What Amazon Can Teach Payments Companies About Collaboration
What Amazon Can Teach Payments Companies About Collaboration
Aiming for Interoperability is the Trait of Non-collaborative Payments
Most companies have a difficult relationship with collaboration.
On the one hand, they espouse the benefits of diverse ideas to make projects succeed. On the other, companies pay for individual performance, which pits employees against each other.
Mary Poppendieck, co-author of Lean software development, put it best:
Competition between teams, rather than individuals, may seem like a good idea, but it can be equally damaging. Once, I worked in a division in which there were two separate teams developing software products that were targeting similar markets. The members of the team that attracted the larger market share were likely to have more secure jobs and enhanced career opportunities. So, each team expanded the capability of its product to attract a broader market. The teams ended up competing fiercely with each other for the same customer base as well as for division resources. In the end, both products failed. A single product would have had a much better chance at success.
— Unjust Desserts, by Mary Poppendieck
I think that companies project this behavior into the technology they build. Rather than collaboration, they offer interoperability. Its purpose is to help external companies build with internal resources. But it collapses any form of human communication into a formal specification document.
Collaboration is about hugging friends. Interoperability is about keeping strangers at arms’ distance.
A common push back I got from claiming that open source payments software is a hidden gem is that companies do not really need collaboration. As long as regulators establish strict rules of engagement, interoperability is good enough.
This is worth thinking about because people keep complaining about the lack of innovation, and the necessity to bring in more competition. I think that there are plenty of cooks in the kitchen already. What we need is to stop spoiling the broth.
Welcome to Money In Transit, the newsletter bridging the gap between payments strategy and technology. I’m Alvaro Duran.
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What is the goal of a platform?
Is it to make things easier, or to make them on your behalf?
Is its goal augmentation, like an Ironman suit, or automation, like a robot?
Ivan Zhao, Notion’s CEO, believes that Notion is so flexible because its goal is to allow everybody to create their own tools. This is so unlike any payments company I know. In payments, building your own tools gets you in trouble. And demanding that ability to your provider gets you excuses and aloof responses. “Not in the roadmap”.
This is a guess. I may be wrong. But I think that this apathy is rooted in the belief that external companies should be kept at arms’ distance.
Instead, truly collaborative companies establish a symbiosis with everyone on the outside. There is only way I know that companies can do that. Each team must have clear interfaces with the outside world, and communication can only happen through those interfaces.
The first rule is to have clear interfaces. Let’s call this The Service Orientation Rule: Any internal system or process must ban back-channel communication, and must be designed to be used by anyone. With service orientation, the company turns into a federation of startups, meant to treat other teams as customers to serve, not competition to squash.
But even with service orientation, companies are tempted to treat the outside world as second class citizens. Rather, companies must be “eating their own dog food”.
You don’t eat People food and give the world Dog Food.
Therefore, the second rule is the Dog Food Rule: Any communication, external or internal, must go through the same interfaces. When using a system or process, the company cannot have any form of privileged access to it.
My guess is that most banks implementing Open Banking are breaking precisely the Dog Food Rule. It just shows.
Amazon, though, is following both rules. But Amazon used to be like banks: desperate for a way to monetize its engineers and computers. You can see how Jeff Bezos arrived at AWS, in hindsight.
But banks are not following those rules.
Is because the opportunity is not obvious? Or is it because the existing culture is blocking any efforts at collaboration?
Banking technology is a manifestation of the culture that produced it. For a long time, they've been proud of internal competition. Now, it's setting them back. And no amount of regulation will change that.
In a competitive culture, you can't force collaboration. What you're going to get is interoperability.
But that’s never been enough.