Marcato

Yesterday afternoon I was talking to a friend and client about our efforts over the last six months to build and ship a new product platform and to use that effort to inspire new customers to use our products and services and new investors to help fund us through to profitability.  The result of those efforts recently shipped to our production data center and are now in use by our current customers.  As he has been talking to investors, he is now using this proof point to demonstrate to them that we have an effective team in place that is capable of delivering on the overall vision we have for the product.  More importantly, he has been telling them that we set out six months ago to build this platform and now, after six months, we have shipped it on time.  The problem?  Nobody believes him.  You can see it in their eyes and in the questions they ask – “Nobody ships software on time.  You cheated.”

I:  ”So you say that after six months of development, you have shipped the product that you wanted on schedule.”

A:  ”Yes…well, not exactly.”

I:  ”Oh?”

A:  ”Well, to be more precise – we shipped the product that our customers need on schedule.”

I:  ”And it’s done?”

A:  ”Of course not – we just started.  Show me a software product that is done, and I’ll show you a product that was just turned off by it’s last customer.”

I:  ”OK – fair enough.  As long as you can fund the ongoing effort from your revenue stream and be profitable, I guess I get what I want.  But let me ask the question a different way.  You said it doesn’t have everything you want but what your customers need – does that mean you had to leave out features?”

A:  ”Yes.  There are things we said we wanted to accomplish when we started that were left out.  But we always left the product owner in control of those priorities, and to the degree that they were able to effectively represent our customers, we were always working on what our customers would say was most important.”

I:  ”Aha!  But that’s cheating – you didn’t actually do everything you said you would the way you said you would at the beginning!”

A:  ”No, we didn’t cheat, but yes, we compromised along the way.  To be fair, the business’ understanding of it’s product, position in the marketplace, customer needs, and financial position changed a lot along the way, too.  Staffing and priorities related to other product lines were in flux, and when we started we had not even chosen the two strategic partners we would have to integrate with to provide a significant part of the feature set.”

I:  ”So, it’s somebody else’s fault that you did not get everything done that you said would get done?  I’ve heard that story many times before.”

A:  ”I think you are looking at it wrong.  If your assumption is that everyone starts with a perfect understanding of what is needed and how to do it and all that is needed is to execute on that plan, then I suppose you could say that it is cheating.  But, if you instead assume that everyone involved is simply making the best decisions they can at the time based on the knowledge they have, then the actual path you take to get to the goal isn’t the result of cheating – it simple acknowledges that we are all always acting on imperfect information.”

I:  ”I suppose that’s true – but how can a business make good financial decisions in a situation like that?  If we don’t know what we are going to get, when we will get it, or what it will cost, then we can’t determine if the investment will be profitable.”

A:  ”Well, you can set some constraints on all of those factors so that you know roughly what the business can expect, but are you saying that even if we could somehow tell you all of those things, then you would be able to tell us exactly how much of that product you will be able to sell?”

I:  ”Hmm – not really, at least not exactly.  After all, we’re in a speculative business venture trying to do something that has not been done before, so while we can try to model how the market will behave and how the business will perform, we can’t really be sure until we do it.”

A:  ”So, what you are saying is that while you can’t list the names and dollar amounts of the people that will buy the product, you can make macro level estimates based on related products and industries and overall estimates of the market potential and then correct that model as needed based on what actually happens when you start to sell the product?”

I:  ”Yes – that we can do.”

A:  ”But that’s cheating by your own definition!  Or would you agree that as long as you get the sales you need when you need them, then the model holds together and you get the results you expect without having to try to predict or control the details?”

I:  ”I see what you are doing; don’t try to twist this around!  OK, I’ll concede that point, but you are engineers; you’re supposed to be smart and detail oriented.  Salespeople have to have some latitude for finding creative ways to make their quote – it’s the only way to retain the best.  I don’t want to micro-manage what they do – it’s just the result I care about.  Anyway, let’s switch to the other side of the coin.  You said you got it done on time – so that means everything went to plan?”

A:  ”Nope – there were lots of things that went wrong along the way, and we missed our goals by a couple of months.”

I:  ”There you go – cheating again!  How can you say you shipped on time when you told me you missed your goals?  You can’t have it both ways.”

A:  ”But you can.  There was always two plans – the public plan that we told our current and future customers and investors, and our internal plan.  Our internal goals were much more aggressive because we knew that there would be some unexpected changes along the way.  What matters was that we committed to incremental steps along the way and corrected our plan each time we discovered that it needed to change.”

I:  ”So, let me see if I have this straight.  You intentionally created an internal plan to ship in April so that you could meet your external plan of shipping in June.  The way I see it, you sandbagged by 50% and came nowhere close to meeting your goals.”

A:  ”Or, another way of looking at it is that we intentionally created urgency within the team to make sure we stayed focused only on the most critical features.  Look at it this way – let’s say you have an interview for a job you really want at noon on the other side of town.  You get a map on the Internet and it says you will need 24 minutes to get there.  Do you leave at 11:36?”

I:  ”Of course not.  You might hit traffic, and the map doesn’t account for the construction on Hwy. 36 where they have it down to one lane, plus it always takes and extra 10 minutes or so to find parking near the actual building when you can find that.  I’d probably leave around 11 just to be sure.”

A:  ”Seems reasonable, but you have to admit that you might get there early and have to wait for it to start.”

I:  ”True, but the consequences of being late are more traumatic.  Besides, if I get there early I can always get other work done while I wait.”

A:  ”The same thing applies to our software release.  What if I told you that some of the team finished early and have already started working on features for the next release?  Would you still say we were sandbagging?”

I:  ”It does help, but it still seems like you could just do whatever you want for the first couple of months and then use the last 4 months to actually build what we asked.”

A:  ”It probably seems that way, but what if I also told you that every two weeks we showed the team actual working software?  It seems hard to hide that way.  And what if I told you that every two weeks you get to decide what we will do next based on your current understanding of what is important to our customers and to the business?”

I:  ”Trust, but verify.  I guess I like that I at least get to know how my money is being spent.  I don’t want to have to watch over every little detail along the way, but I need to know I’m getting value for my money.”

A:  ”I wouldn’t want it any other way.  I know there are situations where the technical teams take advantage of the business, but that’s really hard to do with Agile.  In fact, if there is any risk, it is that the business so dominates the agenda that you do not make important but not urgent investments in upgrading technologies or staying true to your overall architectural plan.  You have to make sure you have leadership that understands how to deliver those things along the way while explaining to the business why they are important enough to invest in.”

I:  ”I feel like we’ve been talking in circles, but I at least feel like I understand what happened.  You didn’t ship what you wanted when you wanted, but you did ship what your business and your customers needed when you needed and the business had good visibility into and control over what was happening along the way.  I guess that’s not cheating – it’s just a practical approach given the situation, especially for an early stage company without a proven product or market.”

A:  ”Exactly.”