APIs: Insurance against the Innovator's Dilemma

(For those unaware of the dilemma, read Christensen’s excellent book)

It should go without saying these days, but tech companies wishing to take insurance against decelerating internal innovation and growing competition ought to be producing robust APIs against their core offerrings / value. 

APIs fundamentally alter the dynamic of innovation by increasing the ‘surface area of opportunity’ from the size of your R&D operations to anyone aware of your value. It also provides the ability for outsiders to recast the core value, free of the burden from escalating features indicative of serving higher up the value chain.

These opportunites can be capitalized in one of two ways:

  1. Monetizing the API
  2. Duplicating or buying the outside innovator

(Be careful, opportunity-type #2 is a mine field of ill-will. Received warmly: Twitter's acquisition of Summize. Received less warmly: Twitter’s acquisition of Tweetie)

What better defense against the future than a well leveraged API exploring it on your behalf?

Great companies provide their value two-fold; directly via primary channels, and through unbounded secondary channels by way of their API. Some companies do this fanatically well:

  • Amazon sells products via computing intelligence, and owns the API for computing
  • Twitter gathers the latest news, and owns the API for distributing it wider still.
  • Facebook dominates providing social communication, and will dominate with their API for the 'ontology of things (& people)’.
  • Apple produces the best devices for consuming media, and is gaining with their API for distribution & payment thereof. (But lets not forget their sister-capacity to produce great media either; Disney/Pixar/Marvel)
  • Google is the king portal to the web, and king with the API for web traffic.

I’d bet heavily against large organizations not opening up their primary value, or with existing APIs that are not being developed against.