Managing Product Development

Orac’s post, Jon Stewart on the Detroit bailout, points to Stewart’s perspective on the bailout. (Watch the video; it’s hilarious.) Some paraphrases and quotes from Stewart:

‘Congress… doesn’t know what the financial industry does and doesn’t want to look stupid.’ (paraphrase of Stewart)

“The auto industry has a product that’s tangible and easy to complain about. … Even the crappy ones [cars] are useful.” (quote)

‘The people you bailed out make derivative paper transfers of derivative groupings of said loans to China.’ (paraphrase, because I’m not sure I wrote it down properly)

“Wall Street lost all the money without making anything” (quote)

Who else makes an ephemeral product? Software-only producers, that’s who. Especially software as a service. Especially if they don’t release and get feedback frequently.

More food for thought when you start thinking about your strategy and your ability to execute.

I was thinking about the automakers, and how they want many billions of $ from Washington (please, noooo). I don’t know what their strategic planning is, but it seems not to have changed from the 1960’s. Certainly, when I started buying cars in the 1970’s, I could not afford the low quality/high price/low gas mileage. When we bought our minivan 11.5 years ago (yes, I’m still driving it), we did buy a Dodge Caravan, because at the time it was the best value for our money.

Now that I’m approaching the end of my minivan years, I’m looking for a relatively high mileage four-door sedan. I have a few other requirements, but if you look at the comparisons of cars, you still don’t see US carmakers in the top tier for high quality/low price/high gas mileage. And if they are, the cars are not fun to drive.

I know enough about the car business to be dangerous, not to be helpful. But one of the reasons Detroit is in so much trouble is that they have such long cycle times. It takes any of the US automakers much longer to bring out a new model than any of the other non-US automakers. The longer it takes to finish a car (and let’s not talk about what done means here)–the cycle time, the longer it takes to see if your strategy is right. If it takes you 2-3 years to take a car from idea to manufacturing, and it only takes your competition 1 year, who’s more flexible? Who can react to a relatively changing market?

In my work with high tech companies, the organizations who can release faster (and I mean done, not releasing a product with major defects) have a variety of term strategies. The have near-term strategies, mid-term, and long-term. If you only have long-term, it’s like a waterfall project; you can’t get any feedback on the strategy until too much time has gone by. (Yes, their portfolio management does reflect their planning.)

To be honest, in this economy, everyone needs a short-term strategic plan that you can adjust frequently. Hopefully, you don’t have to throw it out, but just adjust it. You also need a mid-term plan so you can keep your eye on the path you think you want to take. And, you need a long-term plan so you can understand and adjust the business you’re in.

How to do this? Make your projects short, or at least, have them use an iterative/incremental lifecycle, so you can finish them at the end of a timebox if you need to. Now, at the end of each timebox, you can see progress and adjust if you need to.

I do understand that building a car is not like building software. The cost of the raw materials is huge, so the kinds of prototyping you do and the duration of the prototyping is quite different. But organizations who can successfully prototype quickly and move to manufacturing quickly have a marked strategic advantage over those who can’t.

And that’s true no matter what your business.

I’m sure you’ve read of the AIG scandal by now. (Here is the Fox News story and here is the CNN story.)  Shame is too small a word for those executives. I would love to know where their entitlement comes from. I’d squish it like a bug.

Maybe they went to the resort to do strategic planning. An off-site is good, as well as leaving behind laptops, pagers, pdas, everything that can interrupt you. Keep the tools, leave the interruptions. If your business has changed or needs to change, as I would hope it does after being rescued from bankruptcy, you do need to do strategic planning.

Here are the strategic planning steps:

1. Define your mission. (Why are you in business? Who do you serve? What benefits do you provide?)
2. Analyze the current situation
3. Define the plans for the new situation

There are lots of ways to do the analysis and planning. SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a common way because it’s easy to see and easy to do wrong. Armstrong has a different approach: Seeking commitment as you specify objectives; generate strategies; evaluate strategies; monitor results. Armstrong’s approach appeals to me because it’s an iterative process, not something you do once while at a nice resort. There are other approaches also.

One of the best ways to do strategic planning is to do it constantly. No, not to take off-sites constantly, but to devote a little of your time each week to reviewing the mission, analyzing the situation, and see if you need to redefine your current plans. Of course, for that to work, you need data about sales (or the equivalent if you work in IT or a non-profit), where your projects are, and if you are truly serving your chosen customers. Then, once a month, maybe at the project portfolio evaluation meeting, you can review the strategy.

You might still need to do an offsite once a year. But not a really ritzy resort, where the booze, the golf, and spa treatments take you away from the business at hand. (Manicures and pedicures are not necessary for strategic planning.) Strategic planning is work. Hard work. Don’t treat it like it’s a day at the beach.

Full disclosure: Yes, I facilitate strategic planning meetings. They don’t look like the AIG meeting.

P.S. I forgot to point to the Armstrong paper: The Value of Formal Planning for Strategic Decisions: Review of Empirical Research