Every once in a while, someone writes something that gives voice to an idea you’ve struggled to articulate. Marc Andreessen just did that for me with Why Software is Eating the World.
The essence of his argument is this: software-based businesses are rapidly displacing businesses that aren’t software-based. Amazon is replacing Barnes and Noble. Zynga is replacing Milton Bradley. Netflix has already replaced Blockbuster.
Business Process Automation
This isn’t just happening at a macro, industry level. It’s happening at the micro level too – right down to the individual tasks you perform at work. Just look at the field of business process automation, a class of technology that, until recently, was only seen in very large companies. That’s changing now as companies like Salesforce simplify and reduce the cost of capturing what we do in software.
Capturing “business processes” isn’t really anything new. Management gurus have long talked about documenting “best practices” and we have a long history of industrial pioneers like Henry Ford who have obsessed over streamlining the way we organize ourselves to get work done.
When we capture those good ideas and best practices in software though, something important happens. Those processes can now be executed in software, and that enables us to automate them and scale them up in ways that we simply couldn’t before.
This ability to virtualize work is showing up in lots of places, and with varying levels of continued reliance on humans. Manufacturers have virtualized large portions of their design processes with Computer Aided Design, but still need talented human designers to lead these processes. On the other hand, Automated Teller Machines (ATMs) disperse cash for us without any real assistance from humans, aside from periodic restocking. That’s a process human beings used to do for us not long ago, but it was one that was simple enough that banks and customers agreed that software did a better job, and for less money.
And that’s usually the catalyst for software virtualization: lower cost, better service.
As software gets more sophisticated and more widely integrated into the nooks and crannies of our organizations, the range of business processes that we can virtualize will steadily increase.
One area where we’ve seen huge jumps in process virtualization are the communication and engagement processes that organizations use to connect with the external world. I see these processes as a kind of “organizational membrane” and one of the greatest sources of competitive advantage these days stems from using software to scale up these connections at lower cost and with better service. That’s how Amazon provides a ‘personal’ shopping experience to millions of customers everyday. It’s how Netflix, Zynga, and Facebook serve their huge customer bases as well.
These firms dominate their respective markets because they know how to use software to virtualize the simpler, more straight forward aspects of connecting with their customers. It’s what enables them to scale so magnificently. As customers engage more deeply, and the level of complexity increases, the need for human touch becomes more important, so software doesn’t solve everything – and that’s the essence of the “engagement pyramid.” But what I didn’t address when I wrote that piece is that software is slowly working its way up that pyramid, replacing more and more of the way organizations engage their external constituents.
I Was Wrong. Humanity is Not Guaranteed.
I don’t like contradicting people – especially myself. But I have to correct something I wrote a few months back when I noted that “the organizational membrane may be augmented by technology, but it’s still fundamentally a human phenomenon.” Thinking back on that statement today, I have to say that I’m not so sure.
Will we reach a day when software takes its current trajectory to a logical, if somewhat frightening, conclusion? Will software one day run our organizations? I’m not talking about “run our organizations” in the way our cars ‘run’ on gasoline. I mean “run our organizations” as in “Steve Jobs runs Apple.”
It may seem a bizarre question, more worthy of a science fiction novel than a blog about people and organizations, but I’m quite serious. In our current economic system, where we run companies exclusively to maximize wealth for shareholders, what really would stop us from taking our organizations to this ultimate level of efficiency? Assume for a moment that it is possible, that Moore’s Law will eventually get us there. What would stop us from completely virtualizing our organizations by managing them entirely with software? What would stop us from completely stripping them of their human soul?
I’m not sure what the answer is. Are you?