Why do some software companies build exciting products customers can't wait to buy,
and people love working there, they can be really creative -
while other software companies build BORING products customers could care less about,
and people feel like it's a pressure cooker to work there?
We're going to talk about why if your company is being led by control freaks,
You might really hate your job, and your company can't really profit - right now.
If you're building software at your company, and you're using agile methods of any sort -
scrum, kanban, maybe some other method that's closely related to it,
you've probably used a backlog at some point. This is really just a list of ideas,
for what the customer might want, that the software team then goes and builds.
An important thing to talk about is when are features identified.
Many companies focus a lot on the features that are identified before they're built.
So, at your company you might do some usability studies, or customer interviews,
or ask people what they like about the prior version of the product.
And then the software team has to build user stories, or acceptance criteria
or requirements to describe "what is that feature going to do?"
And that's put into the backlog and the software development team then starts building it.
But often the leadership at your company doesn't really think about -
"What's going to happen when we release our software, our ideas that we think that they want"
"maybe those customers have even told us that they want,"
"What's going to happen when we release that, and we find out there's NEW things that they want?"
When ideas that we put into our software products are identified has a big impact on how much money the company you work for is going to make,
and thus, how much you're going to get rewarded, and the company's going to grow.
And many companies focus on the blue bar in this chart, they just want to know,
and they want to invest in everything they can think of up front.
So they already may have a list like in this case of 150 ideas,
for what we think, and our customers have told us, are valuable for the product.
But there's a hidden, additional set of features people don't think about as much,
which are features and ideas that don't come out until customers start using the product.
And that's what this red bar represents.
And there may only be a small number of these features or ideas, in this case as an example, 25 new features.
But the important point of this chart is just to show you that,
when you release a software product to your customer,
There is undiscovered work, or new things that NOBODY can predict, they're not going to come about,
until customers begin USING your product,
And those can actually be the MOST profitable, and they can make WAY more money
Than a big list of ideas that everybody thought of AHEAD of time!
Another way of looking at the prior chart, is "what is the VALUE of the features that are released?"
In this example, those 150 features that the company thought up
AHEAD of time based on talking to their customers,
and doing research, and surveying maybe what the programmers and
everybody else in the company thinks customers want -
maybe only produced, $150,000 in this example of value for the company as far as revenue.
But there may be those additional features, those ones that are undiscovered
that are really the ones that are most VALUABLE to your customer, and that's what's represented by the second bar.
So that small list of features in the prior chart that was only 25 features,
a lot of people tend to think on their software project,
"We don't need to budget really for changing the product too much,"
"We know what our customers want, we're going to build the product that WE KNOW they'll love,"
"and then when we release it to them, we'll have a little bit of money left over to change the product."
But in my experience, and if you look at many successful software companies out there,
who have been able to truly be agile,
it's really these undiscovered features that customers tell you about once they've used your product
that cause the most revenue and profit to happen.
And in this example I'm showing,
there could potentially be a half million dollar amount of money in revenue that comes into the company
just based on some of those 25 features.
So the question becomes:
If you're working at a company, how can we structure the company, and how can we make it working on your software project like,
to make it a better chance that the company actually puts EFFORT
into releasing things that make a ton of money,
if they can't PLAN for them?
Well the easiest way I've described this to people in the past is,
to ask this question:
When you work at your software company, does it feel more like you work at a factory, or a college?
Does it feel like you work somewhere,
where everything's predicted "up front"and all the focus is on OUTPUT?
Or does it feel like you work somewhere where people can be CREATIVE and discover and LEARN things?
If you're going to work at a company that's going to make a lot of money off their products,
and the people who work there aren't going to just get burned out after a couple of years and LEAVE,
You need to have a situation, and a culture, and a set of processes in place at your company,
that feels more like a college.
Now if you work at a company,
that's structured more focused on output like a factory,
everything's going to be focused on PREDICTING value. Basically,
Doing a whole bunch of math,
and building a whole bunch of data and charts and a bunch of validation to help everybody FEEL SATISFIED
that they're going to build things that are going to make a CERTAIN amount of money, and that's going to be the focus.
If instead you're at a company though that's focused more on learning,
It's going to be more about DISCOVERING value.
The way that software development's done
is going to basically assume:
We can't predict everything! We have to DISCOVER things all the time and be ready to CHANGE.
Also a company that's focused on output is going to be CONTROLLING people a lot.
Putting boxes around what people can do.
Measuring how many hours they're working.
Forcing them to control the way they go about software development to
try to make it as predictable and UNIFORM as possible,
because everything's focused on output, and predicting the future.
On the flip side, a company that's willing to learn and discover potentially
REALLY profitable new ideas that they just can't come up with themselves,
is going to be more focused on TRUSTING people, they're going to empower people to be flexible,
and make decisions ON THE FLY,
based on FEEDBACK and information that's coming into the company that's changing all the time,
so that they can IMMEDIATELY respond to things that the customers tell them they want,
that's totally DIFFERENT than what the plans are!
A company that's focused on output, that's like a factory,
is going to focus a lot on the "burn-down" chart.
This is a tool that comes from scrum, and some methods of agile development,
that helps managers be able to determine:
"Are my software developers completing planned work as quickly as they can?"
Well if you're at a company that isn't focused on planned work, that's focused on building THE RIGHT THING,
then measuring how fast people can build planned work
is actually a BAD thing!
Instead you want to be measuring: "What are we LEARNING about the customer?"
Every time we release something new to our customer,
are we actually learning that we're maybe WRONG in our assumptions on what they want?"
"Are we learning that we're right? Are we learning that - "
"there's whole new maybe UNTAPPED aspects of our market or our product that we've never even THOUGHT about?"
And are we actually taking that into account?
So if you're working at a company that could either be,
an output or factory type of environment,
or a learning or college type of environment,
How productivity is MEASURED can have a huge impact
on how successful, and how profitable, those products are.
If you're at a company that's focused on predicting the future, and output,
they're going to do a lot of work to budget the PROJECT.
to figure out: "When we spend money,"
"is it the same amount of money that we PREDICTED it was going to cost to build this product?"
But a company that's focused more on learning, they're more like a college,
they're going to just set a MONTHLY budget,
and use that money every month,
to do WHATEVER it takes to build the products that are going to be most profitable,
without being controlling, and uptight about whether the amount of work being done met the plan because:
We DON'T want to build software to plan if we want to adapt and change and DISCOVER new valuable ideas.
A company that's setup like a factory, and they're focused on output,
is going to be heavily weighed on tracking EXPENSES.
There's going to be a lot of estimation done,
there's going to be a lot of cost cutting procedures,
and everybody's going to focus a lot on:
"How much is this COSTING us?"
"Can we make it cost LESS to INNOVATE?"
That's a horrible mindset, and if you want to build a product that's really going to cause
astronomical GROWTH in your market and really
build something and deliver something that your customers
SHARE with other people and are EXCITED about
and you don't have to CONVINCE them is valuable, they're SOLD on it -
then the company needs to be focused on tracking PROFITS,
NOT expenses!
Every time we do work, don't look at how much it's COSTING us to build the software as a sign of SUCCESS,
if it's costing us less we feel like "job well done!"
We need to look at how much NEW MONEY is the project causing???
Is the work we're doing to invest in our new software development causing us to LEARN NEW THINGS,
and then causing it to PROFIT!
You can work on a software project that meets its budget,
that comes in even UNDER budget and deadline,
but it causes the company NOT to profit,
because your customers DON'T CARE about it!
So are you working at a company that's more like a factory?
Or a college?
Would you rather work somewhere where everything's predictable, and constrained, and controlled?
Or somewhere where people can be more creative,
And they can really come up with and DISCOVER NEW ideas so everybody makes a lot more money and can have more fun?
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