Seed, Feed, Weed
December 6, 2018 | Posted By: James Fritz
The United States Special Operations Command (SOCOM) has 5 truths that they live by. All of them have guided SOCOM to be the premier fighting force in the world and they all center around people:
-Humans are more important than hardware
Never prioritize your equipment over people. Hardware is always easily replaced. The same is true in technology. Buying a new server is easy. Replacing good engineers is not.
-Quality is better than quantity
Anytime you have the choice between one fully capable person and two okay people, always choose quality over quantity. It gives you the ability to still get the job done and provides more overhead for future hires.
-Special Operations Forces cannot be mass produced
Just like SOCOM, engineers cannot be made in a factory. Yes there are boot camps that help to fill the void in engineering roles but even those graduates still require time to get up to speed on what it is your organization does. No two companies are the same.
-Competent Special Operations Forces cannot be created after emergencies occur
If you hire engineers based upon a disaster, they will be ready for tomorrow’s disaster, not today’s. Always be prepared.
-Most special operations require non-SOF assistance
Engineers can’t work alone. If QA, Security, Marketing, etc. are not present and supporting, then the work that is produced will not be what is required.
It takes an entire team beyond just engineers to get the job done.
People are what make organizations great, nothing else. You may be known for a product, but it is your people that developed it and keep it running.
Seed, Feed and Weed
AKF has a principle of Seed, Feed and Weed. Broken down into each component:
Every day new technology and talent is being produced. Additionally skilled individuals are always looking for their next challenge, particularly if they currently work in a non-favorable company. Some companies use entities to find and evaluate new talent to see if they would be a good fit. Others rely heavily upon their own brand to attract talent. And still others network throughout the community to make sure they are constantly aware of locally available skill.
Given that every day distance from the workplace matter less and less for employees, using all three can be very integral to staying viable. If using an outside entity to evaluate new talent isn’t feasible, make sure that you have a solid method in place for determining not only people’s skill, but their fit into your culture. If you don’t have a strong name to fall back on, make your software the differentiator. You may not be the biggest mass producer of widgets in the world, but maybe you are the only one who can make them blue. Gravitate towards that for attracting talent. And lastly if you can’t network then take some tips from marketing. Figure out how to get out there and sell yourself and your company. If you can’t talk excitedly about what you do with someone you meet, then they won’t be excited to work for you.
There are different facets to Feed. An important aspect of Feed is feedback. Continually communicating with your employees about how they are doing (and not just the wrong stuff) gives them a sense of direction for where you think they should be going. It also lets them know that you pay attention and value their work. Beyond feedback is also training. Managers need to be aware of the required training that someone needs to do their job. If they are managing your databases and have zero database knowledge that is an issue. But employees need more than just required training. They need something that stimulates them. Leaders ensure that employees grow beyond what their role defines them as. If they want to take Underwater Basket Weaving, well encourage it. It may not always benefit the company, but if it benefits the employee it usually has a way of having positive returns for everyone.
Last, and certainly not least, is Weed. No one likes to be the bad guy. Firing people is tough - but getting rid of people with bad behaviors or repeatedly poor results is part of our duty as managers and executives. Have you tried to make them better? Maybe they were just in the wrong position or didn’t have the right training. Or worse, they just weren’t a good fit for the company. If someone has bad behavior it can be very difficult to remedy. If someone is lacking experience, then it just takes training and mentorship. 9 times out of 10, experience can be fixed. 9 times out of 10 it is just better for everyone to part ways with behavioral issues.
The key to a good workplace is identifying which is most important to you at any given time as sometimes it can shift. Which of the three to apply more focus on depends on the condition of your team.
So why are people so important? Unless you have already developed Artificial Intelligence they are the ones doing the work. The Special Operations Community is aware that money can be used to purchase new equipment but the right people take time and nurturing. The same should be applied for your business. If availability and scalability are your concerns, money can get you all the rack space or cloud storage you need. But only time and effort can get you the right people to manage it.
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The AKF Difference
December 4, 2018 | Posted By: Marty Abbott
During the last 12 years, many prospective clients have asked us some variation of the following questions: “What makes you different?”, “Why should we consider hiring you?”, or “How are you differentiated as a firm?”.
The answer has many components. Sometimes our answers are clear indications that we are NOT the right firm for you. Here are the reasons you should, or should not, hire AKF Partners:
Operators and Executives – Not Consultants
Most technology consulting firms are largely comprised of employees who have only been consultants or have only run consulting companies. We’ve been in your shoes as engineers, managers and executives. We make decisions and provide advice based on practical experience with living with the decisions we’ve made in the past.
Engineers – Not Technicians
Educational institutions haven’t graduated enough engineers to keep up with demand within the United States for at least forty years. To make up for the delta between supply and demand, technical training services have sprung up throughout the US to teach people technical skills in a handful of weeks or months. These technicians understand how to put building blocks together, but they are not especially skilled in how to architect highly available, low latency, low cost to develop and operate solutions.
The largest technology consulting companies are built around programs that hire employees with non-technical college degrees. These companies then teach these employees internally using “boot camps” – creating their own technicians.
Our company is comprised almost entirely of “engineers”; employees with highly technical backgrounds who understand both how and why the “building blocks” work as well as how to put those blocks together.
Product – Not “IT”
Most technology consulting firms are comprised of consultants who have a deep understanding of employee-facing “Information Technology” solutions. These companies are great at helping you implement packaged software solutions or SaaS solutions such as Enterprise Resource Management systems, Customer Relationship Management Systems and the like. Put bluntly, these companies help you with solutions that you see as a cost center in your business. While we’ve helped some partners who refuse to use anyone else with these systems, it’s not our focus and not where we consider ourselves to be differentiated.
Very few firms have experience building complex product (revenue generating) services and platforms online. Products (not IT) represent nearly all of AKF’s work and most of AKF’s collective experience as engineers, managers and executives within companies. If you want back-office IT consulting help focused on employee productivity there are likely better firms with which you can work. If you are building a product, you do not want to hire the firms that specialize in back office IT work.
Business First – Not Technology First
Products only exist to further the needs of customers and through that relationship, further the needs of the business. We take a business-first approach in all our engagements, seeking to answer the questions of: Can we help a way to build it faster, better, or cheaper? Can we find ways to make it respond to customers faster, be more highly available or be more scalable? We are technology agnostic and believe that of the several “right” solutions for a company, a small handful will emerge displaying comparatively low cost, fast time to market, appropriate availability, scalability, appropriate quality, and low cost of operations.
Cure the Disease – Don’t Just Treat the Symptoms
Most consulting firms will gladly help you with your technology needs but stop short of solving the underlying causes creating your needs: the skill, focus, processes, or organizational construction of your product team. The reason for this is obvious, most consulting companies are betting that if the causes aren’t fixed, you will need them back again in the future.
At AKF Partners, we approach things differently. We believe that we have failed if we haven’t helped you solve the reasons why you called us in the first place. To that end, we try to find the source of any problem you may have. Whether that be missing skillsets, the need for additional leadership, organization related work impediments, or processes that stand in the way of your success – we will bring these causes to your attention in a clear and concise manner. Moreover, we will help you understand how to fix them. If necessary, we will stay until they are fixed.
We recognize that in taking the above approach, you may not need us back. Our hope is that you will instead refer us to other clients in the future.
Are We “Right” for You?
That’s a question for you, not for us, to answer. We don’t employ sales people who help “close deals” or “shape demand”. We won’t pressure you into making a decision or hound you with multiple calls. We want to work with clients who “want” us to partner with them – partners with whom we can join forces to create an even better product solution.
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The Importance of QA
November 20, 2018 | Posted By: Robin McGlothin
“Quality in a service or product is not what you put into it. It’s what the customer gets out of it.” Peter Drucker
The Importance of QA
High levels of quality are essential to achieving company business objectives. Quality can be a competitive advantage and in many cases will be table stakes for success. High quality is not just an added value, it is an essential basic requirement. With high market competition, quality has become the market differentiator for almost all products and services.
There are many methods followed by organizations to achieve and maintain the required level of quality. So, let’s review how world-class product organizations make the most out of their QA roles. But first, let’s define QA.
According to Wikipedia, quality assurance is “a way of preventing mistakes or defects in products and avoiding problems when delivering solutions or services to customers. But there’s much more to quality assurance.”
There are numerous benefits of having a QA team in place:
- Helps increase productivity while decreasing costs (QA HC typically costs less)
- Effective for saving costs by detecting and fixing issues and flaws before they reach the client
- Shifts focus from detecting issues to issue prevention
Teams and organizations looking to get serious about (or to further improve) their software testing efforts can learn something from looking at how the industry leaders organize their testing and quality assurance activities. It stands to reason that companies such as Google, Microsoft, and Amazon would not be as successful as they are without paying proper attention to the quality of the products they’re releasing into the world. Taking a look at these software giants reveals that there is no one single recipe for success. Here is how five of the world’s best-known product companies organize their QA and what we can learn from them.
Google: Searching for best practices
How does the company responsible for the world’s most widely used search engine organize its testing efforts? It depends on the product. The team responsible for the Google search engine, for example, maintains a large and rigorous testing framework. Since search is Google’s core business, the team wants to make sure that it keeps delivering the highest possible quality, and that it doesn’t screw it up.
To that end, Google employs a four-stage testing process for changes to the search engine, consisting of:
- Testing by dedicated, internal testers (Google employees)
- Further testing on a crowdtesting platform
- “Dogfooding,” which involves having Google employees use the product in their daily work
- Beta testing, which involves releasing the product to a small group of Google product end users
Even though this seems like a solid testing process, there is room for improvement, if only because communication between the different stages and the people responsible for them is suboptimal (leading to things being tested either twice over or not at all).
But the teams responsible for Google products that are further away from the company’s core business employ a much less strict QA process. In some cases, the only testing done by the developer responsible for a specific product, with no dedicated testers providing a safety net.
In any case, Google takes testing very seriously. In fact, testers’ and developers’ salaries are equal, something you don’t see very often in the industry.
Facebook: Developer-driven testing
Like Google, Facebook uses dogfooding to make sure its software is usable. Furthermore, it is somewhat notorious for shaming developers who mess things up (breaking a build or causing the site to go down by accident, for example) by posting a picture of the culprit wearing a clown nose on an internal Facebook group. No one wants to be seen on the wall-of-shame!
Facebook recognizes that there are significant flaws in its testing process, but rather than going to great lengths to improve, it simply accepts the flaws, since, as they say, “social media is nonessential.” Also, focusing less on testing means that more resources are available to focus on other, more valuable things.
Rather than testing its software through and through, Facebook tends to use “canary” releases and an incremental rollout strategy to test fixes, updates, and new features in production. For example, a new feature might first be made available only to a small percentage of the total number of users.
Canary Incremental Rollout
By tracking the usage of the feature and the feedback received, the company decides either to increase the rollout or to disable the feature, either improving it or discarding it altogether.
Amazon: Deployment comes first
Like Facebook, Amazon does not have a large QA infrastructure in place. It has even been suggested (at least in the past) that Amazon does not value the QA profession. Its ratio of about one test engineer to every seven developers also suggests that testing is not considered an essential activity at Amazon.
The company itself, though, takes a different view of this. To Amazon, the ratio of testers to developers is an output variable, not an input variable. In other words, as soon as it notices that revenue is decreasing or customers are moving away due to anomalies on the website, Amazon increases its testing efforts.
The feeling at Amazon is that its development and deployment processes are so mature (the company famously deploys software every 11.6 seconds!) that there is no need for elaborate and extensive testing efforts. It is all about making software easy to deploy, and, equally if not more important, easy to roll back in case of a failure.
Spotify: Squads, tribes and chapters
Spotify does employ dedicated testers. They are part of cross-functional teams, each with a specific mission. At Spotify, employees are organized according to what’s become known as the Spotify model, constructed of:
- Squads. A squad is basically the Spotify take on a Scrum team, with less focus on practices and more on principles. A Spotify dictum says, “Rules are a good start, but break them when needed.” Some squads might have one or more testers, and others might have no testers at all, depending on the mission.
- Tribes are groups of squads that belong together based on their business domain. Any tester that’s part of a squad automatically belongs to the overarching tribe of that squad.
- Chapters. Across different squads and tribes, Spotify also uses chapters to group people that have the same skillset, in order to promote learning and sharing experiences. For example, all testers from different squads are grouped together in a testing chapter.
- Guilds. Finally, there is the concept of a guild. A guild is a community of members with shared interests. These are a group of people across the organization who want to share knowledge, tools, code and practices.
Spotify Team Structure
Testing at Spotify is taken very seriously. Just like programming, testing is considered a creative process, and something that cannot be (fully) automated. Contrary to most other companies mentioned, Spotify heavily relies on dedicated testers that explore and evaluate the product, instead of trying to automate as much as possible. One final fact: In order to minimize the efforts and costs associated with spinning up and maintaining test environments, Spotify does a lot of testing in its production environment.
Microsoft: Engineers and testers are one
Microsoft’s ratio of testers to developers is currently around 2:3, and like Google, Microsoft pays testers and developers equally—except they aren’t called testers; they’re software development engineers in test (or SDETs).
The high ratio of testers to developers at Microsoft is explained by the fact that a very large chunk of the company’s revenue comes from shippable products that are installed on client computers & desktops, rather than websites and online services. Since it’s much harder (or at least much more annoying) to update these products in case of bugs or new features, Microsoft invests a lot of time, effort, and money in making sure that the quality of its products is of a high standard before shipping.
What you can learn from world-class product organizations? If the culture, views, and processes around testing and QA can vary so greatly at five of the biggest tech companies, then it may be true that there is no one right way of organizing testing efforts. All five have crafted their testing processes, choosing what fits best for them, and all five are highly successful. They must be doing something right, right?
Still, there are a few takeaways that can be derived from the stories above to apply to your testing strategy:
- There’s a “testing responsibility spectrum,” ranging from “We have dedicated testers that are primarily responsible for executing tests” to “Everybody is responsible for performing testing activities.” You should choose the one that best fits the skillset of your team.
- There is also a “testing importance spectrum,” ranging from “Nothing goes to production untested” to “We put everything in production, and then we test there, if at all.” Where your product and organization belong on this spectrum depends on the risks that will come with failure and how easy it is for you to roll back and fix problems when they emerge.
- Test automation has a significant presence in all five companies. The extent to which it is implemented differs, but all five employ tools to optimize their testing efforts. You probably should too.
Bottom line, QA is relevant and critical to the success of your product strategy. If you’d tried to implement a new QA process but failed, we can help.
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The Domino or Multiplicative Effect of Failure
September 18, 2018 | Posted By: Pete Ferguson
As part of our Technical Due Diligence and Architectural reviews, we always want to see a company’s system architecture, understand their process, and review their org chart. Without ever stepping foot at a client we can begin to see the forensic evidence of potential problems.
Like that ugly couch you bought when you were in college and still have in your front room, often inefficiencies in architecture, process, and organization are nostalgic memories that have long since outlived their purpose – and while you have become used to the ugly couch, outsiders look in and recognize it as the eyesore it is immediately and often customers feel the inefficiencies through slow page loads and shopping cart issues. “That’s how it has always been” is never a good motto when designing systems, processes, and organizations for flexibility, availability, and scalability.
It is always interesting to hear companies talk with the pride of a parent about their unruly kid when they use words like “our architecture/organization is very complex” or “our systems/organization has a lot of interdependent components” – as if either of these things are something special or desirable! Great architectures are sketched out on a napkin in seconds, not hours.
Great architectures are sketched out on a napkin in seconds, not hours.
All systems fail. Complex systems fail miserably, and – like Dominos – take down neighboring systems as well resulting in latency, down time, and/or flat out failure.
ARCHITECTURE & SOFTWARE
Some common observations in hardware/software we repeatedly see:
Problem: Overloaded F5 or other similar firewalls are trying to encrypt all data because Personal Identifiable Information (PII) is stored in plain text, usually left over from a business decision made long ago that no one can quite recall and an auditor once said “encrypt everything” to protect it. Because no one person is responsible for a 30,000 foot view of the architecture, each team happily works in their silo and the decision to encrypt is held up like a trophy without seeing that the F5 is often running hot, causing latency, and is now a bottleneck (resulting in costly requests for more F5s) doing something it has no business doing in the first place.
Solution: Segregate all PII, tokenize it and only encrypt the data that needs to be encrypted, speeding up throughput and better isolating and protecting PII.
Integration (or Rather Lack Thereof) Of Mergers & Acquisitions
Problem: A recent (and often not so recent) flurry of acquisitions is resulting in cross data center calls in and out of firewalls. Purchased companies are still in their own data center or public cloud and the entire workflow of a customer request is crisscrossing the country multiple times not only causing latency, but if one thing goes wrong (remember, everything fails …) timeouts result in customer frustration and lost transactions.
Solution: Integrate services within one isolated stack or swim lane – either hosted or public cloud – to avoid cross data center calls. Replicate services so that each datacenter or cloud instance has everything it needs.
Problem: As the company grew and gained more market share, the search for bigger and better has resulted in a monolithic database that is slow, requires specialized hardware, specialized support, ongoing expensive software licenses, and maintenance fees. As a result, during peak times the database slows everyone and everything down. The temptation is to buy bigger and better hardware and pay higher monthly fees for more bandwidth.
Solution: Break down databases by customer, region, or other Z-Axis splits on the AKF Scale Cube. This has multiple wins – you can use commodity servers instead of large complex file storage, failure for one database will not affect the others, you can place customer data closest to the customer by region, and adding additional servers does not required a long lead time or request for substantial capital expenditure.
PROCESSES & ORGANIZATION
What sets AKF apart is that we don’t just look at systems, we always want to understand the people and organization supporting the system architecture as well and here there are additional multiplicative effects of failure. We have considerable expertise working for and with Fortune 100 companies, startups, and agencies in many different competencies. The common mistakes we see on the organization side of the equation:
Lack of Cross Functional Teams
Problem: Agile Scrum teams do not have all the resources needed within the team to be self sufficient and autonomous. As a result, teams are waiting on other internal resources for approvals or answers to questions in order to complete a Sprint - or keep these items on the backlog because effort estimation is too high. This results in decreased time to market, losing what could have been a competitive advantage, and lower revenue.
Solution: Create cross-functional teams so that each Sprint can be completed with necessary access to security, architecture, QA, and other resources. This doesn’t mean each team needs a dedicated resource from each discipline – one resource can support multiple teams. The information needed can be greatly augmented by creating guildes where the subject matter expert (SME) can “deputize” multiple people on what is required to meet policy. Guilds utilize published standards and provide a dedicated channel of communication to the SME greatly simplifying and speeding up the approval process.
Lack of Automation
Problem: It isn’t done enough! As a result, people are waiting on other people for needed approvals. Often the excuse is that there isn’t enough time or resources. In most cases when we do the math, the cost of not automating far outweighs the short-term investment with a continuous long-term payout that automation would bring. We often see that the individual with the deployment knowledge is insecure and doesn’t want automation as they feel their job is threatened. This is a very short-sighted approach that requires coaching for them to see how much more valuable they can be to the organization by getting out of the way of stifling progress!
Solution: Automate everything possible from testing, quality assurance, security compliance, code compliance (which means you need a good architectural review board and standards), etc! Automation is the gift that keeps on giving and is part of the “secret sauce” of top companies who are our clients.
Not Empowering Teams to Get Stuff Done!
Problem: Often teams work in a silo, only focused on their own tasks and are quick to blame others for their lack of success. They have been delegated tasks, but do not have the ability to get stuff done.
Solution: Similar to cross functional teams, each team must also be given the authority to make decisions (hence why you want the right people from a variety of dependencies on the team) and get stuff done. An empowered team will iterate much faster and likely with a lot more innovation.
While each organization will have many variables both enabling and hindering success, the items listed here are common denominators we see time and time again often needing an outside perspective to identify. Back to the ugly couch analogy, it is often easy to walk into someone else’s house and immediately spot their ugly couch!
Pay attention to those you have hired away from the competition in their early days and seek their opinions and input as your organization’s old bad habits likely look ridiculous to them. Of course only do this with an intent to listen and to learn – getting defensive or stubbornly trying to explain why things are the way they are will not only bring a dead end to you learning, but will also abruptly stop any budding trust with your new hire.
And of course, we are always more than happy to pop the hood and take a look at your organization just as we have been doing for the top banks, Fortune 100, healthcare, and many other organizations. Put our experience to work for you!
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Effective Incident Communications
September 17, 2018 | Posted By: Bill Armelin
Everything fails! This is a mantra that we are always espousing at AKF. At some point, these failures will manifest themselves as an outage. In a SaaS world, restoring service as quickly as possible is critical. It requires having the right people available and being able to communicate with them effectively. A lack of good communications can cause an incident to drag on.
For startups and smaller companies, problems with communications during incidents is less of an issue. Systems tend to be smaller or monolithic. Teams supporting these systems also tend to be small. When something happens, everyone jumps on a call to figure out the problem. As companies grow, the number of people needed to resolve an incident grows. Coordinating communications between a large group of people becomes difficult. Adding to the chaos are executives joining the conference bridges demanding updates about service restoration.
In order to minimize the time to restore a system during an incident, companies need the right people on the call. For large, complex systems, identify the right resources to solve a problem can be difficult. We recommend swarming an issue with everyone that could be needed to resolve an incident, and then release those that are no longer needed. But, with such a large number of people, it can be difficult to coordinate communications, especially on a single conference call bridge.
Managing the communications of a large group of people working an incident is critical to minimizing the restoration time. We recommend a communication method that many of us at AKF learned in the military. It involves using multiple voice and chat channels to coordinate work and the flow of information. Before we get into the details of managing communications, we need to first look at the leadership required to effectively work the incident.
Technical Incident Manager and Incident Communications Manager
Managing a large incident is usually too much for a single individual. She cannot manage coordinating the work occurring to resolve the incident, as well as reporting status to and answering questions from executives eager to know what is going on. We recommend that companies manage incidents with two people. The first person is the individual that is responsible for directing all activities geared towards restoration of service. We call this person the Technical Incident Manager. This individual’s main job is to reduce the mean time to restoration. She needs an overall architectural knowledge of the product and systems to direct the work. She is responsible for leading the call and deescalating after diagnosis informs who needs to be involved. She identifies and diagnoses the service issues and engages the appropriate subject matter experts to assist in restoration.
The second individual is the Incident Communications Manager. He is responsible for supporting the Technical Incident Manager be listening to the technical resolution chatter and summarizing it for a non-technical audience. His focus is on communications speed, quality, and accuracy. He is the primary communications channel for both internal and external messaging. He owns the incident communications process.
Incident Communications Process
This process involves using multiple communication channels to control information and work performed. The first channel established is the Control Channel. This is in the form of a conference bridge and a chat channel. The Technical Incident Manager controls both of these channels. The second channel created is the Status Channel. This also has a voice bridge and a chat channel. The Incident Communication Manager is responsible for managing this channel.
The Control Channel is used for all communication related to the restoration of service. People only use the voice channel for immediate communication and to announce work that is occurring or address immediate questions that need to be answered. Detailed work conducted is placed in the chat channel. This reduces the chatter on the voice channel to command and control messages. It also serves as a record of actions taken that can be referenced in the post mortem/RCA process. If specific teams need to discuss the work they are performing, separate voice and chat breakout channels are created for them. They move off the main channel into their breakout channels to perform the work. The leader of these teams periodically communicates status back up to the control channel.
As the work is progressing, the Incident Communications Manager monitors the Control Channel to provide the basis for his messaging. He formulates updates that he delivers over the Status bridge and chat channel. He keeps executives and customers informed of progress and status, keeping the control channel free of requests for frequent updates and dedicated to restoring service.
This method of communications has worked well in the military for years and has been adopted by many large companies to manage their incident communications. While it is overkill for small companies, it becomes an effective process as companies grow and systems become more complex.
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Expanding Agile Throughout
September 6, 2018 | Posted By: James Fritz
In our experience we have seen how Agile practices provide organizations within successful companies many benefits which is leading to more and more companies adopting frameworks of Agile outside of software development. Whether they are looking for reduced risk, higher product quality, or even the capability to “fail fast” and rectify mistakes, Agile provides many benefits, particularly in management.
While effort has been expended to identify how to create Agile product delivery teams (Organizing Product Teams for Innovation) and conversely why they fail (The Top Five Most Common Agile PDLC Failures) – a lot of the focus is on the successes and failures of the delivery teams themselves. But the delivery is only as good as the group that surrounds that team.
So how does Agile work beyond your delivery teams? An essay published in 1970 by Robert K. Greenleaf, The Servant as Leader, is credited with introducing the idea of a Servant-Leader, someone who puts their employees’ needs ahead of their own. This is counter-intuitive to a normal management style where management has a list of needs that require completion.
Looking at an Agile team, the concept of waiting for management to drive needs is not conducive to meeting the requirements of the market. A highly competent Agile team has all the necessary tools and authority to get the job done that is required of them. If normal management tactics sit over an Agile team, failure is going to occur.
This is where the philosophy of Servant-Leadership comes into play. If managers, all the way to the C-Suite, understand that they work for their employees, but their employees are accountable to them, then everyone is working towards one goal: the needs of the market. Management needs to be focused on securing the resources necessary for product delivery teams to meet the demands of the market, whether from a high level of the CEO and CFO for additional funding or further down with ensuring that technical debt and other tasks are assigned out appropriately to meet delivery goals. This empowerment for teams may seem risky, but the morale improvement and greater innovation that can be achieved far exceeds the level of risk that would be accepted.
Embracing Agile throughout a company is key to the company being able to survive beyond the first couple sprints. Small changes in management can play a huge role in that. Asking simple questions like, “what do you need to meet your goals”, or “what factors stand in your way of accomplishment” help to enable employees instead of limiting them. Asking yourself why you are successful as a company also helps to identify what segment is responsible for your success.
If the delivery of your services is what customers buy, then identifying ways to enable employees who create those services is vital. This isn’t to say that other roles in the company aren’t important. Without support from the entire company, no one particular segment can succeed. This is why it is so vital for Agile to permeate throughout your entire organization. If you need assistance in identifying gaps in Agile and figuring out how to employ it, feel free to reach out to AKF.
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Migrating from a legacy product to a SaaS service? Don't make these mistakes!!
September 4, 2018 | Posted By: Dave Swenson
AKF has been kept quite busy over the last decade helping companies move from an on-premise product to a SaaS service - often one of the most difficult transitions a company can face. We have found that the following are the top mistakes made during that migration.
With apologies to David Letterman…
The Top 5 SaaS Migration Mistakes
5. Treat Your SaaS Migration Only as a Marketing Exercise
Wall Street values SaaS companies significantly higher than traditional software companies, typically double the revenue multiples. A key reason for this is the improved margins the economies of scale true SaaS companies gain. If you are primarily addressing your customer’s desires to move their IT infrastructure out of their shop, an ASP model hosted in the cloud is fine. However, if your investors or Wall Street are viewing you as a SaaS company, ASP gross margins will not be accepted. A SaaS company is expected to produce in excess of 80% gross margin, whereas an ASP model typically caps out at around 60 or 70%.
How to Avoid?
Make a decision up front on what you want your gross and operating margins to be. This decision will guide how you sell your product (e.g.: highest margins require no code-level customizations), how you architect your systems (multi-tenancy provides greater economies of scale), and even how you release (you, not your customers, control release timing and frequencies). A note of warning: without SaaS margins, you will likely face pricing pressure from an existing or entrant competitor who achieved SaaS margins.
4. Tack the word ‘cloud’ on to your existing on-prem product and host it
Often a direct result of the above mistake, this is an ASP (Application Service Provider) model, not a SaaS one. While this exercise might be useful in exploring some hosting aspects, it won’t truly inform you about what your product and organization needs to become in order to successfully migrate to SaaS. It will result in nowhere near the gross and operating margins true SaaS provides, and your Board and Wall Street expect to see. As discussed in The Many Meanings of Cloud, the danger of tacking the word “Cloud” onto your product offering is that your company will start believing you are a “Contender”, and will stop pushing for true SaaS.
How to Avoid?
Again, if an ASP model is ‘good enough’, fine - just don’t label or market yourselves as SaaS. If you start the SaaS journey with an ASP model, make sure all within your company recognize your ASP implementation is a dead-end, a short-term solution, and that the real endpoint is a true SaaS offering.
3. Target Your Existing Customer Base
Many companies are so focused upon their existing customer base that they forget about entire markets that might be better suited for SaaS. The mistaken perception is
“We need to take customers along with us”,
when in fact, the SaaS reality is
“We need to use the Technology Adoption Lifecycle, compete with ourselves and address a different or smaller customer base first”.
How to Avoid?
Ignore your current customers and find early adopters to target, even if your top customers are pushing you to move to SaaS. A move to true SaaS from your on-premise product almost always requires significant architectural changes. Putting your entire product and code base through these changes will take time.
Instead, apply the Crossing the Chasm Bowling Alley strategy to grow your SaaS offering into your current customer base rather than fork-lifting your current solution in an ASP fashion into the cloud…
Carve out key slices of functionality from your product that can provide value in a standalone fashion, and find early adopters to help shake out your new offering. Even if you are in a ‘laggard’ industry (banking, healthcare, education, insurance), you will find early adopters within your targeted customer base. Seek them out; they will likely be far better partners in your SaaS migration than your existing ones.
2. Ignore Risk Shifts
It may come as a surprise to some within your company to find out how much risk your customers bear in order to host and use your product on-premise. These risks include security, availability, capacity, scalability, and disaster recovery. They also include costs such as software licensing that have been passed through to your customers, but are now yours, part of your operating margins.
How to Avoid?
Many of these “-ilities” are likely to be new disciplines that now must be instilled in your company, some by hiring key individuals (e.g.: a CISO), some through additional focus and rigor during your PDLC. Part of the process of rearchitecting for SaaS includes ensuring you have adequate scalability, are designed with availability in mind, and a production topology that enables disaster recovery. Where vertical scalability might be acceptable in your on-prem world (“just buy a bigger machine”), you now need to ensure you have horizontal scalability, ideally in an elastic form. The cost of proprietary software (e.g.: database licenses) is now yours to carry, and a shift to open source software can significantly improve your margins. These “-ilities” are also known as non-functional requirements (NFRs), and need to be considered with at least as much weight as your functional requirements during your backlog planning and prioritization.
And now, the biggest mistake we see made in SaaS migrations…
1. Underestimate Inertia
Inertia is a powerful force. Over the years spent building up your on-premise capabilities, you’ve almost certainly developed tremendous inertia - defined for our purposes as “a tendency to do nothing or remain unchanged”. In order to achieve true SaaS, in order to satisfy your investors and reach SaaS-like multiples, nearly every part of your company needs to act differently.
How to Avoid?
First, ensure your entire company is ready to embrace change. For many companies, the move to SaaS is the only answer to an existential threat that a known (or unknown competitor) presents, one who is listening to your customers say “Get this IT stuff out of my shop!”. Examples of SaaS disruptors include:
- Salesforce destroying Siebel
- ServiceNow vs. Remedy
- Workday taking on Oracle/Peoplesoft
Is there a disruptor waiting to take over your business?
Many companies choose to disrupt themselves, and after switching to SaaS, drive their stock price through the roof. Look at Adobe’s stock price once they fully embraced (or made their customers embrace) SaaS over packaged software.
Regardless of how you position the importance of SaaS to your employees, there will still be some that are stuck by inertia in the on-prem ways. Either relegate them to stay with the on-prem effort, or ‘weed’ them out.
Once you’ve got some built up momentum and desire within your company to make the move to SaaS, make a concerted examination department-by-department to determine how they will need to change. All involved need to recognize the risk shifts as mentioned, and associated required mindsets. While you likely have excellent, seasoned on-prem employees, do you have enough SaaS experience across each team? The SaaS migration should in no way be treated solely as an engineering exercise.
It always comes as a shock how many departments need to break out of their existing inertia, and act differently. Some examples:
- Can no longer promise code customizations.
- Need to address cloud security concerns.
- Must ensure existing customers know they can no longer dictate when releases occur.
- Learn to speak ARR (annual recurring revenue).
- Should look at alternative revenue schemes (seat vs. utility).
- SaaS presents changes in revenue recognition. Be prepared.
- Should focus in iterative releases that enable product discovery.
- Must learn to balance the NFRs/”-ilities” along with new features.
- Need to consider alternative customers and markets for your new SaaS offering.
- Will likely need to become continually engaged in the PDLC process, in order to stay abreast of releases occurring at far greater frequency than old.
- Must develop (along with engineering) incident management processes that deal with multiple customers simultaneously having issues.
- Better spin up this department in a hurry!
- As no code-level customizations should be happening, you might end up reducing this team, focusing them more on integrations with your customers’ IT or 3rd party products.
Hmm, so much change for this department. Where to start? Start by bringing AKF on board to examine your SaaS migration effort. Here is where we can help you the most.
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People Due Diligence
July 12, 2018 | Posted By: Robin McGlothin
Most companies do a thorough job of financial due diligence when they acquire other companies. But all too often, dealmakers simply miss or underestimate the significance of people issues. The consequences can be severe, from talent loss after a deal’s announcement, to friction or paralysis caused by differences in decision-making styles.
When acquirers do their people homework, they can uncover skills & capability gaps, points of friction, and differences in decision making. They can also make the critical people decisions - who stays, who goes, who runs the various lines of business, what to do with the rank and file at the time the deal is announced or shortly thereafter. Making such decisions within the first 90 days is critical to the success of a deal.
Take for example, Charles Schwab’s 2000 acquisition of US Trust. Schwab & the nation’s oldest trust company set out to sign up the newly minted millionaires created by a soaring bull market. But the cultures could not have been farther apart – a discount do-it-yourself stock brokerage style and a full-service provider devoted to pampering multimillionaires can make for a difficult integration. Six years after the merger, Chuck Schwab came out of retirement to fix the issues related to culture clash. The acquisition reflects a textbook common business problem. The dealmakers simply ignored or underestimated the significance of people and cultural issues.
Another example can be found in the 2002 acquisition of PayPal by eBay. The fact that many on the PayPal side referred to it as a merger, sets the stage for conflicting cultures. eBay was often embarrassed by the fact that PayPal invoice emails for a won auction arrived before the eBay end of auction email - PayPal made eBay look bad in this instance and the technology teams were not eager to combine. As well, PayPal titles were discovered to be one level higher than eBay titles considering the scope of responsibilities. Combining the technology teams did not go well and was ultimately scrapped in favor of dual teams - not the most efficient organizational model.
People due diligence lays the groundwork for a smooth integration. Done early enough, it also helps acquirers decide whether to embrace or kill a deal and determine the price they are willing to pay. There’s a certain amount of people due diligence that companies can and must do to reduce the inevitable fallout from the acquisition process and smooth the integration.
Ultimately, the success or failure of any deal has to do with people. Empowering people and putting them in a position where they will be successful is part of our diligence evaluation at AKF Partners. In our experience with clients, an acquiring company must start with some fundamental question:
1. What is the purpose of the deal?
2. Whose culture will the new organization adopt?
3. Will the two cultures mesh?
4. What organizational structure should be adopted?
5. How will rank-and-file employees react to the deal?
Once those questions are answered, people due diligence can focus on determining how well the target’s current structure and culture will mesh with those of the proposed new company, who should be retained and by what means, and how to manage the reaction of the employee base.
In public, deal-making executives routinely speak of acquisitions as “mergers of equals.” That’s diplomatic, politically correct speak and usually not true. In most deals, there is not only a financial acquirer, there is also a cultural acquirer, who will set the tone for the new organization after the deal is done. Often, they are one and the same, but they don’t have to be.
During our Technology Due Diligence process at AKF Partners, we evaluate the product, technology and support organizations with a focus on culture and think through how the two companies and teams are going to come together. Who the cultural acquirer is dependes on the fundamental goal of the acquisition. If the objective is to strengthen the existing product lines by gaining customers and achieving economies of scale, then the financial acquirer normally assumes the role of the cultural acquirer.
People due diligence, therefore, will be to verify that the target’s culture is compatible enough with the acquirers to allow for the building of necessary bridges between the two organizations. Key steps that are often missed in the process:
• Decide how the two companies will operate after the acquisition — combined either as a fully integrated operating company or as autonomous operating companies.
• Determine the new organizational structure and identify areas that will need to be integrated.
• Decide on the new executive leadership team and other key management positions.
• Develop the process for making employment-related decisions.
With regard to the last bullet point, some turnover is to be expected in any company merger. Sometimes shedding employees is even planned. It is important to execute The Weed, Seed & Feed methodology ongoing not just at acquisition time. Unplanned, significant levels of turnover negatively impact a merger’s success.
AKF Partners brings decades of hands-on executive operational experience, years of primary research, and over a decade of successful consulting experience to the realm of product organization structure, due diligence and technology evaluation. We can help your company successfully navigate the people due diligence process.
Agile and Dealing With The Cone of Uncertainty
July 8, 2018 | Posted By: Dave Berardi
The Leap of Faith
When we embark on building SaaS product that will delight customers we are taking a leap of faith. We often don’t even know whether or not the outcomes targeted are possible. Investing and building software is often risky for several reasons:
- We don’t know what the market wants.
- The market is changing around us.
- Competition is always improving their time to market (TTM) releasing competitive products and services.
We have to assume there will be project assumptions made that will be wrong and that the underlying development technology we use to build products is constantly changing and evolving. One thing is clear on the SaaS journey – the future is always murky!
The journey that’s plagued with uncertainty for developing SaaS is seen throughout the industry and is evidenced by success and failure from big and small companies – from Facebook to Apple to Salesforce to Google. Google is one of many innovating B2C companies that have used the cone of uncertainty to help inform how to go to market and whether or not to sunset a service. The company realizes that in addition to innovating, they need to reduce uncertainty quickly.
For example, Google Notebook, a browser-based note-taking and information sharing service, was killed and resurrected as part of Google Docs and has a mobile derivative called Keep. Google Buzz, Google’s first attempt at a social network was quickly killed after a little over a year in 2011. These are just a few B2C examples from Google. All of these are examples of investments that faced the cone of uncertainty. Predicting successful outcomes longer term and locking in specifics about a product will only be wasteful and risky.
The cone of uncertainty describes the uncertainty and risk that exist when an investment is made for a software project. The cone depicts the amount of risk and degree of precision for certainty thru the funnel. The further out we try to forecast features, capabilities, and adoption, the more risk and uncertainty we must assume. This is true for what we attempt to define as a product to be delivered and the timing on when we will deliver it to market. Over time, firms must make adjustments to the planned path along the way to capture and embrace changing market needs.
In today’s market we must quickly test our hypothesis and drive innovation to be competitive. An Agile product development life cycle (PDLC) and appropriately aligned organization helps us to do just that. To address the challenge the cone represents, we must understand what an Agile PDLC can do for the firm and what it cannot do for the firm.
Address the Uncertainty of the Cone
When we use an Agile approach, we must fix time and cost for development and delivery of a product but we allow for adjustment and changes to scope to meet fixed dates. The team can extend time later in the project but the committed date to delivery does not change. We also do not add people since Brooks Law teaches us that adding human resources to a late software project only delays it further. Instead we accelerate our ability to learn with frequent deployments to market resulting in a reduction in uncertainty. Throughout this process, discovery of both what the feature set needs to be for a successful outcome and how something should work is accomplished.
Agile allows for frequent iterations that can keep us close to the market thru data. After a deployment, if our system is designed to be monitored, we can capture rich information that will help to inform future prioritization, new ideas about features and modifications that may be needed to the existing feature set. Agile forces us to frequently estimate and as such produce valuable data for our business. The resulting velocity of our sprints can be used to revise future delivery range forecasts for both what will be delivered and when it will be delivered. Data will also be produced throughout our sprints that will help to identify what may be slowing us down ultimately impacting our time to market. Positive morale will be injected into the tams as results can be observed and felt in the short term.
What agile is not and how we must adjust?
While using an Agile method can help address the cone of uncertainty, it’s not the answer to all challenges. Agile does not help to provide a specific date when a feature or scope will be delivered. Instead we work towards ranges. It also does not improve TTM just because our teams started practicing it. Company philosophies, principles, and rules are not defined through an Agile PDLC. Those are up to the company to define. Once defined the teams can operate within the boundaries to innovate. Part of this boundary definition needs to start at the top. Executives need to paint a vivid picture of the desired outcome that stirs up emotion and can be measurable. The vision is at the opening of the cone. Measurable Key Results that executives define to achieve outcomes allow for teams to innovate making tradeoffs as they progress towards the vision. Agile alone does not empower teams or help to innovate. Outcomes, and Key Results (OKRs) cascaded into our organization coupled with an Agile PDLC can be a great combination that will empower teams giving us a better chance to innovate and achieve desirable time to market. Implementing an OKR framework helps to remove the focus of cranking out code to hit a date and redirects the needed attention on innovation and making tradeoffs to achieve the desired outcome.
Agile does not align well with annual budget cycles. While many times, an annual perspective is required by shareholders, an Agile approach is in conflict with annual budgeting. Since Agile sees changing market demands, frequent budget iterations are needed as teams may request additional funding to go after an opportunity. It’s key that finance leaders embrace the importance of adjusting the budgeting approach to align with an Agile PDLC. Otherwise the conflict created could be destructive and create a barrier to the firms desired outcome.
Applying Agile properly benefits a firm by helping to address the cone and reducing uncertainty, empowering teams to deliver on an outcome, and ultimately become more competitive in the global marketplace. Agile is on the verge of becoming table stakes for companies that want to be world class. And as we described above noting the importance of a different approach to something like budgeting, its not just for software – it’s the entire business.
Let Us Help
AKF has helped many companies of all sizes when transitioning to an organization, redefining PDLC to align with desired speed to market outcomes, and SaaS migrations. All three are closely tied and if done right, can help firms compete more effectively. Contact us for a free consultation. We would love to help!
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Marriage counseling for technology and business partners!
July 8, 2018 | Posted By: Dave Swenson
AKF often finds itself required to act as a marriage counselor trying to improve the relationship between technology and business ‘spouses’. In fact, we rarely find the relationship between these partners without at least some opportunity for a 3rd party, external, unbiased perspective to produce some suggestions. Given the backgrounds of the prototypical CEO or CTO, it is no surprise there are misunderstandings, miscommunication, and misalignment – there is a substantial experiential chasm between the two…
Recognizing how big this chasm, where it is narrow vs. wide between the two partners is vital to bridging this gap. One of the key aspects we try to immediately ascertain is whether there is a true partnership in place, versus a customer / order taker mindset. How much trust is currently present? Is a single language being used by the two, or is it bits and bytes vs. $$$?
Whether you are a CTO or a business executive, we suggest you go through the following set of questions. Even better, ask your tech or business partner to do their side and discuss and compare! Additionally, this self-analysis shouldn’t occur only at the highest levels, but all throughout the organization, particularly if you’re organizationally aligned.
Questions for Technology Leaders:
- When did you last come up with a proposal to increase revenue?
The best and perhaps most extreme, example of this is AWS, where the technology team took an internal solution built to improve Amazon developer productivity, recognized that all developers must face the same infrastructure challenges, and proposed it to Bezos as a new business line. Are you constantly seeking out ways in product, marketing, sales, technology to generate additional revenue, or solely focused on cost containment?
- Do you understand the balance sheet, statement of cash flows and income statement of your company?
These artifacts describe how the overall business community, your investors, are measuring you. Learning the meaning of these documents aids in spanning the bits & bytes vs. $$$ language barrier. This is where getting an MBA provides the most value.
- Can you represent the importance of addressing technical debt to your business peers?
You are responsible for the technical debt in your codebase, not your business. If you can’t explain the true ongoing cost of the incurred debt, if you can’t justify the periodic pay down of that debt, you frankly are failing as a technology leader, at least if you have a business partner willing to listen.
- Can you state the highest priority issues facing your business peers today?
We love the following quote from Camille Fournier ( former CTO of Rent the Runway and author of The Manager’s Path):
“If the CTO does not have a seat at the executive table and does not understand the business challenges the company is facing, there is no way the CTO can guide the technology to solve those problems”
- Do you feel your team, your engineers, understand how their daily activities affect the business and your customers?
I once left a company producing a relational database to then join a startup that had built its application on top of that RDBMS. I quickly found issues that I knew could easily and cheaply be addressed, but had never heard of these pain points until I personally experienced them! I vowed to never be so removed and distant from my customers again. Zappos requires all new employees to take a month long customer service stint, spending 40 hours on the phones. During the holiday peak, all employees are expected to jump on the phones to ensure the same level of response as the rest of the year. Don’t just “eat your own dog food”, but understand how your customers eat it.
- Do your engineers understand what each functional product component costs to build, maintain, and support - relative to the value it brings to the business? Do they push back against product and business when there’s a minimal or even negative ROI?
A great vehicle to explain revenue flow is a Dupont diagram, mapping out the user experience flow, and assigning value across that flow. That value makes it clear that say, a .5% improvement in relevant search results can turn into a .025% uptick in items in cart, that turns into $X increase in revenue.
- Do you provide early feedback on the likelihood of making key dates? Is that feedback consistently incorrect?
If you’ve ever had your house remodeled, you’ll agree that there’s little that is more frustrating than a contractor who consistently under-delivers, and it late on agreed to delivery dates. You’ve got plans hinging upon the construction completion date, and when that date slips, it destroys your plans. Your business peers feel the same way when your date slips, or scope gets cut. Are you actively seeking out the causes of such delays? How can you be transparent with your partners when you don’t understand the causes?
- Does your technology team measure themselves against metrics that are meaningful to the business?
Ensure your teams are measuring the outcome of their work, not simply the completion and delivery of that work. And, that outcome measurement should be made in business terms. Velocity should always be measured, but an increase in velocity is frankly less important than moving targeted business needles in the desired direction!
- What are you least transparent about, and why?
Typically, the issues we are most reluctant to share are those we ourselves are uncomfortable with. The answer to this question can show you the areas where you are paying the least attention.
Questions for Business Executives:
- What is your reaction when you hear that a date has slipped?
“Shit happens” is too simple of an explanation, but there are many reasons why a key date slips. There might have been a change in prioritization, driven from the highest levels. There could have been critical site issues that pulled the team away from new functionality. The scope could have been grossly underestimated, or have grown for innumerable reasons along the way. The key thing is that your technology partner should be able to explain the causes - so don’t be afraid to ask for an explanation. Just don’t start the conversation by pointing a finger.
- Do you feel technology as a whole understands the business? Are engineers close enough to your customers to really understand the value you bring them?
I am always dismayed when I find engineers who don’t understand what value, and how, your product provides the customer. An engineer shouldn’t only be motivated by technology problems, but should appreciate the value their product provides. I had the great pleasure of witnessing a company adopt Agile, resulting in tighter bonds between customers, business, and technology. A particular engineer had never understood the value of their product, not to just to their immediate customers but their customers’ customers. As this was a medically-oriented product, that end value was basically a better life. The engineer had worked at this company for a few years, yet never witnessed the true value of the product he had been building – a tragedy in my book. Make the effort to ensure everyone in your company understands the value your products provide, and the revenue stream flowing into the company – it will absolutely be worth the investment!
- Do you as a business leader spend as much time attempting to understand the technology team as they are hopefully trying to learn to read financial statements? Any time?
I absolutely love when a business leader is present at an AKF workshop/engagement. I certainly appreciate the dedication of time, but more importantly, the desire to better understand. Have you asked your technology team for a walkthrough of how the systems work? What their challenges are?
- Do the business leaders understand how to ask questions to know whether dates are both aggressive and achievable?
Your car has a redline. Do you typically exceed that redline RPM? Doubtful. Do you understand when your technology team has over-extended themselves? When they have relied upon heroics to meet a delivery?
- Does the business spend time in the beginning of a product life cycle figuring out how to measure success?
The entire company, business/support/sales/marketing/product/technology teams should be driving to achieve important business goals, and measure themselves by the progress, the outcomes, towards those goals. Delivering new functionality is critical, but more important are the improvements in business metrics that functionality brings. Are you measuring how you are affecting business metrics?
Questions for Both:
- What are your shared goals?
We are firm believers in OKRs (Objectives & Key Results), shared across the entire company. Alignment around these goals help frame discussions.
- Who gives more than takes? How are compromises reached?
There should be no real scorecard on this (classic passive/aggressive move, don’t go there), but can you provide examples of where you met in the middle? As in every relationship, it is critical to both give and take.
- Do you meet mostly by exception? When was the last time you did lunch?
I hated my dentist for years, until I met him on a soccer field and saw the whole individual, not just the guy that causes me pain. Commit to meeting your technology/business partner on a regular basis, including periodic out-of-the-office meetings.
- What is your “Marriage Math”?
Psychologist John Gottman, Ph.D., when trying to determine a methodology to predict which marriages will last and which will end in a divorce, found that when the ratio of positive to negative interactions fell below 5:1 (5 positive for every negative interaction), divorce was likely. Do you have a healthy line of communication with your partner, or does the communication quickly degrade into contempt and name calling?
Hopefully now you agree that a look at your relationship with your technology/business partner is of value. Every relationship requires investment and commitment on both sides. Consider bringing AKF to help facilitate these discussions – we are excellent marriage counselors.
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