29 May 2015

Getting to Done - The Start-Up Mentality (Part II)

A Game of two Halves
Welcome back to the second part of this blog post about introducing the delivery focussed start-up mentality to large organisations. In the first part I compared the two worlds and identified what I believe are the key differentiators that produce very different results. In this second part I draw analogies between what happens in the start-up world and how this can be replicated in an established organisation.

My approach to this is to adopt a model in two parts; a split personality methodology. The first part behaves like a start-up and adopts iterative agile methods and a more flexible approach to governance and funding. The second looks more like a traditional waterfall approach but only the part that kicks in during rollout. This is not simply about process, nor is it about asking for cultural change; it is about creating an environment that naturally reproduces the behaviour you are looking for. Culture is like a spring and environment is like a force on that spring. Change the force and the spring changes shape, but try taking the force away and the spring falls back into its natural shape. It is only though environmental change that you can bring about sustainable cultural change.

So let’s take a look at the start-up world as it moves from initial idea to finished product and at each stage examine what it looks like, and what I propose you should do to reproduce this in an established organisation:

I Have a Dream (Idea Stage – Discovery)
What it looks like: Two people meet in a pub and while consuming some fine sparkling mineral water and discussing the world’s problems they have an idea. This is the eureka moment when all the really good stuff happens. Energised by the pure genius of their idea the two colleagues embark on a process of discovery, researching the market, talking to potential users and mocking up the idea on paper. They may even knock up a cardboard model or mock-up to show to focus groups and make it real. The job gets a little more involved now and they may rope in a couple of like-minded friends with additional skills to help in the venture; the team is born.

What you should do: In an established company this happens all the time. All you have to do to make this part of your project approach is to actively encourage it. Don’t expect it to happen without encouragement though. If someone comes to you with a sketch on a piece of paper, an elevator pitch, and a lot of hand waving, don’t tell them to go away and come back with a detailed proposal. As a leader you should be able to quickly decide whether you like the sound of the idea, and if you do, have the courage to find them some space in their workload to go off and explore a little.

Show the Thing (Experimental Stage – Alpha)
Almost as often as asking the question “what is the user need?” Mike Bracken of GDS regularly uses the phrase “Show the Thing”. The importance of this mantra is far greater and fundamental than many people realise. (I’ve blogged on this matter previously under the title “The Art ofPersuasion – Touch it, Live it, Believe it”). It goes to the heart of product development and is based on the idea that until someone actually has the real thing in their hands they simply won’t believe in it.

What it looks like: To really develop an idea you need to show it to people, and so the next thing the team need to do is build a working version; an Alpha. This is where all the real questions get answered. In fact this is where those questions get asked in the first place. Before building something, the team didn’t even know the right questions to ask. This is why an alpha is built quickly from whatever the team have to hand. It is built to try out solutions and to eliminate that which doesn’t work for the user.

What was originally conceived and what emerges from the alpha may be very different beasts, and it is possible that the most important thing that emerges is that the idea doesn’t even work. This is probably one of the most important outcomes as it avoids the embarrassment of creating expensive white elephants.

What you should do: It is a lot cheaper nowadays to develop IT solutions, but it still isn’t completely free. There needs to be a way that the team can tap into petty cash to get an alpha built. It may only be a few hundred pounds or at most a few thousand (if hardware is required) but you can’t expect people to wait for weeks or even days for small amounts of cash or the impetus will evaporate. You need to have this money available to give them and as a leader it is your job to make sure you have a budget available to use at your discretion.

Enter the Dragon (Development Stage – Beta)
Remember, we’re trying to create a start-up environment here so let’s consider what typically happens next. In a large company we now initiate a project and get bogged down in the approvals process. Waterfall rears its ugly head and everything grinds to a halt. In the outside world, there is no company within which to launch a project and so something different happens.

What it looks like: The team reaches the point where the idea can go no further without real funding and they decide to involve the help of keen investors. This is beta, the cycle of invest/prove/invest/improve, and this takes money that the team simply don’t have. Without the security blanket of a large organisation around them, the team members need to find a backer and they turn to the venture capitalists. For this they need a convincing pitch and that pitch has to come with something to show. Luckily they have this, and hopefully they will be successful, but this is where things differ from a large organisation. Dragons are renowned for being fickle and have short attention spans. They are also very protective of their hard earned cash and demand regular demonstrations of progress in order to continue providing investment.

In a start-up you are always painfully aware that progress is the same thing as survival and there is nothing quite like the reality of a fixed date on which the money runs out and another meeting with the investor is needed. Dragons very aware that it is their own money that is being burnt by the team, and they are not fooled by attractive progress reports. They want to see real results with real customers, and start-ups only survive if they provide this.

Finally, VCs want a return on their money. This can of course come from the profitability of the start-up, but more commonly VCs seek an exit strategy and this is the scenario I will consider. Once the start-up has a successful product, but before it has expanded into the broader market, the VC and founder members seek a buyer, and if successful some remain as part of the deal and others move on, profits in hand, to pursue the next entrepreneurial venture.

What you should do: In companies you don’t have backers, you have stakeholders, and stakeholders rarely have anything personally invested in progress. Instead they are put in the position of having to agree to things progressing, but progress might lead to failure and failure gets you sacked. What you need to do is turn those stakeholders into dragons. Give them budgets to invest in ideas and measure their performance based on return on investment. If they are not investing they are not generating returns and so they fail. If they are investing in things that don’t progress this is even worse as now they are generating negative returns.

Instead of being critical stakeholders demanding more and more detailed plans and estimates, prevaricating instead of enabling, they become driving individuals with a personal stake in the success of the project. If things get tricky they will even dive in and get their hands dirty.

But they hold the money, and this is the other important part of the role. That money needs to be spread across a variety of investments and they need to decide where best to place it to get a return (in terms of business benefit). In order to do that they will need to drip feed funding into the various “start-ups” they are involved in and only continue to fund those initiatives that are showing real progress. This creates natural iterative development cycles with real deliverables, and provides checkpoints where genuine go/no-go decisions are made and acted upon. No funding, no start-up. The ones that make no progress are stopped whilst the successful ones produce something of real value.

Then comes the sell – the exit strategy, but we’re inside a large organisation and so instead of looking for a larger organisation to buy them out, the VC and the team pitch the idea to the major stakeholders within the company to take forward to rollout. The product is working, and proven, and all the difficult design work has taken place. The offering is therefore very attractive as all that is left to do is to scale and rollout the solution and take credit for the benefits. It is here that the currency of the sale becomes apparent. We don’t exchange the product for money; instead we sell it for an agreed business case that demonstrates the costs and resulting benefits.

The case can be worked on between the seller and the buyer in a process analogous to a corporate acquisition and this then gives us our mechanism for reward. The proposed benefits are effectively assigned to the seller (the VC and the team) and it is against these benefits that the seller is recognised. The buyer inherits the ability to then realise those benefits and gain credit for delivering the results.

Tomorrow the World (Expansion Stage – Live)
And then we make it production ready and mass produce (includes the creation of the production team)…and this is the waterfall part. Well, it’s actually only a small piece of waterfall; the planning piece. All the difficult questions have been answered. We don’t need to gather requirements because we have a product. We don’t need to guess how long things take because we’ve already done it and we know. We don’t need to hope the sizing is right because we have real metrics from the live service telling us how big it needs to be.

With all this certainty we can very quickly produce a roll out plan to which people can work with confidence and against which we can allocate resource and money.

Most importantly, we can grow a team around this service that will live with it, run it, and continuously improve it, and our original founding members can leave to pursue the next great idea (without needing to leave your company).

Different Strokes
So, in summary, let’s put aside the agile versus waterfall discussion and the old versus new debate. There is no old and there is no new; there are simply appropriate techniques for appropriate situations. Detail, discipline and planning are ideal for repetition of well understood situations at scale but stifle creativity and fail dismally in the face of uncertainty. Iteration and experiment work well with chaotic situations and allow innovation to flourish. You cannot apply the rules of one of the worlds to the realities of the other.

Methodologies are not religions; you are allowed to believe in more than one.

The Enterprising Architect

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