Host: Welcome to A.I.S. Insights, powered by Living Knowledge, the podcast where we connect academic research to real-world business strategy. I’m your host, Anna Ivy Summers.
Host: Today, we’re diving into a study called “Models for API Value Generation.” It investigates how traditional, non-tech companies can effectively use Application Programming Interfaces—or APIs—to create tangible business value.
Host: With me is our analyst, Alex Ian Sutherland. Alex, welcome.
Expert: Thanks for having me, Anna.
Host: Alex, many of our listeners hear the term 'API' and think it’s purely a technical concern for the IT department. But this study suggests that’s a big misunderstanding. What’s the real-world problem it’s trying to solve?
Expert: Exactly. The problem is that while we know APIs can drive cost savings and create new revenue streams, there’s very little guidance on *how* traditional firms can actually achieve this. They know the tool exists, but they don't have a blueprint for using it.
Expert: The study uses the example of Walgreens in the early 2010s. They had photo printing machines in every store, but customers were all using smartphones. By creating a photo printing API, they allowed hundreds of app developers to connect directly to their printers. This drove a huge increase in photo printing and store revenue. That’s the potential, but most non-tech firms struggle to make that leap.
Host: So they needed a bridge between their existing assets and new technology. How did the researchers explore this challenge? What was their approach?
Expert: They took a very practical, real-world approach. They went inside three large, established companies in very different sectors: education, distribution, and healthcare. They conducted in-depth interviews with executives and managers to understand their API journeys from the ground up—what worked, what didn't, and what value was created.
Host: And by looking at those different journeys, what were the main findings?
Expert: The core finding is that companies evolve. There isn't just one way to use APIs. The research identified three distinct models that represent a spectrum of maturity. They call them the Efficiency Value Model, the Focused Value Model, and the Transformed Value Model.
Host: Okay, let's break those down. What is the Efficiency Value Model?
Expert: Think of this as the entry point. It’s the most common model, where firms use APIs primarily for internal efficiency. This means connecting different systems faster, speeding up application development, and reducing maintenance costs. The educational services firm in the study used this to make it much easier for developers to access data, saving huge amounts of time and effort.
Host: So, starting with internal housekeeping. What's the next step up, the Focused Value Model?
Expert: The Focused model is where a company starts being truly strategic. They make a significant investment in an API infrastructure, but they target it at a specific, high-value business area, like their e-commerce platform or supply chain.
Expert: The building supplies distributor in the study did this. They created a robust API platform centered on their B2B sales, which not only made them more efficient but also opened up a platform for innovation and new services for their business customers. Security and governance become much more serious at this stage.
Host: And that brings us to the final model, which sounds like the ultimate goal: the Transformed Value Model.
Expert: It really is. In the Transformed model, APIs are no longer just an IT initiative; they are at the heart of the company's entire business strategy. The firm uses a comprehensive, enterprise-wide API infrastructure to fundamentally change how it operates, create new services, and position itself as an industry leader.
Expert: The healthcare provider in the study, Sentara Healthcare, is a perfect example. They used APIs to build what they call "capabilities-as-a-service." This agility meant that during the COVID-19 pandemic, they were able to scale their telehealth appointments by 100 times in just one week—a feat their competitors couldn't match.
Host: That’s a powerful example. So, Alex, this is the most important question for our audience: why does this matter for business? What is the key takeaway for a leader listening right now?
Expert: The single most important takeaway is that a successful API strategy requires a holistic infrastructure of people, processes, and technology. You can't just buy a software platform and expect results. You need the right skills, the right governance, and a business-first mindset.
Host: So it's a cultural shift as much as a technical one.
Expert: Precisely. These three models give leaders a roadmap. They can audit their current activities to understand where they are today—are they an Efficiency firm? And then they can align their API strategy with their broader business goals to decide where they need to be.
Expert: The study also recommends a crucial mental shift from treating APIs as IT projects to treating them as business products, with dedicated managers and a clear vision. They even suggest appointing an "API Evangelist" to champion this vision across the entire organization.
Host: A fascinating framework. So, to summarize for our listeners: successfully leveraging APIs is a journey of maturity. Firms often move from using them for internal **Efficiency**, to targeting a **Focused** business area for strategic gain, and ultimately, to using them to **Transform** their entire business model and lead their industry.
Host: And the key to making that journey successful isn't just the tech, but creating a holistic strategy that combines people, processes, and a clear vision from leadership.
Host: Alex, thank you for decoding this complex topic for us.
Expert: My pleasure, Anna.
Host: And thank you all for tuning into A.I.S. Insights, powered by Living Knowledge. Join us next time for more actionable insights from the world of research.