Thursday, May 29, 2014

The Virtuous Software Circle

Written for the IMTS Insider May 29, 2014

The Virtuous Software Cycle 
By: Dave Edstrom

When I started working for Sun Microsystems, it quickly became apparent to me that I was going to learn a great deal about economics, in addition to Sun’s incredible array of hardware and software technology. As Sun employees, we were educated on the economics of developers, applications and customers that Sun thought leaders referred to as the “virtuous circle.” In February, I wrote about “Winning the Application Platform” and the importance of being much more than just another application, but instead being a platform that other companies want to build upon. In this article, I will discuss the virtuous circle from a software development standpoint. As software becomes increasingly important for manufacturing, the virtuous circle is something to seriously consider in your strategic software planning.

In February, I talked about how Scott McNealy discussed economics of technology by asking the question, “How expensive would it be for Wang, Data General or any of the other proprietary architecture companies to completely change their architecture?” The rhetorical question Scott asked drove home the point that changing your architecture would be an extremely expensive proposition and could put a company completely out of business. The reasons it is so expensive to completely change the architecture is that customers have applications that they have purchased and written. This virtuous cycle can be thought of as a self-reinforcing feedback loop. This is known as positive feedback. We have all seen the counter examples to the virtuous cycle called the vicious cycle. A vicious cycle might be one where losing one’s job leads to drug use, drug use leads to crime, crime leads to prison, then the person gets out of prison and can’t get a job because they have done time. This then leads to selling drugs. The person has become self-trapped in a vicious cycle.

In 2000, I was a lead for the futures track at a worldwide Sun Microsystem Conference for Systems Engineers. Sun always had a friendly rivalry with our competitor Microsoft. Scott McNealy was known for his many great quips on our friends in Seattle. For example, Scott once said, "The only thing that I'd rather own than Windows is English, because then I could charge you two hundred and forty-nine dollars for the right to speak it." It’s important when you run a conference to have one or two talks that break things up from the norm. In looking for speakers that would bring humor to the conference, I found out about Jennifer Edstrom and Marlin Eller. First, Jennifer Edstrom is no relationship to me, or at least none that either of us knew about. Jennifer and Marlin wrote a book titled, “The Barbarians Led By Bill Gates: Microsoft From The Inside: How The World's Richest Corporation Wields Its Power.” I looked at the book and it was very well written and I thought that Jennifer and Marlin might be up for a talk – especially if we purchased a number of books to give away. Their relationship to Microsoft was that Marlin was employee #72, if I remember correctly and Jennifer was the daughter of the Pam Edstrom who ran Microsoft’s PR firm. That PR firm was called Waggener Edstrom. This book caused quite an uproar and that is why I thought it would be perfect for a Sun Microsystems conference with a bunch of engineers.

In preparation for the talk, I had the good fortune to have dinner and lunch with the both of them. I asked Marlin to tell me the most impressive thing about Bill Gates. Marlin told a great story about how thorough Bill was in his thinking. The story Marlin told is the essence of the virtuous circle and drives home the point why Bill Gates is a genius.

Marlin had an idea for a new software application very early on Microsoft’s history. Marlin explained it to Bill and wrote some of his ideas on the whiteboard. At the time, Marlin was porting DOS to a new platform. Bill listened carefully and then proceeded to ask Marlin a few questions of his own. Bill asked, “If we do this Marlin, then we will have to take you off the current project that you are on.” Bill then continued, “If our goal is to become the default platform in the industry, are we better off putting you on a new project as you suggest, or should we keep moving forward to get DOS on as many platforms as possible?” Bill continued, “what path do you think will get the most number of customers for Microsoft?” Bill was able to focus on the key issue and that was winning the platform as I spoke of in the March 2014 IMTS Insider article. More importantly, Bill was able to put it in the economic terms that a young software developer could understand. Marlin knew that continuing his work on porting to a new platform was the correct choice.

What is key about winning the platform is having the software development tools that developers believe are world-class. Think of writing software as building a house. Homebuilders want the best tools available so they can quickly build great homes in order to sell lots of homes. Having the best tools is a key aspect of the virtuous circle.
Here are the key components of the virtuous software circle:
  • Customers want great applications.
  • Developers want to write great applications for a large customer base.
  • Applications are created with development tools.
Let’s take a graphical representation of the Virtuous Software Circle below.

When we look at the diagram above, it begs the obvious question, “What is the best way to increase the size of your customer base?” The obvious answer is great applications. The harder question is, “How do we get great applications?” If we are Microsoft, the first thing we want to do is own the platform. But how do you really own the platform? You build great developer tools. That is why I referenced in my February 2014 IMTS Insider article the famous 2006 video of Steve Ballmer of Microsoft jumping around the stage screaming, “developers, developers, developers.” What Mr. Ballmer was really saying was that Microsoft couldn’t continue its hold on the WINTEL (Windows and Intel) platform without taking care of developers.

The inflection point for a virtuous software circle is feeding the developers with world-class tools on a great platform. That was exactly what Microsoft was trying to do and accomplished to a very high degree. So what would you do if you were Scott McNealy at Sun Microsystems? Would you give up, or come up with a better set of developer tools. Enter Java. The employees at Sun Microsystems absolutely knew that we had to redefine the world of software development if you want to increase the size of our application and, most importantly, our customer pools. Sun created the world’s best software platform and completely revolutionized software development.

As manufacturing becomes increasingly software centric, it will become very important to think in both technical and economic terms. Think about the software virtuous circle from your company’s standpoint and ask, “Do we understand the inflection points and are we feeding the right parts of mechanism?” Who knows, maybe you can create the next Microsoft or Sun Microsystems in manufacturing?

For questions or comments, Dave Edstrom can be found at Virtual Photons Electrons.