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The Rip Van Winkle Question

July 18, 2012 by 2 Comments

Several years ago, I become responsible for a reasonably large business.  As you’d expect, the team regularly reviewed progress using a series of reports full of numbers.  Page after page of them, with thousands of numbers, analyzing performance by region, by pricing level, by licensing model, by customer type – you name it.

To an expert, these reports were filled with wonderful nuggets of insight.  Wow, what happened to sales in Germany last quarter – why did they tank even though the competitor’s results were strong?  Clearly, the Japanese sub is the only one leveraging the price increase – their average revenue per unit is spiking while everyone else is just plodding along.  And so on.

To somebody who was not expert (i.e. me), it was just a wall of numbers that didn’t convey much of anything.  To get a sense, check out a report like this one.  If you are an experienced investor, or used to reading accounting statements, you can glance over it and almost instantly you know a lot of interesting things about Google as a business.  If you aren’t, your eyes probably glazed over and you are hoping there won’t be a pop quiz at the bottom of this blog post.

In my case, I didn’t even know what half of the numbers on the business reports were about.  What the heck was the “PSP attainment vs. seasonality adjusted target”?  Did it matter that we seemed to be below what we had originally expected?  But I had to get smart quickly – these reports were the lifeblood of the business.  It’s like a medical chart to a doctor; they can spot patterns that reveal what is happening to their patients.  I had just become the doctor for this business, and I needed to know if the patient was suffering from any serious illnesses, so I could do something about them pronto.

So How to Start?

The best technique I’ve found is what I call the “Rip Van Winkle” question.  If you aren’t familiar with the short story, Rip was a man who fell asleep for twenty years, and found that the world had changed dramatically when he woke up.

What I did was to take every important angle on the business and find somebody who was really smart about it.  Then I sat down with them and asked the key question: “if you fell asleep for a year or two, when you woke up, what are the first things you would look at on this report to understand how the business is doing?”  Over and over again, I got amazing insights by asking this.  “Well, the first thing I’d do is look at new sales in the enterprise segment to make sure we are getting growth instead of just milking the installed base.  Then I’d divide that by the number of units for a quick check that our price was holding up and we’re not jacking up sales with deep discounting.  Then ….”

I did this walk-through with around 30 people, for a total of some sixty hours of discussions.  Finance people told me how they analyze the finance numbers.  Customer service showed me how they track and assess problems and customer satisfaction.  Sales managers talked about the pipeline and performance and hiring.  Often, different people would take me through the same report, and come at it from radically different directions.  I took copious notes, but I always asked for the top 2-4 things they would look at first.  I would highlight and number the places that held the answer.

Vital Signs

It turns out that for just about any report, even if it has hundreds or thousands of numbers on it, there are a handful that really tell the crucial story.  The rest of them might be useful to support the story or diagnose a problem, but you mustn’t get distracted.  In medicine they call them your vital signs – tell me your pulse and whether your eyes dilate and a couple of other things that can be measured by an EMT in seconds, and I will know if you are basically ok or deeply traumatized.  I may not know if you had a stroke or a concussion, but I’ll have a good basic sense of how you are doing.

This technique hinges, of course, on finding insightful people with an intuitive mastery of the numbers.  I could never predict who it would be from the org chart – they might be high up or buried deep.  But the people who worked in that area almost always knew whom I should talk to.  Ask around!  Once I found the right people, they were usually happy to share some wisdom with an interested and enthusiastic listener.  Buying them lunch never hurt, either.

By the end of those sixty hours, I was pretty darn good at diagnosing the business from the numbers, because I had learned from such a wide range of experts.  The process also turned out to be a useful diagnostic tool in its own right.  If I couldn’t find anyone in an area with great insights to share, chances were pretty good this was a side of the business that wasn’t being managed very well.

What I’ve learned by doing this exercise many times is that project reporting is almost always far too detailed – it’s like the old story about writing a shorter letter if you had more time.  It’s very hard to distill a lot of complexity into a tight report that shows only the key things – that means you have to figure out what those key things are (and have confidence that you didn’t miss anything vital!) – so most people cop out and throw in the kitchen sink.  As you are ramping up, think about how to cut way down on the amount of information being reported.  More is definitely not better, when it comes to metrics.  Einstein’s famous dictum applies perfectly here – “make things as simple as possible, but not simpler”.

The next time you have to get smart about a report full of numbers, give the Rip Van Winkle technique a try, and see if it works as well for you as it has for me.

Filed Under: 1000x, 100x, 10x, 1x, Rhythms of Business Tagged With: , ,

Rubber Gloves, Not White Gloves

June 14, 2012 by Leave a Comment

I’ve always loved to be involved in making things happen, on the ground.  The detail of execution, the individual decisions that mount up to determine success or failure – I like to plunge my hands into the engine grease.  Hence, rubber gloves, not white gloves.

That enthusiasm hasn’t always been embraced by the environment I’m in – places where the focus was on Big Ideas™, not the minutia of execution.  In academia, research labs, and staff or management roles, I was often supposed to step back, see the bigger picture, and identify the key trends and leverage points.  I love to do that, but I find that big ideas often become irrelevant if you are disconnected from the details.  In studying many projects that both succeeded and failed, my conviction has only deepened that the combination is where the magic lies.

Combining Vision and Execution

A great example is Brunelleschi, the architect who designed the beautiful Duomo – the dome that sits atop the famous cathedral that dominates the skyline of Florence.

It took 140 years to complete the building; the dome had remained a puzzle for decades because nobody could figure out how to build it.  The solution called for rediscovering ideas that had been forgotten since the days of the Roman Empire, and new inventions that had never been tried before.

Brunelleschi solved the problem in 1419 and got the commission, dedicating most of his adult life to constructing the dome and other parts of the cathedral.  The dome took more than four million bricks (37,000 tons of material!), and with the lantern on top stood 375 feet high.  He got a couple of the first patents ever issued to protect his ideas for a new kind of hoisting machine and a river transport vessel.  Brunelleschi was intimately involved in every step of the construction, laid some of the bricks himself, and immersed himself in every detail (including the work schedule and diet of the people doing the construction).  If you are interested, check out the Wikipedia entry; Ross King did a great job telling the story in more detail in the book, Brunelleschi’s Dome.

Another interesting case study was the race to reach the South Pole first in 1911.   Two expeditions were involved.  One party, led by Robert Scott, was less focused on the details of planning and preparation.  The other, led by Roald Amundsen, was a great example of deep focus on every detail.  Amundsen insisted that every member of the expedition be an expert skier who had been practicing the sport since they were children.  Scott’s team mostly couldn’t ski.  Amundsen prepared navigation sheets so that they wouldn’t have to make complex calculations when they were exhausted.  Four out of five members of his final team were experienced navigators.  Scott had one, and used a technique that required more calculation.  Amundsen relied heavily on sled dogs and figured out how to keep them properly fed and cared for.  Scott’s team didn’t want to rely as much on dogs so they were dependent on horses, which turned out to be poorly adapted for the conditions.

Both teams were staffed with brave and seasoned explorers, but the results starkly illustrate the cost of poor focus on execution basics.  Amundsen got to the pole first and returned successfully without losing a man.  Scott, and the four companions who made it to the pole with him, all died.

Right Vision, Bad Execution

There are many, many examples where a compelling vision but poor execution leads to disaster.  It often happens even if the vision is a great and achievable one.

I thought it was very interesting to learn about the history of the Panama Canal in the excellent book by David McCullough called Path Between The Seas.  Basically, there was a competition to come up with the design for a canal that would connect the Atlantic and Pacific Ocean and avoid the laborious and dangerous trip around South America into the treacherous waters of Drake’s Passage.  A Frenchman, Ferdinand de Lesseps, had been the leading spirit behind the Suez Canal and came up with a hastily slapped together plan that chose a sub-optimal path and paid little heed to the enormous engineering challenges.  An American team very carefully and thoughtfully developed an alternative based on extensive surveys.  Lesseps, who was a charismatic, larger than life figure with little engineering knowledge, carried the day anyway and inspired investors to finance the effort.

An engineering group estimated it would cost $214 million; Lesseps cut that to $120 million with no real justification.  After eight years, 22,000 people had died (mostly of malaria and yellow fever – nobody realized that they were spread by mosquitos) and $235 million dollars had been spent, but the project was only partially done with the hardest issues unresolved.  The company went bankrupt.   The project was eventually taken over by the American government, after a fifteen year delay, and it took another $375 million and nine years to complete (but came in under the budget estimate!).  I think it’s a powerful example of a great vision, uncoupled to strong execution, leading to horrible results.  Then that same vision, carried forward in more pragmatic and expert hands, created a vital global resource.

Vision is Crucial .. but Must Not Become Decoupled From Reality

I’m a great believer in the importance of vision and strategy.  But strategy has to be deeply, deeply informed by all the infinite detail of execution.  And in looking at brilliantly successful strategies in technology, I’ve found that they are often emergent properties.  They were glimpsed, and then refined, by someone steeped in a deep understanding of their markets and the technology forces transforming them.  A kernel of insight evolves into a huge success – it doesn’t leap forth from the mind fully formed, like Athena from the forehead of Zeus.   Having a big and bold goal is fantastic .. but strategy is shaped, and success or failure is determined, by the execution.

Great execution is hard and requires endless focus and obsessiveness to achieve.  I’ve mostly worked on large software projects, and when you are building something that has millions of lines of code in it, the team must work together extraordinary well.  Such projects call for Herculean efforts and tiny bits of friction can lead to huge problems.  The code, the test suites, the shiproom triage meeting, the bug count, the milestone definition .. those are the clay and brick from which the great cathedrals are forged.  Lose your connection to the grit and the glue at your peril.

That’s why I love being in a startup .. we have a bold vision for what we hope to achieve, but our days are full of designing and building the product with endless and loving focus on every detail.  Hopefully we are achieving a combination of vision and execution that will let us have the impact we aspire to make in the lives of our users.

Filed Under: 1000x, 100x, 10x, 1x Tagged With: ,

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: ,

Five favorite books .. of insight from unexpected places

March 16, 2012 by Leave a Comment

I’ve found many intriguing ideas about teams and projects from books on seemingly unrelated subjects.  I’m convinced there are universal principles that can be used in any environment for virtually any goal that you set your mind and heart to achieve.

Dance Choreography

Twyla Tharp is a very well known choreographer who founded her own dance company in 1969 and has performed many works that heavily influenced her field.  She is still active, and in 2003 she wrote a terrific book called The Creative Habit.  In addition to many interesting stories and anecdotes from her long life in dance, it is filled with practical advice on how to organize and carry out complex creative projects (complete with many exercises for you to try).

“The first steps of a creative act are like groping in the dark: random and chaotic, feverish and fearful .. For me, these moments are not pretty.  I look like a desperate woman, tortured by .. a message thumping away in my head.”  She tells us how to go from that stage to performance of a completed dance .. and to keep doing it, as she has, through a long and productive life.

Film-Making

I’ve always been fascinated by the way that movies are made.  I see remarkable similarities between the creation of a movie and a V1 software project.  You have an originating vision that must evolve as you go, you bring together experts in many different disciplines who often have trouble getting along, the team must solve very challenging design problems, and there is a long period of refining the raw material into a polished and compelling final product.  There is often a tense relationship between the creators and the funders, and the final outcome is the product of many people’s contributions rather than being completely under the control of any single person.

William Goldman is one of the most successful screenwriters in the industry.  He wrote many famous movies, including Butch Cassidy and the Sundance Kid and All The President’s Men.  He’s also written some of the best books about the movie business, including Adventures in the Screen Trade and Which Lie Did I Tell?  Check out either one to learn about making movies (with great anecdotes about famous movies and the often deeply odd people who make them).  One of his well known mantras is: “Nobody knows anything”.  By which he means, nobody has a clue how a movie will do until it is released – the expectations of the most experienced movie makers are routinely confounded.  The same can be said about radical new software products!

Poetry

I really like to read poetry, which can often be a rich source of introspection and insight.  Catching Life by the Throat, by Josephine Hart, lets you read some wonderful poems and learn about the poets who wrote them.  What I love about the book is that it captures the energy and excitement of a great poem and conveys some of the all-consuming passion to create.  “I was a word child, in a country of word children, where life was language before it was anything else.”  “Poetry, this trinity of sound, sense and sensibility, gave voice to experience in a way no other literary art form could .. it threw sudden shafts of light on my own soul and drew at least the shadow outline of the souls of others.”  The act of creating anything new springs from passion and is refined through unceasing and painstaking effort.  This is a passionate book about the magic of poetry.

Chess

You may have heard about Josh Waitzkin because of his father, who wrote a fun book called “Searching for Bobby Fisher” about the development of his son into a chess prodigy.  The book, which was also made into a movie, is a fascinating glimpse into the peculiar world of obsessive chess players.  Mostly ignored by mainstream society, the subculture occasionally bursts into view, as it did during the cold war or when its stars were pitted against supercomputers in man vs. machine contests.  Josh had a long period of prominence in the chess world, starting when he won the National Chess Championship at 9 years old.  He then went on to become a Tai Chi world champion as well!

From these experiences, Josh wrote his own book called The Art of Learning.  He shows how he takes on a new discipline and applies the same approach to it that he learned as an obsessive childhood chess player.  He copes with losing, deals with adversity, and is very systematic about achieving an extreme level of skill and ability.  He’s also able to learn from just about anyone – as a child, he got some of his best insight into chess from playing street hustlers and gamblers.  The book is an unusual blend of autobiography and instruction, with a wealth of anecdotes about the extremely different and equally obsessive worlds that Josh has inhabited throughout his life.

Art

I decided to learn how to draw as an adult, and I love doing it.  Many excellent books helped me along, but one stands out particularly when it comes to letting creativity flow (in any field).  Julia Cameron wrote The Artist’s Way to help unblock artists and get their creative juices flowing.  It became unexpectedly successful and the series that it spawned has sold millions of copies.  It does have some new age religious ideology that doesn’t resonate with me, but it is chock full of productive exercises to help you work through blocks and loosen up.  She lays out a 12 week process for breaking through obstacles, finding what really inspires you, and making it happen.  I think that any great achievement starts from a deep passion.  Once you know what you are inspired to do and you begin pursuing it with conviction, you are on the path to a life of meaning.  This book can help you find it.

Have you found insight in unexpected places?

Filed Under: 1x Tagged With: ,
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