allan kelly

The last couple of weeks – if not months – have been depressing. I’ve been hearing far too many stories about IT failures. Not the kind of failures that bring everything crashing down, rather the kind of failures which stop people from being productive and keep people working far harder than they need to on projects that will not live up to their potential benefit.

These are what I call Low Level Failures. Things keep working but they make people’s lives miserable and cost us money.

At the risk of depressing you too here’s what I’ve been hearing:

• A major international bank that hires new developers and leaves them for two weeks without a PC. No e-mail, no intranet access, no tool to work with. Pure waste.
• A major international ISP which is developing some new software in-house. The team leader has been complaining about internal customers who won’t come and look at the software his team are developing. Now he’s found out that the company managers want the users kept away from the software. What chance have they of delivering the right thing?
• Yet another major international bank (there are a lot of them in London) where the project manager is preventing the team doing the right thing. The code is a mess too but she doesn’t want them taking any risks. The project manager knows that if the developers leave the project is lost. What she doesn’t know is that the developers see her as the problem and if it wasn’t for one of them taking the lead nothing would happen. And if it wasn’t for this one developer encouraging the others they would have gone by now. Somebody need to help her.
• An investment house in the City were the internal customers who will use a new IT system don’t think it important enough to turn up to meetings about the new system. Why bother developing it then?
• Another international bank were the project is a mess. The manager in charge got drunk one night and confessed he knows they are in trouble but doesn’t know what to do. Good he knows there is a problem but shouldn’t he ask for help when he is sober too?
• One of the banks mentioned above work to such internal procedures that there is nothing for the developers to do. I’m coming to the conclusion that the reason companies have internal procedure and process standards is not so much to make sure work gets done but to insure that people can’t do too much damage. Won’t it be cheaper to just not hire them?
• An information supplier that decided to launch a new project. Hired an offshore development team and hired people in London for the project then had second thoughts. People started work on the project only to be told there was nothing for them to do and then get laid off. Shouldn’t they have thought this through a bit more?
• One of the banks already mentioned have a lengthy interviewing process to ensure they get good people. But it hasn’t stopped them giving a job to one of the worst developers I have ever met. This person will hold the team back, they will make more work for their colleagues. Anything they do create will be a nightmare to maintain. I can only imagine they were hired to fill head count or because the person doing the interview was incompetent. Fortunately the bank procedures will probably stop them doing any damage.

Thing is, although I’ve heard all these stories in the last few months they aren’t really new. Back in 1998 I worked for a company in the City were it took two weeks to get me a PC. When they did it was massively under powered. The support department had better PC in stock but held them in reserve in case another broke.

My point is not that failures happen in IT but that we live with so many low level failure every day. This failure saps our energy, our enthusiasm, it makes work dull and boring. In each case the situation can continue because it doesn’t cause anything to really break. No crunch moment occurs. Things are just generally bad.

These examples are mostly taken from the financial markets. There are two explanations for that. The obvious one: I live in London and talk to people who work in the financial sector but I’m sure low level failures happen everywhere.

Second, the financial markets are booming just now, banks are throwing money at projects. Consequently it is easy for a project to burn money without showing a return. And because there are so many projects there is a shortage of developers so the really bad ones get hired. Not only do they get hired but they make things worse.

There is a third explanation which is quite scary but may contain an element of truth. The people I know in IT are in general good. Perhaps they are not just good but are outstandingly good. The things we see as problems are what others see as normal. Could it be that outside of my bubble the rest of the world is used to massively inferior service and IT? I hope I am wrong here.

Its easy to say “Huh, what do I care?” but actually these companies are spending your money. One of the banks not named above may be home to your cheque account, your pension, your savings. You may be a customer of that ISP, or your pension might contain their stocks. Their waste hits you.

Am I the only one to see this? Can’t other people see these problems? What are the managers at these companies doing?

It is a double loss: the people on these project have a miserable time and we all lose money.

What now?

One, I feel better having shared the idea of low level failure with you. I will sleep better tonight having got that off my chest.

Two, there is a link between my last post about agile and these projects. Some of these projects were agile but not all of them. I will return to this subject soon.

I’m not a big TV watcher. Some nights the TV doesn’t go on in our house at all. However for the last three nights I’ve been gripped by a short series on BBC 2 called “Can Gerry Robinson Fix The NHS?”

In this program Gerry Robinson (who you might describe as a celebrity business man, guru, turn-around specialist or something similar) spent six months helping an NHS hospital. His goal was apply some business management ideas to improve the hospital. Perhaps surprisingly it made for gripping TV and was highly education. (Note to aspiring managers: don’t bother doing an MBA, beg, borrow, steal copies of this series.)

What made it so fascinating? Well many things, basically you have management on one side who are trying to, well, manage, and you have a bunch of technical specialist on the other side (doctors, nurses, etc.) and there is a great divide between the two groups. Add in a history of top-down solutions which means nobody feels empowered and you have a recipe for Do Nothing.

More than once I found myself watching thinking: this is just like IT. The medical staff are just like programmers/testers/project managers and the management are just like, well, managers.

Robinson wasn’t given any money to improve the hospital – although he did manage to get some additional money spent. Instead his tools were those of inquiry, empowerment and using his legitimacy to get people to talk to each other.

Time and time again he found people who knew how to improve something but felt nothing could be done. They felt somebody would block any change or that nobody was interested in changing. And even if they did want to change things they could not get the right people to talk together or agree to actual action. About the half way mark this seemed to get Robinson really down.

But then it turned around and things started moving. People started to feel empowered, they started to feel things could change and they did start to change them. And consequently Robinson got much happier!

Of course its difficult to tell how much this chorology actually happened and how much was constructed through judicious editing to make a good story. Either way it certainly seems that people started to feel they could change things and this led to improvements.

I found myself agreeing again and again with Robinson when he said things like “Management isn’t a mystery” and “People doing the work know the answers”. It is all about getting the people who work to actually take power and make things happen. Unfortunately management can become a block to change rather than a catalyst.

There are so many barriers to change. The first barriers are in peoples own minds. They think things can’t be changed, or others won’t agree to them. Several times in the TV series people said “Mr X won’t agree to that” only to find that Mr. X and everyone else did agree.

The next barriers are the problems other people see. They jump to assumptions and see reasons why things won’t work or why you can’t do that. Sometimes there are real reasons and sometimes imagined. Either way these blocks can kill an idea dead. When they are imagined it is a case of checking reality, maybe by asking someone else. When the problem is real it is a trigger to work around the problem, to find an alternative answer or a different way of working.

Barriers of communication existed too. People didn’t talk to each other; they assumed what they thought to be the case was. Managers didn’t talk about problems, they preferred “strategic solutions” (shuffling paper, making plans and changing structures.) Technical people sometimes wanted to do their technical thing rather than engage in conversation and tended to see anything management did as a problem.

There never seemed to be a barrier with authority, only assumed authority. Neither were resources ever a real barriers. Once or twice lots of money or construction was needed so ideas were dropped but usually that was just led to a new idea that achieved much the same success.

In most cases all that was needed was someone to show an interest, someone to lend legitimacy to the improvement ideas, someone to ask for it to be done, someone to inject a sense of urgency and occasionally someone to bang heads together and get people talking to each other. And most of all: someone to appreciate what people had done, someone to say “Thank you.”

Robinson wondered around the hospital spotting opportunities and applying this (his) philosophy to the situation. It wasn’t genius but it got results. The rest of the time he seemed to spend his time trying to persuade the hospital chief executive to do the same thing. This guy was a “big thinker” who wanted “strategic plans” (my terms not his, this is the way he appeared to me.) As a result he was out of touch with what was happening. Staff felt he was remote and nobody (except Robinson) was walking around making people feel useful and conferring legitimacy to change.

I think Robinson’s greatest success was finally persuading the chief executive to try this approach. At first the exec was sceptical (“Why do they need me?”) but once he had one win under his belt the exec was converted and saw the point and was converted. His real power lay not in making plans, re-organizing structures or signing checks but in simply asking people to do what they wanted to do.

At the end of the day it wasn’t a big plan that was required, it wasn’t a new strategy, nor was it more money and resources. It was simply a thousand little improvements and a constant attention to further improvement.

As I said at the top, a very good programme. If there was more TV like this I’d watch TV more often. I’d love to buy the DVD of this series – if anyone out there knows where I can get it let me know.

I’ve already mentioned this book in a blog entry a couple of weeks ago in this blog so it should come as no surprise that I’m recommending Strategy Bites Back.

If you have an interest in business strategy then this is an interesting book to read.  And if you know nothing about business strategy but think you should then probably this is the best book you could buy.  The book will come as no surprise to anyone familiar with The Rise and Fall of Strategic Planning– also by Henry Mintzberg – many of the same themes emerge.

In fact this might be the most enjoyable book I’ve ever read on business strategy – and yes, I have read quite a few.  The book takes a light hearted, serious and intelligent look at strategy and some of the contradictions and absurdities firms and strategy makers wrap themselves in.  Early on the authors admit they are trying to add some humour and fun to what can be a boring and all too serious subject.  There reasoning is: strategy needs to be fun, it needs to be fun so we enjoy doing it, if you don’t enjoy it then you probably won’t make any use of your strategy.

Another nice thing about the book is that it is structured as a series of short essays – or bites and bytes as the authors call them.  Some bites are just a page long, others run to several pages but none of them get overly academic.  I found quite a few of the bites offering really useful insights, either supporting something I already suspected or giving me a new idea to think about.  Two of the later bites in particular stood out.

One, from Harvey Schachter finally lays to rest the debate about whether strategy comes from the top of an organization down (lots of big brains sitting in a board room directing company activity) or whether strategy comes from the bottom up (lots of individual decisions and initiatives made by people who actually do the work and later adopted as strategy).  Actually says Schachter companies do both.  Yes the big brains in the board room have a role to play but so do the little people at the coal-face.

The book contains no less than three pieces from Jeanne Liedtka and while her “Strategy as a little black dress” may have the best title of any strategy article (ever) its her third contribution, “Strategy as the art of seduction” that really caught my attention.  She argues that for a company strategy to be effective it has to appeal to everyone in the organization, the strategy has to make them want to change and implement the strategy.  Thus, the importance of the strategy is not so much whether it is a “good strategy” or not but rather whether it motivates people.  That is: does the strategy seduce you and make you want to be part of it?

Liedtka’s argument is also an argument for involving everyone in the organization in strategy formation – something I’ve been know to argue myself in this blog.  And if your going to involve everyone in formation and execution then naturally your going to want to make strategy fun, which neatly brings us back to were this book came in.

Anyone who read my last blog entry might be wondering what it was that I found so interesting in the Sloan Management Review, well, it was this piece Generating Premium Returns on Your IT Investments which got my attention.

I’ve been running across the term IT Portfolio Management for a while now and wondering what it was all about.  You can always make an educated guess from such a term but then you risk getting it wrong or missing the important points.  Quite often IT Portfolio Management was associated with the term IT Governance which is something else I thought I should know more about.  Well, this piece on IT investment did three things: it set me straight about what is IT Portfolio Management, it inspired me to read more about IT Governance (I’ll write something about this soon) and it provided some interesting statistics about IT success.

So, what is IT Portfolio Management?  Basically it is the idea that organizations should know what IT projects they are undertaking and should review them as a whole rather than just a one at a time basis.  The idea is that while you might have four big IT projects on the go, all of which make sense in their own right, when you look at them collectively you see that two of them are doing the same thing.

Now this is one of those things that sounds obvious.  How could any reasonable company not know it was funding overlapping or even competing projects?  Yet this happens, its quite possible large companies don’t know every project that is happening, in a geographically dispersed company things get more difficult still.  Add in the way many companies distribute IT projects to business units and its quite clear that the investment group in Australia might be doing a project that looks a lot like the new business group in Sweden.

So the first step in IT Portfolio Management is simply to catalogue all your IT projects.  The next step is to review them all and then… well this is were the SMR piece is really focused.  This suggests that companies should categorise each project as: Strategic, Informational, Transactional or Infrastructure.  Each company should also decide what percentage of the IT budget to allocate to each of these types of project and use that as a management tool for managing the whole protfolio.

Well that’s the idea in a nutshell, I won’t go on about it any more.  The interesting thing that arises from this research is that the authors identify two types of company: those that are IT savvy – i.e. those that understand IT and can exploit IT – and the then those who are not IT savvy.

Those companies that are IT savvy can have higher profits the year after doing an IT project, typically $247 extra profit for every $1 invested in IT.  So for these companies doing IT project makes a lot of sense.

For the other companies, the non-IT savvy companies, the reverse is true.  Doing IT projects reduces subsequent profits, typically they make $909 profit less profit for each $1 spent on IT the year before.  In other words: these companies would be better off not doing IT projects.  (Which is worrying from a long term point of view.)

What occurs to me is that we can link all of this back to Nicholas Carr’s arguement IT Doesn’t Matter.  Carr argued that IT was no longer strategic and companies should concentrate on commodity IT.  Of course many people (including myself) took exception to this and argued the contrary.  Now perhaps we have an answer to the discussion, and its answer using one of those re-occurring business ideas: segmentation.

Carr is right, for some companies IT is not important, for those companies who are not IT savvy, they should get away from IT and find some other way to improve their business.  For other companies, namely the IT savvy ones, IT is important and can produce real benefits.

So the answer to the question: “Is IT important?” is simply; “it depends.”

Before finishing there is one more points that struck me in the Sloan piece.  One of the recommendations is: Companies should learn from post-implementation reviews and formal training.  This gives two action points.

Firstly, companies do not invest enough in IT training – typically less than 2% of the IT budget.  They optimistically think that giving someone new software is enough.  It isn’t, you need to train people in it.  I’ve lost count of how many times I’ve seen this done.  Being on the development side I hear about companies who buy software but don’t buy the training, or users who see the software as too complicated (it usually is) but can’t get any more training; or, perhaps the worst of all, the manager who believes his staff can learn a new package (or even programming language) by reading the manual.

People are great learners, they will find a way of learning new software and even complex languages so the manager are right, why spend the money?  Simply: providing the training will help it happen much, much faster.  You want your project sooner?  You want your product delivered quicker?  Want to see an improved ROI?  Then spend the money on the training, don’t leave it to trial and error and manuals.

Second point; post-implementation and in-process review help companies realise the benefits of IT projects, motivate the staff and improve organizational learning thus making the company more IT.  In other words, Retrospectives make a difference.

Too many companies talk about doing retrospectives but very very few companies actually do them.  The reasons for not doing them vary, and often when they are done they are done badly so fail to maximise the learning and change.  When they do happen and are done right they make a massive difference.

Now the question is: do you want your company to be IT savvy?  If so, start doing the retrospectives and giving people the training.  If not, then I suggest you save your money and get out of IT altogether.

I’m currently reading Strategy Bites Back and I’ll write a proper review in time.  Before then I read something on Friday that really made me think.  The book is organized a series of essays, summaries and reprints – the “bites” of the title.  The bite I read on Friday was by Spyros Makridakis who is a business school professor so he should know what he’s talking about.

What he says is: manager have a hard time making rational decisions. 

They may think they are making rational decisions but they probably aren’t.  And its not just managers, its all of us – even engineers!  This is because….

• Most people only look for evidence to support the point of view they hold.  If we believe something we don’t tend to look for opposing evidence.
• When we do look for supporting evidence we may not always find conclusive evidence but we’ll think positively of the evidence we do find – even if it is isn’t quite what we needed.
• We are far more likely to remember evidence that supports what we think than evidence that challenges what we think.
• Making decisions in groups doesn’t necessarily help because we suffer from “group think”.
• Managers are in a worse position because they rely on information filtered at various levels below them, since everyone below them suffers from the same problem it is unlikely that opposing evidence will ever get in front of a senior manager.
• Finally, many of the things that our culture leads us to believe are true aren’t, e.g. we make better decisions when we have more evidence – this doesn’t hold, indeed, for all the reasons I just outlined more evidence may simply support our initial position.

So making a rational decision is hard, very hard.  And not just for us, what about for our competitors, our employees, our employers and everyone else in our business?  The same effect works on them too so they won’t act rationally, and how do you predict what an irrational person or business will do?

My question is: if making a rational decision is so hard what can we do about it?

At the moment I don’t know, I find the whole thing quite worrying.  This much is clear: we need to learn to accept opposing evidence and we need to make a positive effort to seek it out to correct our natural bias.

Which makes the question: how do I seek out evidence and information I might otherwise avoid?

Again I don’t have the answer.  It does seem that putting yourself in unusual situations might help, opening yourself to new ideas and talking to different people should help.  I’m also reminded of Scenario Planning – one promise of scenario planning is to help you consider the world differently and practise for difference scenarios.

For the moment thought the world just got a lot more irrational.

Mary Poppendieck recently pointed out this piece on one of the mailing lists I subscribe to.  It is a piece in Fast Company magazine online about Toyota’s approach to improvement.  It is well worth reading.

Working to improve things in your organization means you have to tread a narrow path.  On the one hand if everything is good you risk complacency – nobody sees the need to change or improve anything.  On the other hand if things are bad and need changing then you risk depressing everyone by constantly talking about problems and failings, people get defensive and don’t want to change – this takes us into the arguments around appreciative enquiry.

So, you want to motivate people to change but you don’t want to get them all defensive.

The Fast Company piece describes how Toyota are constantly making improvements to their process and products but nobody seems to be defensive or upset by failings.  The pull factor is the urge to do better, its the promise of a better tomorrow, a more productive company, a better factory, more enjoyable work.  To some degree Toyota may have pre-selected for employees with a problem solving attitude but they have also created a culture were people see opportunities to get excited about and not problems to get depressed about.

The net result is that Toyota are constantly improving, and that means many incremental improvements and solutions on top of existing incremental improvements and changes – thousands of changes a year in one plant.

I like this, I’m a fan of incremental change, incremental improvements and solutions.  However I’m also aware that incremental change often gets a bad press, that’s because incremental change can go horribly wrong and make things worse.

The problem with incremental solutions is that you don’t tackle the underlying problems, rather you only tackle the immediate problem and the obvious issues.  Unfortunately we see this with many Government actions: tariffs to protect industries from overseas competition, financial support for declining industries, sticking plasters for infrastructure – sometimes we need a root and branch overhaul, or we need to recognise that some activities have no long term future and we are better letting them slowly die while we developing new ideas and industries.

Sometimes radical change is needed and I don’t want to say that incremental change can solve every problem.  But, and this is a pretty big but, if you need radical change then you have failed at incremental change.  The objective of incremental change should be to ensure that you never need radical change because you have already adapted yourself to a changing environment.

Look at Toyota, lots of small incremental changes, you don’t see major change programmes like you do at Ford or GM.

The problem for incremental change is to avoid simplistic solutions which only tackle the immediate problem, the symptoms if you like.  Before you make incremental changes you need to fully understand that which you are proposing to change.  You need to think deeply about the issue/opportunity/problem, talk it through with other people, maybe model the situation and your proposed solutions, maybe create some future scenarios, engage in systems thinking, understand the real problems and look for alternative solutions. 

And when you do change look to see if your change makes a real difference, or whether there are any unforeseen side effects.

In short: incremental change needs to be thought through and considered in depth.  Don’t jump at the first thing you think of.

Having said all that don’t let the need for analysis and deep thought stop you from making a change, don’t get caught in paralysis by analysis.  Get use to changing often and changing fast.  So what if you get things wrong once in a while?  You can always put things back the way they were and mark it down as a learning experience.

That’s an awful lot to do for a small change, but then, I never said this stuff was easy.  If it was easy then we’d all be doing it and it wouldn’t need writing about.

First there was Extreme Programming, now it seems we have Extreme Managers – according to the Financial Times.  The mention of Extreme Programming always made me imagine programmers jumping out of airplanes with keyboards and programming in freefall, the parachute opening and them surfing their keyboards to the ground. 

Extreme Managers – lets call them ‘XM’ – it seems prefer four-in-a-bed sleepless nights.  Manager, their partner and two Blackberries – whether this is one Blackberry each or whether the XM has two Blackberries themselves isn’t mentioned in the report.

(In fact, the FT report is a cut down version of a forthcoming report in the Harvard Business Review, which most likely is the cut down version of a more academic report and in all likelihood will be turned into a book by Harvard Business School Press – such is the incisions world of business publishing.)

It seems Extreme Managers like working 12 hour days, 70-hours a week, they manage teams spread through the world, they are always-on, travel a lot but, perhaps surprisingly, actually really like their jobs.  At first sight it looks like a win-win, managers like the work, companies like the results – after all they are only paying for 40 hours a week.

There are obvious problems here: what about their families?  If they actually have any.  And their health?  Such people are creating health problems for themselves and society further down the line.

Then there are the hidden problems: these people can burn themselves out, and by the sounds of it these are people the company comes to depend on.  Second, these people enjoy their jobs but don’t want to keep doing and eventually will quit, again the firm looses out.

For managers I think such extreme hours are a red flag: they say “This person can’t delegate”, they say “This person can’t manage their own work load” – they should be prioritising more and cutting away the unnecessary items.

And what about the people who report to these managers, if these guys are always on the run when do they find time to sit down and give feedback to their staff?  When do they have time to help their reports develop? 

Even if they can find the time what kind of message are they sending to their workers?  First they are sending the message “I’m always busy, don’t bother me” so they have closed their eyes and ears to problems, staff development and ideas from the shop floor.  Second they are making a very bad role model for those who might one day replace them.  XM’s are only making their own lives worse.

The word the report doesn’t use but should is “Sustainability.”  These jobs are just not sustainable in the long run.  When you look at it this way the interesting thing is sustainability itself.  More and more this is the issue: for the environment, for personal health, for corporate success, for individual projects.  We need to move to a world were, at all levels, we do things in a sustainable way.

Unpaid overtime has always seemed a dangerous thing to me.  If a firm relies on its workers working 50, 60 or 70 hours a week but only pays them for 40 it isn’t charging the true cost of its goods.  This is very true with software companies; you see development teams proud of pulling 60-hour weeks to ship a product.  The company may make a profit if it only pays for 40 hours but what if it had to pay the true cost, for 60 hours?  Quite possibly the profit disappears.

In other words, the business model does not work; in the short run you are dependent on the good-will of your workers to give money to your shareholders.  In the longer run this model is not sustainable either.  The replacement costs of the product are far higher than you think, the risks of product development are far higher and your dependency on individual’s is far higher.

Over the long run not paying for overtime is not a win-win, its a loose-loose.  Your company shouldn’t be proud its workers pull a 60+ hour week, its not commitment, its a sign that you don’t understand your business.

It never ceases to amaze me how many bad companies there are in the world.  Companies that provide bad customer service, poor products, treat their employees badly, break all the rules in management books and yet continue to survive and trade, and even make profits.

Such companies grow to a certain size, usually not very big, a few hundred people at most, and then stagger on for years.  Sometime I think starting a company is as easy as falling off a log, it is growing of a company that takes skill.

Unfortunately I’ve worked for a few of these companies in my time and many of my friends still work for such firms.  It seems incredible to me that software firms don’t invest in training, don’t send their people to conference, these guys are in the knowledge business, how can they close their eyes?

And I wonder about restaurants were the food is poor and service worse.  Don’t these guys ever eat in other restaurants?  Why should I wait 45 to get the bill? Does anyone ever come a second time?

Poor websites are one of the things that get me often.  Has anyone who works for British train companies ever booked a ticket online?  You can choose from about 8 different sites, each of which simply has a different skin over the same (poor) booking system.  Then the choice of tickets – why tell me about the tickets I can’t buy?

Now I must say I do not include my last employer in this list, sure they laid me off but I actually consider them amongst the good – or at lest the neutral.  Sure they made mistakes and they weren’t perfect but they were good, not bad. 

Good companies on the other hand seem to be few and far between.  Sometimes it seems there are so few of them I can name them: Toyota, Dell, Shell, Southwest Airlines, SAS Institute, my former employer, … – OK, I know, I’ve read too many case studies at business school, the same names come up again and again.

Optimistically I want to believe that there is a silent majority of good companies out there that just don’t get case studies written about them.  Actually, I think most of us assume that to be the case, that’s why we keep looking for these companies, unfortunately it can be hard to tell them apart when you only have a few hours in an  interview. 

A suggestion for job hunters: do your own due diligence on potential employers, search the net for them, not just websites check news groups and mailing lists too.  See if you can get some financial information on them – I’ve been using UK Data and Companies House to get some financial background.  You might not find a lot but you might find a red flag.  Yes, you have to pay for these services but its not a lot of money when you look at your salary then multiply by several years.

Anyway, back to good companies…

I’m not saying the good companies are perfect, most of the companies I just named have slipped up at some time or another but on the whole they get it right.  But why are there so few good companies and so many bad companies?

So I have a theory.  The theory is in two parts.  I’ve already given you the first part: there is very little to stop you founding a company.  At least in the UK you can be banned from being a company director but you have to break the law first.  Many of the companies I’m talking about are just run bad, not illegally.

As long as you have some idea that is different enough from the competition you can get into business.  I’m not saying this is easy, look at the life expectancy of new companies, most fail.  I’m just saying that if some element of your product is good you can get up and running.  You could have a unique product, a great sales guy, you could be first into the market or just a good location for your shop or website.  This is all you need, you don’t need to know much else, the better this one idea the worse you can be at everything else.

If you get that bit right you can get everything else wrong.  You can treat your staff badly, you can ignore strategy and you can ignore your customers.  And the longer you are in business the more entrenched your position will be.  Sure you are open to competition but as long as nobody notices you can continue.

(Advice for software companies: make sure you sell on going support and maintenance for your products.  I’ve seen companies survive for years on this revenue alone without selling anything new.)

The flip side is you probably won’t grow very large, and if someone does notice your weakness they can easily topple you but in the meantime you can employ a bunch of people who don’t actually have a good time working for you.  Thus explaining why so many people seem to work for bad employers.

The second part of this explanation is statistical: being a good company means doing a lot of things right.  First you still need the product, location, idea what ever, you still need that essential driver.

Then you need to do your product or idea well, you need to treat your customers well, you employees well and get everything else going well.  This is so much more difficult than being a bad company, there are a lot of ducks to get in the row.  And if you are successful you’ll probably attract more attention from competitors – although you should be able to fight them off better.

So, simply because being a bad company is so much easier than being a good one I would expect there to be many more.

Now, under this model, every bad company reaches a size were it is just about manageable by the people who run it badly.  Think of this as the Peter Principle for companies if you like.  Some good companies will start off good but as they expand they’ll get it wrong, expansion is hard and they too will hit the Peter Principle.

A few companies will get it all right.  They will manage the growth, they will keep the good product/idea/location.  These companies are real killers, they will be super successful.  Its just that there won’t be very many of them because this is hard.

Consequently, most of my friends are condemned to work for bad companies.  Sorry.

I have to put a disclaimer in here.  I’ve never founded a company that employed anyone other than me. I’ve come close a couple of times but I’ve not done it.  Real entrepreneurs out there are quite right to say “What does he know?  He’s never done it.”  I agree, I’ve never done it.

All I’m saying is: to me, it looks like starting a company is as easy as falling off a log – provided you have an idea.  The hard bit is growing a company, keeping it good and avoiding the Peter Principle.

As regular readers will have noticed I Write.  I write this blog, I occasionally contribute to ACCU journals – although I have contributed a lot more in the past – and I’m half way to writing a book. (I expect to sign the contract before Christmas now.)  Recently, I’ve become aware of the need to improve my writing so I thought I’d so in the time honoured way: by reading a book.  When someone recommended Weinberg on Writing I decided this was the book for me.

Gerry Weinberg is a minor legend in the computing field.  He’s probably most famous for one of his early books, The Psychology of Computer Programming (get the Silver Anniversary Edition) – it was in this book that he coined the term “Ego-less Programming”.  Since then he’s gone on to write many more books – if his publisher’s description is to be believed over 40.

(While we’re on the subject of Weinberg’s books, a quick note to my friend who asked me earlier today “How much should I charge for my consultancy services?”  The answer is in Weinberg’s The Secrets of Consulting even if you are not a consultant this book is worth reading.  There is lots of good advice for work and life generally.) 

In Weinberg on Writing he sets out to describe his Fieldstone method of writing.  Basically, this method entails collecting lots and lots of ideas for book section and assembling them into different books.  There is other advice for writers here but this is the subject he comes back to again and again.  As it happened, this technique isn’t a million miles from the way I write.  

Weinberg spends a lot of time on describing how to find and collect the fieldstones needed to write the book.  My problem tends to be the reverse.  I’m forever collecting stones, I see interesting ideas everywhere, its a question of finding the time to put these stones in good homes that I have.  Still, the blog and the current book use up lots.

I liked the book and although I found it covered a lot of territory I had already visited I still found good advice.  I probably would have found more value if I had completed more of the exercises he describes for budding writers.  I didn’t find any significant revelations in the book so in that way I was a little disappointed but again, I think thats because I’ve already addressed some of the issues in my own way.

If you are a budding writer then I highly recommend this book – and I recommend doing his exercises.  And if your not a budding writer then keep your eyes open for Weinberg’s other books, none of the others are about writing, many are about computing but not all, and they are all well written and useful.

 

Ever since Nicholas Carr wrote “IT doesn’t matter” there has been a well publicised debate on the real value of IT in modern businesses. Sometimes Carr is right, commodity hardware and commodity software is good enough, there is no competitive advantage to be gained by going beyond cheap commodity products.

But sometimes IT does matter. Sometimes IT can be the source of competitive advantage, sometimes it can help you do things you couldn’t do otherwise. I’m always on the look out for these instances and the front page of today’s Financial Times gives a great example.

The London Stock Exchange (LSE) has just announced half year profits up from £26m to £76 – yes a three fold increase. This is on trading volume up 42% to 744bn shares. And the reason? An improved IT system.

Over the last 10 years stock exchanges – and related institutions – have switched to electronic trading systems. These have multiple advantages over the old “open outcry” systems: accuracy, speed, process automation, etc. etc. Perhaps one of the biggest benefits is that electronic trading systems allow fully automated trading, a computer programmed with the right algorithms can conduct the trading. This is more than just automating the process it is a radical change in the basis of share trading system and has helped hedge funds reach their current position.

Earlier this year the LSE introduced a new version of its trading system, SETS. In reality this probably meant a software upgrade, perhaps a hardware upgrade, maybe even bandwidth upgrades. The hardware is commodity boxes (Sun boxes I think) and the bandwidth is purchased from regular communication providers, the software is the interesting bit, this is specific to the LSE. A change to the system usually means a software upgrade, and sometimes this can go wrong – like it did earlier this week at the London Metals Exchange (LME).

In the case of the LSE and its customers IT does matter, it allows them to do something different and it can make a big difference to the bottom line. But it comes with risk, it matters because your business now depends on this stuff, like at the LME.

This IT is expensive and difficult to get right – I know, I worked on the Reuters end of the LIFFE Connect trading system when it went live in 1999. As the LSE shows, when you get it right it makes a big difference.

However, IT also has its limits. Its all to easy to dream up some big new idea, some strategy and say “Technology will implement it.” Technology has its limits and this can effect strategy is a very real way. A good example of this is the problem Skype faces, describe by Robert X. Cringely in July.

Although most people think Skype is a pure peer-to-peer networking system it isn’t. Because of Network Address Translation (NAT) Skype needs to impose a server into most calls. These don’t have to be Skype’s own servers, they’ve worked out how to borrow server bandwidth from others but as the user base grows this will become a bigger problem.

For Skype there is no short or medium term way around this problem – their techno-business strategy means at some stage they had to get access to lots of server. Consequently it was almost inevitable that they had to sell out to a big player like eBay or Google sooner or later to get access to more public servers.

Meanwhile, Skype, and similar VOIP technology, is changing the business strategy of other companies, obviously traditional telcos like AT&T and BT are vulnerable, so to are mobile operators like Vodafone but also companies who simply use telephones – which is most of us – face change. Even if in the long term VOIP becomes yet another commodity technology it is causing change now, and that is strategy and that is important.

So, there you have it, another reason why I still believe IT is important. Ignoring IT in creating your strategy is wrong, letting it run the entire show is wrong, you need to find a middle way, which is were you need people who understand both.