Shifting the focus to longer term

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.

Development Process Stability

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.

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

Why is Engineering the last to call for help?

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.

A + B + C ≠ D (The game changes at the fourth round of financing)

When a startup company reaches a certain size, a number of changes have to occur to allow it to survive. Here are some of them:

1. The founders have to choose new roles for themselves. Having been key idea-people or leaders of a particular part of the business process, they may have trouble envisioning themselves in a role that meshes with a larger company. This is OK — particularly if they are willing to go off and found another company. Where it’s not OK is in a company that desperately needs to establish processes that work for the long term, and a founder is standing in the way of moving in that direction. The impetus to change things may come from the venture investors, from other key executives in the company, or — rarely — from a founder him- or herself. ‘Tis a wise founder who knows his/her own limitations.

2. Product development has to become more predictable. While at this stage of growth a company often is launching multiple development projects at the same time, the need to know when the process will complete becomes more important as the customer base grows and Marketing starts implementing more sophisticated product introductions. In addition, the engineers who have survived the startup environment are often close to burnout, accustomed to an unstructured work environment, and unwilling to consider that in a larger company, risk has to be reduced. What kind of risk? Things like making sure that software backups are made, versions of code are archived, drawings are in fire-safe locations, and that the website is not offering free access to proprietary design information.

3. Knowing how long it will take to implement certain features, whether software or hardware implemented, is key to becoming predictable. Predictablity can be helped by agile development methods, which emphasize frequent demonstrations of working models, making regular estimates of output over the next few weeks and refining one’s ability to predict that output. This gives the developers a lot of say in the process, while also getting realistic “customer” feedback on features and functions on a regular basis.

4. The company management may have to pay attention to issues that aren’t so prominent during the early startup phase, such as infrastructure (development tools, website and equipment maintenance), retention & professional development, trade associations & standards, and intellectual property protection.

5. Scaling up the company is not just a matter of cloning the existing projects and production lines. As a new layer of management is brought in to allow expansion of the operating departments, the top management must examine its way of working, including values, culture, communications, and transparency. Plotting strategy without considering these factors can leave them wondering why the workforce isn’t following management’s lead.