to building entrepreneurial skills.

Changing the way we think

Can a product be sold before it exists? It sounds counterintuitive, but makes a lot of sense. Interacting with customers helps product developers determine whether consumers are ready to buy the product before investing in making it a reality.

There are obstacles to doing this in an environment with an established brand and several decision-making levels to go through before any content is published.

Deutsche Telekom started an initiative in early 2014 to enable a nimbler approach to innovation practices in its organisation. It brings new practices to a tech-driven company where collaboration with university scientists is a point of pride. The company is still struggling to understand the value of customer contact during the innovation process. It applies the approach and assumes the results will speak for themselves.

In 2014, Futurice conducted a survey on the state of digital transformation in Finland and 70 per cent of the responding companies had digital initiatives in their top three strategic projects. The greatest challenges the companies said they faced were the sluggishness of their organisations, corporate culture and difficulties identifying digital opportunities. Corporate structures are traditionally optimised for success in the present and a given market.

Success in an age of accelerated change requires that an organisation understands the customers’ needs and is capable of meeting them quickly with the right services and products.

The paradigm shift that originated in Silicon Valley continues to travel east. Slush originated in Finland, but it’s built on the startup ethos. The first official Slush Asia will take place in Tokyo in April 2015. 

Consultants from Futurice and other Finnish companies spent the last week of the month showing Japanese businesses how they too, can use the new approaches to kickstart their innovation motors, thinking and acting more fluidly, learn through experimentation and embrace a fast growth mentality.

No matter where in the world they come from, companies that develop solutions to answer questions we aren’t even aware of yet are going to be the winners in this digital transformation.

Mathias Calonius is head of consultancy at digital services firm Futurice.