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Eyes of a Stranger

June 1, 2012 by Leave a Comment

I’m always looking for best practices to adapt and adopt, and I got an idea that I really like from a mentor.  It is a way to combat the complacency that sets in as we settle into any role – that tendency to become accustomed to the way things are, even when they are pretty screwed up.  “Well, of course you stand on one foot and tug on your left ear with your right hand .. that’s just how things are done here.”  With fresh eyes, we might ask “but, umm, isn’t that kind of stupid?”  And, “about the fire burning over there .. maybe throwing some water on it would be good?”

So periodically – maybe once a quarter, or once a year, the idea is to do an exercise I like to call “eyes of a stranger”.  Pretend that you just got your job and are figuring things out – you are in your “first 30 days” and are coming up to speed on the important things you need to focus on.  What is a top priority issue or opportunity that you would see and decide that you absolutely have to pursue?  What inefficiency would you discover that would just bug you until you got it fixed?  What joy-killer is afflicting the team (or you) that needs to get taken care of?

There’s a scene from a book that got stuck in my mind; it’s in Kon Tiki, the really fun story about an anthropologist who gathers a set of kindred spirits to prove that it is possible to sail a raft from the Peruvian coast to the Polynesian islands, using only the technology available in ancient Peru.  At the end of the book, they have crashed on a reef and the raft is smashed, they are pinned down and waves are pounding over them, and one of the people clinging to the remains of the boat says calmly “This won’t do.”  I try to apply that same calm but determined spirit to situations at work that feel desperate.  As you look at your job and the environment around you, what “won’t do” that you’ve gotten used to and have been letting slide?

I’ve found that you probably want to come out of the exercise with a very short list of things you are going to pursue more aggressively than you have been – one is good, three is probably an absolute max.  If you come up with a longer list, revisit it after you do something about the top ones.  I tend to find that you get wildly more bang for the buck by focusing on a couple of things (or one!) rather than dutifully writing down ten “priorities” and feeling overwhelmed so you just go back to ignoring them.

For each of the issues that you’ve picked, you need to figure out what concrete steps you can actually go take to deal with them.  I like to sit down with a piece of paper and do a mind map.  If the issues are worth addressing and you haven’t been doing it, it’s a good bet that you are a bit stuck in figuring out what needs to be done.  Maybe you just need to spend 30 minutes listing next steps or coming up with a plan.  Or, perhaps it will work better to pick somebody you have a good rapport with, and brainstorm about it together.  If it’s a really big issue, you might find it helpful to apply (some of) the framework that I outlined in the series on “Cracking the Nut”.

I’ve done this exercise over a dozen times, and each one has helped me get hard core about tackling something that needed doing and that wasn’t moving forward.  See if it works for you, too!

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Relay Race vs. Diving Competition

May 25, 2012 by 2 Comments

When you are evaluating how people are doing, it seems reasonable to focus on the business results they deliver.  In my previous team, we called this the relay race model.  What matters in a race is finishing, and finishing with the fastest time.  Nobody cares whether your running form was good or terrible – you are measured solely on the results you deliver at the end.  In most work environments, this is appealing, intuitive, measurable … and wrong.

A diving competition is almost the exact opposite of a relay race.  After all, everybody is going to hit the water, and it will take about the same amount of time no matter what you do.  The score is based on your form – how difficult a set of moves you undertake, and how gracefully and perfectly you do them.

Why the Diving Competition Matters

So what does this have to do with measuring job performance?  It’s the difference between assessing the pure business results that somebody delivers vs. the way they delivered those results.

It’s easier to measure (and talk about) the results that were delivered.  Did the product ship?  How much revenue did it generate?  Did you hit your sales quota?  Was the code quality where it needed to be?  Is the product performance hitting the ship goal?  It depends on your job, of course, but in many cases it’s relatively straight-forward to tell whether the person and/or the team achieved the goals that they were striving towards.

But there is another side of things – the way you behaved in pushing towards that goal.  Did you help build up the team?  Do people find you a good person to work with?  Do you help make the whole team better, smarter, and more capable?  I’ve worked with a lot of aggressive young engineers, and they sometimes are very impatient when I bring up these questions.  “Hey, I wrote the code, the product shipped, and it’s good.  I didn’t have time to humor those other idiots – we were on a tight schedule.  And I was right, wasn’t I?”  Often, yes.  But you are still going to get dinged on your review, because you may have been right about the issue, but you didn’t handle it the right way.  By running roughshod over the other person and leaving them feeling dismissed and mistreated, you blew it.  Why?

Well, for one thing, you are only responsible for part of the project.  Checking high quality code into the build is important, but the crucial thing we need to do is solve the customer’s problem.  Which means we need to understand their problem holistically, build a complete solution that meets their needs, test it, explain it and then sell it to them, support it, and integrate with other products.  That calls for a group of people to work effectively together.

Also, a particular deliverable is just one in a long succession of business results that we have to achieve together.  Sure, we shipped the product .. but that was just the beginning.  Even with packaged software, we have to ship patches.  We immediately start building the next version.  If it’s a service, shipping is the beginning of the hard work, not the end – now we have to run it 24/7 and manage the business that is based on it.

All of these ongoing business deliverables rely on the team working smoothly together.  When you are working on a problem that involves groups of people, no single person’s work alone can make the whole group successful.  If you achieve the goal you are focused on but leave a path behind you strewn with dead bodies, you can easily do more harm than good even if you do achieve what you set out to do.  Every team member has as much of an obligation to help ship the team as they do to help ship the product.  Given our ongoing responsibilities, the team is often the more important deliverable.  In the software business, if we create an unpleasant working environment and everyone leaves, we’ll be left with a big pile of code and no ability to run it, fix it, evolve it, support it, and sell it.

So for very hard-headed business reasons, I think it is necessary to evaluate people based on both the relay race model (the explicit results they achieved) and the diving competition model (whether they work effectively with others).  If you only focus on one, you aren’t encouraging and rewarding the behavior that yields the most value for the organization.  And on a more personal note, who wants to be on a team that’s unhappy and mistreats each other?

Filed Under: 100x, 10x, Managing People Tagged With: ,

What Do You Want to Be When You Grow Up?

May 18, 2012 by 2 Comments

When I’m managing or mentoring somebody, this is one of my favorite questions.  It’s a good way to crawl into their heads a bit, understand their motivations, and figure out how I can help them.  It’s also not a bad question to ask yourself!

Framing

There are different ways to approach the answer – you might base it on:

  • A particular person’s abilities: code like Guy Steele, move an audience like Meryl Streep, or paint like Raphael.
  • A particular job: be the VP of your division, the CEO of a Fortune 500 company, or the founder of a growing startup.
  • An achievement:  win an Olympic gold medal in swimming, design a piece of software that millions of people adopt, or take a company public.
  • A state of being: be crazy passionate about your job, feel that you are living in perfect alignment with your principles, or devote your life to serving the community.

How somebody chooses to answer will tell you a lot about their values, ambitions, and self-image.  Be careful about guiding them too much .. we’re talking about their dreams, not yours.

Cheerleader or Critic?

In doing this exercise with many people, it’s usually at least imaginable that they might achieve their ambitions with hard work and some (or a lot) of luck.  However, now and then somebody will come up with a goal where you have to struggle a bit to keep a straight face.  Often it’s about personality and passion – if you are impatient and can’t stay focused on your own, writing novels might not be your best bet.  So what do you do when someone who hates math wants a Nobel Prize in physics?

I try to be a “pragmatic cheerleader”.  I don’t want to be a dream buzzkill – most people are surrounded by plenty of those already.  But I also don’t want to be mindlessly encouraging.  The next question often helps to get things more grounded in reality.

What Does it Take to Achieve That Goal?

Dreaming big is great, but you have to break down the goal and figure out what it takes to achieve it.  One approach I like: if the person wants to be an X, I get them to write down a description of what the absolutely perfect X would be like.  For example, when I was running a relatively large team, I came up with what I thought a perfect team leader should do .. I wrote about that here.

Often, the person doesn’t have a great answer.  They are attracted to the idea of being a CEO, but they don’t actually know much about what the day to day life of a CEO looks like.  After some discussion, we can usually rough out an outline of the skills and qualities needed, but we often agree that a key next step is to validate that list with people who actually have that role or are more familiar with it than we are.  That’s a great practical step forward on the journey.

How Do You Stack Up Today?  How Do You WANT to Stack Up?

The next thing I do is have them assess themselves against those ideal qualities or skills.  At this point, people sometimes realize that their supposed goal doesn’t actually make a lot of sense for them.  I was talking to one person who thought they wanted to be the CFO of a public company.  We talked about the skills you’d need to be a fantastic CFO, and then she thought about when in her work life she had been really happy and why.  And she realized that the things that really did make her passionate and inspired were not the key activities of that job at all.  So I think that was a helpful moment of self-revelation.

This exercise also tests self-awareness.  Sometimes, they are confident that they have some needed quality .. and you think they are wrong.  It’s tricky to handle this.  I tend to tread pretty lightly – the goal here is self-revelation, not a lecture on their weaknesses, which tends to bring the discussion to a halt in a hurry.

But if people have at least a basic level of clue about their true nature and abilities, this exercise can have quite a profound impact.  I’ve watched people realize that they were carrying around outmoded ideals foisted on them by authority figures from their youth, and realize that they have an inspiring path open to them in a quite different direction.  That’s what you hope for – an opportunity to enable somebody to achieve a profound moment of self-discovery.

How Does One Actually Get That Job?

Next, I like to consider how people actually get the job or the opportunity to achieve the goal in question.  If it is a well-defined role, then the answer is usually straight-forward, but many people don’t think about it very practically.  I’ve repeatedly asked, “how do you become a VP” (or whatever).  People go on about a demonstrated track record, a well rounded set of skills, and all sorts of worthy things … but none of those are the real answer.

The actual answer is, “somebody who hires VPs chooses you”!  Now why would they do that?  All these ideas about skills and roundedness are fine, but often the true reason is that the hiring manager has confidence in you to do a great job and trusts you.  They’ll almost always pick somebody with strong skills, whom they deeply trust, over an unknown with a potentially stronger resume but who might be a whacko.  And they trust you because they know you over a long period of time, and have watched how you handle many different situations.  So one of the things that might be necessary to achieve your goal is to deeply commit to a particular team or company for an extended period of time, rather than bouncing around all the time.

Alternatively, the goal might be something that has to be created rather than granted – becoming the CEO of a new startup is self-elected (!).  But they need to have enough money to survive without an income and perhaps to fund the company for a while.  They may need a network of people they can hire.  And so forth.  Pretty much any ambitious goal will require something in order to open up the opportunity.

What Are Your Next Steps?

Now they have identified the goal, what it takes to get that opportunity, what they need to be successful, and where they stand now.  For each skill or ability where they aren’t already strong and experienced, I’ll brainstorm with them about a specific action that will develop it.  For example,  they can often build up skills that aren’t a direct part of their job by volunteering for extra projects – what I like to call “hobbies”.  I’ve learned a ton from hobbies – helping to organize and run a large developer conference, participating in working groups considering radical new directions to take the team, teaching classes, etc.  None of those had much to do with my core job, but I practiced new skills, learned about new areas, met really cool people .. and had a lot of fun.

The goal is to finish the discussion by identifying very concrete steps that will build the skills they need to achieve their dreams.  And if you have an ongoing relationship, hold them to it.  If you can really help somebody achieve their dreams, that is one of the best feelings in the world!

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On Being Acquired – Lessons Learned

April 30, 2012 by 2 Comments

Once upon a time, I was one of the three full-time employees at Colusa Software, which Microsoft acquired in 1996.  We all came to Microsoft as part of the buyout, and went on to learn some interesting lessons about having your very small company acquired by a very large one.

Who We Were

Colusa was building some nifty virtual machine technology – you could target it from any conventional language, could run in a protected sandbox, and could get close to natively compiled performance on a variety of hardware platforms.   Our dream was that we would contribute towards a VM for Windows that would ultimately run much of the software in the world.  Other companies wanted to acquire us, but we came to Microsoft because we thought it offered the best chance for our technology to be ubiquitous – we said to each other that it would be a place to build software that “my mom will use.”  That was a very powerful motivation.

What Happened

After we were acquired, we ended up in the Visual Studio organization.  It seemed to make sense because we needed to work closely with the compiler team to target the VM, but actually it was a mistake.  All of the major decisions about runtimes were being made elsewhere, and we had limited contact with the key people.  Many of them were already committed to other solutions.

The result was that we kept getting redirected from afar.  “Your VM would be perfect if the wire size was smaller than Java.”  Ok, we went and built a cool compression strategy that yielded extremely compact code.  “Your VM is out of the question because it isn’t compatible with Java bytecodes.”  Oh.  “Your VM is Microsoft’s future.”  Great!  “Your VM would be cool, but isn’t practical without a substantial modification to Windows that would require too many resources.”  But …  And so on.

Amidst these conflicting messages, we tried to soldier ahead.  We rebuilt our original system to work with Windows, and demonstrated that it worked  by recompiling Microsoft Word and running it on the VM with performance indistinguishable from natively compiled code.  Eventually the team helped design the bytecode strategy of one of the VMs in the operating system.  Although it wasn’t what we had originally hoped to accomplish, the ideas did influence the design of a part of Windows.

So, what did I learn from all this?

Lesson #1: Have a champion

By far the most important lesson is that you desperately want to have a senior person who is the champion for your group.  We didn’t have one, and we suffered badly for it.  The need is particularly acute if you walk into a politically charged area.  There were deep divisions in the company that we didn’t understand – it was confusing for long-time employees and utterly baffling to us.  We thought we had something that the company would eagerly seize upon.  Over the course of six months, we were told that we had one of the most important projects in the company, that our technology would be scrapped, and that we should redesign it in ways that we felt would be a disaster.  Not fun.

I don’t think anyone could have prevented the situation from being difficult and confusing, because the company was facing very tough and important decisions.  But at least we would have felt that somebody was in the key meetings advocating for us and then telling us what was happening.  I think the team was hurt, for example, by a feeling among some key partner teams that we were overselling.  We thought we had carefully explained that, for a commercially viable solution, we would have to rely on other parts of the company to deliver key missing pieces.  But that message didn’t get through.  This kind of disconnect happens all the time and is natural; people who hear about a technology without the details make assumptions about what it does and doesn’t deliver.  Teams have to actively (and continually) educate their partners.  We just weren’t talking to them.  In fact, we didn’t even know their names.

To a company being acquired, I can’t stress enough that you want a politically savvy champion who has the ear of the key architects, people in management, etc. and will go to bat for you when it is appropriate.  You want that person to be identified with the acquisition and their credibility on the line as to whether it succeeds or fails.  They should drive you hard and want to exploit your ideas for the maximum benefit of the company – after all, that’s what you want, too!

Lesson #2: End up in the right part of the organization

Many large organizations have teams that are quite autonomous from each other.  If you land in the right place, which we didn’t, the people around you will understand how to integrate your technology into the product portfolio of the company and be in a position to make that happen.  The key thing, though, is that your hosting organization is the one that drives the decisions that most directly affect you.

Lesson #3: Nobody trusts you

Getting acquired feels like a seal of approval.  It says that you were doing something cool enough that the big company felt it was better to buy it than to build it themselves.  That doesn’t prepare you for the likelihood that nobody in your new company will trust you at all.  They won’t believe that your code is any good or that your team is up to the standards of the rest of the organization.

As far as I’ve seen, there are only two solutions:

  • Seed your team with some experienced and trusted employees from the big company.  This is a great idea anyway, because in addition to providing credibility, they can also be enormously helpful in getting things done in your new environment.
  • Ship and win in the marketplace.  That’s the ultimate coin of the realm in any software company.

Final Thoughts

There were ups and downs throughout the experience, but I learned an enormous amount from being acquired by and working within a large company.  I’m doing my third startup now, and hopefully applying lessons learned from all the experiences I’ve been fortunate enough to have along the way.

Filed Under: 1000x, 100x, 10x Tagged With: ,

Ready to Ace Your Exit Interview?

April 18, 2012 by Leave a Comment

When I’m having a management or a mentoring conversation, I like to pose the following challenge: “You just got offered an amazing new job .. it’s one you’ve always dreamed of.  But before you leave, you have an exit interview with your manager and your successor.  What do you want to tell them about your tenure, your team, and your projects?  What burning issues will your successor inherit and are they on track to being resolved?”

The answers depend, of course, on the nature of your current role.

  • If you are a manager, you probably want to talk about what a great, high morale team you have.  How the people are on a good trajectory, or how you are working with the ones who aren’t to get on a clear path for addressing the problems.  How you have a strong bench of future leaders you’ve been developing (hopefully your successor is one of them).  The mission is inspiring, the goals are clear and reflect the biggest opportunities available, the strategy is compelling, and the execution is effective.
  • The projects that you are responsible for are on a great path to success.  As you leave, things will continue seamlessly forward because the work is well organized and you have made sure that it an be passed over cleanly to somebody else.  No commitments will be missed, no balls dropped.
  • The issues that potentially block success have been analyzed and are being addressed and/or mitigated.

If you can say all that, congratulations on having aced your exit interview!  The person who is taking over for you is truly set up for success, but they have some big shoes to fill.

*****

Is that how it’s going to go?  If not (and I have yet to meet anyone who says it will!), what are the biggest reasons you won’t be taking a victory lap at your exit interview?

Usually, I find that there are a handful of big issues that people are worried about and that aren’t on a good track to resolution.  They might be:

Unpleasant.  People problems often fall into this bucket.  Sure, things aren’t great, and yes, something really ought to be done about it, but dealing with it is going to suck.  It’s often doubtful whether there will be a clear resolution at the end, especially if the other person doesn’t work for you and hence you have limited options for adjusting the situation.   So, it’s easier to just avoid the whole thing and keep bumbling along.

Important but not urgent.  Creating that new market would be an amazing win for the company.  Hiring a senior architect could transform the ability of the team to build great software.  But there is no particular urgency – no deadline will be missed, there is no forcing function.  And there are a hundred emails to answer, and that milestone is coming up, and my schedule is packed, and …

Hard.  I know that I should really be working on this big issue or opportunity, but I don’t exactly know how to do it.  I have to go get educated in some new area, or break through a tough analysis, or learn a new skill that I secretly fear I’ll be lousy at.  One way or another, it’s going to be a ton of work, and I’m not sure that I’ll really get anywhere, and my plate is full of things I do know how to do.

I’ve found that these big issues that people feel bad about are often the most important things they should be focused on.  So, I get them to write down the list of those issues, and then I ask the key next question: what specific actions are you going to take about each one, and when?  Because feeling bad doesn’t accomplish anything .. you need to take action.  I keep track, too, and the next time we talk, I bring it up again to see whether there has been progress.

Are you ready to ace your exit interview?  Why not?  What are you going to do about it?

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Do You Want To Work For You?

April 12, 2012 by Leave a Comment

So here’s your challenge: you just got a new manager and it is … yourself.  How do you feel about that?  I think it’s a good test to figure out what managers are for, and how to be a better one.

Say you are Worker Bee, pounding away on a daunting array of projects.  And your new manager is Fearless Leader, who happens to be your exact clone.

Are You Happy?

If you aren’t happy and excited about having yourself as your new manager, you should think really hard about why not.  Mostly, those reasons are things you need to fix, because they will bug other people who might work for you, too.  And no, you aren’t so fabulously special that you need a different kind of manager than all those “normal” people.

A reasonable sounding answer (that I think is bogus) is that you want a manager who is much more experienced and senior than you are, so you can learn from them.  Sure, maybe, but there is a good chance in life that you will be managing people who are just as experienced as you are, or more.  So you’d better find ways for managers to add value, even when you aren’t wiser and more expert than the team, or there are going to be a very limited number of management roles you are going to be good at.

You Won’t Be Clones For Long

One of the interesting side effects of a new role is that it inevitably changes your perspective .. and it happens much more quickly than you’d think.  As Mark Twain says, “You tell me whar a man gits his corn pone, en I’ll tell you what his ‘pinions is.”

Worker Bee will start grumbling that Fearless Leader doesn’t understand how difficult some of the challenges are in getting the key projects done on time and needs to back off.  Fearless Leader thinks that Worker Bee is mired in the details and just can’t get with it on the big picture.  Why can’t he understand what is really important, and why does he keep going dark on key issues and leave me, Fearless Leader, out of the loop?  And so forth.

That’s both good and bad.  It means that you will each have to do some work to understand the other’s point of view, but it is also the key that will solve our puzzle.

How Does Fearless Leader Add Value?

There is some notion that managers are supposed to be wiser and more skillful than the people working for them.  But often, they aren’t.  And especially as you get more senior and manage larger teams, it’s pretty much impossible to be better than all of your direct reports at their job.  You will have people working for you with years or decades of experience and deep expertise in their fields .. fields that you often know little or nothing about.  At an extreme, a CEO is very unlikely to be a better engineer than the VP of engineering, a better marketer than the VP of marketing, AND a better salesperson than the VP of sales.  But the CEO is still supposed to lead the team and add value, despite being (often) incapable of doing their job.

In our thought experiment, Fearless Leader is fortunate enough to start out exactly as skillful and capable as Worker Bee.  But, he adds exactly zero value from his additional expertise – he hasn’t got any.  In fact, very shortly he’s going to know less than Worker Bee.  He’s going to meetings (maybe useful ones, or maybe about exciting things like “building an empowered team and enhancing manager capability”) while Worker Bee is writing code or designing products or whatever it is that he or she does.  Fearless Leader’s “doer IQ” will probably be on a steady slope downward, especially if Fearless is a good manager and keeps getting more responsibility.

The more cynical among us might say that Leader’s job is to “do no harm” while others get the job done.  But that is selling the job of manager too short – there are a lot of ways that they should be helping the team:

  • Clearly articulate the mission, strategy, and execution plan.  Since we know that Fearless has no lock on expertise in the team, they aren’t supposed to be the all-knowing sage.  In fact, they generally will not (can not) be the most knowledgeable person about the details of most issues.  Sometimes the answers are defined by somebody else – maybe Fearless’s manager has made it clear what the mission of the team is.  Fearless might not be a programmer but has a lead developer who owns the coding plan and schedule.  Exactly how the mission and plan are determined can vary all over the map – that’s fine.  The thing that Fearless must do is make sure that there is a clear plan, that it has been appropriately validated, and that everyone who needs to know is kept informed.
  • Be a channel of communication up and sideways.  Fearless is in meetings with people up the management chain and in other teams, while Worker Bee is heads down getting things done.   Fearless should be acting as a communication network up, down, and sideways .. representing the team, getting information about what’s going on elsewhere, and bringing it back.
  • Be a fair advocate.  When people are being evaluated, Fearless needs to be a strong but honest advocate.  He or she needs to make sure that everyone in the management team understands the performance of the people on the team, that compensation and promotion are being handled well, and so forth.
  • Be a great coach.  As the manager, Fearless is “watching the movie” that Worker Bee is acting in.  Just like you get a totally different experience (often uncomfortable) watching a video of yourself , Fearless is in the audience for Worker Bee’s movie.  That puts Fearless in a great position to give honest feedback, push Worker Bee to go beyond the comfort zone, and hold Worker Bee accountable.  The best tennis or basketball players in the world have coaches, whom they could generally crush in one-on-one competition .. but still get tremendous value from.  It may be harder, but you can be a fantastic coach without being better at the activity than the person you are coaching.

These are things that I believe managers should be great at, regardless of whether they are more experienced than the people working for them.  Master them, and I think you will be able to say honestly that you’d be a great manager for yourself.

How do you stack up?

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Cracking the Nut (Part 4) – Wrapping it Up

April 2, 2012 by Leave a Comment

It’s time to get this decision landed.  What’s Slimy going to do?

Defining the Possible Solutions

Early in our project, we came up with a list of possible options for competing with BigSludge.  By this time, with all the discussion and analysis, we’re ready to update that list.  We’ve refined some of them, maybe some have crumpled under their own weight, maybe we have some new ones.

In our case, here is what came out of our investigations:

  • Direct head to head competition in their core markets looks like a losing strategy.  We went and talked to people on the front lines, we talked to some customers we’d like to convince to use our industrial slime, and we mapped out what kind of return we’d get from additional spending on marketing and sales.  It all looks lousy.  BigSludge is entrenched, they have relationships we can’t disrupt, the market is pretty locked in, and our products aren’t different enough to give us a unique value proposition.
  • We found some intriguing sub-markets where we are doing really well.  We’ve gotten serious traction selling slime for cleaning the grime out of industrial manufacturing machines.  And, you can cover buried power generation plants with it to reduce temperature fluctuation and do weather proofing.  BigSludge has no presence in those markets and our products work much better for these uses, so our specialized slime offerings are growing quickly and have a good head start.
  • The kid market for prank slime looks like a potential winner.  We’ve tested our slime out with kids, our test version is flying off the shelves, and it’s showed up in a couple of edgy TV shows as the Next Big Thing.  Word of mouth is strong.
  • The kid market will take several years to develop.  Based on every precedent we’ve looked at, it just isn’t possible to grow a large new toy market quickly.  No product we looked at that relied on selling through retail channels was able create a new category and grow to a large size in less than five years.

So our updated options are:

  1. Aggressively pursue the specialty commercial markets
  2. Aggressively pursue the kid market
  3. Do a blend of both

The next step is (yes, you saw this coming) to write them down.  We put together a summary for each:

  • Define the option in one page.  Capture the intuition for it, and keeping it short forces us to stick to the essentials.
  • What’s the plan – outline how we’d execute on this idea in very concrete terms.  Milestones, key steps.
  • What you have to believe.  I learned about this approach from a class I took on strategy, and I’ve found that it is a really useful way to capture the key assumptions for a particular option.  You write down the key things that you have to believe in order for the option to be viable/optimal:
Option What you Have to Believe
Pursue specialty commercial markets Slimy can make enough revenue from these markets to sustain our growth needs and can protect our position from BigSludge and other competitors.
Pursue kid market The market is big, viable, and will develop quickly enough to compensate for relatively flat growth in the core business.
Pursue both Slimy Inc is capable of effectively carrying both initiatives forward at the same time (resources, time/focus of management team).  And, the kid market will be slow enough to develop that we need some nearer term revenue.

Evaluating the Options

By the time you have written down the options in more detail, sometimes you will find that the decision basically makes itself.  It is obvious to everyone that one makes the most sense and you are done.  That’s a nice outcome.  But let’s assume we aren’t so lucky; how are we going to decide?

The next thing I do is to assess every option against every one of the criteria we came up with in part 2 (link).  There are two basic ways to go after this – quantitative and qualitative.

Quantitative – if you want, you can create a precise mathematical model to weigh your options.  You can build a spreadsheet with a numerical value for each of the criteria against each option and a weighting factor per criterion.  Then the spreadsheet will happily compute a score for each option, and the highest score ought to be the answer, right?  I’ve done that before, and it has been useful on occasion, but I think it generally gives a false sense of precision to the exercise.  Your tidy spreadsheet full of numbers and formulas can leave you convinced that you are engaged in a scientific analysis.  But you aren’t, really.  At the end of the day, you are making a decision based on (informed) guesses about the future and intuitively chosen priorities.  So I usually don’t bother to build that spreadsheet.

Qualitative – what I generally find more useful is to assign a rough score (maybe 1/2/3 or A/B/C/D/F) to each option for each of the criteria.  Have a justification for each score, so you don’t spend all your time arguing about B’s vs. C’s when people look at the table.  Then eyeball the result and you are in a pretty good position to decide, or to have the debate among the decision makers if it isn’t up to you.  The Slimy, Inc table might look something like this (note that we updated our criteria a bit):

  Specialty commercial Kid market Both
Medium term revenue (3 yrs) A C B
Long term revenue (5-10 yrs) B A B
Risk of revenue projection B D C
Ability to execute A C D

It might seem much too simplistic at first to distill many, many hours of analysis and detail into a little chart with A/B/C/D on it.  But I have found that there is remarkable power in simplicity.  It’s like the old line about writing a shorter letter if you had more time.  Having to summarize a mountain of analysis in a very succinct form forces you to commit.  Complexity is often a security blanket against making a hard call – as long you as you can say “on the one hand, on the other hand”, you can avoid making a decision.  By committing to the values in the table, it gets you in the habit and helps walk you towards the harder ultimate decision that you are trying to make.

And now that you have all the analysis done, and summarized .. get whomever you need in a room, and DECIDE!

Conclusion

I hope that this approach to analyzing issues has given you some tools that you can use the next time you are confronted with a difficult decision.  Use as many or as few of the tools as you need .. in some cases, as in Part I, you might just pick a couple of them.  Other times, when facing a really complex and involved question, you might need to throw the kitchen sink at it.

Remember that no tool or approach will make a tough decision for you – that’s your job.  And a hard decision will stay hard no matter what.  But a framework like this one can let you approach it with what I like to call systematic subjectivity – you make your judgments in a systematic and thoughtful way that helps you wade through unknowns and emotional entrapments.  Good luck!

P.S.  Slimy decided to aggressively pursue the specialty commercial markets.  They will continue to incubate the kid products to see whether they get further traction.

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Cracking the Nut (Part 3) – Heart of the Analysis

March 26, 2012 by Leave a Comment

Carrying forward from part 1 and part 2, we’ve gotten the foundations laid down, so let’s keep powering ahead.

Context

This is the quadrant where we focus on two areas: what we need to know that is knowable and what’s blocking us.

Know What Is Knowable

As we saw in Part 2 (link), there is a big debate within Slimy Inc about the potential size of the kid’s slime market and our ability to generate revenue in the commercial slime market against the dominance of BigSludge.  While these are both predictions about the future and hence cannot be perfectly known, they are subject to analysis.  By bringing some data into the conversation, we can help reduce the uncertainty around the value to assign to these criteria for our various options.

Figuring out the potential kid market is probably the hardest problem.  There is always a lot of risk in any new kind of product, but we can do many kinds of analysis to get insight: look at comparable products that we would be competing with/displacing, consider which channels we could use to go to market and how hard it will be to break into them, look at the historical ramp of comparable products, and so forth.  Beyond analysis, we need to actually get into the market and mix it up in the real world with some customers and partners.  We could sell samples through a handful of selected toy stores, or give some away to kids and get their reactions, or do a limited advertising campaign and see what kind of response we get.  The key thing here is, as Steve Blank says, to get out of the building.  All of these tests will give us some data about how much our target audience will actually want our product, what market size we could aspire to, how to build our sales at what cost, and how quickly we could expect it to grow under best/average/worst case.

The other question should be easier to answer – we probably have a lot of insight into our ability to compete with BigSludge, because we have products in market and have been selling them.  There is always the possibility of some brilliant new stroke that changes the game, but in the absence of that kind of insight, we probably know the channels, the costs, the margins, and the levers that exist in the current business.  So we can estimate with some degree of accuracy how much revenue/margin we can generate doing the kinds of things that are conventionally done.  If somebody has a clever idea for disruption, we should do some analysis/investigation to get a sense of how much to expect from it.

The net of these exercises should be some real data on what we can expect under a variety of different assumptions.  That helps assign a value to each criterion for the proposal under consideration.  Think about each one and ask whether you are ready to assess the proposals against it, or if you need more information to do it as well as possible.

Know What’s Blocking the Decision

Many things can block the ability to make a decision aside from the inherent uncertainty about what to do.  In our case, after thinking it through, we realize that there are three:

  1. This decision is supposedly owned by the VP of marketing, but everyone knows that he doesn’t have the authority to make it stick.
  2. One of the original founders of Slimy Inc., who is very influential, is hell-bent on going into the kid slime market.  He’s going to reject any plan that doesn’t focus on that.
  3. The possibly acquisition of Slimy by BigSludge is really distracting senior management.  They aren’t sure how aggressively they want to go after BigSludge until that’s landed, so they will be reluctant to rock the boat.

Any of these three things could torpedo our whole effort.  There is no point in beavering away and coming up with a great answer, if nobody is going to pay attention or act on it.  So we have to get all three resolved in some fashion, or we need to reconsider if there is any point to the whole project.

Meta

That leads us to the “housekeeping” quadrant – all the scaffolding we need to drive the project.  There are a series of important questions we need to think through:

  • Who are the stakeholders and what is their role?  Who can make the decision and make it stick?  Who needs to be consulted before the decision is landed?  Who can veto it?  Who needs to know after we’ve landed it?
  • What are we delivering?  A deck?  A presentation?  A document?  To whom?  When is it due?
  • Workback/milestones – are there any needed steps along the way?  Maybe an early review where we present progress and get feedback?
  • Key open issues – from our analysis so far, we should have a pretty good idea of the open issues – list them, get them owned and driven and landed.
  • Workstreams – are there any sub-projects that have a life of their own and need to be owned/driven?  Maybe that analysis of the kid market, which might involve finding stores and doing trial sales and evaluating results and doing mini-ad campaigns.
  • Next actions – what specific actions need to happen next?  Who will do them?

That’s the heart of the analysis.  In the next post, we’ll wrap it up and land the decision.

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Cracking the Nut (Part 2) – Tackling a Messy Problem

March 22, 2012 by 1 Comment

In the last post, we used the model to analyze a constrained problem.  Now, we’ll take on something a lot more open ended.

We work for Slimy Inc, an upstart company in the hotly competitive market for slime.  There is a dominant player in the market – BigSludge – and we are trying to figure out how to compete with them.  The traditional slime market is focused on commercial uses, and we’ve been having a tough time competing with BigSludge because they are the market leader and far larger than we are.  But, we’ve created some innovative new slime for kids to play with – a radical development in the slime market.  We’re definitely going to be first to market, though we have heard that BigSludge has a team investigating toy slime.

There is a raging debate within Slimy, Inc about how to compete with BigSludge.   Some people want to continue going after them head-on in the large commercial market, relying on our superior products.  Others want to put all the company’s efforts into the new kid slime product line (but is there really a big enough market, and will it develop soon enough?).  Another faction is pushing for an acquisition – BigSludge knows about the cool new products we’ve come up with, and they’ve had a couple of discussions with our leadership team about it.  As usual, there are dozens of variations of these basic ideas, and they’ve gotten tangled up with each other.  Emotions are running high and discussions have been going around in a circle.

We’ve been asked to take on this problem, analyze it, and get the decision landed.  The stakes are high – the decision will probably determine the future of the company and perhaps its very survival.  So, it’s time to get methodical.

Defining the Problem

We start here, as always.  The problem may seem obvious, but often the various stakeholders in the conversation have quite different notions.  So we’ll start with a statement of the problem, and it’s incredibly important that we write it down.  There is a great quote by Leslie Lamport, a well known computer scientist: “we write things down in order to realize how poorly we understand them.”  In our case, we land on this: “what strategy should Slimy use to compete with BigSludge?”

Looking at the other tools in the quadrant, there are a couple that will be helpful.

Scope – what is in and out of scope for our problem solving effort?  In this case, let’s put the decision to pursue acquisition out of scope – that’s an interesting analysis, but it’s pretty separate from figuring out how to compete.  Our project may provide good insight, though: if we can’t come up with any compelling way to compete, then we may have a lot more enthusiasm about acquisition.  But we’ll confine our scope to competing with BigSludge.  We also have to make sure we get the key people to agree on our proposed scope!

Assumptions, Axioms, and Principles – I think of these as the foundation of the analysis, and they are incredibly useful to work through and write down.  They are related notions, but I try thinking about all of them to see which are most relevant to the problem at hand.

  • Assumptions – something you believe to be true, but you are aware that you might be wrong.  “There is a large potential market for toy slime that BigSludge will not be able to address for at least three years”.  Once you’ve identified your assumptions, you can decide how risky they are, how much your potential wrongness could hurt you, and hence how much you need to validate them.
  • Axiom – “a self-evident truth that requires no proof” – you simply accept an axiom without debate or validation.  In our case, an axiom might be “commercial slime is an essential need for current customers and nothing will replace it in the market during the next ten years.”  Your axioms can save you a lot of time, since you don’t need to bother analyzing them.  But, they are obviously dangerous, because if you are wrong about them, you can choose a really bad path.  DEC had an axiom that PCs weren’t a threat because they were too small to do “real computing” – and DEC paid dearly for that axiom by going out of business and being acquired in a fire sale by one of those scorned PC makers.  So one of my main reasons to poke on axioms is that groups generally have a set of them that are accepted unconsciously and unquestioningly.  It is worth teasing them out and stating them explicitly to make sure that they really should be axioms, and are not just questionable assumptions masquerading as revealed truth.
  • Principles – a core belief that you are going to follow.  Ex: “we will produce no toxic by-products in our manufacturing processes” or “we will tell every customer the turnaround for any order within 2 days of accuracy.”  Principles help you be clear about what you believe in, and they guide you in terms of what solutions you are willing and able to consider.

Goals and Defining Success – often when people are disagreeing about a course of action, it is because they don’t agree on what “success” means.  Are we trying to achieve a good ROI on our product development investments? Establish ourselves as the share leader in a new market?  Win share from BigSludge in the current market?  Grow revenue or profit by a certain amount?  Survive as a company?

I have found it best for the goal of a project like this to be succinct and measurable.  I also prefer if the goal

  • Doesn’t pre-suppose a particular strategy.  In our case, if we define the goal to be “create a large new market for slime”, then it heavily influences the approaches we can use to get there.
  • Is defined positively, not negatively.  I much prefer “radically increase our revenue and profitability” vs. “take share from our competitor”.  The negative approach can lock you into a zero-sum mentality, rather than creatively looking for any way to achieve your true goal.  Presumably what you really want is to make massive amounts of revenue and profit, regardless of what your competition does.

For our purposes, we will use this: “a successful strategy will yield a set of quickly growing product lines in the market that have higher profitability than anything we currently sell.”

Constraints – we are always under many constraints and we need to understand how they limit our options.  They might involve resources (money or people), legal requirements, etc.

Solution criteria – just like we did in the last post, we will need to come up with a ranked set of criteria for evaluating our options.  This is often the hardest part of defining the problem; fierce disagreements are often disguised arguments about the criteria.  For example, we have one group that wants to tackle BigSludge head on in their core market, which is large and well established.  Another wants to dedicate the company’s resources to expanding into the new kid slime market.  What’s going on?

The real challenge is that there are competing (and valid) criteria to judge potential strategies.  In this case, they are:

  • Size of the target market – one group questions whether the kid market is real and large.  There is no question that the current market is large.
  • Growth of the target market – the current market is mature and is growing with GDP.  We don’t know of anything on the horizon that will change its trajectory (per our axiom above).  The future of the kid market is much harder to predict; if the company can really nail an offering, it could be a huge and high growth market.  Or, it could stay tiny because only the early kid adopters will ever bother playing with slime.
  • Riskiness of our market prediction – obviously one is not risky in terms of its existing, the other is high risk.  Also, BigSludge has that research group that might get a clue and develop a competing offering in the kid market – it’s unclear how long we can have it to ourselves.
  • Ability to capture target market – to get the traditional market, you have to find a way to compete with BigSludge and take share or expand the market somehow.  The company probably has a pretty good sense of how hard this will be and has some ability to execute on it, but it may be very difficult to succeed.  To create a whole new market, even if the demand is there, calls for specialized skills and new partner relationships and the like.  Does Slimy have what it takes to pull this off?

The disagreement between the two groups is a disagreement about the value to assign to each criteria and the relative priority of the criteria.  This is really key to understand.  Until you start digging at the real basis of the disagreement, you will often go around in circles and everybody will just get locked more deeply into their point of view.

The faction that wants to go after the traditional market believes that (a) the opportunity in the kid market is small and will stay small, (b) betting on that market is much too risky and will take a lot of energy to pursue, and (c) Slimy doesn’t have what it takes to create new markets.  The other group believes that (a) the kid market has huge potential, that (b) it will grow quickly, (c) Slimy is in a good position to take a risk for huge upside, and (d) the company can learn how to sell to a new audience.  They also (e) doubt whether Slimy can compete effectively with BigSludge in their core market.  So the two groups differ on:

  • The value to assign to a criteria: is the kid market going to be large and high growth or small?   Can Slimy really make headway in the traditional market?  These questions can’t be answered perfectly, of course, since you are predicting a future outcome.  But you can certainly get data to support the analysis.
  • The relative priority of the criteria.  One group is risk-averse, the other isn’t.  This is a useful debate – how much risk is the company willing to take on?  What kinds of risk?

The key thing you can do with an analysis like this is move the debate from an unproductive place – “We should go after the kid market!” “That’s crazy, we should go after the money, and that’s in the commercial market!” – to a much more useful discussion around the real issues – can we get facts to assign values to the criteria more confidently, and how should we prioritize competing values?  These are still very hard questions, and they still require us to make decisions in the face of uncertainty.  But they let us focus our energies on reducing the key points of uncertainty and on having debates that we can actually settle.

We’ve now got the foundation in place for our problem solving effort – we know the problem to solve and its scope, we know what our goal is, we have articulated our principles and assumptions, and we know how we’re going to evaluate possible courses of action.  Next, we’ll move on to other quadrants of the model.

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Cracking the Nut (Part 1) – How to Make Almost Any Decision

March 19, 2012 by 6 Comments

One of my favorite challenges is to take on a really hard complicated problem .. and figure out how to move forward based on a compelling and rigorous analysis.  Best of all is to do it with a small group of kindred spirits.  In a team that I was part of for many years, we called this process “cracking the nut”, and over the years I’ve developed a model for tackling a new problem.  I thought I’d share it in a series of posts, applying it to a couple of examples.

Getting Started

For the first example, let’s pick something straightforward and personal, but potentially hard: choosing among a set of job offers.  This diagram outlines the model (you can download a full sized version here):

Define the problem

Let’s dive in.  The first thing to do is make sure that you really define the problem.  For our job conundrum, that’s pretty easy: “figure out which of my job offers is the best”.  Of the tools in this quadrant, there is one that is really going to be helpful for us: decision criteria.  In other words, what actually matters about the new job.  There are many factors that might matter.  One team works in a really cool office, another is located in a great neighborhood, another is working on an exciting project, another has a dynamic leader, etc.  Those are all potentially legitimate reasons to pick one over the other .. the question is, what matters to you?

It can be quite hard to figure this out – you have to become a bit of a detective, because often your emotions will lead you to over- or under-weight different criteria vs. how they will truly affect your life.  One way I get started is to list all the characteristics that spring to mind about each of the jobs.  Then winnow down to the ones that I think are the most important.

Let’s say you have done this and came up with four rank ordered criteria.  You will probably be inclined to have more, but try to keep the list short – priorities get watered down if you have a lot of them.

  1. Impact of the project
  2. How skillful I am at the work
  3. Salary
  4. Work/life balance

Challenge yourself a bit here.  Think back on when you were happiest and most engaged in your work, and ask if that is really reflected by the criteria you picked and the order you put them in.  “Let’s see .. I loved my job on the WickedCool project.  Why?  Well, the woman running the project was amazing and inspiring.  I got to dive in to a bunch of new areas I’d never done before.   I worked like a dog, but it was so fulfilling to see the project ship and touch so many people’s lives.”  And think about counter-examples.  “I was miserable working on the Grumble project.  Nobody was inspired by what we were doing, it was the fifth version of a minor product.  I got home for dinner every night, but I just dragged myself through the day.”

Now, do the things that popped out as great or bad match your original criteria?  No, not really.  An inspiring leader and team didn’t make your list, but that was critical in both WickedCool and Grumble.  Work/life balance was lousy when you were happy, and good when you were miserable.  Salary didn’t come up.  And if you were learning all the time on WickedCool, you were probably lame at your job for a fair amount of time in the beginning.  But the impact point did make the list.

So perhaps this is a more accurate set of criteria:

  1. Inspiring leader/inspired team
  2. Impact of the project
  3. Chance to learn new skills

Keep going, keep challenging yourself.  Pose hypotheticals – if I got offered a job working for somebody great who is doing something I don’t care as much about, would I take that rather than working for a less exciting person on a project that inspires more passion?  Another good tool is to demote a criterion to a constraint.  You might need a certain salary in order to support your family, but as long as you make that much you won’t prioritize one job over another because the first one pays better.

Again, the whole point in a personal decision like this is to figure out what really matters to you.  Not what is supposed to matter.  Not what matters to your inner critic or your mother or would impress that teacher who liked somebody else better.  To you.

Context

This quadrant focuses on what you need to understand better in order to make the decision.  You want to focus on things that will actually affect the decision, are not known, and are knowable within a time frame that is relevant.  In the case of the job hunt, you’d look at the criteria that we identified above, and see whether you actually do know how the different job options stack up, and if you can know.

Take “inspiring leader/inspired team”, for example.  If you went through a whole set of interviews with people on the team, then you should have a decent read on that one.  But if it’s one of the most important things to you, then it may be worth digging some more.  Maybe you can take somebody on the team out to lunch and explore it more informally.  If they are offering you a job, they want to sell you – it’s a big investment of their time to find somebody and make an offer, so they will presumably be motivated to encourage you to join.  If not, that’s a potential red flag – you learned something even by being turned down.  Talk to somebody who works with them and whose judgment you trust, if possible.  Talk to somebody who left the team.  Do the best you can to figure out how a team or company or neighborhood or whatever really stacks up on your key criteria.

Meta

This quadrant covers the project management aspects of the decision.  In the case of picking a job, it might not be too complicated.  But, there may be other stakeholders (do you have a spouse/family/etc who would be affected if you picked one job over another?).  You probably have a deadline – the date by which you need to make a decision.  There might be a workback, in the sense that you have to notify your current employer/team, or you have to negotiate salary, or you need to sell your house or give up your lease or whatever.  Make sure you have all of these aspects captured.

Evaluating Solutions

Now that you have done your research, go back to your set of options, and test them against your criteria.  You’ve spent a bunch of time figuring out what truly matters to you, so focus on that – don’t let surface things that influence you emotionally take precedence.  You definitely shouldn’t ignore your emotional reaction – a gut feel that something is wrong is always worth listening to.  But, a gut feel that you will be a much cooler person if you work for a company in a particular area code should be given the importance that it deserves .. whatever that happens to be for you.  Now you can really stack up your options with a clear idea of how to evaluate them, and figure out which one is the best choice for you.

So that’s an example of using the framework to make a constrained decision.  Next, we’ll give it a spin on something much more open-ended.

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