Tag Archives: Design Constraints

Things I Occasionally Forget

Things I Occasionally Forget

GUEST POST from Mike Shipulski

Clean-sheet designs are fun, right up until they don’t launch.

When you feel the urge to do a clean-sheet design, go home early.

When you don’t know how to make it better, make it worse and do the opposite.

Without trying, there is no way to know if it will work.

Trying sometimes feels like dying.

But without trying, nothing changes.

Agreement is important, but only after the critical decision has been made.

When there’s 100% agreement, you waited too long to make the decision.

When it’s unclear who the customer is, ask “Whose problem will be solved?”

When the value proposition is unclear, ask ‘What problem will be solved?”

When your technology becomes mature, no one wants to believe it.

When everyone believes the technology is mature, you should have started working on the new technology four years ago.

If your projects are slow, blame your decision-making processes.

Two of the most important decisions: which projects to start and which to stop.

All the action happens at the interfaces, but that’s also where two spans of control come together and chafe.

If you want to understand your silos and why they don’t play nicely together, look at the organizational chart.

When a company starts up, the product sets the organizational structure.

Then, once a company is mature, the organizational structure constrains the product.

At the early stages of a project, there’s a lot of uncertainty.

And once the project is complete, there’s a lot of uncertainty.

Image credit: Pixabay

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Innovation Requires Constraints

Innovation Requires Constraints

GUEST POST from Greg Satell

Some years ago, I wrote an article in Harvard Business Review about stock buybacks, which were being pilloried at the time. Many people thought that companies were spending too much money to gin up their stock price when they could be investing those funds into innovation, making better products and creating new markets.

Yet I pointed out that things weren’t as they seemed. As Clayton Christensen had showed around the same time, there was a superabundance of capital (in response to the financial crisis, central banks had been flooding markets with money) and corporations had more money than they could profitably invest.

I also suspected, although the evidence was scant at the time, that the extra money was going to Silicon Valley startups, which seemed to me to be less potentially problematic, especially when the public sector was being woefully underfunded at the same time. Today, we can see the results and they aren’t pretty. Without constructive constraints, even good ideas go bad.

The Chimera of Mass Adoption

Shai Agassi had a good idea. His key insight was that electric cars couldn’t survive without an ecosystem of charging stations. Therefore, he reasoned, to spur mass adoption you needed to develop the cars and the charging stations in tandem. Once you relieved the problem of “range anxiety,” so the theory went, ordinary consumers would buy in.

An entrepreneur at heart, Agassi started a company, Better Place, to make his vision a reality and, with the support of a wide array of celebrities and politicians, raised nearly a billion dollars of venture capital. It seemed like a sure winner. After all, with that much money and star power, what could go wrong?

As it turns out, everything could go wrong. From the design of the cars, to the charging stations to the batteries themselves, every detail was fraught with problems. But with so much money, Agassi could continue to press forward, sell his vision and win over partners. Instead of resolving issues, they multiplied. In a few short years, the company was bankrupt.

The truth is that, outside of software, going after mass adoption from the start is usually a bad idea. Rather than trying to please everybody at once, you are much better off focusing on a hair-on-fire use case—a small segment of customers that has a problem they need solved so badly that they almost literally have their hair on fire—and building up from there.

Incidentally, that is exactly what Elon Musk did with Tesla. He didn’t try to build for the mass market, but for Silicon Valley millionaires who wanted a cool, eco-friendly car and wouldn’t need to rely on it for everyday use. That foothold allowed the company to learn from its inevitable mistakes, improve the product and its manufacturing process and, eventually, to prevail in the marketplace against much bigger, but more traditional, competitors.

Buying Into The Silicon Valley Myth

While Agassi’s idea had a certain logic to it, Adam Neumann’s is much harder to figure out. Essentially, he sold investors on the idea that renting coworking space to businesses, which was not at all a new or innovative idea, could somehow be married with some Silicon Valley pixie dust. The result was WeWork, a $47 billion debacle.

While WeWork is, in many ways, an exceptional case, in others it is surprisingly mundane. For more than a decade, investors—and the business community at large— have bought into the Silicon Valley myth that its model of venture-funded entrepreneurship is widely applicable outside of software and consumer gadgets. It is not.

The truth is that Silicon Valley’s way of doing business was a specific solution that applied to a limited set of industries where low or near-zero marginal costs and the potential for network effects made increasing returns to investment not only possible, but a legitimate business planning objective.

Unfortunately, when you try to apply those same business principles to an industry where those conditions do not exist, you essentially get a Ponzi scheme. As long as investors continue to pour money in, the business can continue to win market share by undercutting competitors on price. Eventually though, as in the case of WeWork, the bottom falls out.

The Cult of Talent

Better Place and WeWork, as well as other notable “unicorn debacles” such as Uber and Theranos, are cautionary tales. Venture capitalists, believing in their own brilliance as well as their ability to spot it in others, shoveled money into founders with questionable ideas and, as soon became apparent, even worse morals.

But what if you could have the best of both worlds? What if you could take all of that Silicon Valley venture money and, instead of throwing it all at some young hotshot, invest it in some grizzled veterans with real track records. Instead of betting on a long shot, you could essentially put your money on a proven performer.

That, essentially, was the idea behind Quibi, a short form video company founded by Jeffrey Katzenberg, who revived Disney’s animation studio and then went on to even greater success as Co-Founder of Dreamworks, and Meg Whitman, who led eBay from a small startup of 30 people to become a global powerhouse employing thousands and earning billions.

Yet these two old hands, with all of their experience and know-how, somehow managed to do even worse than the more obviously incompetent Agassi and Neumann. Despite raising more than $2 billion, within seven months of launching, Quibi acknowledged defeat, shutting down operations and vowing to return whatever money that was left over to investors.

A Recurring Pattern of Fundamental Fallacy

It’s not hard to see an underlying pattern in all three of these massive failures. Venture investors, whose model is based on the principle that one outsized success can easily make up for any number of failed ventures, have come to believe that betting big can increase the chance of hitting that unlikely triumph.

What they don’t seem to have considered is that too much money can make a good idea go bad. Clearly, electric cars can succeed in the marketplace. Coworking spaces have been a viable business model for decades. There’s no question that Katzenberg and Whitman are talented executives. Yet, with the massive support of investors, they all failed massively.

Yet researchers have known for decades that creativity needs constraints. When you have a limited budget, you simply don’t have the luxury of ignoring problems. You have to face up to them and solve them or you won’t survive. When you have virtually unlimited resources, however, you can leave the hard stuff till another day. Eventually, it all comes crashing down.

Unfortunately, as Charles Duhigg explains in a piece in The New Yorker, that Silicon Valley investors who are seen as insufficiently “founder friendly,” now find themselves shut out of the best deals. Further research has begun to show that these tendencies, souped up by an overabundance of capital, have begun to crowd out good investments.

Or, put another way, Silicon Valley is building a doomsday machine and we desperately need to get off.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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A Trigger Strategy for Driving Radical, Transformational Change

A Trigger Strategy for Driving Radical, Transformational Change

GUEST POST from Greg Satell

There’s an old adage that says we should never let a crisis go to waste. The point is that during a crisis there is a visceral sense of urgency and resistance often falls by the wayside. We’ve certainly seen that during the Covid pandemic. Digital technologies such as video conferencing, online grocery and telehealth have gone from fringe to mainstream in record time.

Seasoned leaders learn how to make good use of a crisis. Consider Bill Gates and his Internet Tidal Wave memo, which leveraged what could have been a mortal threat to Microsoft into a springboard to even greater dominance. Or how Steve Jobs used Apple’s near-death experience to reshape the ailing company into a powerhouse.

But what if we could prepare for a trigger before it happens? The truth is that indications of trouble are often clear long before the crisis arrives. Clearly, there were a number of warning signs that a pandemic was possible, if not likely. As every good leader knows, there’s never a shortage of looming threats. If we learn to plan ahead, we can make a crisis work for us.

The Plan Hatched In A Belgrade Cafe

In the fall of 1998, five young activists met in a coffee shop in Belgrade, Serbia. Although still in their twenties, they were already grizzled veterans. In 1992, they took part in student protests against the war in Bosnia. In 1996, they helped organize a series of rallies in response to Slobodan Milošević’s attempt to steal local elections.

To date, their results were decidedly mixed. The student protests were fun, but when the semester ended, everyone went home for the summer and that was the end of that. The 1996 protests were more successful, overturning the fraudulent results, but the opposition coalition, called “Zajedno,” soon devolved into infighting.

So they met in the coffee shop to discuss their options for the upcoming presidential election to be held in 2000. They knew from experience that they could organize rallies effectively and get people to the polls. They also knew that when they got people to the polls and won, Milošević would use his power and position to steal the election.

That would be their trigger.

The next day, six friends joined them and they called their new organization Otpor. Things began slowly, with mostly street theatre and pranks, but within 2 years their ranks had swelled to more than 70,000. When Milošević tried to steal the election they were ready and what is now known as the Bulldozer Revolution erupted.

The Serbian strongman was forced to concede. The next year, Milošević would be arrested and sent to The Hague for his crimes against humanity. He would die in his prison cell in 1996, awaiting trial.

Opportunity From The Ashes

In 2014, in the wake of the Euromaidan protests that swept the thoroughly corrupt autocrat Viktor Yanukovych from power, Ukraine was in shambles. Having been looted of roughly $100 billion (roughly the amount of the country’s entire GDP) and invaded by Russia, things looked bleak. Without western aid, the proud nation’s very survival was in doubt.

Yet for Vitaliy Shabunin and the Anti-Corruption Action Center, it was a moment he had been waiting for. He established the organization with his friend Dasha Kaleniuk a few years earlier. Since then they, along with a small staff, had been working with international NGOs to document corruption and develop effective legislation to fight it.

With Ukraine’s history of endemic graft, which had greatly worsened under Yanukovych, progress had been negligible. Yet now, with the IMF and other international institutions demanding reform, Shabunin and Kaleniuk were instantly in demand to advise the government on instituting a comprehensive anti-corruption program, which passed in record time.

Yet they didn’t stop there either. “Our long-term strategy is to create a situation in which it will be impossible not to do anti-corruption reforms,” Shabunin would later tell me. “We are working to ensure that these reforms will be done, either by these politicians or by another, because they will lose their office if they don’t do these reforms.”

Vitaliy, Dasha and the Anti-Corruption Action Center continue to prepare for future triggers.

The Genius Of Xerox PARC

One story that Silicon Valley folks love to tell involves Steve Jobs and Xerox. After the copier giant made an investment in Apple, which was then a fledgling company, it gave Jobs access to its Palo Alto Research Center (PARC). He then used the technology he saw there to create the Macintosh. Jobs built an empire based on Xerox’s oversight.

Yet the story misses the point. By the late 60s, its Xerox CEO Peter McColough knew that the copier business, while still incredibly profitable, was bound to be disrupted eventually. At the same time it was becoming clear that computer technology was advancing quickly and, someday, would revolutionize how we worked. PARC was created to prepare for that trigger.

The number of groundbreaking technologies created at PARC is astounding. The graphical user interface, networked computing, object oriented programing, the list goes on. Virtually everything that we came to know as “personal computing” had its roots in the work done at PARC in the 1970s.

Most of all, PARC saved Xerox. The laser printer invented there would bring in billions and, eventually, largely replace the copier business. Some technologies were spun off into new companies, such as Adobe and 3Com, with an equity stake going to Xerox. And, of course, the company even made a tidy profit off the Macintosh, because of the equity stake that gave Jobs access to the technology in the first place.

Transforming An Obstacle Into A Design Constraint

The hardest thing about change is that, typically, most people don’t want it. If they did, it have already been accepted as the normal state of affairs. That can make transformation a lonely business. The status quo has inertia on its side and never yields its power gracefully. The path for an aspiring changemaker can be heartbreaking and soul crushing.

Many would see the near-certainty that Milosevic would try to steal the election as an excuse to do nothing. Most people would look at the almost impossibly corrupt Yanukovych regime and see the idea of devoting your life to anti-corruption reforms as quixotic folly. It is extremely rare for a CEO whose firm dominates an industry to ask, “What comes after?”

Yet anything can happen and often does. Circumstances conspire. Events converge. Round-hole businesses meet their square-peg world. We can’t predict exactly when or where or how or what will happen, but we know that everybody and everything gets disrupted eventually. It’s all just a matter of time.

When that happens resistance to change temporarily abates. So there’s lots to do and no time to wait. We need to empower our allies, as well as listen to our adversaries. We need to build out a network to connect to others who are sympathetic to our cause. Transformational change is always driven by small groups, loosely connected, but united by a common purpose.

Most of all, we need to prepare. A trigger always comes and, when it does, it brings great opportunity with it.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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