Painless IT

Tips on managing product development and engineering by John Levy, consultant, expert and author of “Get Out of the Way!, An executive’s guide to creating timely, innovative and relevant products.”

Loss Leader

January 26, 2008

My colleague Joel Harrison is good at encapsulating learnings from his experience. In 2006, while I was visiting him at his startup company, Abrevity, he said, “You can’t justify a new product based on a cost analysis of the first-generation product. You have to have a vision.”

Joel and I had experienced the frustration of trying to create new products at a company that was in a high-volume, low-margin business — hard disk drives. On the one hand, Joel had prototyped a product that could have been the first available Ethernet-interfaced free-standing disk storage unit. I had been involved with defining a disk drive that stores and plays back video streams without a computer attached. While our company had funded the early prototyping of these products, it did not make the investment needed to launch them as consumer or end-user products.

Joel’s explanation, as I understand it, is that the company did an analysis of the cost of the first products in each case and concluded that the product cost too much to be priced reasonably in the marketplace. Now here’s where “vision” comes in. When you’re introducing a radical new product, you have to price it not based on the initial product’s cost, but based on a combination of the needs of the market and the expected cost curve as volume increases.

Companies selling services, such as cell phone service, do this all the time. To make the service workable, they have to invest a large amount of capital in infrastructure, such as cell phone towers, switching equipment, and so on. But pricing of the phone service must chosen both to make it attractive to the consumer and, when the number of subscribers reaches a reasonable target, to make a reasonable return on the investment.

The same thing is true with new products. The barrier to radical innovation and new product introduction in companies that have been operating in a low-margin high-volume environment for years is primarily a failure of imagination. They need the vision to see that (a) there is a market to be created or captured, (b) the product they have conceived is viable, and (c) initial pricing will lead to losses during the early stages of market development. Venture capital is based on selecting and funding this sort of innovation. But old companies have trouble thinking outside the low-margin, pay-for-itself-or-die product box.

That’s what Joel was telling me. If we could have planned the new businesses beyond the first product, and had got a commitment to fund the initial losses, we could have made history in disk drive marketing.

Filed Under: Painless IT Tagged With: , , , , , , , , ,

Shifting the focus to longer term

January 26, 2008

Startup organizations are typically unsustainable and barely stable, because:

1. The pressures to develop and market a first product require taking some expedient shortcuts, such as hiring the most capable, but not necessarily the most team-oriented individuals; placing all priority on getting a workable product out the door, rather than building the product for maintainability and growth; putting in the most features rather than the best-tested features.

2. The top management habitually focuses on the race between funds running out and product delivery, rather than on internal communications, employee satisfaction (except with the potential value of their options), and leadership style. The command-and-control management style is workable for the first few years, but typically fails to inspire the organization to build itself into a self-renewing structure.

3. Having a focus on delivering a product using already-developed technology, the company does not need to invest in longer-term development of underlying technologies, or in the people who will bring in a steady stream of new technology.

The short-term focus of a startup must change soon after the deliver of the first few products. Companies that fail to incorporate longer-term thinking around their third year find themselves living from crisis to crisis. This makes the company unattractive to good managers and good technologists who don’t necessarily get their jolllies from living in a startup environment, where “startup” means short-term thinking.

What sort of changes does your organization need, now that the product has been delivered? A new CEO who actually allows the organization to function as if there were competence at all levels? A seasoned technology executive who knows what to do to make the organization attractive to innovative people? A shift in emphasis to listening to customer feedback and involving existing customers in product decisions? Addition of a Quality department that actually has the teeth to delay a product introduction?

Whatever the changes needed, don’t be surprised by the shift. Two reactions to the shift are typical:
(1) “What happened to my adrenaline rush?” — the people who need crises to keep up their energy should pursue another startup.
(2) “I didn’t know that a company could actually plan and execute with the future (beyond 1 month) in mind!” — the people who are stressed by the company’s failure to plan and execute for the long term grow into steady, reliable contributors.

Filed Under: Painless IT Tagged With: , , , , , ,

Is your software on fire?

January 26, 2008

The spectacle of Dell laptops on fire in the summer of 2006 due to Sony battery problems has prodded me to think about product failures. There is nothing so attention-getting as a fire in a conference room. Few people who see this sort of failure will forget what they have seen.

Software failures may not be so spectacular, but they can be just as memorable to the people who witness them.

Examples from large-scale software systems: if you were waiting for your baggage in the new Denver airport a few years ago, you may have waited until human intervention delivered your bags, because the bag sorting system failed. And what if you dialed 911 and the call did not go through?

Examples from embedded systems: your cell phone drops a call due to a software glitch in the phone; your hard disk loses track of its position and takes an extra several seconds to recover.

Examples from everyday use of an operating system: Windows gets confused while processing interrupts from the web browser, and the browser hangs until you reboot; Outlook misses a beat and an email doesn’t appear on the screen when you expect it to.

If the computer or phone were to catch fire when any one of these failures occurs, you can bet that the manufacturer would do a massive recall the way Dell has done. But they didn’t. Instead, they let the users keep on running with a piece of software that “catches fire” regularly. If you’re like most users, you have become accustomed to seeing these fires and dealing with them. But do you like them? Of course not.

What are the consequences? Word of mouth travels quickly, and these failures have created a large population of users who resent having to use devices and software that fail. Resentment leads users to search for a better alternative. This is good for competitors who offer a better, unfailing solution.

But the whole world of software (and digital devices that depend on software) suffers from a bad image because of these failures. From consumer devices to mission-critical industrial control systems, everyone who has to deal with modern digital devices is gun-shy about failures. And rightfully so.

Is your software on fire?

There are known methods to assure that the software-dependent devices you make will not catch fire. If you’re not certain what these methods are, or who can implement them for you, you need to find someone who can help. But before you call in a consultant, be sure that you’re willing to pay the price: It takes time and money to make software reliable, just as it does in batteries and laptops. Are you ready to buy in?

Filed Under: Painless IT Tagged With: , , , , , ,

What is Product Marketing’s role in development?

January 26, 2008

A colleague asked, “Do you believe Product Marketing could be the bridge between the Engineering and R&D organizations? It seems to me that market requirements are the other piece to incorporate there and Product Marketing could add that to R&D’s specs before working with Engineering to determine what’s feasible and on what time schedule… What do you think?”

It works at the front end to have an Advanced Development group build prototypes and conceptual specs/models, with specs or requirements added by Product Marketing before giving them to Engineering. But the problems (below) don’t come out until the crunch — when you’re waiting for the next milestone in actual product development.

The problem is that Product Marketing and Engineering (the department responsible for developing products delivered to customers) have a natural tension: they have to arbitrate between what’s feasible within the time/dollar/featureset constraints; Product Marketing should have the customer deliveries in mind, and should interpret “what the customer wants,” while Engineering is responsible for determining which (and how many) features can be delivered within the cost and time constraints.

As a product is developed, Engineering will naturally come back now and then to renegotiate features vs. schedule (and sometimes $) as they uncover problems (or opportunities) that impact schedule. Product Marketing cannot act as the arbiter for this negotiation — Engineering must participate as a fully-responsible party, determining what can be delivered when. When Product Marketing has all the power in this negotiation, you either get emasculated Engineering, which won’t take any chances because they’re being second-guessed; or you get promises that can’t be kept, because Engineering isn’t really running the development process.

Filed Under: Painless IT Tagged With: , , , , ,

Development Process Stability

January 26, 2008

After shipping a first product, successful companies face a number of challenging problems in product development, including lack of development process stability as development work scales up. Here are some responses that have worked well in the computer, software, storage and consumer electronics industries.

Why process selection matters now

As Product Development scales up to involve multiple concurrent projects, three things happen to stress the development environment and to threaten its results:
1. The informal processes used at startup no longer work reliably to get quality products produced on time.
2. More managers are needed as the development department becomes too large for one person to manage directly.
3. Supporting customers and manufacturing takes time away from development but offers opportunities for feedback that must not be ignored.

This is an opportunity to choose good processes for the next 5 years. There will never be time to reconsider process selections. The cost of change only goes up.

Managing multiple projects is more complex. Engineering and Product Marketing must cooperate in new ways to assure that the next generation of products is successful.

Founders and early employees who are technologists have been crucial to success, but they may not be willing or able to make the transition into a development environment that is sustainable for the long run.

Development processes

Development must move out of crisis mode, so that projects can be completed on a predictable schedule.
There may have to be changes clarifying who is responsible for setting project goals.
Project management tools need to be used to manage schedules and feature lists without overloading the development team with overhead tasks.
When a milestone is missed, rapid analysis and decision-making is critical to staying on track for product introductions. Certain metrics are useful here, and project teams need feedback about how they’re doing.

Development tools

Who is responsible for Quality? The Development department must get serious about product quality, even if QA is managed from Operations or elsewhere.
Bring in hardware and software tools for testing, establish disciplined procedures for release, and stay in the issue/correction feedback loop.
In addition, Development can provide useful input to product direction in the next cycle through interaction with customers and field staff.

—–
If you would like more information about how we assist growing companies with managing product development for the long term, please visit https://johnlevyconsulting.com, call 415 663-1818 or email info@johnlevyconsulting.com

Filed Under: Painless IT Tagged With: , , , , ,

Why is Engineering the last to call for help?

January 26, 2008

Engineering and the product development organization are critical to a company’s survival. In successful companies, they deal daily with a vast array of problems, from technology shifts to people loss. One of the key talents of successful technical managers is to deal with changing priorities and resource availability. They manage these dynamically whether by PERT charts or just seat-of-the-pants intuition.

So why is it that they don’t often ask for help?

I believe it has to do with two aspects of the occupation itself.

(1) When your daily life is filled with adaptation and improvisation, you have trouble imagining that there is anything anyone can do to help. Your talent as a technologist managing others is to be able to evaluate technical directions in an instant, moving people around to cover the top priorities of the day, and communicating to your bosses what is going on. How could a consultant or an internal mentor help this kind of activity?

(2) You are already in the midst of trying to improve the engineering process and the way your people accomplish projects. You have the credibility with them, so you can influence their work to improve a little at a time. It is inconceivable that an outsider, or a non-specialist insider, could have more influence on your staff.

The Marketing Department and even the Finance people know that Engineering is in trouble when products don’t get completed on schedule, turnover is high, or products need extensive tweaking to meet customer needs. But inside Product Development, life is normal: dynamically adapting to the shifting priorities, making quick decisions about fixes, and just getting the next product out the door.

The only way to get the processes to improve significantly is to get perspective. And perspective is the one thing that most Engineering departments don’t have. They’s too busy meeting their commitments. Perspective is what consultants and internal mentors have.

Filed Under: Painless IT