First Principles Organisations

Purchasing software is becoming more challenging.

I am not referring to the value assessment of software, or changes in how we use or consume it. I am referring to the difficulty in commitment.

Commitment Issues

The volatility index of software capabilities and experience is particularly high. The market is evolving and expanding at an unprecedented rate, with new products, features, and interaction paradigms being introduced on a daily basis that were not possible the day before.

Committing to fixed contact terms becomes difficult to justify when software keeps changing. Maintaining optionality becomes necessary to keep up with the latest and best software to compete effectively. The delta between yesterday’s software and today’s new release can represent meaningful gains in efficiency that affect both the top and bottom lines of business operations. Flexible pricing models (usage or outcomes based) are therefore not only more aligned with customers in terms of value, but also in terms of usage patterns.

The underlying consequence is that organisations are becoming more agile and adaptable. Teams and individuals can more fluidly move from one solution to another based on the task or outcome they are responsible for. This shift is welcoming companies to go back to operating from first principles - in the jobs they hire for, the teams they form, and the software they use.

Process Capping Outcomes

Until now, the software we committed to determined how we worked. Software prescribed pre-defined processes for organisations to operate and scale. We relied on these processes to structure workflows and assign roles to them. Functions progressively evolved into collections of processes to be streamlined and executed. Horizontal software became favoured over purpose-built solutions to reduce vendor and team coordination overhead, often resulting in “best common denominator” software for all. The upfront cost of software implementation justified long-term commitment, with fixed contract terms further reinforcing it.

While useful in some contexts, streamlining processes confines what can be done and accomplished. It places employees in an autopilot state where process is trusted over creativity and judgement. Stagnation gradually becomes the operational norm - until the software contract expires.

In a world in which things are constantly changing, streamlining rigid processes becomes questionable. Relying on a process that was designed for yesterday’s conditions is not necessarily optimal to guide tomorrow’s strategy. Stagnation is also not an option. The reduction in variability of pre-determined process becomes a liability more than a benefit.

The emergence of software optionality invites teams to rethink what they do and how they do it more proactively. It enables them to derive process from outcomes rather than the reverse. It introduces a new era of outcome-driven organisations, strategically informed by first principles.

Building from First Principles

First Principles Organisations hire for judgement, organise around priorities, and derive process from outcomes - including the software they use.

As software choice becomes more open-ended, jobs become defined by the outcomes they are responsible for, and not by the processes they operate. Talent is encouraged to develop laterally, as general-purpose intelligent machines rather than single-task workflow models. This implies much more cross-functional roles, with larger surface areas to execute on. Individuals are hired for their judgement and intuition (more this here), and assigned to outcomes accordingly. Outcomes can be objectives, deliverables, or metrics. This does not mean that individuals are responsible for executing every task required for the outcomes they are assigned to. Humans remain limited by time, attention, and energy. Comparative advantages remain relevant in teams. It just implies that human capital becomes more malleable.

Teams also start to organise themselves differently. Functions are defined by projects and objectives rather than generic department definitions. Sprints become the delivery cadence, measured in days, weeks, or months. Every participant becomes a mini project manager, with minimal layers of coordination. The means of production are theirs to determine - software that augments them, agents they delegate to, or other humans to work with. The process becomes a part of project strategy development, not a starting point for operation. Once projects are delivered or complete, human capital can be reallocated to oversee new outcomes.

What is most compelling about enabling teams with software optionality is the shift in culture. Culture becomes defined by its people, and not by its inherited way of doing things. It treats human capital as the foundation to work with, and the systems around it become the products of their intention. It welcomes teams to nurture ingenuity, get creative, and take ownership. It enables progress to move faster, and on the right things.

First Principles Software

Software optionality is a precursor to what comes next, where processes are not only more adaptable due to open software choice, but also because software itself will be more adaptable.

As the primary form factor of AI progresses from agent calls to dynamic interfaces, workflows can start to be reverse-engineered (or reverse-prompted) from desired outcomes in real-time. Workflows may be rendered for the user to interact with, or performed by agents from end-to-end. This is the stage in which organisations, teams, and roles truly become driven by outcomes - when processes are generated, or abstracted all together.

This further distances us from the traditional way we price and purchase software. Workflows no longer have to be adopted at the organisational level. Organisations will continue to maintain systems of record, on top of which individuals can generate their own software. Interface selection or generation will be informed by individual user needs and preferences. Some organisations may impose design systems or capability restrictions for humans or agents to adhere to. Software becomes producer and product, using desired outcomes as input, and deriving its design and capabilities from it. This may manifest as custom workflows for assisted work, or as fine-tuned agents for delegation.

The growing prevalence of personal software selection or generation in business contexts may also lead to systems of record dissociating from the interface. Systems of record may be sold or built as core infrastructure, presented as unified indexes. “Interface software” may be introduced as a new product category, providing value in the form of design system, feature unit, or fine-tuned model curation to be used within opinionated user experiences or for end-user generation.

The implication of adaptive software is that business software becomes personal software. The traditional way to conceive, market, and implement business applications changes. B2B and B2C software start converging. Teams no longer need to compromise for the “best common denominator” software, and individuals no longer have to conform to a default way of working. Users are empowered to select or create their own based on what is most efficient or intuitive to them. Software choice or generation becomes contextual, making GTM more reliant on branding to reinforce the right heuristics for users to convert when they need it, and with the least friction possible. Ecosystem integrations also become increasingly important as product placement and distribution strategies. Being where the individual user is, both in mind (brand) and place (ecosystem) will matter.

This reality is still a work in progress, and may not be applicable or desirable for all types of software. Some software workflows are more efficient as deterministic. That being said, it does open the door to more types of edge-case software, in a way that is more aligned with the company, user, and objectives at any point in time.

Enforcing Intentionality

I am excited by a world in which the way we use and consume software enforces first principles thinking. Software selected intentionally or developed dynamically should enable us to focus on the goals we should be achieving, and the things we want to be doing. Software no longer has to impose streamlined ways of working, and instead can allow us to derive workflows from what is most effective and valuable to us. It indirectly sets the foundation for intentional agency in the organisations we work for and in our personal lives.

I tend to believe that first principles thinking is the best foundation for innovation and impact. Flexible software is one way to facilitate it, and the other is mindset. The latter is not something flexible pricing models or adaptive software can fix. It is a choice to reframe how we operate from process executors to outcome owners - and take full responsibility for it.