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, reach out to AKF.
Subscribe to the AKF Newsletter
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.
Subscribe to the AKF Newsletter
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!
Subscribe to the AKF Newsletter
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.
Subscribe to the AKF Newsletter
Crossing the People Chasm Within Your Organization
June 6, 2018 | Posted By: Pete Ferguson
Crossing the People Chasm Within Your Organization
In Geoffrey Moore’s book “Crossing the Chasm,” he argues there is a chasm between the early adopters of a product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). He illustrates well the differences in each of their self-interests and their very differing needs for security verses willing to take on risk.
People’s talents, attitudes, and skills similarly must cross the rapid growth chasm within your organization if your company is to remain viable and competitive.
As AKF Partners assess fast-growing companies in technical due diligence engagements, we often observe Moore’s chasm principle in play with an organization’s people and the ability for legacy employees to make the jump to the “next big thing” and keep up with explosive growth. Or conversely, we have also seen the “why change” attitude greatly hinder and blindside the scalability of a fledgling company.
The Chasm From Startup to Established Company
Young, well-funded startups have a lot of flare that Millenials and corporate escapees love – free food, eccentric workplaces, schedule flexibility, and very little bureaucracy, policy, or procedure. This works very well for small, talented teams during a very scrappy period of rapid growth where the common goals of the organization are well-known and lived and breathed on a daily basis and personal and group conversations with the CEO and CTO occur regularly, sometimes daily. Often there is minimal rigor around Agile rituals – and during periods of startup and rapid growth, their likely is very little time to formalize processes and the outcomes - 100-200% customer acquisition and profits - can be mistaken as a “full steam ahead” desire to not make any changes.
Recently we worked with a company that was a decade old and was fairly large compared to many startups we see in our technical due diligences for investors. The founders has seen the need to bring in experienced and open-minded senior leadership and it was inspiring to see the the vigor, enthusiasm, growth, and speed of a young fledgling company, but with defined metrics and compliance to set ground rules.
There was not an observed bureaucracy. There was clear direction.
As unfortunately this is more of an outlier than it should be, I was impressed and wanted to know what set them apart from other more mature companies I have worked with or worked for and I found several differentiators.
My observations of companies who bridge the organizational chasm of growth:
- Successful companies do not confine themselves to one segment of the market - they are thoughtful and disciplined when taking on new segments. They follow Moore’s observations well and saturate one small subset of a new market with marketing, sales, customer service and provide steep discounts to get a foothold. Once established, they expand horizontally within the subset and rinse and repeat until they are the market leader. This allows them to fail forward fast through constant innovation and iterations. This requires the people in their organizations to have an Agile mindset and not rest on their laurels.
- Successful companies have teams with a good diversity of opinions, but are unified in how they execute on their plan. The senior leadership are very successful in constantly communicating the vision of the company through desired outcomes and allow teams the autonomy to get there however they can. Because the focus is on the outcome rather than the process, there is very little bureaucratic red tape, trust is very high, and teams are not afraid to fail fast, learn, and reiterate more successfully.
- Successful companies keep things simple and team members are onboard with the company philosophy and understand how their role fits into the larger scheme of things. Google pioneered OKRs - “Objectives and Key Results” - as how they measure success within their organization. OKRs allow for nested outcomes to be defined, aligning teams with the broader company goal and successful companies have the common thread of how success is defined through outcomes from the top to the bottom of the org chart.
While some of the companies highlighted in Moore’s 1999 version of the book eventually could not cross the chasm with newer products (Blackberry, 3Comm/Palm Pilot), the principles he outlined are common to companies who are enduring today (Apple desktop to MP3 player to mobile phone/tablet to watch to … [insert Apple’s next category DOMINATOR here]).
When looking at products, according to Moore, the marketer should focus on one group of customers at a time, using each group as a base for marketing to the next group to create a bandwagon effect with momentum that spreads to others in the next marketing segment. The focus on each segment is intense and an “all hands on deck” blitz approach to include marketing, software engineering, product, customer service, sales, and others.
Similarly when it comes to what is going on inside of organizations, it is important to ensure your people cross the chasm of change required for your products to remain viable and enduring. Successful companies know that either their people have to make the transition to new skill sets/mindsets or they will need to be transitioned out of the company. Either way it’s important to inject new people with the experience needed into the organization. At AKF, we refer to this as Seed, Feed, and Weed.
What we see in successful companies is an early focus on standardization but with freedom for exploration. Allowing each team to use their own communication devices (Slack, Hive, Spark) and Agile methods is something that does not scale well. But seeking input from team members and having each team follow a standard software development cycle with similar Agile methodology does scale well and allows teams to interoperate without administrative and communicative friction.
Successful companies endure because individuals are allowed autonomy to reach shared outcomes. Tools are provided to help individuals succeed, fail forward fast, learn and share their learning, automate mundane tasks, and are not a bureaucratic bottleneck. To remain successful, companies must constantly focus on how to take their team members with them through the chasms of growth into new and emerging markets by continually upgrading their skills and contribution to the company desired outcomes.
Measuring success is not just in the stock price (many failing companies - i.e. Palm Pilot - had a good stock price while the internal decay had been going on for several quarters), it must be a thorough measurement of all aspects of the company’s technical abilities - architecture, process, organization, and security.
Technical Due Diligence Checklists
Do You Know What is Negatively Affecting Your Engineer’s Productivity? Shouldn’t You?
SaaS Migration Challenges
The No Surprises Rule
We’d love your feedback and an opportunity to see how AKF Partners can help your organization maximize outcomes. Contact us now.
Subscribe to the AKF Newsletter
Enabling TTM With Contributor Model Teams
May 6, 2018 | Posted By: Dave Berardi
Enabling TTM With Contributor Model Teams
We often speak about the benefits of aligning agile teams with the system’s architecture. As Conway’s Law describes, product/solution architectures and organizations cannot be developed in isolation. (See https://akfpartners.com/growth-blog/conways-law) Agile autonomous teams are able to act more efficiently, with faster time to market (TTM). Ideally, each team should be able to behave like a startup with the skills and tools needed to iterate until they reach the desired outcome.
Many of our clients are under pressure to achieve both effective TTM and reduce the risk of redundant services that produce the same results. During due diligence, we will sometimes discover redundant services that individual teams develop within their own silo for a TTM benefit. Rather than competing with priorities and waiting for a shared service team to deliver code, the team will build their own flavor of a common service to get to market faster.
Instead, we recommend a shared service team own common services. In this type of team alignment, the team has a shared service or feature on which other autonomous teams depend. For example, many teams within a product may require email delivery as a feature. Asking each team to develop and operate its own email capability would be wasteful, resulting in engineers designing redundant functionality leading to cost inefficiencies and unneeded complexity. Rather than wasting time on duplicative services, we recommend that organizations create a team that would focus on email and be used by other teams.
Teams make requests in the form of stories for product enhancements that are deposited in the shared services team’s backlog. (email in this case) To mitigate the risk of having each of these requesting teams waiting for requests to be fulfilled by the shared services team, we suggest thinking of the shared services as an open source project or as some call it – the contributor model.
Open sourcing our solution (at least internally) doesn’t mean opening up the email code base to all engineers and letting them have at it. It does mean mechanisms should be established to help control the quality and design for the business. An open source project often has its own repo and typically only allows trusted engineers, called Committers, to commit. Committers have Contribution Standards defined by the project owning team. In our email example, the team should designate trusted and experienced engineers from other Agile teams that can code and commit to the email repo. Engineers on the email team can be focused on making sure new functionality aligns with architectural and design principles that have been established. Code reviews are conducting before its accepted. Allowing for outside contribution will help to mitigate the potential bottleneck such a team could create.
Now that the development of email has been spread out across contributors on different teams, who really owns it?
Remember, ownership by many is ownership by none. In our example, the email team ultimately owns the services and code base. As other developers commit new code to the repo, the email team should conduct code, design, and architectural reviews and ultimately deployments and operations. They should also confirm that the contributions align with the strategic direction of the email mission. Whatever mechanisms are put in place, teams that adopt a contributor model should be a gas pedal and not a brake for TTM.
If your organization needs help with building an Agile organization that can innovate and achieve competitive TTM, we would love to partner with you. Contact us for a free consultation.
Subscribe to the AKF Newsletter
The Top Five Most Common Agile PDLC Failures
April 27, 2018 | Posted By: Dave Swenson
Agile Software Development is a widely adopted methodology, and for good reason. When implemented properly, Agile can bring tremendous efficiencies, enabling your teams to move at their own pace, bringing your engineers closer to your customers, and delivering customer value
quicker with less risk. Yet, many companies fall short from realizing the full potential of Agile, treating it merely as a project management paradigm by picking and choosing a few Agile structural elements such as standups or retrospectives without actually changing the manner in which product delivery occurs. Managers in an Agile culture often forget that they are indeed still managers that need to measure and drive improvements across teams.
All too often, Agile is treated solely as an SDLC (Software Development Lifecycle), focused only upon the manner in which software is developed versus a PDLC (Product Development Lifecycle) that leads to incremental product discovery and spans the entire company, not just the Engineering department.
Here are the five most common Agile failures that we see with our clients:
- Technology Executives Abdicate Responsibility for their Team’s Effectiveness
Management in an Agile organization is certainly different than say a Waterfall-driven one. More autonomy is provided to Agile teams. Leadership within each team typically comes without a ‘Manager’ title. Often, this shift from a top-down, autocratic, “Do it this way” approach to a grass-roots, bottoms-up one sways way beyond desired autonomy towards anarchy, where teams have been given full freedom to pick their technologies, architecture, and even outcomes with no guardrails or constraints in place. See our Autonomy and Anarchy article for more on this.
Executives often become focused solely on the removal of barriers the team calls out, rather than leading teams towards desired outcomes. They forget that their primary role in the company isn’t to keep their teams happy and content, but instead to ensure their teams are effectively achieving desired business-related outcomes.
The Agile technology executive is still responsible for their teams’ effectiveness in reaching specified outcomes (e.g.: achieve 2% lift in metric Y). She can allow a team to determine how they feel best to reach the outcome, within shared standards (e.g.: unit tests must be created, code reviews are required). She can encourage teams to experiment with new technologies on a limited basis, then apply those learnings or best practices across all teams. She must be able to compare the productivity and efficiencies from one team to another, ensuring all teams are reaching their full potential.
- No Metrics Are Used
The age-old saying “If you can’t measure it, you can’t improve it” still applies in an Agile organization. Yet, frequently Agile teams drop this basic tenet, perhaps believing that teams are self-aware and critical enough to know where improvements are required. Unfortunately, even the most transparent and aware individuals are biased, fall back on subjective characteristics (“The team is really working hard”), and need the grounding that quantifiable metrics provide. We are continually surprised at how many companies aren’t even measuring velocity, not necessarily to compare one team with another, but to compare a team’s sprint output vs. their prior ones. Other metrics still applicable in an Agile world include quality, estimation accuracy, predictability, percent of time spent coding, the ratio of enhancements vs. maintenance vs. tech debt paydown.
These metrics, their definitions and the means of measuring them should be standardized across the organization, with regular focus on results vs. desired goals. They should be designed to reveal structural hazards that are impeding team performance as well as best practices that should be adopted by all teams.
- Your Velocity is a Lie
Is your definition of velocity an honest one? Does it truly measure outcomes, or only effort? Are you consistent with your definition of ‘done’? Take a good look at how your teams are defining and measuring velocity. Is velocity only counted for true ‘ready to release’ tasks? If QA hasn’t been completed within a sprint, are the associated velocity points still counted or deferred?
Velocity should not be a measurement of how hard your teams are working, but instead an indicator of whether outcomes (again, e.g.: achieve 2% lift in metric Y) are likely to be realized - take credit for completion only when in the hands of customers.
- Failure to Leverage Agile for Product Discovery
From the Agile manifesto: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software”. Many companies work hard to get an Agile structure and its artifacts in place, but ignore the biggest benefit Agile can bring: iterative and continuous product discovery. Don’t break down a six-month waterfall project plan into two week sprints with standups and velocity measurements and declare Agile victory.
Work to create and deliver MVPs to your customers that allow you to test expected value and customer satisfaction without huge investment.
- Treating Agile as an SDLC vs. a PDLC
As explained in our article PDLC or SDLC, SDLC (Software Development Lifecycle) lives within PDLC (Product Development Lifecycle). Again, Agile should not be treated as a project management methodology, nor as a means of developing software. It should focus on your product, and hopefully the related customer success your product provides them. This means that Agile should permeate well beyond your developers, and include product and business personnel.
Business owners or their delegates (product owners) must be involved at every step of the PDLC process. PO’s need to be embedded within each Agile team, ideally colocated alongside team members. In order to provide product focus, POs should first bring to the team the targeted customer problem to be solved, rather than dictating only a solution, then work together with the team to implement the most effective solution to that problem.
AKF Partners helps companies transition to Agile as well as fine-tune their existing Agile processes. We can readily assess your PDLC, organization structure, metrics and personnel to provide a roadmap for you to reach the full value and benefits Agile can provide. Contact us to discuss how we can help.
Subscribe to the AKF Newsletter
Achieving Results, Culture, and the AKF Equation
April 24, 2018 | Posted By: Marty Abbott
We can tell a lot about a company within the first hour or so of any discussion. Consider the following statement fragments:
“We have a lot of smart people here…”
“We have some of the hardest working engineers…”
Contrast these with the following statement fragments:
“We measure ourselves against very specific business KPIs…”
“We win or lose daily based on how effectively we meet our customer expectations…”
There is a meaningful difference in the impact these two groups of statements have on a company’s culture and how that culture enables or stands in the way of success. The first group of statements are associated with independent variables (inputs) that will rarely in isolation result in desired outcomes (dependent variables). When used in daily discourse, they reinforce the notion that something other than outcomes are the things upon which a company prides itself. Our experience is that these statements create an environment of hubris that often runs perpendicular to, and at best in no way reinforces, the achievement of results. Put another way, when we hear statements like this, we expect to find many operational problems.
The second group of statements are focused on meaningful and measurable outcomes. The companies with which we’ve worked that frequently communicate with these statements are among the most successful we’ve seen. Even when these companies struggle, their effort and focus is solidly behind the things that matter – those things that create value for the broadest swath of stakeholders possible.
The point here is that how we focus communication inside our companies has an important impact on the outcomes we achieve.
Success is often a result of several independent variables aligning to achieve a desired outcome. These may include, as Jim Collins points out, being in the right place at the right time – sometimes called “luck”. Further, there is rarely a single guaranteed path to success; multiple paths may result in varying levels of the desired outcome. Great companies and great leaders realize this, and rather than focusing a culture on independent variables they focus teams on outcomes. By focusing on outcomes, leaders are free to attempt multiple approaches and to tweak a variety of independent variables to find the most expedient path to success. We created the AKF Equation (we sometimes refer to it as the AKF Law) to help focus our clients on outcomes first:
Two very important corollaries follow from this equation or “law”:
Examples of Why Results, and Not Paths Matter
Intelligence Does Not Equal Success
As an example of why the dependent variable of results and not an independent variable like intelligence is most important consider Duckworth and Seligman’s research. Duckworth and Seligman and associates (insert link) conducted a review of GPA performance in adolescents. They expected to find that intelligence was the best indication of GPA. Instead, they found that self-discipline was a better indication of the best GPAs:
Lewis Terman, a mid-20th century Stanford Pyschology professor hypothesized that IQ was highly correlated with success in his famous termite study of 1500 students with an average IQ of 151. Follow on analysis and study indicated that while these students were successful, they were half as successful as a group of other students with a lower IQ.
Chris Langan, the world’s self-proclaimed “most intelligent man” with an IQ of 195 can’t seem to keep a job according to Malcolm Gladwell. He’s been a cowboy, a stripper, a day laborer and has competed on various game shows.
While we’d all like to have folks of average or better intelligence on our team, the above clearly indicates that it’s more important to focus on outcomes than an independent variable like intelligence.
Drive Does Not Equal Success
While most successful companies in the Silicon Valley started with employees that worked around the clock, The Valley is also littered with the corpses of companies that worked their employees to the bone. Just ask former employees of the failed social networking company Friendster. Hard work alone does not guarantee success. In fact, most “overnight” success appears to take about 10,000 hours of practice just to be good, and 10 years of serious work to be truly successful (according to both Ramit Sethi and Malcolm Gladwell.)
Hard work, if applied in the right direction and to the right activities should of course help achieve results and success. But again, it’s the outcome (results and success) that matter.
Wisdom Does Not Equal Success
Touting the age and experience of your management team? Think again. There’s plenty of evidence that when it comes to innovative new approaches, we start to “lose our touch” at the age of 40. The largest market cap technology companies of our age were founded by “youngsters” – Bezos being the oldest of them at the age of 30. Einstein posited all of his most significant theories well before the age of 40 – most of them in the “miracle year” at the age of 26 in 1905. The eldest of the two Wright Brothers was 39.
While there are no doubt examples of successful innovation coming after the age of 40, and while some of the best managers and leaders we know are over the age of 40, wisdom alone is not a guarantee for success.
Only Success = Success
Most of the truly successful and fastest growing companies we know focus on a handful of dependent variables that clearly identify results, progress and ultimately success. Their daily manners and daily discourse are carefully formulated around evaluation of these success criteria. Even these company’s interaction with outside firms focuses on data driven indications of success time and time again – not on independent variables such as intelligence, work ethic, wisdom (or managerial experience), etc.
These companies identify key performance indicators for everything that they do, believing that anything worth doing should have a measurable value creation performance indicator associated with it. They maniacally focus on the trends of these performance indicators, identifying significant deviations (positive or negative) in order to learn and repeat the positive causes and avoid those that result in negative trends. Very often these companies employ agile planning and focus processes similar to the OKR process.
The most successful companies rarely engage in discussions around spurious relationships such as intelligence to business success, management experience to business success, or effort to business success. They recognize that while some of these things are likely valuable in the right proportions, they are rarely (read never) the primary cause of success.
AKF Partners helps companies develop highly available, scalable, cost effective and fast time-to-market products. We know that to be successful in these endeavors, companies must have the right people, in the right roles, with the right behaviors - all supported by the right culture. Contact us to discuss how we can help with your product needs.
Subscribe to the AKF Newsletter
How to write concisely
April 11, 2018 | Posted By: Geoffrey Weber
The Three Sentence Rule
Variations of the Three Sentence Rule have been around for a long time. The differences are multiplicative but the base rule is a useful and often necessary tool to teach concision to the wordy.
Say what you need to say in THREE sentences, or less.
Anyone who has been through flight school learns how to be concise on the radio. Who are you? Where are you? What do you want? That happens to be three sentences. “Palo Alto Tower, Cessna 15957X; 5 miles southwest of SLAC with information Echo; request landing.” The need to be precise, accurate and speedy is a requirement at a tower as busy as Palo Alto tower. Controllers have no patience because there are 12 other aircraft waiting to communicate.
As technologists, we are generally rewarded for producing details, the more the better. Engineers have to be obsessed with substance; their work is about precision and there are no shortcuts when it comes to building complex tools. It wouldn’t make any sense to try and distill how Cassandra compares to a relational database, in three sentences, in a room filled with colleagues, at a meet-up.
But what if our CEO asks us about Cassandra? How can we possibly explain to someone who is just a wee bit tech-illiterate the differences between two very different data stores? Moreover, why on earth would we try and distill that down to three sentences?? Let’s start at the beginning… before there were databases there were Hollerith Cards…
Lack of brevity is a death sentence to any technologist who finds themselves interacting with non-technologists on a regular basis. We see this as a common anti-pattern for CTOs; some never learn the difference between a novel, a paragraph, or sentence and why each has utility.
The controller in the tower could care less about why we’re in an airplane today, that we’re stopping at the restaurant for the traditional $100 hamburger and that we need to be home for dinner tonight:
- Who are you?
- Where are you?
- What do you want?
- Cassandra is a new database technology.
- It’s very different than what we use today.
- It will lower costs in the next 12 months.
That is the CEO-version of Cassandra in three sentences. “What is it called, why should I remember it, what does it do for me?”
At AKF Partners, we believe that technology executives need to start practicing a version of the three sentence rule as soon as they transition into their first leadership role. Specialists in Operations roles have an advantage because of the daily chaos and need for ongoing communications: “Customer sign-in unavailable for 15 minutes; 100% of our customers are impacted for 15 minutes; we are restarting the service for 100% operations in 10 minutes—update in 20 minutes.”
- What happened?
- What is the impact?
- When is it going to be fixed?
There’s a practical reason for such precision: most CEOs are consuming information on tiny screens, sometimes over really bad internet (Detroit Airport) at 2 in the morning, and news also just arrived about a sales crisis in Europe, there’s a supply-chain issue in India, and the Wall Street Journal is doing a feature about the product that’s going live next week. If we mentioned Hollerith, or even thought about it for a second, we’re Exploring Alternative Employment. If they have a moment to breath, they can ask for more detail. Or maybe next week.
Sometimes we’re required to communicate when there’s no answer. Try this:
- Impact update,
- Standard procedures failed, assembled SWAT,
- Updates every 15 minutes until resolution.
An equally important rule for executives is the “No Surprise Rule” (stay tuned) and zero sentences are as fatal as 4 sentences at the wrong time. Keeping a CEO waiting for 2 hours until root cause is determined is stupid.
The final place to consider the Three Sentence Rule is the boardroom itself. Most boards members are not going to read through the 200 page board deck, and our ten minutes to discuss the Cassandra project is unlikely to resonate with most of the attendees. Up and coming executives understand the need for absolute precision. Steve Jobs could do it with a single slide:
Three sentences, if you count the background gradient as a sentence.
For the Board:
- We’re introducing new technology next fiscal year.
- It’s called Cassandra.
- A year from now I will demonstrate how it increased EBITDBA by $2M.
- Anything can be explained in 3 sentences
- Even concepts so fantastic they seem magical
- If you don’t believe me, Books in 3 Sentences
At AKF Partners, we can help with mentoring, coaching and leadership training.
Subscribe to the AKF Newsletter
< 1 2 3 >