How To Move Your Business From Periodic Investments to Sustainable Software
Many businesses are now in technology for the long term and to develop a sustainable digital future, fundamental changes in thinking are needed.
It’s almost trite to say we’re living in a time of unparalleled change, especially in the digital sector. The evidence is all around in the many business sectors reinventing themselves around digital models. Change is further fuelled by the sustained interest in entrepreneurship and the technology talent marketplace which is increasingly global.
Many businesses are finding they are digital businesses as well as traditional businesses. However, for many of the same businesses “IT” was something bought in externally: an agency for your website; an ERP provider; or a payment systems specialist.
As technology becomes central to much of what businesses do, how they engage with it needs to change. It’s no longer a case of buying upgrades on a three or five-year cycle, but a continuous investment requiring full time attention.
How do organisations move from periodic investments to sustainable software? When embarking on technology-led Change Management, businesses need to consider strategy, Agile development, incremental delivery and organisational structure.
To deliver results, Digital Performance Strategy needs to be driven by analytics, flexible and above all built for the long term.
Lean Startup is an increasingly mainstream branch of management thinking that has grown out of digital business practice. It asserts that a startup is any endeavour initiated under conditions of extreme uncertainty.
At launch, it’s very difficult to predict how a customer will engage with your product (if at all) and which parts of the service will really take off. In response, businesses should launch minimum viable products (the smallest possible service for the minimum possible investment) and then rapidly extend the product, whilst rigorously measuring what works and what doesn’t. Where an idea doesn’t gain traction be prepared to ‘pivot’ your product rapidly to one with more potential.
Lean Startup immediately challenges how most businesses engage with their technology providers. Historically, most engagements are discreet projects with signed off requirements, fixed costs and fixed schedules.
Can your business predict in advance if the requirements agreed are the right ones? If the annual digital budget has been sunk into a single project, how will you react when customers hate your site registration policy?
Organisations need to carefully consider how their technology systems are funded and balance of in house vs. bought in services. When using external partners be clear about what the objectives are – this could be access to the latest ideas, technology skills or training. Consider if the investment will be project based or a long-term partnership.
Agile has emerged over the last 15 years, increasingly becoming the standard approach for software development, promoting a focus on incremental delivery of working software rather than volumes of up front documentation or large single releases.
In many ways, Agile was really the first management response to the change unleashed by the digital age and it remains the underpinning of all other strategies.
With the ability to rapidly update websites or app stores with new versions of software, the already useful Agile approach really reaps benefits. Not only can organisations quickly develop new versions of software, they can now rapidly deliver them and understand how real customers respond to changes in the product. This approach is called incremental delivery.
The benefits of incremental delivery give organisations the ability to quickly change a product in response to how customers use it.
In deciding what to put in the next release, organisations should actively learn from the last one.
As incremental delivery has become widespread, models have emerged for learning from each delivery.
Dave Maclure developed Startup Metrics for Pirates and Eric Ries conceived Lean Startup to show how to measure each release and conduct experiments (A/B tests) to find out what works and what doesn’t. Impossible without incremental delivery and instant Internet-based distribution, measurement fundamentally changes the software investment lifecycle.
One-off waterfall investments no longer make any sense. Ries and McClure demonstrate that to find out what works and to capitalise on it, requires ongoing investment – not a single hit. The answer is to keep product developments lean and Agile, saving money for ongoing investment rather than spending all the budget on a single release.
As digital becomes more widespread, incremental development will continue to gain wider acceptance. Development is no longer a discrete activity, but a continuous process that is core to the life of organisations.
Companies, that in the past may not have considered themselves in the technology business, must now decide how they fund technology development. Meanwhile, existing technology businesses must ensure they keep ahead of nimble new competitors.
New organisational structures that are emerging show how to build a ‘flexible technology workforce’ that is able to change and adapt as business opportunities present themselves.
Spotify described how to scale Agile by creating ‘squads’ focused on particular parts of their platform. Each squad is designed to operate like a mini-startup responsible for their own destiny and able to develop their part of the platform as they see fit.
Games company Valve published their staff training manual. Their culture has the lightest possible management structure with staff deciding what they want to work on and having no defined managers.
The company I worked at for almost a decade, RM, evolved similarly with highly focused, autonomous teams. Each team is led by a Creative Lead, Technology Lead and Project Manager who ensure all parts of a solution were in balance. Although not identical, this model was very similar to the ‘squad’ structure later adopted by Spotify.
Each of these initiatives shows how management theory is adapting to knowledge work in the software industry.
Developers have been frustrated for many years that often the only way to grow their careers is to move into people management. The irony of this is that technologists tend to require little people management, are self-motivated and thrive when left to solve technology problems.
Organisations are starting to realise that being a technologist is an end in itself to be rewarded and developed.
Bersin by Deloitte summarises how companies need to change their career and reward structures to develop highly skilled knowledge workers and not divert them to careers in people management.