Smartest Guy in the Room

Knowing When to Innovate, Invest, Delegate, and Divest

I think a lot of people probably wrestle everyday with the big picture of what they do.  I’m sure a lot of people are doing things they don’t particularly like doing.  I’m sure they would rather spend their time figuring out how to do something they’ve been looking to learn.  They would like to take something they’ve mastered and create something completely new with their skills and passion.  With my colleagues, I’ve started to coach and mentor them using a matrix to help them visualize their goals and objectives and see how they can grow and increase their excitement for what they do.  

I don’t have a name for it yet, but the idea is this:

• Spend most of your time innovating.  This is where you derive the most pleasure and generate the most value.
• As a close second, spend lots of time investing in yourself.  Go learn a new language.  Pick the guitar back up again.  Fix your finances.  The goal is to make your investments worth innovating around.  Items from the bottom right should migrate to the top right.

Now, that should take up 99% of your time.  But there are still other things you own or are your responsibility.  The goal is to begin marginalizing these things.

• Delegate the things that you no longer enjoy doing.  These things may be things that were once in the upper right and that you’ve innovated around, but now are less invested in.  Whatever time you invest in these areas should be to teach and inspire others to carry the torch.
• Divest yourself of things that really don’t do anything for you.  If you’ve honestly tried something, given it your all, and separated yourself from your lizard brain and the task at hand and can sleep well at night saying “I don’t want to do it and I can’t figure out how” then you should eliminate these things from your radar.

By taking this approach, you maximize the time you spend creating value either for yourself or others.  You can flex your mind around the crafts and arts that matter to you, and spend less time on menial or non-important things that are ultimately diversions or distractions from what really matters.

Automation vs. the Mechanical Turk

I’ve been reading “Linchpin” and thinking a lot about Seth Godin’s ideas and (something he’s fairly sparing in his writings about) their general application.  He talks about the mechanical turk (you know, the computer that plays chess, only it’s a box with a human inside?) and how given a prescription, anyone can be a mechanical turk.  In IT consulting, nothing could be more true.

Get task.  Put task in box.  Task gets done.  Box has been “programmed” with the how to get it done, so it gets done the same way every time (except when it doesn’t).

And Godin is right - this doesn’t really grow people or create much value.  It’s commoditizing human capital.  

In technology, Martin Fowler comes to mind.  Fowler talks about how “Frequency Reduces Difficulty” which is an evolution of practice makes perfect.  The more you do something, the more you understand it, and the more you understand it, the more able and likely you are to automate it.  Sure, you could just do it over and over again, but then you are the mechanical turk.  And then you’re just a commodity.

Automation is a skill.  Automation tools are a plenty (Puppet, Chef, etc.) but a culture and mindset that automation is the means to the end, an objective that increases quality and the value that the resource can deliver by removing focus from the commodity task and creating the bandwidth to create value - is scarce.  How do you create an innovation culture that sees the investment in automation as an objective to a successful delivery?

Why Higher Ed is Ripe for Disruption

The average cost of a college education in the United States in 2012 was $22k per year at public institutions, and $46k per year at private ones.  That’s a fully loaded rate.  For a four year university, that’s means an education costs between $100k and $200k.  22 million Americans were expected to attend college last year.  So roughly speaking, the size of the undergraduate education market is $500B-$1T annually.  

Anyone want to find a way to get .001% of that market?

Can lean survive in the big enterprise?

We know it can. But I’m not sure that stories like Intuit aren’t the exception rather than the rule.

The old guard is till out there. They want targets. They want KPIs. Worst of all, they want marketing campaigns that build hype. There are few in the enterprise today that understand the early adopters curve, or failing fast. It is the way that business has tried and failed at small scale: give me promises; meet those promises; failure is an outcome, but not an option.

Why is it such a hard pill to swallow to push aside all of the MBA bullshit and think practically? Who has ever succeeded repeatedly in doing anything without doing it a scale and without any particular clarity as to what the resutl will be, when it will be achieved, and what impact I will have? Vanity metrics are the things Eric Reiss says are the ultimate defense for myopic plans that lacks the foresight to understand that nothing is certain. You are what you are measured by. If delivering to a plan is what you are measured by - that is what you will do, to hell with the result.

The illusion of certainty is what keeps innovation at bay and what allows entrepreneurialism to thrive. This illusion is just a market inefficiency, one that most founders look to exploit. Yet if CEOs and CTOs at large today were to look at their curren companies, they would realize how they are being manhandled by entrepreneurs not because of the soundness or disruption of their ideas (though that’s not always false, either) but rather by their will to not engage in the tactics of their enemy.

The United States won it’s war of independence by engaging in ways deemed unconventional. Today, guerilla warfare is THE tactic that makes a difference on the battlefield. No modern general in their right mind would line up line after line of infantry dressed in red to shoot at the enemy. Yet so many enterprises can look at the world around them and see where their world is being turned upside down and by and large, would rather buy the enemy and change the rather tha learn from their tactics. The intrapreneurial movement is something that will ultimately revolultionize business, if today’s guard only has the courage to admit how wrong they’ve been.

Health care’s ivory tower of data

As I stood through VC’s at the Health 2.0 Spring Fling talking about the opportunity they’re trying to guide startups through in health care, a few things stood out:

1. They speak largely generically as if they were incubating a company in 2001.  
2. They certainly aren’t thinking much of the companies they’re investing in.

First of all, it sounds like these guys are taking 6-7% equity in these startups in exchange for $20-50K (virtually nothing).  So the guys taking this cash are either a) stupid or b) after something else.  

Health care startups are hard.  While other industries have been incredibly disrupted through entrepreneurial tidal waves of IT in the last couple of decades - health care has remained pretty stagnant.  The industry for movie rentals didn’t require government stimulus, not only because there was no social impetus to prop up a fledgling industry, but also because the market would find it’s own way and wasn’t actually dominated by large players.  Playing in health care as a startup requires access to information - not capital.  And the big players with the valuable information aren’t playing ball.

But they are.  They realize they don’t have the will or political capital to say “I’m going to build a new suite of products to manage care delivery by performing big data analytics on claims data that I own.”  But they also realize that there are serious problems with their models that aren’t going away.  The big players are talking about ACO, they’re building PCMH offerrings, they see the writing on the wall: government is going to kill the fee for service model if they are to continue to subsidize customers to use services in the health industry.  Insurers have a different risk management game to play now.  Whereas controlling consumer behavior and managing risk in that interaction with the system was the modus operendi, that model doesn’t work with an individual mandate.  Now risk management is about managing care delivery, and that’s where steerage of care with delivery vis a vis providers becomes important.

But this means measuring care.  It means measuring outcomes.  And it means prescribed treatment plans that are shown to generate positive outcomes both medically and financially.  None of this can be done without access to data at a speed that other industries that have already mastered, and that is where the political will falls apart.  The glass ceilings of these enterprises are limiting their ability to do the things Netflix and Google were able to do.  So the only choice they have is to go outside and acquire these companies or have consultants come in and drive innovation from the inside.  But what is decidedly not happening is the opening up of this data in a way that would allow industry to grow around the large players.

And so the role of the health care VC is very different.  They are, in effect, buying agents for Kaiser Permanente, United, BCBSA, etc.  They have skin in the game, placing the right bets that a select few have ideas that once enabled by the 500-pound gorillas, can be disruptive and can enable them to adopt new models.  But the low investment and relatively high stake in these companies is a sign that the VC’s are not here to get these companies from startup to growing business.  This is a small-cap, fast exit play that gets small ideas into the big companies quickly, and builds on the ivory tower.  It’s not in and of itself disruptive - it’s farming disruption for larger companies.

The companies that come out of this age of health IT innovation will be focused on the consumer end.  They are the ones that will find ways to work around the ivory tower and still have an impact that individuals and retail medical providers value.  But HIT startups looking to make an impact on the equation of cost of care had better be ready to get cozy with the very companies that they are inherently trying to disrupt.

“Moneyball” is lean management

This goes without saying.  Michael Lewis’ 2003 book on the purported improbable success of the Oakland A’s is as much a baseball book as “Beowulf” is about a monster.  In a 2010 podcast, I cited Moneyball as one of the more valuable pieces of literature on agility in my cannon.  It may seem like an odd choice against books by Mike Cohn or Kent Beck, but indeed - it’s a great practical example of trying to maximize the value delivered by each dollar invested.

The crux of Moneyball is that in inefficient markets, small efficiencies can be incredibly disruptive.  Billy Beane and his cronies found that baseball was underpaying for productivity that was in fact a more valuable performance indicator than what had been historically measured.  The rise of Agile is in effect, the realization that waterfall methods were targeting a measurement of risk mitigation at the expense of change resistance.  Agility is simply a response to this assumption with the hypothesis that a business that is solely centered around risk minimization as a driver for growth and innovation is actually an inefficiency - just as measuring batting average and subjective assessments of skill are now accepted as being nearly irrelevant for measuring baseball performance.

Where I diverge from some of my Agile colleagues is that Agile needs to be a measurable business process, and that the key measure of any business process that innovates needs to be value earned.  Value earned is the on-base percentage of product innovation.  If your teams can look at the investment made in any feature and assess the value produced (and NOT necessarily ROI) - you should have a very sabremetric framework for judging the value of products that are being proposed for delivery.

What does Apple learn from leaking?

There’s no real reason for Apple to ever reveal anything.  But Wednesday we will get the ceremony about the iPad 3, in spite of the fact that we have seen copious evidence of what it will be.

The simple reason is that Apple is using it to build hype.  Fine.  But do you need to leak product parts to build hype?  What does Apple stand to gain from letting the proverbial cat out of the bag?  Every competitor can scrupulously analyze what they’re about to release by taking this route - so it stands to reason that if Apple can build hype simply on the basis of saying “there will be an iPad 3” and saying nothing else that they would have a better net/net gain in terms of hype versus exposure to the competition.

So the value they are looking for from such porous leaks must be greater than hype.  The wise man’s guess is that from the time two years ago when a retina display-capable iPad was first rumored that those rumors came from Apple, and they were rumors to gauge how receptive the market would be to that product given the significant investment it has apparently taken to develop it.  If this is true, then we should be measuring these “Apple is making their own TV” rumors as far as market speculation goes.  It doesn’t mean Cupertino doesn’t have prototypes - but it’s hard to think that the smartest company of the last 20 years doesn’t have control over information that ultimately is very informative of the market they are selling to.

Overloading Beta

The things Google has done to the product lexicon are curious.  What does beta mean anymore?

Back in 2004, Gmail was in Beta.  As late as 2009, Gmail was still in beta.  One can argue in one way of thinking that Gmail is always in some beta state.  But what likely qualified it as something of second class status in the last decade was it’s overall objective - reinvent how people use email.  That meant that Gmail’s beta users were test subjects more so than they were customers.  That abusive behavior continues today with continuous new innovations around Gmail and fewer changes to Gmail.  It’s official time in beta achieved one thing - it marketed Gmail as the next big thing.  But Gmail’s beta was not in and of itself a milestone.

In the last few years, I’ve had a few clients come to me throwing the beta moniker around as their major milestone.  They’ve all gone out and hired some UX firm, brought in engineers and consultants like me to build it, and sounded the urgency alarm.  I need to get to beta in 4 months.  To me, what they really want is a prototype.  But prototypes don’t have customers and don’t make revenue.  If this is true, then beta has become a vehicle to bypass market validation for a minimum product.  It is an excuse for delivering something to a market that actually doesn’t want what you’re selling.

If you’re starting a new product, milestones are good for investors.  They mean nothing to your customers.  So if you need a beta to get excitement around your product - that’s fine.  But if you’re looking at beta as some critical milestone for what your customers want, my advice is to stop and figure out another way to answer that question.  Investing time and money that is better spent delivering your minimum product in something that is completely unqualified by your target market is akin to playing your first ever hand of blackjack at the high stakes table.  By the time you learn enough to succeed, you’ll have already spent most of your money unwisely.  

Breaking Down The Big Project

The problem with big technology projects is that you will basically know nothing about what you need to do until it’s on your doorstep.  In fact, this is part of life with small projects as well - but when composed against the backdrop of who is the recipient of your delivery, small projects have manageable risk by virtue of being indivisible.  Large projects introduce the complexity of needing to divide and conquer to break risk into purportedly manageable chunks that are theoretically independent.  This is how all waterfall projects evolve.  You analyze to determine requirements, you design to determine total effort and scope down to timeline, and then you go off and execute.  Doing this for a paper airplane is trivial, but doing it for the space shuttle implies that you know that the wing design won’t change after you’ve constructed the fuselage.

So, when engaging on the large project - you have two options.  Either create the illusion that you can remove these types of risk through explicit project activities dedicated to risk analysis and removal (e.g. a software or implementation design phase) and build your solution within the boundaries of the defined blueprint, or simply manage that risk as you go along - aiming to solve the problem through a little bit of guts, a little bit of heroism, and a lot of proactive micromanagement.  Most IT professionals today call this Agile.  

I’m a long-time proponent of Agility.  The cost of solidfying contracts or project plans to create gates and milestones that allow parties to change expectations, fire you, or cancel your project is the subject of a tremendous amount of waste that would be better applied to innovation and trial and error.  After all - a project plan at the end of the day doesn’t go to market, doesn’t get an IPO evaluation, and doesn’t introduce marked barriers to market entry.  Product does.  Working software does.  The faster you can produce something, the less risk of your product failing.  Compared to the certainty of a plan that took 3 months to develop and leaves you with nothing more than ink and empty commitments, it’s a pretty good deal.

If you’re in professional services - big projects don’t imply waterfall or six sigma, they simply indicate the opportunity for an extended revenue stream to fund development.  Wasting 1/4-1/3 of your client’s budget on project and program management may give your client the piece of mind that you can deliver (particularly in a fixed price scenario) but will erode their budgets and make them question if they couldn’t have spent the same effort doing that themselves and sending the development offshore to a low cost development house.  

If you’re a VP of Product Development or a CIO, big projects shouldn’t lead you to build an all inclusive plan that creates culpable deniability and cover for your own ass if something goes awry.  Plans derived from goals almost inevitably lead to mediocre delivery that fulfills the plan but not the mission.  It’s not that the organization is underperforming - in fact quite the contrary.  It’s that the organization is performing to the bar that you’ve set.  Even the best plan that has bottom up validation with top down objectives and reliable work breakdown structures that lead into weekly plans are simply all delegates for producing value, and the plans that overpromise and underdeliver simply fail every time.

Regardless of where you are in the management of IT projects, you will need to set objectives and expectations that ultimately you can deliver and overdeliver on.  Completing a project on time, on scope, and on budget is a great way to please a CFO.  Completing a project that differentiates itself based on the aligned incentives from the executives to the associates and results in a superior product will please everyone.  While there will always be the need for planning to ensure that there is consensus on what needs to be done, the plan should be lean and malliable, and not a moment should be invested in it that couldn’t otherwise be used to improve what is delivered rather than how it is delivered.