APIs are the Most Powerful Change Agents, Ever

Originally published on Tumblr.

A few weeks ago I was at the API Strategy & Practices conference in Amsterdam and sat on a panel that discussed “Media, Music and Audio APIs”. One of my co-panelists, Toby Sims, is responsible for developer relations at Pearson, a multinational media conglomerate, Pearson. Pretty big company: over £5B in annual revenue. During the question and answer session, I realized that I had a question for Toby. I wanted to ask it publicly, so I did. I asked: “Do you think that APIs are having a bigger impact on Pearson than management consultants.”. Toby couldn’t answer on the record, but his answer was interesting, and I’ve been thinking about it ever since.

My company exposes its service via an API. That’s all we sell, so the consumption of our service through our API has a clear, profound impact on us. But what about companies that sell their products in other ways, and then make all or part of that product available via an API?

Let’s stick with Pearson.

It was founded in 1844. It started off in the construction business. At that time they definitely didn’t worry about APIs.

In the 20th Century, Pearson bought newspapers, magazines, book publishers, and TV production companies. Still no APIs, or very few. Certainly large companies weren’t thinking about them.

In the 21st Century, Pearson entered the education business, a big business that relies more and more on media assets. So today, Pearson owns and publishes a lot of content, and just a few months ago, they decided to start making that content available via APIs.

So now what? Nobody knows.

Nobody knows, and that’s why those APIs will change Pearson more than any other force affecting their business.

When I first started thinking about this I thought that APIs were important to large companies because they allowed them to precisely measure people’s engagement with their content and services. But I quickly realized that that was nonsense. Big companies are really good at measuring how their clients behave. They don’t need APIs for that.

Then why should they embrace them? To discover the unknown.

Engagement via an API is by its very nature unpredictable, and often disruptive. API publishers don’t know what people are going to do with them. They may have some ideas, but most will be completely unexpected. And those unexpected ideas can be transformative.

They might highlight an aspect of the business that, until then, seemed unimportant. That can lead to the famous “pivot”. Small companies pivot all the time, and big companies do too, even if they do it more slowly. The good ones have done it many times, and they’ve been the first to embrace the API culture. No one who’s studied IBM’s history, for example, is surprised that they exposed Watson via APIs.

But companies don’t need to pivot radically in order to survive and grow. They can introduced new products discovered by someone else using their API. They can then copy those products, partner with the inventors, or acquired them outright. This pattern hasn’t escaped startups. Many of them build on another company’s API with the aim of being acquired.

And sometimes the exact opposite happens. A dying product is exposed via an API, and no one cares. There’s no stronger signal that that product is dead.

Now let’s go back to our straw men, the management consultants. What do they do? They help companies embrace best practices. But best practices, by definition, are known. Best practices are yesterday’s best practices. A survivor, in today’s world, needs to discover tomorrow’s best practices as quickly as possible. The best way to do that is by embracing disruptive innovation, and most disruptive innovation comes from outside a company’s physical or virtual walls.

There’s no guaranty that a new idea will use a company’s API, but it likely will. Disrupting from scratch is hard; leveraging something that already exists is often the path of least resistance. In an exit-driven startup ecosystem, starting with a competitor’s API can be both technically and economically smart.

APIs therefore act not only as a catalyst for disruption but also as a lubricant between established companies with large cash flows and startups with bright ideas and energy. APIs facilitate a symbiosis that accelerates both destruction and creation.

Businesses that don’t expose themselves via APIs run two risks. They run the risk of innovating more slowly than their competitors, and they run the risk of hanging on to dead products far longer than they should. APIs aren’t replacing fundamental business practices, but they are, without a doubt, the most powerful change agents available to businesses today.