Thinking About a New Way To Scale

In The Elastic Enterprise we introduce the term universal connector to describe technology that makes business much easier to scale. Why is this idea so important? Making it easy to scale business is transparently important but can it be true that something so little known as an API or an RSS feed can be pivotal to business?

Surely products like the iPhone or Android are what change the world?

Connectors though are ultimately more important because they are part of the new business infrastructure.

We also introduce the term “sapient leadership”. By sapient we don’t just mean wise or smart. We mean leaders who are capable of understanding and using the new infrastructure as it emerges around them.

As well as universal connectors we also speak of Cloud computing as a new infrastructure. Both enable incredibly low friction in business; both offer incredible efficiencies. Added together they are a major force in being able to scale wealth creation.

So with these thoughts in mind I was talking recently to Oren Michels, CEO of Mashery, a major provider of API management services. An API – or application programming interface – is a powerful universal connector. Oren and I discussed how we could convey the idea of the API or connector to a non-technical audience, an audience of strategists who need to grasp the transformation of infrastructure.

Think of a hotel as an API or connector. A hotel offers many, many services, though in essence what the majority of hotels specialise in is helping people to get a good night’s sleep while they are traveling.

There are hotels that help people stage a great wedding or to eat great food but let’s stick with the essence of the hotel – sleep.

A hotel might be situated next to a golf course, close to a salmon river, or adjacent to a Disney Park. They are connected to those event-driven businesses.

In the physical world the connection is very clear. Customers book the golf course, and take a buggy over to do their 18 holes. The hotel will also have a kitchen – more than likely run by the hotel – to connects sleeping to dining.

Some hotels are starting to see also that they don’t perform key tasks very well – so, for example, a growing number in the USA are asking Starbucks to run their coffee shops.

These partnership relationships are becoming pivotal to business.

If a hotel has event partners it can market itself more effectively. So too, though, the event partner can market itself as a place to unwind over a weekend.

The reality of business is that partnership is becoming ever more important. it will become even more so as the global middle class evolves. In fact you can imagine a hotel expanding its presence globally simply by focusing on a good night’s sleep – a box for a building and comfortable beds, while partnering with a developer, golf and other event companies, Starbucks, Spa providers, a restaurant chain, ground transport companies and a number of online booking sites.

Not having to worry about the periphery means you can expand the core. Better than that though you expand a company that is performing its tasks and building relationships at a much higher standard.

An API is a way to do that online. The API is where the partnership is activated. For example the Golf event company might have access to a hotel’s customer base through its API. It might create an app that makes it possible to book a round of golf once you are on the hotel’s site.  Between the hotel and the golf course they can begin to profile the types of visitors who book hotel and golf together.

They can offer a free coffee at Starbucks if the golfer doesn’t get the green time they first opt for. Between the three partners you now have a set of relationships with the customer. What if the Spa is involved? A golfer who chooses a two night stay with a second round of golf might get an offer of 15% of a Spa massage.

All this can happen without human intervention. The partnership between the four entities and the deeper customer relationship.

The connector infrastructure lets information and analysis flow in ways that are relevant to the partnership. It helps to build business. With connector layer in place a company can expand its business because it is not expending resources on every human transaction. We think the universal connector is hugely important – it’s only crime is not being well known. Not yet anyway. Just as all infrastructure can be replicated, companies are now creating APIs that other companies can buy and adopt. The connector concept is set to grow.

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