What corporate IT should learn from Startups: Part 2 – Roadmaps
As I have mentioned in numerous posts over the last several months, I am finding that things like process, governance, architecture, SOA, cloud computing, and others are much easier in my new startup world than in my old corporate world that I battled in since the 80’s. Even though I never intend to return to the corporate world I feel obligated to share with my colleagues in the corporate world because I know how hard it can be innovate and promote change in established cultures. In part one on process, I recommended creating a startup atmosphere by building a small team free from the constraints of the corporate setting.
In this post I will focus on roadmaps. Whether you are building a roadmap for you overall architecture, for a portfolio of projects within a given domain of your architecture, or for reengineering business processes, roadmapping can be a challenge because of large amounts of legacy systems and ingrained behavior. Many roadmapping exercises start with a long process of capturing the current state. Often this leads to analysis paralysis and lots of time and money is spent while nobody is building the future state.
WWSD?
What would a startup do? Well, a startup’s current state is that they have a blank sheet of paper and an opportunity to build the best possible solution with no legacy constraints. Hmm, doesn’t that sound attractive? I wrote a post back in 2007 called Getting to Future State where I recommended designing the future state first and then capture the current state later. The reason is simple, if you start with the current state you immediately constrain the innovation process for future state. Why not start with the perfect world and work back instead of starting with an imperfect world and adding to it?
Starting with current state can create undesirable results
Starting with future state can increase your chances for a desirable outcome
WWSD? A good startup would map out what it wants to be when it grows up first and then work towards that goal while carefully managing its precious resources and capital. A startup will also deliver early and often because it has to generate revenue, customer interest, and investor enthusiasm before it goes broke. That is exactly what a corporation should do! Deliver early and often making incremental improvements and proving its value to the executives (corporate equivalent of investors).
I have seen and been involved in too many promising projects where the next new technology, process, or organizational change was going to solve all of the world’s problems. Each time these initiatives fell short of expectations and each time these new solutions were just another layer on top of the last solution. Each layer added a new layer of complexity and legacy on top of the previous layer. The reason for this is these teams started with what existed and figured out how to “wire in” the next technology, instead of figuring out how to move off or abstract parts of the legacy systems in order to take advantage of the newer technologies.
So the next time you have a roadmapping exercise, don’t start by analyzing what exists. Start with a blank sheet of paper and ask “If we were a startup and were starting business today, what would the future state look like?” Once you define what the perfect world looks like, then figure out how to get there. You will likely find that you will have to make some sacrifices here and there but at least your innovative thinking was unconstrained when you envisioned the future state!
What corporate IT should learn from Startups: Part 1 – Process
I have spent well over 20 years in corporate IT environments, most of it working for IT shops in the 100-300 person range. In every company that I worked for, IT was seen as a bottleneck and IT struggled to satisfy the needs of the business. In many companies, this is the standard. The reasons for these struggles can be boiled down into the following categories:
1) Process – Too much, too little, or the wrong process for the organization
2) Architecture – No focus on EA (”Wild West”), vendor driven, or Ivory Tower Syndrome
3) Culture – Silos, change resistant, IT thought as a cost center, wrong or unmotivated people
4) Priorities – No portfolio type thinking, decisions made at the wrong level, lack of accountability/justification
In the last 18 months, I have worked in a startup with a team of 10+ employees advisors, partners, and consultants. Many of the above issues are not a problem in our environment for the following reasons:
1) Process – Teams are small, easy to communicate, everybody depends on everyone else
2) Architecture – We see architecture as both a necessity and a competitive advantage
3) Culture – Survival depends on alignment, agility, and change
4) Priorities – Every penny spent better contribute in some way towards a penny earned
Established organizations can usually survive and sometimes thrive even despite their deficiencies in IT because their core business is bringing in sufficient revenue. For startups, I have seen some great business models fail because of the company’s inability to execute. Startups, especially those in early stages, rarely succeed if they are inefficient. So how can larger, established companies create that entrepreneurial environment that brings the same motivation, accountability, and alignment that comes naturally in startups?
What does success look like?
Often, companies like to create a profile of their most successful employees so they can use this profile as a hiring tool for identifying talent that matches the best people in the company. I recommend that any company who recognizes that it needs to make changes to improve delivery and business/IT alignment create a profile for what a successful startup looks like. Notice I did not say what a successful well established company looks like. The reason is simple. Startups typically deliver frequently, with little capital, with just enough features, and with more modern solutions. Isn’t that what established companies really want at the end of the day?
So why do startups tend to move faster and innovate more?
1) Smaller teams
2) Better communication/alignment
3) Smaller budgets = less features and shorter deadlines
4) Employee incentives (survival) are directly tied to results
5) Everybody matters, everybody contributes
6) Not married to legacy systems, processes, cultures
7) Everybody sees the big picture
So how can leaders in IT create this kind of environment that fits the profile of so many successful startups? Transforming an entire organization can be an ominous task. We have seen many companies fail implementing new technologies because of the inability to change the culture. It takes buy in at the highest levels and great transformational leadership to change a company’s culture and motivation. Maybe the solution is simpler. Create a “startup” within your organization and ask yourself, “What would a startup do?”
WWSD?
A good startup would build a business plan that shows investors what it will build, how it will generate revenue, how it will keep its burn rate to a minimum, how it will deliver quickly, and why it is better than the competition. Then the startup would build a small team with its limited funds and create extremely aggressive goals and targets that are back loaded with incentives for employees pending on the outcome of their delivery and future funding. Then the team would be empowered to do whatever it takes to meet those deliverables within the limits of the existing funds and resources. In a startup, it takes a certain mentality for an IT person to survive and thrive in this type of environment. Make sure that only those types of people are included in this internal startup. It only takes one corporate attitude to destroy a startup.
To meet the commitments, team members will have to heavily rely on one another. They will also need to innovate to figure out how to balance features, functionality, and quality. Decisions will need to be made quickly and documentation will have to be just enough. In my startup we call this JEJIT - Just Enough, Just In Time. Our requirements and design documents are more visual than textual. You won’t see any 150 page requirements documents because nobody has the time to create it. Instead you will see an iterative process where we get just enough requirements to throw a prototype together. Then we show the prototype to the product owner and iterate through changes until the requirements are good enough for a demo. The first slide of the following presentation shows how we iterate through each phase.
Startups, cloud computing, and the freedom to innovate
I was the guest writer for this week’s Zapflash article for the guys at Zapthink. I wrote a piece talking about how startups have been the ones innovating with cloud computing while the bigger, established companies are still trying to understand the pros and cons of the cloud.
In this article I discuss my own personal experience where the well established paper coupon industry is in a mad dash to transform itself to paperless. The market leaders in this space are bogged down with legacy systems and executing against their current business models. In the mean time, agile startups with no legacy systems, no data centers, and a entrepreneurial cultures are quickly advancing this space and effectively becoming the service providers for the paper giants at a price point that can’t be matched with on-premise computing solutions.
Read the article and you will see how cloud computing is changing the landscape of business and how those that resist this change may be hurting their business in the long run. If you know of similar examples in other industries, please share.
Observations of a burned out corporate soldier turned entrepreneur
As I reflect on the year 2009, my first full year at my new startup, I thought I would share my observations as I look back at the challenges that I used to deal with throughout my long corporate career.
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| From Enterprise Initiatives |
In November of 2008, I joined a startup called M-Dot Network as CTO and employee #1. I had spent the first 23 years of my professional career working for medium sized corporations with IT shops in the 100-300 person range (Note: I enjoyed working at all of these companies and learned valuable lessons). I started out as a programmer working on mainframe systems and eventually followed the market and developed on Unix and Microsoft based client server environments. In the late 90’s there was a manager position available in my group. I applied for it only because I was tired of working for managers who knew nothing about technology. What I found out is that I knew nothing about management and I really sucked at it. Being a competitive guy and one who does not like to suck at anything, I worked real hard at improving my management skills and eventually my leadership skills. Over time I worked my way up into senior IT leadership roles where my last corporate role was chief architect. Along this journey from programmer to manager to C-level, I learned a lot about people, cultures, and organizations. I also learned that many of the frustrations of corporate America are not unique to any one company or culture but are almost epidemic in our society. Here are some of my observations:
- As companies grow, the employees get further detached from the overall vision and mission. The overall mission becomes lost at the lower levels of an organization if the company does not continuously communicate the mission, actually deliver on the mission (not just words), and reward people for contributing to the mission.
- Layers are only good for onions. When you run out of fingers on one hand counting the reporting layers between the workers and the IT top dog, the company’s ability to innovate becomes crippled. I have seen a medium sized IT shop with 8 layers. A small group of corporate soldiers did a ton of work and the middle 6 layers spend a lot of time communicating up to the top layer what these people were doing. To make matters worse, they typically reported what the top wanted to hear because the non-worker bees had to justify their existence. How productive was that?
- The reward structure in most companies are the root cause of all evil. Companies tend reward the people who break shit and then fix it instead of rewarding people who deploy stuff that works. Working hard tends to pay better than working smart. It is all about perception which is the direct result of putting managers in charge who know nothing about the technologies that they manage.
- Companies tend to get too inbred. The downside of longevity is that people start to feel too secure in their jobs and feel like their job is a privilege, not something they must earn each day. When a company becomes too inbred, adopting technologies or methodologies that require organization change become extremely challenging. This point was one of my main reasons for exiting the corporate world. In an inbred culture, everybody knows what the problems are but nobody wants to lift a finger to help change it. That is what happens when people think of their job as a privilege instead of commitment to the people who deposit money into their bank account every two weeks.
- You are who you hire. “A” players hire “A” players, but “C” players hire “C” players. Put one “C” player in a leadership role for a couple of years and that area will be littered with “C” players over time. Some of them will get promoted into leadership roles and mediocrity will spread like a virus. This is one of the biggest culture killers. If enough “C” players get in power your “A” players leave.
- IT tends to forget why they are being paid. The whole business-IT alignment issue is just mind boggling to me. Growing up in a family owned business there was never any confusion that the goal was to provide value and satisfaction to the customer so that the business would prosper. It was easy to see who the customer was. In corporate IT, we tend to forget who the customer is. I have even seen some people who don’t think they have any customers! It shouldn’t be that hard. There are external customers (buyers of products and services) and internal customers (people who get external customers). At the end of the day IT must enable both of those groups. I have seen way too many IT resources spending way more energy serving everyone except the customers who pay the bills and the people who sell to them.
- Silos represent lack of overall leadership. Silos are corporate killers. Silos create broad inefficiencies from a technology standpoint, a business process standpoint, a customer service standpoint, an organizational agility standpoint, and so forth and so on. Silos are often the result of a company growing rapidly with no strategy or roadmap of what the company wants to be when it grows up. How many times have you seen a good company grow like crazy for a number of years and then hit a wall? When the dust clears from several years of rapid growth, many companies find themselves riddled with inefficiencies and sky rocketing expenses caused by organizational silos. Mini cultures start forming within these silos and even within departments. I have seen turf wars between groups within IT. Forget about business-IT alignment, we often need IT-IT alignment. This is a direct result of senior level management not keeping their eye on the ball. No matter how fast a company is growing, they should have a growth strategy and a plan to prevent “hitting the wall”. Growth is not only generated from products and services, it is driven by people.
- Many people hate their jobs but will never leave. This is like cancer. I have seen good hard working people turn into unproductive and even destructive employees. Sometimes this is caused by lack of opportunity, lack of acknowledgment of accomplishments, or just a direct result of the above mentioned bullets. I always go back to our family business where my dad had a small pharmacy with about 3 employees. If somebody hated their job, their performance sucked, thus causing a poor customer experience. That person would be gone in a heart beat. In the corporate world, these individuals can last forever and some even get rewarded for it!
- Politics get in the way of sound business decisions. It amazes me how political some organizations have become. My first thoughts are always about how we can increase revenue, decrease expenses, and help our customers. Unfortunately, many people let topics like career aspirations, vendor favoritism, and even religion factor into their decision making process.
I could go on but for those current and former corporate soldiers out there, you get the point. Now that I am in startup, I am completely free of all this nonsense. At the same time, I want to make sure as we build this company from 10 to say 100 people, that we don’t make the mistakes of the past and create another one of these political, silo-based, innovation-starved organizations. Life in this startup has been so energizing to me for the following reasons.
- Everything is earned. We raise money one angel investor at a time. We cannot fail. When I get in front of highly successful business people who are trusting part of their retirement in our hands, I have an obligation to do everything in my power to give those people a return on their investment. If they had not taken a chance on us, I would be back in a cube or corner office dealing with the pain and politics of corporate America. These investors have set me free and created a better quality of life for me and my family. We owe them our best effort every day!
- Business and IT is aligned at the hip – We cannot survive without business and IT alignment. IT builds the services and does everything in its power to provide the business with the tools it needs to sell and raise money. That is just good business. When the organization is less than 10 people that is a no-brainer. The challenge is to not lose sight of that by the time the company hits 100 people.
- No time for politics. In our environment, it is a first market mover opportunity. There are many players competing for this new piece of pie and the first one to grab the lion’s share will be very successful. The others may perish. So there is not time for power plays, position jockeying, brown nosing and all those games. If we don’t deliver we simply will cease to exist.
- Perform or leave. When you only have a handful of employees, everybody must bring their “A” game. In a 200 person IT shop, you can carry some dead weight. When the number of projects and clients exceeds the number of people in your organization, everybody must deliver every day.
- Everyone wins and loses together. In the corporate world, you can always tell when your company has a good quarter because the executives and top sales guys are driving yet another new Mercedes to work. Everyone else is still struggling to put food on the table. In most startups, the early employees usually sacrifice significant amount of salary in exchange for equity. This is great for two reasons. First, it keeps the burn rate down but more importantly, everybody is highly motivated because so much is at stake financially for everybody. If we fail, we all lose lots of money that we could have been earning in salary. But if we win, we can make way more money than we ever could have made as law abiding corporate soldiers.
- Agile is required. There are no wars about whether agile makes sense or not in the startup environment. Our motto is JEJIT – Just enough, just in time. When you take money from angel investors and VCs, they want results. When your paycheck is coming from 40-50 people that you know by name, you tend to not see your job as a privilege. You must show incremental progress in short increments so you can continue to raise money to allow you to progress towards that multi-year roadmap. Be quick or be dead!
Conclusion
I think my early days of working in my dad’s pharmacy trained me to be very customer focused and results oriented. Then I entered the corporate world. In the early days while I was in development, I was so energized by learning new technologies that many of the issues in the corporate world were foreign to me. When I entered management, I started to realize that corporations broke many rules of good business practices. The higher up I got, the more apparent it was and the more frustrating it became. Even though I was getting paid good money, I was actually happier when I was in my own little world solving problems with code. All along, I was trying to apply the mindset of an entrepreneur in organizations that were not able or willing to accept those principles. It is hard to create change when status quo is rewarded. So I bailed after 23 years, with no job. Now, 18 months later, the same philosophies that I tried as a law abiding corporate soldier are welcomed and necessary in the daily survival game in the world of a startup. My biggest challenge (besides making sure we succeed) is figuring out how to grow this company and keep the entrepreneurial spirit.
We have a joke around here….”When we have to hire a VP of Human Resources, it is time to sell”. It is a joke, but it just might be reality. When we have to dedicate people to managing people instead of delivering products and services, it is the first sign that the company is on the path to becoming corporate. When the business and IT leaders start talking about aligning, it is time for the next startup!
