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Pop goes another great business opportunity

I’ve mentioned before that I’m in the process of moving house. So yesterday’s Financial Times (10 September 2005) was very interesting.

The thing that really caught my eye was a story entitled Investors get chance to profit in property. A bank and an estate agent are planning to offer an investment product that will track the housing index.

At the moment, for the individual, the only way to get exposure to the property market is by buying property but that is not always what we want to do – it is expensive, time consuming and may not fit with our life style.

Now I’m not one of these people who considers property investing to be a good thing. The figures I’ve seen show that the stock markets out perform housing markets in the long run. However, we all need somewhere to live and once you add in the utility of owning a property then I think it makes financial sense.

But would I buy a second property and rent it out? No, its a lot of hassle and the returns are not actually that good. In fact, as far as I can see, the only real return is from rising property prices, if they are not increasing you loose. And don’t forget, they can, and do, fall.

In fact, its worse than that. What many people forget is that not only do property prices need to be increasing but they need to be increasing more than the next best investment – notwithstanding risk exposure. So, in fact, the stock market might expose you to more risk but the returns are better, or, a savings account or Government bond may offer better security at a return that is not a lot less.

Anyway, I didn’t mention this story to get into a debate on property investment – and please don’t take my advice, I’m not an expert!

No, I mention this story because Jonathon Sefton suggested this idea to me about 12-18 months ago. He’d done some research and decided he could buy a set of products that would create such an instrument but it wasn’t easy.

Then he suggested: would this be a viable business? And the suggestion: why don’t we do it?

Well we didn’t, and now someone else is. Once again I passed. Perhaps I need to set my sights higher. Maybe I’m too risk averse, or maybe I don’t know a good thing when I see it. One day I’ll get it right.

XP2 and the real problem in software development

I went to talk given by Rachel Davies last night. This was organised by the BCS SPA group who hold monthly sessions in London. Although I’m not a fan of the BCS (British Computer Society) the SPA group is quite interesting and active.

(As usual some of the most interesting conversations are held in the pub afterward so its always worth going for a pint.)

Rachel was talking about Kent Beck’s second edition of Extreme Programming Explained book. I have to admit that while I’ve had this book on my desk for several months I’ve not read it. Having seen Rachel’s very good presentation I have to say I’ll probably not read the book.

Its no secret that I’m not a fan of XP – or at least XP version 1. Don’t get me wrong, there is a lot of good stuff in there but I’ve never been happy with Kent’s “Do this, do everything I say or don’t call it XP”. I think every organization and team are different and the important thing to do is to create your own system that works for you.

So, while I’m a big fan of the Agile development movement I’m not fanatical about any of the methodologies. I view Agile as a collection of tools you can use to think about problems and devise solutions. Some of the tools can be used “out of the box” other need tailoring.

The best thing about the first edition of XP was that was a “call to arms” (as my friend Kevlin Henney says). The book describes an alternative way to live your life, an ideal, it rallied people and made them think “things can be different” – it offered an alternative identity, it said “developers are really important, don’t devalue coding.”

From what I hear about the second book its a bit of a kitchen sink. It doesn’t say no to anything, if it sounds like a good idea Kent’s included it. Its probably unfair to comment on a book I haven’t read so I won’t say any more.

If you are interested in XP, Agile or Lean development the best book you can read is Poppendieck and Poppendieck.

However, at the end of the evening I left with the same thoughts as I always have after discussing XP, Lean, Agile, software development process, etc. etc.

We know how to do it. There are plenty of books which tell us how, plenty of people who know the techniques, people who’ve don’t. Doing isn’t the hard bit.

The hard bit is: how do you change? How do you move from here to there.

This is the real problem and its hard. The “software development community thinkers” haven’t really addressed change.

This is also sad because IT is actually all about change. When you develop a piece of software and it gets installed you change the people who use it. You change the organization, you change the problem. In fact, the objective of introducing a new IT system is usually to introduce change. Nobody really wants to run SAP, they want to change their production department and SAP is merely the way to do that.

We often hear about software development failures – the figures differ but the message is usually the same “most software projects fail.” Truth is, most change initiatives fail, since software projects are about change is it really surprising that failure is so common?

Who are you? – identity and change

Identity has been much on my mind lately. Not identity as in “identity theft” – yes that is important but not what I’ve been thinking about. Nor internet identity as my friend John Merrells talks about it – XACML and all that jazz.

No, more identity in how we define ourselves and how that identity then defines us. I’ll give you a couple of examples.

As I’ve said before I’m moving house. This flat/apartment is me. I bought it eight years ago and although I’ve been away (2 years in California, 1 year in Nottingham) it is part of me and I am part of it. The daring red carpet in the lounge, the (slightly impractical) blue carpet in the bath room, the simple plain walls with modern art (Kandinski, Heron, Pollock, (Ellsworth) Kelly (no relation) since you ask) they are me. I defined the flat and the flat now defines me. Moving to another house I get the chance to redefine it but it also defines me, its got 3 bedrooms, a large kitchen – see.

And this applies at work too. I’m a software engineer by trade, what I do is write programs, design them too, perhaps get involved in process discussions or elements of project management. Testing? Maybe I leave that to others. And perhaps I want to leave project management to someone else.

A project manager I know always speaks to me about projects in terms of “risks” and “tasks to be done” – I once told him I was examining the strategy behind the project and his reply was something like “why are you doing the? It was determined by management months ago, all we have to do is execute.”

When we are young our identity is not yet framed: should I be fireman? an engineer? a policeman? And as we get older we can become rooted in that identity.

Much of what we do day to day is not rooted in the job title we hold, or even the role we are filling but it rests in who are. I was a software developer for about 10 years, no matter where I worked, what project I was doing, or what I was called I did more or less the same thing. My identity was intact wherever I was.

Perhaps this explains some of the problems I have now I’m a product manager. My identity is still largely a software developer. So when I’m wondering: “what should I be doing?” its not just the practical “what should I do in the next five minutes” I’m wrestling with its the (almost) metaphysical “who am I? what should I be doing in this identity?”

Changing employer doesn’t necessarily change your identity, you can be the same person just elsewhere. You have to do something more.

You can change your identity. I made a pretty good stab at it when I did my MBA. For a year you get to pretend your all sorts of other people: the head of GE, the head of IBM, a human resource manager, an entrepreneur, an academic…

When you choose to do an MBA your reaching for that new identity, if you believe the hype maybe you’ll be a McKinsey man at the end. And it is a new start in many ways, by the end of it you have an almost clean sheet, ready to start again. Maybe that’s why going back to what you did before seems like a failure to some people. But then, it is who you are.

So, identity has a role to play when your considering change. Think of all the coal miners who lost their jobs in the 1980s (in the UK). Their identity was coal-miner. Becoming a supermarket assistant, or an airport baggage handler was a big change. People don’t know what this strange new world holds for them – of course they are worried and scared – identity goes deep.

And he same thing happens in companies. Companies take on an identity and changing from that is hard. So it takes them time to recognise they are loosing money – think of General Motors – and it takes them time to get out of one industry and into anther – think of IBM, in retrospect the changes Gerstner made are obvious.

Where does this insight leave us? I don’t know, but when I look around me and wonder why people don’t change I often see identity, I’ll leave you with a few more examples:
– the software developer who continues to blame “managers” when he could change things himself
– the C++ programmer who can’t see any good in Java
– the support engineer who is continually busy
– the academic who bemoans the lack of industry interest in their work

I promise to return to this subject.

The final sustainable edge

I’ve finished reading “The Only Sustainable Edge” by Johns Hagel and Seely Brown. At the risk of boring my readers with a third entry on the subject of this book I think it deserves a wrap up – and a slight correction to some of my initial comments.
(See 20 August, and 18 August.)

The books central argument is that sustainable competitive advantage (to use a loaded term) is only achievable by companies that can adapt and change to take advantage of changing markets and environment.

I can agree with that central argument. In fact, I can imagine a lot of people agreeing with that statement. Problem is, it is incredibly difficult to do, far easier to find something that gives you and advantage now and try to guard that.

So how to the two Johns propose we do this?

When I started reading the book I thought one of the pillars of this was going to be the development of your employees. Helping your staff to learn, grow and change. Maybe I was guilty of reading what I wanted to read but I think the start of the book, and the epilogue do emphasis this idea. However, in the middle it gets lost.

The authors advocate the creation of “process networks” and “process orchestrators.” (Curiously, the word “orchestrator” is used a lot but doesn’t appear in the index, this makes me wonder if the book was rushed, or maybe is was just poor indexer.)

In a process network a variety of different companies come together to produce a product. Each is specialised in some aspect (e.g. design, manufacture, end-customers) and one company takes the lead in organizing all of these – the process orchestrator. Importantly, the orchestrator has a wide network of firms it operates with, for any one assignment it will choose which of its partners best fits the need and bring them together.

Li & Fung (of Honk Kong) are cited again and again as the canonical case of an open network, a company that maintains a network and works on behalf of its own clients. Nike and Cisco are examples of closed networks maintain networks for their own products.

This model works well for these companies but the authors then make the jump and claim that this will become the dominant model in the future. I’m not sure of this. I can believe that this model will work for some, there probably will be more companies working like this, but the dominant model? The way things “will be” ? I think not.

(I often find this is the case with books published by Harvard Business School Press. The authors (often management consultants) find some examples, say “look this works well for companies Z, Y and Z” and then jump to the conclusion: “this is how it will be for all companies, change now or die.” There is a singularity to the authors’ argument which isn’t the case. They show a model, it works yes, but does this mean the whole world will be like this one day? No.)

According to Hagel and Seely Brown the way to achieve these networks is through “loose coupling”. This takes a number of forms, and they openly admit they’ve stolen the term for the IT world. Given how much trouble software developers have actually implementing “loose coupling” (and the corresponding “high cohesion”) one wonders how much trouble business will have with it.

On the whole this is an interesting book. It takes a number of current trends to their extreme and shows what could happen to businesses. As such it may give you a new perspective on things. So should you read it? I’d say yes, its not very long (173 pages) so the cost of reading it is low.

One thing that will stick with me from the book, and is interesting as a stand alone subject is their discussion of offshore-outsourcing operations. According to the authors, it turns out that the advantages here are not only cost. Sure, you can save some money by moving your call centre or IT to India but there is another benefit.

In offshore environments you are likely to get better workers. Two reasons: first, the workers are more highly qualified; second, because this is a green-field site, and costs are lower, many of the “best practices” of management can be followed to help develop the workers. So, for example, lower wages mean a higher manager-to-worker ration so managers can spend more time helping the worker develop, e.g. feedback, coaching, etc. Consequently, the workers improve faster and the whole company will benefit.

One example of this benefit is apparently that “Most Indian outsourcing firms operate at [CMM] level 5 … while most internal departments in the US will likely operate at level 2 or 3.” (page 38.)

Now, switching back to more general comments about the book…

Unfortunately, I’ve never met any practicing software developer who believes CMM level 5 is either a good thing or good measure of success. In fact, most of the code-face people I’ve met who have experience of offshore software development believe it is pretty much a disaster both for their own jobs and technically.

For two authors well versed in IT I find their faith in CMM surprising. Likewise, they see the rise of SOA (Service Oriented Architecture) as a building block for their “process networks.” I think on both counts they’ve drunk too much Cool-Aid.

Sold out – I’ve become an Amazon affiliate.

I think there is another reason I’ve been blogging a lot which I didn’t mention in the last entry. I’ve told you before I’m now a Product Manager, actually I’m a the product manager for my companies support portal, where customers can log issues, track them, download information on the product etc. This is a web based product and has not only increased my interest in just how the internet is working these days but also how you can get the most from it.

Sometimes the best way to learn about something is to be there. I’ve had a website for years, and sometimes I even get a lot of visitors but things have changed on the web. Some are emerging trends (e.g, social networking sites like LinkedIn, some are new ways of doing things (like RSS) and some have just got stronger (like Google and Blogging.)

So now I Blog I understand it more. I now see the blog and my website as complementary, and I feel I need to make more of my home on the web. For this reason I’ve decided to become an Amazon affiliate and let people buy books via my website.

There are other reasons too. I don’t expect to make a lot (if any!) money from this but I’m interested to see how it works and if it works. And, picking up my theme of feedback, I’m interested in this as a form of feedback.

I’m not really proud that I’m affiliated to Amazon. They aren’t my favourite website or internet retailer but they are the one I do most business with. Perhaps 80% of everything I buy on the web is through Amazon.

I don’t like them because I don’t approve of their employment practices (anti-union), and I’ve never really gotten over their scam where they used cookies to charged existing customers more than new customers – so much for loyalty! And I guess, like a lot of people I want to stick up for the under-dog a bit.

So, I would actually prefer to do business with Blackwells. When I lived in the USA I used to use Powells. Both of these are good wholesome book retailers. So why don’t I use them?

I don’t use Powells because I don’t live in the US any more.

I don’t use Blackwells because their website isn’t actually very good: they don’t have wish lists, they don’t have multiple addresses available and you can’t check the status of your order so well. On the other hand, I can spend hours browsing in Blackwells shop on Charing Cross Road – unfortunately I don’t have the time to do this as often as I would like.

But most of all Amazon is cheaper. I’m prepared to pay a bit more to support the under dog but I’m not prepared to pay more and receive poor services.

And if I’m not prepared to shop elsewhere myself why should I ask people referred from my website to put up with it?

So that’s why.

My intention is to add books to my recommended list when I think they are good. Some of these I’ve already read so I’ll build up the back catalogue and as I read new ones I’ll add them if I think they deserve it.

For a while now I’ve been a fan of the book recommendations of GBN – this is another good place to find books. For those of you who don’t know about GBN they are an interesting company, although I know them more by reputation than by direct experience – maybe I’ll meet them one day.

Why blog so much? – the importance feed back

I seems to have been blogging a lot more in the last couple of weeks than I was to start off with. I’m not completely sure why I blog at all, I have some ideas and one day I’ll write more about “why” but for now I can answer the easier question: Why have I blogged so much lately?

Well partly its because I have things I want to say and when I think them through they make sense as a small piece of writing. As anyone who knows me will know I usually do have things to say, but the second part, about actually writing it down as a short piece is new, its a skill I’m getting better at now I’ve started doing it more regularly.

That’s the first part of the answer: because I can.

The second part goes back to something I mentioned a couple of weeks ago: the importance of feedback. A couple of things have happened lately to give me feedback on my blog.

First, I (finally) got around to getting myself an RSS reader (Mozilla Thunderbird – damn good mail client and RSS reader, highly recommended) so I’ve been exploring all that jazz. Its great, I now see just how important RSS is, this may be a small simple thing but it is really important. I can remember when PointCast first started doing push news and everyone thought this was big. Now we’ve reduced it to a commodity – and an Open Source one at that.

Second, a couple of people I know actually told me they where reading my blog! Shock horror, someone actually pays attention to something I write. That makes me feel good, they wouldn’t read it, let alone tell me they read it, if I was writing complete rubbish.

So there you go. Two feedback mechanisms that are reinforcing what I’m doing, makes me feel good about it, tells me I’m on the right path.

Holidays – take one, get one free

Monday is a public holiday in Britain, not sure why but it is and I’m glad. We all need a break from time to time and the odd extra day off is well worth it.

Software development tends to be organized as projects with clear start and end dates – that’s not to say the end date doesn’t change but there is one. This is the thing about projects they do start and end, programmes on the other hand just go on and on. Many jobs are like that, they just go on and on, think of shop assistants or cleaners, these jobs just are.

But many modern jobs are organized as projects, you have one project, when that is done you do another, then another and so on. Its never a good time to take holiday, what every project your working on seems to be in danger of slipping.

Then when the project does finish – and quite often they finish late – you need a break. But timetabling your break when a project is near the end (or slipping) can be difficult.

And often when you do end the company aren’t ready to put you back into the trenches on another project. For one thing, they can’t start another project if the one before it is slipping, and do you want to divert people from one project to another before it starts?

So, for these reasons – and more – I’ve always thought it would be a good idea if companies encouraged people to take their holidays right after a project finishes. Of course companies try this but “encourage” often just means an e-mail saying “Please take your holiday…” why not put their money where their mouth is and offer you extra holiday?

Taking holiday after a project makes lots of sense: people get to unwind, they get to clear their mind of the last project, they get refreshed and ready to start again. For the company it means people start back fresh and they don’t have those days in between projects where they are coming into the office and trying to be busy.

Pick your ratio: take one get one free, or, one extra day for every three taken. This is real encouragement and presents a win-win.

But! – I hear you scream – The cost!

Well, companies carry the cost of holidays not taken on their books – its something they owe you, so your taking it actually improves profitability in the accounts.

Lost productivity? How productive are you really in the week after a major project finished? Usually not a lot, your going through the motions of coming into the office so the company won’t loose much.

And if you know you can get some extra holiday at the end maybe it will motivate you to meet the schedule. Maybe it will offset some of those late nights you pulled to get it done.

Now my question to you dear reader: does company you know actually do this? I love to hear of some examples.

Is it ever right to create barriers to competition?

Ultimately any company is in business to satisfy some customer need. Sometimes we say we are in business to satisfy a customer want, this might be a game a semantics, “want” versus “need” – the same or different?

To my mind a “want” is something less than a “need” – I need a new pair of shoes, but I want a pair of Adidas trainers (sneakers to any American out there). Actually, for many people in modern society the concept of real need is rare, for example, I have several pairs of shoes, and I usually replace them long before they are unwearable so the concept of me needing a pair of shoes is subjective. But I digress… back to what I was saying.

Another way to phrase the ultimate business objective is: we are in business to solve some customer problem.

Whether we are solving a problem for a customer, or providing them with something they need we are able to charge money for the product or service. We have some ability that the customer lacks – either through choice or circumstance – and they are prepared to pay for us to solve it.

Now this leads me to ask: Is it ever right to create a barrier to competition?

I’m not talking about a moral question here, just a practical one.

If we are in business to solve a problem or satisfy a need then taking time out to create a barrier to the customer going elsewhere is a diversion. Surely we should concentrate on the matter in hand?

Yet we often hear talk about companies creating barriers to entry, barriers to switching, barriers to competition – these ideas are contained in books, business literature and taught in business school.

But do barriers create value?

At the moment I can only see them detracting value from the customer. They might create value for the supplier but we should remember to count the cost of creating the barrier. And that begs the question: could the same resources have been used better elsewhere? – improving the product say.

Lets turn the question around: if I’m a competitor and I come across a barrier constructed by my competitor should I spend time and money over coming this barrier? Perhaps, given my comments above the answer is obvious: No, don’t bother, find out what the customer actually wants, improve your product or service, you’ll better match their need – and as a side effect you’ll create a different kind of barrier to the other guy.

Terminal 5 is Lean

wMy local airport is Heathrow. Fortunately I’m not so close that I hear the planes so its mostly upside benefit, on a good day I can leave my place, get the tube to the airport, check-in (or what passes for check-in in these days of online and self-service checking) and through security in under and hour – not bad.

Anyway, I didn’t raise the subject of Heathrow to sing the praises of my house. The airport is in the middle of a major expansion with the construction of a fifth terminal – Terminal 5, this is due to increase the airports capacity by something close to 50%.

The project is massive, to give you some idea, the smaller of the two buildings is bigger than the existing Terminal 4, there are 13.5km of tunnels in the project and its going to cost about £4.2bn – or £4,200,000,000 – about $6.7bn.

For me there is something even more interesting about T5: the project is Lean. The team building the project have borrowed a lot of ideas and techniques from the lean production movement – also called Toyota Production System and best known for just-in-time production.

The owners of Heathrow are BAA (British Airports Authority as they used to be known) and they know Terminal 5 is risk, so risky it could sink the company. They also know their core-competence is running an airport. So, current management theory you would expect them to sub-contract this project to someone like Bechtel. But they didn’t, they took the attitude: this is so big a risk we have to manage it ourselves.

Because T5 is being built within the existing Heathrow perimeter space is at a premium. So stock is held offsite or brought direct from the supplier. There is only 24 hours of materials on site at any one time, if there is a delay it will be noticed quickly. Even if you had more space it might not be that useful, there is only one road in and out of the site.

When they came to raise the roof they took all the parts and sub-contractors to a large field and had a dry run. They then took it apart, took it to Heathrow and did it for real. now that’s real team building and training.

Then there is bonus payments: these are pooled, all sub-contractors share a bonus pool so there is an incentive to work together not waste time throw blame around. And if there is an unseen problem to solve, well that’s paid for out of the bonus pool too.

I could go one but I’ll leave you to read more yourself. There is a good piece in the Economist this week, and from last year’s Economist. Pieces crop up elsewhere, like the BBC’s In Business radio programme so keep your eyes and ears open.

What’s really interesting here is the way lean is breaking out of the production system. it came from car production, I know it in software and its gaining ground in the construction industry (check out Last Planner and the Lean Construction Institute.) For years people have pointed to the construction industry and said “they know how to plan and deliver” – thing is they don’t. How often is a construction project late and over budget? And unlike in software when you construction project goes wrong people get killed.

I used to think that the software industry took wrong turning somewhere about 1970. It decided to follow big Methodologies and project planning. I’m starting to wonder if the whole world took a wrong turn.

More inspired by that book

Last time I promised to tell you where John Seely Brown and John Hagel’s book “The Only Sustainable Advantage” got it right. To put it simply: growing capabilities, growing people.

You might be able to get competitive advantage from low labour costs but how do you keep this advantage? It seems there is always someone out there who will work for less.

You might get a competitive advantage from some special resource, say a good location on the high street, or the world’s only green-kryptonite mine but what if the internet makes the high street obsolete? And what if someone finds a substitute for green-kryptonite?

But if your advantage is in growing your capabilities things are different. This is essentially the ability to renew yourself. This is saying: what ever we do well today we will do better tomorrow but more importantly, we will have improved ourselves. At its heart this is about improving your people, making people more capable, making them better learners, making them happy with change.

To my mind this is what managers should be doing, everyone is an HR manager, everyone is a teacher, everyone a coach. I hate it when I see managers in meetings discussing release schedules, or resource allocation, or quality. They shouldn’t be doing this, they should be creating an environment where this stuff just happens.

(OK, I’ve used that awful word: resource, they are not resources! They are people! And what of the Human Resource Department – what an awful description Human? Resources? What ever happened to Personnel departments, lets put the people back in business.)

Unfortunately, a lot of this stuff happens on the quiet. Managers need to spend time one-on-one with people, coaching them, listening to them, helping them develop. And they need to spend time with their teams, helping the teams reach common understandings, common purposes, helping the teams see how they can improve.

But maybe this stuff doesn’t look very productive to you. 3 hours spent in a team discussion? Doesn’t sound productive does it? Surely they should be reorganizing people, moving Fred from one team to another, reallocating resources, planning, making, strategising.

I see this in software development organizations. Managers have to be seen to be doing something. So, I see Joe get promoted to Team Leader, at first he still wants to spend time cutting-code – after all you can do this team leading in the afternoons can’t you? Sometimes Joe doesn’t want to give up coding really, or Joe doesn’t know what to do, or Joe thinks spending time in meetings is a waste, so Joe just keeps on coding – they shy away from really leading the team.

Or Joe starts managing: goes to lots of meeting with product managers, spends time talking to other managers about “process” and “quality” and “new products” so he doesn’t have much time to team lead either but he is “managing” because he spends so much time with other managers. And when one project starts to fall behind schedule Joe moves Fred from one that is ahead onto the one that is behind. He’s managing.

But, what can the team do now that it couldn’t before Joe was promoted? How is it better off?

What I say is: Joe should be concentrating on his team, building the teams shared-vision, shared-values and responsibilities. Helping the individuals on the team learn and improve.

Joe (and his fellow managers) could produce a quality guide, a coding standard, and even a project plan. But who’s are these? These belong to the managers, they are imposed on others. Yet if Joe spends his time helping his team devise these they will believe these ideals and they will be capable of doing more themselves.

That’s capability building.

And yes, in the long run I think JSB and Hagel are right, it is the only real competitive advantage.

There is a catch though. Its a good catch, perhaps the best there is. To do this you need to do it personally, you need to have a good attitude, personal confidence, empathy with your people and time, lots of time. That’s hard. Its relatively easy for me (or you) to see the problem, agree the solution, but to actually do it? That’s hard.