As with most modernized economies, the United States economy utilizes capitalist principles. It is only fitting that we invented a technological solution that will help companies engage in c-api-talism using APIs in a more efficient manner.
If we look back into the history of mankind, we progressed towards more civilized, mature, monetary-based economies on a steady basis. The progression from the Stone Age, to the Bronze Age, to the Iron Age, to the Industrial Age and to the current Digital Age all made strides towards the current digital economy.
The Stone Age was about using stones with sharp edges as tools for hunting and gathering, which created a self-centered economy for accumulation of wealth for families and established tribes which led to a localized trade and economy.
The Bronze Age created more sophisticated tools and hence an urbanization concept, fine craftsmanship and the establishment of inter-community trade. This resulted in chiefdoms, cities and regional economies.
The Iron Age gave birth to literature, languages, art and more. This also led to government based national economies. Kingdoms and empires were established during this period resulting in trade, culture, and economies that are driven and controlled by a central authority.
The Industrial Age started the ideas of complex socio-economic cultures, power driven machines, first establishment of automation tools for self- service and semi-automated economies. Countries with defined borders and currency-based economies backed by governments were all established in this era.
Finally, we are at an age – the Digital Age – where the sophistication of mankind and the thinking that separates us from the other living creatures is truly taking shape. In this digital economy stage, we are trying to establish self-serving, borderless, universal trade practices that can be entirely defined, established, conducted, consumed, and paid using digital methods. This is where we are starting to establish legacies.
In order to truly participate in the digital economy, the following need to be done correctly.
1. Convert your assets to digital
I see many corporations struggle with this. There is a major difference between a digital immigrant and a digital native corporation. Most digital native companies are either cloud-born or have IT systems that can easily engage in digital economy. Most digital immigrants have already spent a lot of money in building industrial grade IT systems which are isolated from the connected digital world. The digital transformation process is not only expensive, it’s also very time-consuming. The digitization of assets, or digital transformation, is the first critical step that will help you engage in the digital economy. Legacy modernization, digital transformation, hybrid integration, cloud migration, IoT enablement, Big Data/Analytics and insights, are all part of the process that helps organizations get there.
2. Expose them via flexible interfaces – APIs.
The digital economy is a different beast than the other economies. It can grow hyperbolically and have a mind of its own to help take your business to the next level, whether it is B2B, B2C or B2B2C. Regardless of the nature of your channel, the exposure of your digital assets in a frictionless manner is the next important step to engage in digital economy. A corporation can digitize its assets, but if those digital assets are not properly exposed, secured, governed, managed, and utilized then you have created a digital brick which will be worthless. By providing a flexible interface, or APIs, you not only can provide a frictionless interface but also manage a self-service interface that will allow others to take your business to the next level. For example, a digital native developer can find your digital assets so useful that he/she might create a mobile app that would put your corporation in a trade market you never dreamed possible. I have seen companies create and participate in global economies so far out in Africa, by having a small office in the USA, but never have agents, an office, a phone, a partner or other capital or recurring expenses in Africa.
3. Monetize the consumption.
After you have done all of the above, when it is time to stand tall in the digital economy I have seen many corporations miss out on this area badly. Exposing your digital assets for consumption doesn’t always have to be free because you don’t have a proper mechanism to monetize that. In addition, “soft” monetization techniques like brand awareness creation, bringing new business partners onboard, customer loyalty and retention should all be measured and counted as part of monetization metrics as well. But most importantly the monetization needs to happen across all channels – such as direct business models, indirect business models, internal consumption, and freemium to premium conversation. In addition it is important to add self-serving smart contracts that can be digitally auto-discovered, auto-negotiated, agreed upon, enforced, consumed, billed and collected.
About 2500 years ago, Confucius stated, “If your conduct is determined solely by considerations of profit you will arouse great resentment.” But in today’s world, corporations that engage in self-serving profit realization modes like Uber, AirBnB, and Facebook are exploding; the Fortune 500 companies that can’t keep up with this are fast disappearing. Confucius would have added a caveat for the digital economy if he lived now!
Your corporation’s growth is not going to come from flooding certain markets hoping for the best scenario. It will come by engaging in digital economy, and by making your assets available for consumers to use what they need, when they need it, at the right time and for the right price. I see huge gap between the IT departments (or the digital producers) and the digital consumers in discovery, exposure, frictionless integration, self-service, and monetization. We at IBM are working to solve these issues to help our clients with seamless digital transformation. Visit us at our booth at API world in Santa Clara this week or reach out to me @AndyThurai to continue this conversation.