The experience economy, the ecosystem mandate, and why API design may be the key to competitive advantage

Jul 26, 20227 mins
APIsInnovationSoftware Development

As the experience economy and API economy collide, enterprise leaders must take a proactive approach and embrace a little-known but deeply rooted technical discipline.

How do you compete in a world where the experience is everything, and no organization stands alone?

In the not-so-distant past, enterprise executives had the “luxury” of just worrying about producing and delivering a great product. In today’s experience economy, it’s not so simple.

The modern consumer and business customer demand an experience that is intuitive, automatic, and seamless. Consistently delivering that combination is complicated enough, but another emergent factor is compounding the situation.

Today, no organization truly stands on its own. Those intuitive and seamless experiences that customers want are increasingly reliant on data and interactions from other organizations.

But your ability to deliver these delightful, connected experiences is the key to your ongoing competitiveness in a world where the so-called experience economy and API economy collide.

The question is how to do so? The answer may lie in a little-known, but deeply rooted discipline called API design — and it may just be the key to unleashing your competitive advantage.

The experience economy and the ecosystem mandate it has created

The idea of the experience economy goes back almost 25 years. Still, it’s only been the recent advancement of technologies — and disruptive technology companies that have applied them — that has begun to bring it to life.

As it did, consumers of all sorts almost immediately demanded evermore integrated and seamless digital experiences.

As a result, even the most industrial companies increasingly rely on technology and software to deliver their products and services, presenting a rich mix of opportunities and challenges.

This evolution has landed an otherwise technical construct — the application programming interface (API) — smack in the middle of the enterprise strategic mandate.

“As businesses increasingly depend on software-based services to generate revenue, the creation and maintenance of APIs has become a major part of business strategy,” said Stephen J. Bigelow in his article, Guide to building enterprise API strategy.

APIs have become so central to both the experience and an organization’s competitive posture because of the second trend we discussed: the fact that organizations no longer stand alone. As a result, organizations must form a cohesive and integrated ecosystem of collaboration partners to deliver these seamless experiences.

“A rich and diverse API ecosystem enables a business to access, process and provide data, then derive revenue from those activities either directly through sales or indirectly through better efficiency,” continues Bigelow. “This is called the API economy.”

But as many organizations are discovering, merely slapping a bunch of APIs together will not only fail to achieve this ecosystem-powered competitiveness, it will work against it.

So, as the experience economy and API economy collide, enterprise leaders must take a proactive approach and embrace a seemingly technical discipline: API design.

The executive mandate to embrace the discipline of API design

To leverage the power of APIs to connect your ecosystem and deliver compelling experiences, you need to begin by taking a strategic and proactive view of them.

“We’ve learned that API design can have a profound impact on user interfaces and thus user experiences,” explains Danny Baggett, writing for RT Insights. “Poorly designed APIs can lead to awkward, unnatural or inefficient workflows within a user’s experience, while a well-designed API can mitigate these issues or at least make it clear to consumers what all is technically possible.”

API design is rooted in the broader design thinking ethos. It combines an outside-in customer perspective with a comprehensive architectural view to establish a cohesive design modality.

The challenge is that the entire discipline of API design is something that many technical teams have skipped over or ignored — mostly because they’re looking at API development strictly from a technical perspective. But like most strategic mandates, a broader perspective is necessary to ensure that APIs deliver their ultimate business value.

“While there is little disagreement about the potential of the API economy to transform business models across all industries, the topic of API design has unfortunately lagged API development,” says David Zhao of Deloitte Consulting. “Whereas API development deals with the implementation of individual API’s, design is concerned with coordinating a holistic set of API’s to achieve a desired business outcome.”

This understanding that API design is a strategic enabler of ecosystem-powered business outcomes is what demands executive-level focus. While enterprise architects and development teams should care about the broader implications of any technology, it is ultimately the executive team’s responsibility to establish a governing ethos that aligns strategic disciplines to the business outcomes they seek.

That alignment means that embracing API design must be an executive mandate.

Because, as Baggett says, “You wouldn’t build a house and then draft blueprints.”

Using API design and a focus on the developer experience to unlock competitive advantage in the experience economy

There are two challenges with everything I’ve put forward thus far. First, enterprise executives are incredibly busy — the case for making API design an executive mandate must be compelling.

Second, in our hyperbolic world, it’s easy to dismiss the call for API design to be an executive mandate as just the latest round of hype.

While both of these points are fair, I am confident that API design rises above them. And I’m not alone.

“APIs have become the essential connective tissue that enables companies to securely and quickly exchange data and information with the outside world,” says Falon Fatemi, CEO & Co-Founder (with Mark Cuban) at Fireside. “Today’s forward-thinking companies are taking APIs very seriously and doubling down on their API strategies.”

She goes on to make the case that APIs allow organizations to expand their reach, tap into new markets, and supercharge innovation. This idea that APIs enable market growth and innovation is likewise gaining traction. “APIs are designed products that can open new markets and revolutionize the way businesses measure success,” writes Jason Harmon, CTO of Stoplight in an article for Forbes. “Building a design-first API program is the first step—resulting in customer-focused APIs built around proper language and useful to executives.”

Moreover, because most executives are only beginning to wake up to the potential competitive power of API design, those organizations that get there first will have an even more significant advantage.

But in case all of that were not enough, there’s one other element of API design that makes it an essential part of your competitive posture: It dramatically improves the developer experience.

In today’s experientially driven economy, you’re competing not just for customers, but for partners and developers, as well.

One of the delightful side effects of taking a strategic approach to API design is that it results in a vastly improved developer experience for your and your partners’ developers — which can make all the difference as you compete for each of them.

Taken together, it is clear that the discipline of API design is a secret competitive weapon for those enterprise leaders that embrace it — with the greatest spoils going to those who do so earliest.

As strategic mandates go, it packs an impressive punch. In one fell swoop, you can deliver better customer experiences, cement your ecosystem, improve operational efficiencies, and enhance your developer and partner recruitment bonafides.

That’s quite a return — and your onramp to winning in the experience economy.

Disclosure: Charles Araujo is the publisher of The Digital Experience Report, of which Stoplight is a client. The author retained full editorial control of this analysis.


Charles Araujo is a technology analyst and internationally recognized authority on the Digital Enterprise, the Digital Experience, and the Future of Work. Researching Digital Transformation for over 10 years, he is now focused on helping leaders transform their organizations around the digital experience and to reimagine the future of work. Publisher and principal analyst of The Digital Experience Report, founder of The Institute for Digital Transformation, co-founder of The MAPS Institute, and author of three books, he is a sought-after keynote speaker and advisor to technology companies and enterprise leaders.