Business

Popular business writers often say flat organizations are better than hierarchical organizations, and small businesses are better than big businesses. By “better” they usually mean more creative, nimble, fun, and ultimately profitable. But they don’t often try to explain why small and flat is better than big and hierarchical. They support their argument with examples of big sluggish companies and small agile companies, but that’s as far as they go.

Paul Graham posted a new essay called You Weren’t Meant to Have a Boss in which he also argues for small and flat over big and hierarchical. However, his line of reasoning is fresh. I haven’t decided what I think of his points, but as usual his writing is creative and thought-provoking.

Update: See Jeff Atwood’s comments, Paul Graham’s Participatory Narcissism.

In a recent interview author and economist Tim Harford argued that CEO compensation is not based on the economic value of the CEO’s leadership. Instead, companies compensate their CEO’s generously in order to provide an incentive to aspiring CEOs. In this view, an executive compensation package is a sort of lottery prize designed to motivate those further down the corporate ladder.

There’s a saying that clients can have good, fast, or cheap. Pick two, but then the third will be whatever it has to be based on the other two choices. You can have good and fast if you’re willing to spend a lot of money. You can have fast and cheap, but the quality will be poor. You might even be able to get good and cheap, if you’re willing to wait a long time.

A variation on this theme is the iron triangle. You draw a triangle with vertices labeled “features”, “time” and ”resources.” If you make two of the sides longer, the third has to become longer too. Here goodness is defined as a feature set rather than quality, but the same principle applies.

There’s a problem with this line of reasoning: no matter what clients say, they want quality. They may say they want fast and cheap, and if you tell them you’ll sacrifice quality to deliver fast and cheap, you’ll be a hero — until you deliver. Then they want quality. As Howard Newton put it

People forget how fast you did a job, but they remember how well you did it.

Sometimes you can cut features as long as you do a good job on the features that remain, but only to a point. Clients are not going to be happy unless you meet their expectations, even if those expectations are explicitly contradicted in a contract. You can tell a client you’ll cut out frills to give them something fast and cheap, and they’ll gladly agree. But they still want their frills, or they will want them. The client may be silently disappointed. Or they may be vocally disappointed, demanding excluded features for free and complaining about your work. Eventually you learn what features to insist on including, even if a client says they can live without them.

Interaction design guru Alan Cooper gave a presentation recently entitled An Insurgency of Quality. As part of his talk, he explains why programmers cannot be managed. Traditional management has an industrial age mindset, while software development is a post-industrial craft. That mismatch explains a great deal. For example, industrial workers respect authority, but programmers respect competence.  

According to Cooper, the leader of a group of programmers should be a facilitator, not a manager. Johanna Rothman in her interview on the Pragmatic Programmer podcast elaborates on this same view. The manager’s job is to remove obstacles to productivity — acquire resources, provide protection from interruptions and distractions, etc. — rather than to manage in the industrial sense.

Cyndi Mitchell in a talk from Rails Conf points out how “enterprise” in the phrase “enterprise software” has taken on the opposite of its customary meaning.

If you call a person enterprising, you have in mind someone who takes risks and accomplishes things.  And “Enterprise” has been the name numerous ships, real and fictional, based on the bold, adventurous overtones of the name. But Cyndi Mitchell says when she thinks about enterprise software, the first words that come to mind are bloatware, incompetence, and corruption. I wouldn’t go that far, but words like “bureaucratic” and “rigid” would be on my list. In any case, “enterprise” has a completely different connotation in “enterprise software” than in “USS Enterprise.”

Kevin Kelly has a post entitled Better than Free that lists eight things people will pay a premium for, even while closely related things are free or cheap:

• Immediacy
• Personalization
• Interpretation
• Authenticity
• Accessibility
• Embodiment
• Patronage
• Findability

Daniel Pink has a related list in his book A Whole New Mind. (Here’s an interview with Pink that gives an overview of his book.) Pink says the skills that will be increasingly valued over time, and difficult to outsource, are:

• Design
• Story
• Symphony
• Empathy
• Play
• Meaning

In The World Is Flat, Thomas Friedman says four kinds of people are “untouchable,” that is, immune to losing their job due to outsourcing. These are people who are

• Special
• Specialized
• Anchored
• Really adaptable

In Friedman’s terminology, “special” means world-class talent, someone like Michael Jordan or Yo-Yo Ma. Anchored means geographically anchored, like a barber. For most of us, our best options are to be specialized or really adaptable.

How do these three lists fit together? You could see Kelly’s and Pink’s lists as ways to specialize and adapt your product or service per Friedman’s advice.

• Meet your customer’s emotional needs (design, authenticity, patronage, empathy).
• Make things convenient (immediacy, accessibility, findability).
• Bring the pieces together, both literally (personalization, symphony) and figuratively (interpretation, story, meaning).
• Be human (embodiment, play).

Seth Godin has a post this morning about what he calls the three key marketing levers: fear, hope, and love. He concludes

The easiest way to build a brand is to sell fear. The best way, though, may be to deliver on hope while aiming for love…

People don’t want fear, they want faith. They want to buy something they can place their trust in to alleviate their fears. Replacing the term “fear” with “faith” makes the three levers more parallel, stating each in terms of positive aspiration. With this edit you could summarize Seth Godin’s marketing advice as follows.

Now abide faith, hope, and love. But the greatest of these is love.

I think I’ve read that somewhere before.

If you read a few personal productivity articles you’ll run into this advice: Interruptions are bad, so eliminate interruptions. That’s OK as far as it goes. But are interruptions necessarily bad? And when you are interrupted, what can you do to recover faster?

Not all interruptions are created equal. Paul Graham talks about this in his essay Holding a Program in One’s Head.

The danger of a distraction depends not on how long it is, but on how much it scrambles your brain. A programmer can leave the office and go and get a sandwich without losing the code in his head. But the wrong kind of interruption can wipe your brain in 30 seconds.

In her interview with John Udell, Mary Czerwinski points out that while interruptions are detrimental to the productivity of the person being interrupted, maybe 75% of the time interruptions are beneficial for the organization as a whole. If one person is stuck and other person can get them unstuck by answering a question, the productivity of the person asking the question may go up more than the productivity of the person being asked the question goes down.

Given that interruptions are good, or at least inevitable, how can you manage them? Czerwinski uses the phrase context reacquisition to describe getting back to your previous state of mind following an interruption. Czerwinski and others at Microsoft Research are looking at software for context acquisition. For example, one of the ideas they are trying out is software that takes snapshots of your desktop. If you could see what your desktop looked like before the phone rang, it could help you get back into the frame of mind you had before you started helping the person on the other end of the line.

Have you discovered a tool or habit that helps with context reacquisition? If so, please leave a comment.

If you’re working on three projects, you’re probably spending 40% of your time task switching. Task switching is the dark matter of life: there’s a lot of it, but we’re hardly aware of it.

I’m not talking about multitasking, such as replying to email while you’re on the phone. People are starting to realize that multitasking isn’t as productive as it seems. I’m talking about having multiple assignments at work.

John Maeda posted a note about multiple projects in which he gives a link to a PowerPoint slide graphing percentage of productive time as a function the number of concurrent assignments. According to the graph, the optimal number of projects is two. With two projects, you can do something else when one project is stuck waiting for input or when you need variety. But any more than that and productivity tanks.

Johanna Rothman has an interview on the Pragmatic Programmer podcast where she discusses, among other things, having multiple concurrent projects. She thought it was absurd when she was asked to work 50% on one project, 30% on another, and 20% on another. Research environments are worse. Because of grant funding, people are sometimes allocated 37% to this project, 5% to that project, etc.

We’re not nearly as good at task switching as we think we are. I hear people talking about how it may take 15 or 30 minutes to get back into the flow after an interruption. Maybe that’s true if you were interrupted from something simple. A colleague who works on complex statistical problems says it takes her about two or three days to recover from switching projects. In his article Good and Bad Procrastination, Paul Graham says “You probably only have to interrupt someone a couple times a day before they’re unable to work on hard problems at all.”

Seth Godin has an interesting blog post today called The problem with perfect. Companies with a reputation for perfect service are only remarkable when they disappoint. Being interesting is a more viable business strategy than being perfect.

Everything is supposedly growing exponentially these days. But when most people say “exponential,” they don’t mean what they say. They mean “fast.” Exponential growth can indeed be fast. Or it can be slow. Excruciatingly slow.

If you earn a million dollars a day, your wealth is growing quickly, but not exponentially. And if you have $100 in the bank earning 3% compound interest, your money is growing slowly, but it is growing exponentially.

Linear growth is a constant amount of increase per unit of time. Exponential growth is a constant percentage increase per unit of time. If you buy a pack of baseball cards every Friday, the size of your baseball card collection will grow linearly. But if you breed rabbits with no restriction, the size of your bunny heard will grow exponentially.

It matters a great deal whether you’re growing linearly or exponentially.

When you start a new enterprise — a company, a web site, etc. — it may truly grow exponentially. Growth may be determined by word of mouth, which is exponential (at first). The number of new people who hear each month depends on the number people who talk, and hearers become talkers. But that process can be infuriatingly slow when it’s just getting started. If the number of visitors to your web site is growing 5% per month, that’s great in the long term, but disappointing at first when it means going from 40 visitors one month to 42 the next.

How do you live on an exponential curve? You need extraordinary patience. While any exponential curve will eventually pass any linear curve, it may take a long time. If you’re making barely perceptible but compounding progress, be encouraged that you’re on the right curve. Eventually you’ll have all the growth you can handle. Realize that you may be having a harder time initially because you’re on the exponential curve rather than the linear curve.

How do you know whether you’re on an exponential curve? This is not as easy as it sounds. Because of random noise, it may be hard to tell from a small amount of data whether growth is linear or exponential, or even to tell growth from stagnation. Eventually the numbers will tell you. But until enough data come in to reveal what’s going on, look at the root causes of your growth. If you’re growing because customers are referring customers, that’s a recipe for exponential growth. If you’re growing because you’re working more hours, that’s linear growth.

Nothing grows exponentially forever. Word of mouth slows down when the message reaches saturation, when the talkers run into fewer people who haven’t heard. Rabbit farms slow down when they can’t feed all the rabbits. Most of the things we call exponential growth are more accurately logistic growth: exponential growth slows to linear growth, then linear growth begins to plateau.

How do you live on a logistic curve? Realize that initial exponential growth doesn’t last. Watch the numbers. They’ll tell you when you’ve gone from approximately exponential to approximately linear. Understand the mechanisms that turn exponential into logic growth in your context.