apidays LIVE London 2021 - Interfaces from a strategic and management perspective by Will Venters, London School of Economics

Interfaces from a strategic and
management perspective*
Dr WillVenters,
Assistant Professor of Digital Innovation.
The team involved:
• Dr Roser Pujadas,
• Dr ErikaValderrama,
• Dr Enrico Rossi.
*(a work in progress)
©2021 WillVenters. www.willventers.com

Interfaces Reasoning for Interactive Systems (IRIS)
£7m research programme to
examine interfaces at all levels.
(one of the largest such grants in
the UK)
Industry Partners
LSE Research Team:
Dr Will Venters (Lead)
Researchers:
Dr Roser Pujadas,
Dr ErikaValderrama,
Dr Enrico Rossi.
Academic Partners

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API usage in many companies seems to
resemble the first digital camera..
• Innovation led by technical experts not
business strategists
• Evolved out of the technical lab as
demonstrators / prototypes.
• Created by hacking together readily available
parts– not necessarily the best.
• Messy and not rigorously tested.
• Not supported by business strategy and CxO
level leadership.
• Poorly aligned with overall business strategy.

My
argument:
• APIs are of strategic
importance because they
shape industries.
• To understand them we
need to think in terms of
flow
• Configuration work is
required to shape this
flow within and between
organisations within the
ecosystem.

Our digital economy is becoming
like an aspen forest…
Arthur, W. B. (2011). The second economy. McKinsey Quarterly, 4, 91-99.

APIs shape industries. Let’s look at the online
travel industry.
• Discussion of APIs in business often
focuses on platforms with a focal
actor.This simplifies the evolution
pattern.
• API network started with large
“platforms”
• Giata (Content distribution)
• SiteMinder (Channel manager and
booking engine)
• DerbySoft (hotel distribution)
• Kayak.
OnlineTravel
2001-2009
(Dynamic Network
Analysis)
Pujadas, R., Valderrama, E., & Venters, W. (2020). Interfaces and the Dynamics of Digital Ecosystems: A Study
of the Online Travel Ecosystem ICIS: International Conference of Information Systems, India/Online.
https://aisel.aisnet.org/icis2020/

2010-2014:
Interfaces-to-Interfaces

APIs and multiplicity
(2015-2020)
•Direct Booking API
• Google,TripAdvisor &Trivago.
•The line between metasearchers and
OnlineTravel Agents became blurry
• Internet Booking Engines “booking
button” interface
•Facebook & WordPress.
•Direct booking
• APIs for developers
• Expedia, Booking.com,
Amadeus, Sabre
• API marketplace
• Apaleo

From a strategic perspectives.. Companies
need to understand flow
They face “Red Queen Problem”:
Red Queen to Alice in ‘Through the
looking-glass’ by Lewis Carroll:
“Now, here, you see, it takes all the
running you can do, to keep in the same
place”
The hypothesis in evolutionary
biology which proposes that
species must constantly adapt,
evolve, and proliferate in order to
survive while pitted against ever-
evolving opposing species.

Flow of technology
Flow is a concept to move us from thinking
about things to thinking about process.
Baygi, R. M., Introna, L. D., & Hultin, L. (2021). Everything Flows: Studying Continuous Socio-Technological Transformation in a Fluid and Dynamic Digital World. MIS
Quarterly, 45(1), 423. https://doi.org/http://dx.doi.org/10.25300/MISQ/2021/15887
Khannah, A., & Venters, W. (2014). Exploring the rhythms of information infrastructure coordination for smart cities: The case of building a mobility infrastructure in Berlin.
22st European Conference on Information Systems, Tel-Aviv, Israel.
Flow of technology
Flow of business models and strategy
Flow of personnel Flow of the marketplace

API-Strategy requires focus on different digital
innovation arrangements within this flow
Executives & Contracts: Inter-organisational networks managed by
contracts and personal connections. Long-term contracts with small
amount of partners
Tier-1: Close Innovation
Tier-2: Near Innovation
Tier-3: Distant Innovation
Flexible Networks & Service Portfolios: Digital support for
managing inter-organisational collaboration with many entities.
Many partners, complex innovation interdependencies between
these.
Tools & Rules: Large-scale global collaboration at arm’s
length through boundary resources.
Large amount of partners but all working on
independent innovations.
Software Development Kits (SDKs), Application
Programming Interfaces (APIs), and associated
organisational rules on digital platforms
implementing multi-sided markets
Global communication systems,
crowdsourcing services, tools for
managing external research
projects, innovation flow tools
Meetings,
contracts, video
conf, M&A, golf?

APIs are strategically valuable Boundary Resources
within the flow of technology
• Tier-1: Close Innovation: E.g. Internal APIs used within organisations & tightly
controlled partners.
• Reduces complexity and increases agility
• Requires local standards and knowledge-sharing
• Require a focus on loose coupling and tight cohesion within overall architecture design
• Sanchez, R., & Mahoney, J. T. (1996). Modularity, flexibility, and knowledge management in product and organization design. Strategic Management Journal, 17(S2), 63-76.
• Baldwin, C., & Clark, K. (2000). Design Rules: The power of modularity (Vol. 1). MIT Press.
• Tier-2: Near Innovation: E.g. Partner APIs used to facilitate communication and
integration across companies/industries. (e.g. Netflix)
• Require tight collaboration agreements through contracts and formal documentation.
• Require new skills – security, documentation, support.
• Tier-3: Distant Innovation: E.g. Open APIs
• “Free” open-access.
• Licenced / contracted for…
• Enables and controls interactions between companies (through a tussle)
• Eaton, B., Elaluf-Calderwood, S., Sørensen, C., & Yoo, Y. (2015). Distributed tuning of boundary resources: The case of Apple’s iOS service system. MIS Quarterly, 39(1), 217-243.
• Based on Open Standards (e.g. JSON API) and requires management.

The term “cloud corporation” emphasised how organisations’ are
increasingly integrated through these three tiers of digital innovation.
Cloud Corporation(cc) 2
Commodity technology: Storage, Computing, networking…
API service Specialist application
Cloud
application
API service
ML as a Service
Cloud Corporation(cc) 1
Business Process
as a Service
Data access services
cc
cc
cc
cc

But boundary resources have malleability and
agency – they can be changed easily and
cause unanticipated change.
It is often easy to make substantive change to a business through
software….
And yet APIs and Cloud services are often adopted by technical
employees with little CxO level oversight!
“Often the customer [of an API] is the developer, leading to an
extremely low-friction sales process”
Murphy, M., & Sloane, S. (2016). The rise of APIs. TechCrunch.

Skills shortages at board
and technical level lead
to deficiencies, and to a
flow of people.
Weill, P., et al. (2021). "Does Your C-Suite Have Enough Digital Smarts?" MIT Sloan Management Review.
“UK organisations lose £217m a
year due to lack of cloud skills”
Venters,W. & Sorensen, C (2017). The Cost of Cloud Expertise,
Rackspace and Intel.

• New governance challenges and rapid risk
• Potential of technology to overwhelm IT strategy – losing
alignment to business strategy
• Service integration becomes more critical
• Integration can be the major obstacle in gaining the most
benefit from cloud and APIs
• Governance and interoperability in the cloud ecosystem
become key
But APIs demand a digital business strategy
encompassing all IT.

Pujadas, R., Thompson, M., Venters, W., &
Wardley, S. (2019, June 8-14). Building
situational awareness in the age of digital
ecosystems. 27th European Conference on
Information Systems (ECIS), Stockholm &
Uppsala, Sweden.

In conclusion:
Executives
should…
• Focus on flow not events.
• Focus on technology, skills and
strategy.
• Focus on unintended
consequences (including risk and
security).
• Focus on skills portfolios.
• Develop deep situational
awareness – particularly on the
direction of the industry and
business models.
22

apidays LIVE London 2021 - Interfaces from a strategic and management perspective by Will Venters, London School of Economics

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