How to Identify What Needs Improvement

November 29, 2011

Improving the efficiency and effectiveness of your organization is at the heart – and is the art – of management. Where do you start? What are the key areas that you should focus on?

A small set of general questions can reveal problem areas at all levels of your organization. You begin at the point most applicable to you—a line manager will use these questions at a departmental level whereas an executive will focus on a division, for example.

Are You Living on Past Glory?

November 25, 2011

While I’ve recently argued that revenue per employee is the ultimate productivity metric, I balanced this against over-using financials to run the company, urging that as leaders we must look beyond the spreadsheet. In a nutshell, my message was that you shouldn’t “cut your way to glory” today to the extent that you squeeze your company out of business tomorrow. If you are leading your organization as an ongoing, sustainable business, you need to be making investments in your future.

This implies that the revenue per employee metric can be deceiving because today’s revenue is the result of yesterday’s investment. If our goal is healthy, sustainable, long-term growth, we need to focus on innovation. What types of innovations and what levels of investment are important? Jane Stevenson and Bilal Kaafarani tell us in their book Breaking Away (How Great Leaders Create Innovation that Drives Sustainable Growth--and Why Others Fail) that we need to focus on four types of innovation.

Look Beyond the Spreadsheet!

November 22, 2011

In my last post, The Ultimate Productivity Metric, I stated that while revenue per employee is an excellent gauge for understanding how much you are generating from your people, it is an incomplete measure of how well the business as a whole is operating. Costs, for one, are not taken into account.

The implication is that you can be doing very well in terms of revenue generated per employee compared to your competition, but you may be losing money in the process. When it comes to controlling costs, the big trick is to find that sweet spot where you are producing more income for each dollar spent while avoiding cutting so deep in an effort to save money that you cut away activities that generate your income.

The Ultimate Productivity Metric

November 18, 2011

Agile leadership understands the advantage in maximizing the performance of a team as a whole, avoiding problems with sub-optimization:

“If each subsystem, regarded separately, is made to operate with maximum efficiency, the system as a whole will not operate with utmost efficiency.” - (Lars Skyttner) General Systems Theory

When dealing with complex knowledge work such as software development where there is a high degree of uniqueness and variability with each and every project—plus the need to leverage the functional skills and abilities of knowledge workers across multiple disciplines, we need to focus greater attention on outcomes, not functional outputs.

Results-Oriented Creativity: A Separation of Concerns

November 15, 2011

Do you consider yourself to be creative—or know someone that is highly creative? Creativity can surface in different ways, whether it is a novel idea for a new product or a unique approach to solving a difficult problem. Creativity is a differentiator for individuals and corporations, and we all know when we see it.

But what is goes into being productively creative? And by that, I mean coming up with ideas that have merit, ideas that work. Is it better to be creative or analytical? The answer is that you need both, but you need to cleanly separate your creative and analytical mindsets.

Do You Have a Prototype in Production?

November 11, 2011

The act of delivering software to the market is a continual learning process. My recent posts have been talking about bringing new products to market using fast, low-cost experiments to empirically learn about what really works—what customers will value and pay for.

If you have entrepreneurial types (and these can be intrepreneurs) driving your innovation, keep in mind that they are really experimenting and that they typically have a strong desire to get something in front of real customers to validate their learning. They also have a tendency to drive development teams for speed, and in response development teams start cutting corners on good design and technical practices that pay dividends later.

Other times, there is so much uncertainty about what really needs to be built that the entire development process can wind up being a giant learning exercise. Unfortunately, if that learning has been done under schedule pressure, you can still end up in the same place.

I call it the prototype in production problem.

Book Review: The Lean Startup

November 8, 2011

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
With The Lean Startup, Eric Ries has produced a truly interesting, engaging book that is valuable for anyone seeking to drive innovation. In fact, given the intense scrutiny that venture capitalists purportedly have towards startups these days, this book might actually be more applicable to larger organizations and those who want to be better intrepreneurs.

The Lean Startup, as the title suggests, guides the reader in the application of Lean principles in a software startup. A startup, according to Ries, is “… a catalyst that transforms ideas into products.” And the products that a startup builds, “are really experiments; the learning about how to build a sustainable business is the outcome of those experiments.”

As part of this Ries advises us to avoid sub-optimizing individual functions, favoring working through what he calls the Build-Measure-Learn feedback loop in a specific way. Ries’ point is that, “… the goal is not to produce more stuff efficiently. It is to—as quickly as possible—learn how to build a sustainable business.” In the context of applying the principles of the Lean Startup, what matters is how quickly you can get through the entire Build-Measure-Learn loop.

Put Your Product Assumptions to the Test!

November 4, 2011

In the latter half of my last post I began to pull from Eric Ries’ book, The Lean Startup, discussing how minimal viable products (MVPs) are minimalist implementations that allow you to start the process of learning as quickly as possible, with the least amount of effort expended. There are times where what you learn may take you by surprise, as Ries recounts in his book.

At one point in his career, Eric Ries was a cofounder and chief technology officer at IMVU, an online social entertainment destination where members use 3D avatars to meet new people, chat, create and play games. IMVU’s first MVP shipped with avatars in virtual environments, but they were stationary.

Of course, customer feedback was that they wanted the ability to move their avatars around…

How to Fire a Business Bullet

November 1, 2011

One piece of advice offered by Jim Collins and Morten T. Hansen in Great by Choice is to avoid making a big bet on one innovation that ends up wasting your energy and your resources. Collins and Hansen observed that great companies fire bullets first, then cannonballs.

The analogy at work here is that if you are on a warship at sea fighting another ship – and you have limited gunpowder – it is better to fire a few bullets first to calibrate your shot. This way, you can determine the correct firing range and increase the odds of success with your larger cannonball shot.

The business research conducted for Great by Choice demonstrates that great companies obtained a 69 percent calibration rate on their “cannonballs” versus 22 percent for the comparison companies. Would you like to increase your odds by a 47 percent margin? What does a bullet look like in a business context?