The Software Paradox

Chapter 5. What to Do

The Software Paradox and Your Business

Having seen the impact of the Software Paradox across a wide variety of organizations, from consumer to enterprise, startup to industry bellwethers, the obvious question is how to respond. There is no one path forward, as the appropriate organizational response will depend on a number of variables, including the resources on hand, current business model, market permission to and accessibility of adjacent markets, and so on.

There are, however, three recommended strategic considerations for organizations subject to the Software Paradox moving forward.

#1: Assume the Software Paradox to be True

The first step to solving any problem is to acknowledge the problem, which in this case means accepting that the upfront, realizable commercial value of software is in a period of decline. Even if you work for a Palantir or a Splunk and your business is currently an exception to this trend, it’s useful to model the impact if only as a thought exercise. Many businesses, including successful ones, have been caught unprepared by unanticipated downturns in their ability to monetize software. As in the Innovator’s Dilemma, few have predicted this in advance based on the mechanics of their existing businesses. More problematically, the more successful their history of generating software revenue, the more difficulty they have in envisioning challenges to it moving forward.

As a result, the most important recommendation for organizations of all ...