Early on the idea of an “Application Economy” was revolutionary.

Very few companies embraced the concept that any business, no matter what the industry, should imagine, create, and distribute online tools, apps, or products.

Today, as leading analysts and market pioneers continue to prove the business value of customer-facing apps, more and more companies are taking digital transformation seriously. They understand they must start thinking and acting like a software company, and some of them are… but that doesn’t mean every company is doing it well.

Why do we need to think like a software company? Your customers lead increasingly digital lifestyles. Whether you realize it or not, their expectations will naturally stretch your organization – not just in IT but also in marketing, in customer service, and in virtually every functional area – in entirely new ways.

Why? Software is now the face of almost every business. Customers want to do business via applications so that means your company must provide those applications. But you don’t become a software company simply by adding some mobile functionality. You need a thorough understanding of all the latest digital technologies, a product strategy, a go to market plan, a support plan, a plan (and commitment) for implementing organizational change…

To survive, your company cannot just evolve – it must transform.

But at the same time you don’t need to scrap your core business. Thinking like a software company is additive; it’s not about changing what you do but about transforming how you do what you do.

So how can your company make that transformation?

Manage IT like a profit center.

For years IT was, in fact, a cost center: servers, networks, software, and programmers supported operations… someone had to maintain databases, manage data, and provide assistance to users. Information Technology was, like preventive maintenance on equipment, a cost of doing business.

Not here. While your IT department should still support operations it should also generate revenue, but that function should not report to the COO or CFO.

Instead have the person building products for your customer report to your CMO or CEO; that change in reporting will immediately begin to shift the way you see – and utilize – your technology resources and capabilities. Now, you will focus on driving up value and revenue instead of driving down costs.

Listen even more closely to your customers.

Customers, like most people, don’t actually know what they want. They know what they need – they know their pain, their problem, their issue, or their challenge – but they don’t know how to solve it.

Say I ask you to design a new car. In all likelihood, you’ll start by telling me what’s wrong with the one you currently have. (Why? What you have is your only real frame of reference; it’s incredibly hard to dream up something brand new.)

The same is true for your customers. They can’t articulate something new because they can’t imagine something new.

What they do know are the problems they have – and that’s where you come in. You can solve their problems. You can figure out how to solve their problems. You can imagine solutions they could never dream of. You can ensure customer experience remains top of mind for everyone in your organization.

But that means you must get out of your own box and truly understand your customers’ problems – and the only way you’ll do that is to really listen to your customers.

Don’t just sell. Engage.

Technology – and the shorter attention spans that result – makes brand loyalty increasingly short-lived. That’s why customer engagement begins not with selling but with engagement by building relationships and brand affinity.

Increasingly, software can create those relationships. Think about all your customer touch points and adopt new ways to get information to your customers and to listen to their feedback.

How you want to interact with customers is irrelevant; how they want to interact with you is everything. Increasingly they want those interactions to be digital, and that creates the perfect opportunity for your company to find new customers, engage existing customers… and drive more sales to your core offerings.

But – again – the only way you’ll do that is to really listen to your customers.

Build a culture of permission.

Want your employees to be creative? Want your employees to be innovative?

Then you must give them the permission – and the freedom – to fail.

When you expect every new idea to work you ensure no new ideas are ever tried. Why would any employees risk being sorry when they can be safe? Think about Google; you often hear about projects that sound crazy. Some turn out to be crazy.

But that’s okay; no one at Google gets punished for trying crazy ideas. If something doesn’t work, they don’t waste time blaming people – they just stop and move on to another idea. Successful software companies adopt a mindset of freedom and taking chances: they give their employees room to try, to stretch, to dream, and occasionally to fail – because they know that blaming for failure is the fastest way to stifle creativity.

Accept that every idea won’t work. In fact, be excited that some ideas don’t work – that means your employees have ideas and are willing to try them… and that means you’re fostering a genuine culture of innovation and pushing yourselves.

Make sure you value outcomes over time.

Most businesses say they value achievement. In theory most businesses really do value achievement, but in practice they stifle it. How? They lose sight of the goal by over-managing the process.

The key to thinking like a software company is to value a desired outcome over incremental units of time. What matters more: how many lines of code were written per hour… or whether a new application is delivered on time, on budget, and to specifications?

Give people the freedom to work the way they work best and they will naturally be more creative and innovative – and their work and your products will benefit.

Want to have the mindset of a software company? Start by thinking and acting differently.

Not only will a major shift in perspective and attitude help you develop some cool new products and services, it will transform the way your entire organization operates – and transform your relationships with your customers.

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