Software has been an important—if often hidden—shaper of industries and consumer behaviors for several decades. But in the past decade or so, we have seen how software can fundamentally alter, disrupt, and create industries, business models, and sources of competitive advantage. Software is the thread that stitches together what we call the “digital metasystem”—a digital environment that offers the ability to mine big data and connect and engage with customers anywhere and at any time.
This software-powered digital metasystem will have far-reaching impact, crossing industry boundaries and pervading all aspects of business and society. Understanding these developments cannot be optional for management.
Companies in the technology, media, and telecommunications (TMT) industries are at the vanguard of bringing the products and services to market that will drive this cross-industry transformation. Future winners will grasp this opportunity by responding to the needs of customers, expanding to new customer groups in emerging markets, and building trust in business models that are driven by personal data. Lasting success will require much more, however. Leaders need to understand this rapidly changing landscape, and companies need to transform their mindsets, capabilities, and overall business models.
Companies that can quickly and effectively build capabilities based on software and computer intelligence into their business will gain competitive advantage. They will need to focus on innovation rates but also on overall strategy, alliances, customer-centricity, and productivity—essentially managing the transition from current business models to new ones.
In addition, engagement with policymakers and regulators will be increasingly important. Because technology is changing faster than regulation, leaders must ensure that regulatory policies are based more upon broad principles of conduct; policies must also recognize and enable innovation.