When Physical Goods Become APIs and Services
Photo credit: Pixabay
The Internet has significantly changed many aspects of our lives, our work, and the interconnected nature of global economies. From a business perspective, the most critical change of this digital transformation has been the impact that the Internet has had on “distribution”. For most of the 20th century, the most powerful companies were built on the premise that they closely controlled the distribution of their products and services. These distribution channels allowed companies to influence pricing (supply/demand), availability, and dictate the entire customer experience.
But as more physical products and services begin to have an integrated digital element, the economics of the Internet begin to shift the focus from “owning distribution” to allowing “free access to distribution”. In essence, the Internet breaks down the previous silos of distribution and makes it nearly frictionless to distribute digital products around the globe. So is this a good thing or bad thing for business? Like any business transition, it can be viewed as a challenge or an opportunity.
For some companies, the prospect of widespread, unmanaged distribution will lead to fears of brand delusion and an overall lack of control over their business.
For more forward-looking companies, that understand the trends around mobile computing and social media, the ability to digitally distribute goods and services through many marketplaces is an opportunity of a lifetime.
An example of this is Blockchain technology and the Hyperledger Project. For many years, financial services companies feared the unknown surrounding digital currencies (e.g. Bitcoin) and what might evolve from a distributed control model. But as they have dug into the underlying technology more and more, they are beginning to see the possibilities to offer new types of products and services to their customers. In addition, they are beginning to see the possibilities when this technology is developed through open community participation.
Evolving from Products to APIs
At the core of these digital transformations is a focus on making APIs (Application Programming Interfaces) the storefront of the business, or the digital representation of the products or services. APIs allow application developers to digitally engage with a business in a programmatic way, enabling them to create a broader set of services that can embed digital products into business workflows.
In representing a product with an API, the product (or service) is now available to any marketplace on the planet. This allows business partners and the market to creatively integrate a product (or service) in ways that might not have been imagined in the past. For example, the Weather Channel or Netflix or an online shopping or music experience could easily be added to the display system of a new automobile by simply integrating with the API. This provides the automaker with the flexibility to offer new experiences to buyers in the future, and application developers with the knowledge that they could design new types of services to reach that audience.
As the storefront of the future moves into consumers pockets, in the form of mobile devices, the mindset of business will need to evolve to understand that distribution of products and services has rapidly evolved. Understanding how those goods can be represented as a digital API will open up new opportunities to represent the business in new ways to partners and customers.