The ideas of Lean Startups, Innovation, #NoEstimates development, and Minimal Viable features are all the rage. Many times all the rage by people who have never been in a start-up, had to produce Saleable Viable Features to make the revenue goals to earn back the EBITA to pay the venture capitalist, make a stock dividend, or make payroll or loan interest - or ever had to make the balance sheet balance.
So what's the problem with these ideas - all good ideas around lean and innovation.
- Business accounting is straight forward. You have a top line - revenue. You have a bottom line after everything is been accounted for - EBTIA. Which is the earnings before the deductions for interest (on the loans), taxes (paid quarterly), and amortization of the expenses (the cost of doing business). The Bottom Line is what is left after these and the costs of producing the products or delivering the services that the firm does while it is doing what it is doing.
- This business accounting annoyance is how business runs. Top line minus Bottom line equals what's available to do your work. Those not connecting with the basics of business are in the class of people like the South Park Gnomes and their business strategy. There is no connection between the 1st Phase and the 3rd Phase. We focus on producing value to the customer. What's it going to cost? Oh hell we don't know and really don't want to know. Knowing takes away effort from producing value.
- The next issue is the notion of minimal viable features in a product or more importantly an Enterprise IT system, a software intensive solution, say a global infrastructure system, a software based product that is NOT selling into the gaming, toys, interweb, or some clever gadget market but instead is a boring, lackluster, uninteresting system like getting paid by Medicare, or having the electric infrastructure work 100% of the time under software control, or getting fuel from the ground to your gas tank through a myraid of process control systems, or even better, having the 737 land on the proper runway at DIA in a bad storm and have no one die in the process. You know, the vast majority of software intensive systems we use and depend on every day. Those kind of products.
- In those products there are no set of minimally viable features there are a set of mandatory viable features. Nothing can be missing from the system. If it were it wasn't needed to begin with and never should have been on the list of needed features for this product version. Or better, we'll have that capability in the next release, once we get this out to door and have it start earning its keep.
So in these boring, mundane, lack luster technology domains what is the fundamental - Immutable - principles of success?
- Do we know what DONE looks like in units of measure meaningful to the decision makers?
- Do we have a plan - a plan is a strategy for success - to reach DONE when those paying for our work expect us to?
- Do we know what resources - people, processes, facilities, tools, or what ever - are needed to reach DONE, when we'll need them, how much they'll cost, and what their effectiveness is in moving our project toward DONE? These resources also include money. Money is always part of the conversation about reaching DONE. In many instances Schedule is King. But most often cost drives our decisions.
- Do we know - or have some sense of - the impediments that will impact our progress along the way to DONE?
- Do we know how we are going to measure progress toward DONE? We're delivering value every few days is a common platitude. What's the unit of measure of that value? How about dollars that's a good measure. What's the cost of that value. Can we afford to have you keep producing that value.
- What's the order of delivery for this value? Do we know we have enough time and money, at our current capacity for work to show up on time with all the needed capabilities required to meet the strategic goals of the business or system? Is the 777 going to be able to land in CAT1 conditions (bad conditions) if it is missing some of the features we didn't get to because we ran out of time and money. The current C919 Chinese aircraft is an example of being late with a softball schedule (lots of margin) and losing market share by the day.
- Being on time is a critical success factor for all products.
- Having the right - not minimal - features is next.
- Being on budget for the price point of the product is next.
All of these are part of the equation for success in the product development business.
So As Project Managers, What Does This Mean?
- You have to have a plan. Plans are strategies. Plans are not fixed, they respond to emerging conditions. But Plans are part of the conversation of any successful business.
- You have to know to some degree of confidence what it is going to cost to reach DONE. Those pesky accountants aren't going to let you get away with some notion of we'll know what it costs when we're done in the mean time we'll focus on producing value. Sorry that's now how business works, outside the dome.
- You have to know what DONE looks like in terms of capabilities that will be exchanged for a customers money.
- This is all based on a simple principle - another immutable principle - if it's not your money, you rarely get to ignore those questions about cost, schedule, estimates to complete, features to complete, and all those project performance management processes. The notion that doing those is a waste and your time would be better spent writing code or bending metal, ignores completely the principle of all business:
- Our products have to be acceptable to the customers.
- They have to be priced in some competitive way so those with money will buy them. A senior Big 4 accounting firm once told us your strategy should be simple - your customers have money, you want it. Give them something they want and are willing to pay for, and you didn't spend too much building so there is money left over in the end.
- Our COGS (Cost of Goods Sold) has to meet the target margin number, otherwise we won't be in business for long.
- And finally, we need to know something about these numbers before we start, while we are working, and as we get closer to the end, so we have the confidence that we can stay in business once our product ships with all those mandaorty viable features.
So in the End
It's about the money. It's always about the money. Many want it to be about them or their colleagues, or the work environment, or the learning opportunities, or the self actualization.
And it is - along with all the other hygiene attributes of the work environment. That's the foundation for attracting and retaining all those talented resources back in that bullets above about building products or providing services.
But all those, and any other soft goals that can be thought up are funded by EBITA.