Ask someone to tell you about IKEA and they’ll probably mention flat-packed furniture, afternoons spent trying to find piece A or screw B, and that uneasy feeling you get when you have a fully assembled bookshelf or bed…but still have one piece left over.

For most people IKEA can be described as a furniture company or maybe a homewares company, but almost nobody will describe it as a software company.

Which is a shame because, for the last couple of years, IKEA has been thinking, acting, and growing just like a software company does.

In 2016 Fast Company published an article with the provocative title IKEA’s Quest to Think Like a Software Company. It outlined how the Swedish giant was adopting an approach to business and to product development that was more Silicon Valley than Scandinavian.

Furniture designer Tom Dixon explained that, much like a software company would build a platform upon which developers could design all sorts of software solutions, IKEA had developed core platform products that designers could build on top of. A sofa became an “open source platform” on which designers could innovate and iterate, and even “hack” – as IKEA’s Head of Design Marcus Engelman put it, “You buy the platform from Ikea and the upholstery from somewhere else”.

IKEA might have been one of the early cross-over companies beginning to think like a software company, but they weren’t the last. Indeed, I am convinced that today every company needs to start thinking like a software company, and that there are enormous productivity and business benefits ready to flow to those that make this change in thinking part of their digital transformation.

Thinking Like a Software Company

As the CEO of Cosmo Tech, a software company I founded with Michel Morvan back in 2010, I’ve become used to thinking like a software company. While you’ll find a marketing, sales, finance, and HR teams at Cosmo Tech just like you would at any other company, we decided to break the silos and separation between departments that is common in most companies and to encourage collaboration within multi-disciplinary and agile teams around our solutions. As a result, members of our solution teams can now interact constantly and with autonomy to scale from idea to action faster than endless meetings and navigating corporate hierarchies ever could.

This agility is a hallmark of a software company, but it’s not the only way that thinking like a software company can help transform a business.

Consider the cycles of product development in the software industry. Software companies don’t wait for their products to be perfect for an entire market of potential users. Instead, they identify early users, go to market with the minimum viable product (MVP) that can add value immediately, and then build towards a more complete product that responds to a growing client demands while reaching more users as word spreads. A traditional company seeks to have everything perfect for launch, while a software company seeks to add convincing value at launch and then get started on iterating the product towards perfect.

Software companies also understand that the very process of building something often results in building something else along the way – and this ‘something else’ can be monetized, too. I regularly talk with leaders in some of Europe’s biggest companies that have adopted this ‘think like a software company’ approach and that have begun to monetize parts of their business that were only ever necessary, in-house by-products in the past. A piece of software written in-house to overcome a specific issue can be generalised, adapted for use by others, and sold on the open market; indeed, some of the biggest companies in Europe are creating new business and significant margins by doing exactly that.

The Next Step in a Digital Transformation

Digital technologies are already impacting the way that businesses are run, and most business leaders recognise that the digital transformation is one of the major challenges that they are facing and will continue to face.

Yet the embrace of digital technologies is just the first step in a digital transformation. The necessary second step is the embrace of a new approach to business, an embrace of thinking like a software company.

The value of doing so is, for me, so very clear, and the value of larger companies working with the startups as they make this transition even more so. I’m convinced that partnerships between large corporations either beginning or in the process of making their digital transformation and smaller ‘born digital’ startups are truly examples of win-win business relationships. As corporate leaders continue to come around to thinking more like software companies, the opportunities for big and small businesses alike will only expand.

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