The predominant model for managing digital products and services today could be aptly described as "command and control." Annual planning and top down decision-making structures are the rule rather than the exception. As a result, large groups of people move slowly in lockstep toward a shared vision, while startups run circles around them. It's an approach I've been loosely referring to as "redcoat digital."
At the time of the Revolutionary War, it was common for armies to engage on open field, with three or more rows of soldiers volleying rifle fire at the opposing force. The other army had little choice but to endure it, while they attempted to improve their position and prepared to return fire.
One key reason for this counterintuitive behavior was the nature of the weaponry itself. The smoothbore military musket was not a terribly accurate or speedy device. Variance at 50 yards was up to 18" and a trained company could only fire about four times a minute. Effective use required them to engage at close range and as a united front, taking turns firing while others reloaded. This was surprisingly effective, compared to other methods of the day.
Redcoat digital worked similarly well when categories and competitors were clear, and barriers to entry were significant. Yet, today the battlefield is crowded with armies of various shapes and size, all coming at the user from different perspectives. It's effectively a melee. Think Skype vs. AT&T vs. VOIP – Paypal vs. Square vs. AMEX – iTunes vs. Spotify vs. Amazon. With this much action on the field, it's impossible to engage anyone head on (who should you face?).
For most companies, the appropriate response to this chaos is a decentralized approach. The people on the front line can see the bullets flying. They know the threats and opportunities firsthand. You must empower them to break away and try things. People often accuse Facebook of absorbing competitive features (and developers), but it's important to recognize how adaptive and powerful this mimicry really is.
Standing still while your competitors innovate (and praying to survive long enough to fire back) isn't a sustainable response to tumult in the marketplace. As idea-to-market-to-exit timeframes get shorter and shorter, the value of a 12-month delay can measure in the hundreds of millions or even billions.
Think about your digital products and services. Are they managed as standing armies? Or are they cut loose like a scrappy militia? Perhaps there exists somewhere a healthy blend of the two – an organization that knows how to move as one when the strategy demands it, and how to find the edges when the way forward is unclear.