One of my recurring themes when considering the impact of connected digital technologies on the future of business has been the notion of frictionless enterprise. This argues that, whereas traditional models of the enterprise encourage a 'walled garden' model, the most successful participants in the digital economy are those who are the most open to connections. This is a worldview that's very aligned with MuleSoft CTO Uri Sarid's concept of the coherence economy, so we got on the phone the other week and recorded a short podcast discussion, which you can listen to below.
So what is the coherence economy? In a nutshell, it's a digitally enabled ecosystem of providers that collectively orchestrates a personalized experience for every consumer. As Sarid explains:
A coherence economy is where various building blocks of an experience are tailored on the fly, just in time, to a particular end customer, at this moment in their journey. And so the end experience is actually a very, very different one than the kind of generic mass consumption experiences that we have today.
The trouble with the traditional 'walled garden' model, in which a single enterprise or brand wants to own the entire consumer experience, is that it relies on achieving economies of scale. This means the experience can never be truly personalized, which makes it vulnerable to competition from a new generation of providers willing to operate within a connected ecosystem, he believes:
Once consumers get used to this, once this becomes the bar, you can never put the genie back in the bottle. This becomes the new set of expectations. Those businesses that can deliver these kinds of coherent experiences are the ones that will win in the marketplace.
Joined-up sightseeing with Big Bus Tours
It's early days in the evolution of the coherence economy, but we need real-world examples to make sense of the concept. One that Sarid cites is MuleSoft customer Big Bus Tours, the sightseeing tour operator best known for its open-topped double-decker buses in major cities around the world.
Big Bus has already opened up its ticketing API so that businesses along the route can offer tickets to their customers. Now it's looking at returning the favor. The buses of course are fitted out with wifi, and so as the bus is driving down the street, the proposition is to offer tourists a tailored experience along the route that draws together all of the players in the surrounding tourism ecosystem:
Because it's a hop-on hop-off system, it's doing the physical integration between the various businesses, and allowing every tourist to have a very tailored experience that can change on demand, as weather conditions change, or their interests change, or they see something interesting as they're going along the city.
You can imagine this is great, obviously, for the businesses along the route. It's great for Big Bus because it's able to expand its offering. Most importantly, it's great for the end consumers who are not just being provided with transportation, but rather with a very full experience through the city that they're going through.
The guiding principle of the coherence economy therefore is that all of the separate point experiences of the old model become a joined-up, networked experience that's a composite of all those previously separate engagements.
Changing the mindset
Of course this all depends on a lot of intercommunication and sharing of context between the various participants, and, as he points out, it must be orchestrated by computing because it's too complicated to do manually. You may by now be thinking to yourself, 'He would say that wouldn't he?' MuleSoft makes its money as a platform for robust API publishing and management, and this vision isn't going anywhere without plenty of that. That's a point I pick up in the podcast. But irrespective of MuleSoft's role, what this boils down to is the trend towards standardization, as Sarid points out:
What was the real magic behind the industry revolution and mass production, and so on? It was the notion of interchangeable parts. Once the parts were interchangeable, you could get them from various sources. If one didn't work, you could use another one. We're talking about interchangeable parts for applications. That's really what APIs are.
As with any big change on this scale, the barriers to widespread adoption aren't the technology. It depends on a huge mindset shift from the way businesses have traditionally operated:
In the experience economy in particular, every business says, 'I want to own the experience, I want to be the provider. I want the consumer to associate that with my brand, and I will take care of everything.'
In a coherence economy, that simply doesn't make sense, it won't work. And so this notion of being able to say, 'I am a player in a bigger ecosystem, I will make my offerings available for others to incorporate just as I incorporate others, and this will be an ecosystem of offerings' — that's probably the biggest mindset shift. If you own a small piece of a much, much bigger pie it will turn out to be advantageous versus trying to own the entire thing.
This is a worldview I can heartily agree with. It's at the heart of the frictionless enterprise vision, in which businesses compete not by integrating as much as possible within a single enterprise, but by putting themselves at the heart of an ecosystem of connected services, from which the consumer can then gain the best possible joined-up experience.
The technology is getting close to making this a practical reality. It's now up to forward-looking businesses to bring it to fruition.