Conway’s law and organizational design for cloud computing firms

by Prabhakar Gopalan

Conway’s Law
It is worth recalling Conway’s law (first published 1968) for this discussion:
Any organization that designs a system will inevitably produce a design whose structure is a copy of the organization’s communication structure.

Conway’s Law gives us a prognosis for what kind of software firms will succeed in the cloud computing market place: GenXY firms.

Design of the cloud computing firm
Definitions aside, objectively speaking, cloud computing system requirements boil down to modular, distributed software that can integrate with a variety of systems internal and external at low costs (compared to pre-existing systems). Great examples of this are SaaS providers. No legacy architecture to deal with and a computing system  entirely with the business model driving software design. These systems need to interact and integrate with a variety of other systems, quickly and elegantly to be successful.  No long wait times of months, and sometimes even years of partner meetings between teams to figure out the interfaces and specifications to interact. This is software that is built for an entirely new business model – meaning no ‘cloud washing’ of existing enterprise shelfware, ahem, software with, ‘cloud in a box’, ‘cloud ready’ and other such useless marketing labels.  In the cloud, everything is a service and everything needs to be plug and play to work with other complimentary, adjacent services.  These fundamental characteristics demand modularity not seen in typical silo based software design of a previous generation.

If we look at nature of firms best suited to deliver the design required for cloud computing – a design devoid of traditional siloed enterprise software design, the firms themselves need to be modular and distributed. Only an organizational design that supports those values will succeed in producing software optimal for systems like cloud computing. So that brings us to the question of what are GenXY firms and what makes GenXY firms best suited for that?

GenXY Firms
GenXY firms are firms that are founded and filled with young, enterprising people from Generations X and Y who carry significantly different workplace attitudes from the previous generations. People at GenXY firms value openness, cooperation, common goals, meaning and a purpose. They have very little tolerance for being managed within the archaic command and control structure that is the predominant organizational design in many large firms. GenXY firms are lean organizations and innovative by every measure right from start. They do not deliver incremental changes to existing products. They create an entirely disruptive product innovation stream. Above all, they are driven by an organizational design and culture of openness and ‘hierarchy busting meritocracy’. Because they are organized in flat, hierarchy-less teams, peer to peer cluster groups, they design software that is also peer to peer in design, ala plug and play. They are able to integrate with products from other/similar firms effortlessly and quickly. Examples? Facebook, Twitter, LinkedIn, Netflix, Zynga, Salesforce, Amazon, Google…the familiar list goes on.  In other words, your end product and its design mirrors who you are.

Summary claim
The lesson is simple here – if you are looking to drive innovation and formulate a growth strategy in an innovation driven market place like cloud computing, organize yourself first – be like a GenXY firm – be lean, be flat, bust your organizational silos before they appear.

Here’s a parting question – is acquiring a GenXY firm a winning strategy for a command and control company and the larger society as a whole? What are your personal experiences?

For further reading on this topic:
Gary Hamel’s fantastic exposition at about what he calls the Facebook generation is a great read.  Also related to this topic is the book Managing the Generation Mix by Carolyn Martin and Bruce Tulgan.  Two empirical studies, one regarding open source and another by Microsoft researchers on Windows Vista validate the claim about organizational structures affecting the quality and type of software produced.


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