Highlights for Turn the Ship Around

Our world’s bright future will be built by people who have discovered that leadership is the enabling art. It is the art of releasing human talent and potential.

Leadership is communicating to people their worth and potential so clearly that they are inspired to see it in themselves.

“You know, sure, maybe over time things would have improved, but who wants to gamble their career—no, their life energy—on the hope of a sea change at an established, ‘successful’ company. I went on to pursue my dreams, and I’ve done so.”

The leader-leader structure is fundamentally different from the leader-follower structure. At its core is the belief that we can all be leaders and, in fact, it’s best when we all are leaders.

Rather than telling everyone what we needed to do, I would ask questions about how they thought we should approach a problem. Rather than being the central hub coordinating maintenance between two divisions, I told the division chiefs to talk to each other directly.

The twelve chiefs are the senior enlisted men. They are middle management. At our submarine schools, the instructors tell us that officers make sure we do the right things and chiefs make sure we do things right.

My unfamiliarity with the sub’s technical details was having an interesting side effect: since I couldn’t get involved with the specifics of the gear, I opened up space to focus on the people and their interactions instead, and to rely on the crew more than I normally would have.

What are the things you are hoping I don’t change?

What are the things you secretly hope I do change?

What are the good things about Santa Fe we should build on?

If you were me what would you do first?

Why isn’t the ship doing better?

What are your personal goals for your tour here on Santa Fe?

What impediments do you have to doing your job?

What will be our biggest challenge to getting Santa Fe ready for deployment?

What are your biggest frustrations about how Santa Fe is currently run?

What is the best thing I can do for you?

 

Although I cursed my lack of technical knowledge, it prevented me from falling back on bad habits. In the past when I would interview a crew member about how something worked, I only acted curious because, in reality, I knew how it worked. Now, when I talked to the men on the ship, I actually was curious.

You can’t “direct” empowerment programs. Directed empowerment programs are flawed because they are predicated on this assumption: I have the authority and ability to empower you (and you don’t). Fundamentally, that’s disempowering.

We discovered that distributing control by itself wasn’t enough. As that happened, it put requirements on the new decision makers to have a higher level of technical knowledge and clearer sense of organizational purpose than ever before.

The crew was still focusing too much on complying with regulations rather than working to make our submarine the most operationally capable warship possible. It was the same problem as focusing on avoiding mistakes instead of trying to achieve something great.

SHORT, EARLY CONVERSATIONS is a mechanism for CONTROL. It is a mechanism for control because the conversations did not consist of me telling them what to do. They were opportunities for the crew to get early feedback on how they were tackling problems. This allowed them to retain control of the solution. These early, quick discussions also provided clarity to the crew about what we wanted to accomplish. Many lasted only thirty seconds, but they saved hours of time.

Inefficiencies in my time were highly visible, especially to me. Less visible, however, were the inefficiencies of all the people throughout the organization.

What happens in a top-down culture when the leader is wrong? Everyone goes over the cliff.

In effect, by articulating their intentions, the officers and crew were acting their way into the next higher level of command. We had no need of leadership development programs; the way we ran the ship was the leadership development program.

You want more, you give more orders, and you become more controlling. It has a seductive pull on the leaders, but it is debilitating and energy sapping for the followers.

There were no shortcuts. As the level of control is divested, it becomes more and more important that the team be aligned with the goal of the organization.

This had a big effect on me. It showed me how efforts to improve the process made the organization more efficient, while efforts to monitor the process made the organization less efficient.

We worked hard on this issue of communication. It was for everyone. I would think out loud when I’d say, in general, here’s where we need to be, and here’s why. They would think out loud with worries, concerns, and thoughts. It’s not what we picture when we think of the movie image of the charismatic and confident leader, but it creates a much more resilient system.

Thinking out loud is essential for making the leap from leader-follower to leader-leader.

We had been taking actions that pushed authority down the chain of command, that empowered the officers, chiefs, and crew, but the insight that came to me was that as authority is delegated, technical knowledge at all levels takes on a greater importance. There is an extra burden for technical competence.

The personal liberty, well-being, and economic prosperity we enjoy in the United States are unique throughout the history of mankind.

The result of increased technical competence is the ability to delegate increased decision making to the employees.

The change from passive briefs to active certification changed the crew’s behavior. We found that when people know they will be asked questions they study their responsibilities ahead of time.

They hear and think they know what you mean, but they don’t. They’ve never had a picture of what you are talking about. They can’t see in their imagination how it works. They are not being intentionally deceitful; they just are not picturing what you are picturing.

SPECIFYING GOALS, NOT METHODS is a mechanism for COMPETENCE.

Have you seen evidence of “gamification” in your workplace? Perhaps it’s worth reading one of Gabe Zichermann’s blog posts and discussing it with your management team.

Since we were in a combat zone, the bonuses we awarded sailors when they reenlisted were tax-free.

I continued to see benefits of deliberate action. DELIBERATE first of all reduced errors by operators and was also a mechanism for TEAMWORK. Finally, it was a mechanism for SIGNALING INTENT.

This is the power of the leader-leader structure. Only with this model can you achieve top performance and enduring excellence and development of additional leaders.

Highlights for Good Strategy Bad Strategy

The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.

Bad strategy tends to skip over pesky details such as problems. It ignores the power of choice and focus, trying instead to accommodate a multitude of conflicting demands and interests. Like

To make matters worse, for many people in business, education, and government, the word “strategy” has become a verbal tic.

A good strategy doesn’t just draw on existing strength; it creates strength through the coherence of its design.

An insightful reframing of a competitive situation can create whole new patterns of advantage and weakness.

A large organization may balk at adopting a new technique, but such change is manageable. But breaking with doctrine—with one’s basic philosophy—is rare absent a near-death experience.

To detect a bad strategy, look for one or more of its four major hallmarks:

  • Fluff.
  • Failure to face the challenge.
  • Mistaking goals for strategy.
  • Bad strategic objectives.

Bad strategy is long on goals and short on policy or action. It assumes that goals are all you need. It puts forward strategic objectives that are incoherent and, sometimes, totally impracticable. It uses high-sounding words and phrases to hide these failings.

If you continue down the road you are on you will be counting on motivation to move the company forward. I cannot honestly recommend that as a way forward because business competition is not just a battle of strength and wills; it is also a competition over insights and competencies.

Good strategy works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.

A long list of “things to do,” often mislabeled as “strategies” or “objectives,” is not a strategy. It is just a list of things to do.

The purpose of good strategy is to offer a potentially achievable way of surmounting a key challenge. If the leader’s strategic objectives are just as difficult to accomplish as the original challenge, there has been little value added by the strategy.

When a leader characterizes the challenge as underperformance, it sets the stage for bad strategy. Underperformance is a result. The true challenges are the reasons for the underperformance.

Bad strategy flourishes because it floats above analysis, logic, and choice, held aloft by the hot hope that one can avoid dealing with these tricky fundamentals and the difficulties of mastering them.

Only the prospect of choice inspires peoples’ best arguments about the pluses of their own proposals and the negatives of others’.

So they avoided the hard work of choice, set nothing aside, hurt no interest groups or individual egos, but crippled the whole.

Serious strategy work in an already successful organization may not take place until the wolf is at the door—or even until the wolf’s claws actually scratch on the floor—because good strategy is very hard work.

Strategy does not eliminate scarcity and its consequence—the necessity of choice. Strategy is scarcity’s child and to have a strategy, rather than vague aspirations, is to choose one path and eschew others.

Strategies focus resources, energy, and attention on some objectives rather than others. Unless collective ruin is imminent, a change in strategy will make some people worse off. Hence, there will be powerful forces opposed to almost any change in strategy. This is the fate of many strategy initiatives in large organizations. There may be talk about focusing on this or pushing on that, but at the end of the day no one wants to change what they are doing very much.

The transformational leader, they argued, unlocks human energy by creating a vision of a different reality and connecting that vision to people’s values and needs.

Called the New Thought movement, it combined religious sentiment with recommendations for worldly success. The theory was that thinking about success leads to success. And that thinking about failure leads to failure.

Nevertheless, the doctrine that one can impose one’s visions and desires on the world by the force of thought alone retains a powerful appeal to many people. Its acceptance displaces critical thinking and good strategy.

The kernel of a strategy contains three elements:

1. A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

2. A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

3. A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

A good guiding policy tackles the obstacles identified in the diagnosis by creating or drawing upon sources of advantage.

A guiding policy creates advantage by anticipating the actions and reactions of others, by reducing the complexity and ambiguity in the situation, by exploiting the leverage inherent in concentrating effort on a pivotal or decisive aspect of the situation, and by creating policies and actions that are coherent, each building on the other rather than canceling one another out.

An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem—one that is solvable. Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to be overcome. To take responsibility is more than a willingness to accept the blame. It is setting proximate objectives and handing the organization a problem it can actually solve.

When someone says “Managers are decision makers,” they are not talking about master strategists, for a master strategist is a designer.

A design-type strategy is an adroit configuration of resources and actions that yields an advantage in a challenging situation. Given a set bundle of resources, the greater the competitive challenge, the greater the need for the clever, tight integration of resources and actions. Given a set level of challenge, higher-quality resources lessen the need for the tight integration of resources and actions.

Existing resources can be the lever for the creation of new resources, but they can also be an impediment to innovation.

It is also human nature to associate current profit with recent actions, even though it should be evident that current plenty is the harvest of planting seasons long past. When the profits roll in, leaders will point to their every action with pride. Books will be written recommending that others immediately adopt the successful firm’s dress code, its vacation policy, its suggestion-box policies, and its method of allocating parking spaces. Of course, these connections are specious.

Were there such simple, direct connections between current actions and current results, strategy would be a lot easier. It would also be a lot less interesting, for it is the disconnect between current results and current action that makes the analysis of the sources of success so hard and, ultimately, so rewarding.

 

The proposition that growth itself creates value is so deeply entrenched in the rhetoric of business that it has become an article of almost unquestioned faith that growth is a good thing.

No one has an advantage at everything. Teams, organizations, and even nations have advantages in certain kinds of rivalry under particular conditions. The secret to using advantage is understanding this particularity. You must press where you have advantages and side-step situations in which you do not. You must exploit your rivals’ weaknesses and avoid leading with your own.

The forces at work were not only altering the fortunes of companies, they were shifting the very wealth of nations.

To make good bets on how a wave of change will play out you must acquire enough expertise to question the experts.

Leaders who stay “above the details” may do well in stable times, but riding a wave of change requires an intimate feel for its origins and dynamics.

Thus, software’s advantage comes from the rapidity of the software development cycle—the process of moving from concept to prototype and the process of finding and correcting errors.

What is actually surprising about the modern computer industry is not the network of relationships but the absence of the massively integrated firm doing all the systems engineering—all of the coordination—internally. The current web of “relationships” is the ghostly remnant of the old IBM’s nerve, muscle, and bone.

During the relatively stable periods between episodic transitions, it is difficult for followers to catch the leader, just as it is difficult for one of the two or three leaders to pull far ahead of the others. But in moments of transition, the old pecking order of competitors may be upset and a new order becomes possible.

The simplest form of transition is triggered by substantial increases in fixed costs, especially product development costs. This increase may force the industry to consolidate because only the largest competitors can cover these fixed charges.

Many major transitions are triggered by major changes in government policy, especially deregulation.

A third common bias is that, in a time of transition, the standard advice offered by consultants and other analysts will be to adopt the strategies of those competitors that are currently the largest, the most profitable, or showing the largest rates of stock price appreciation.

Another bias is that, faced with a wave of change, the standard forecast will be for a “battle of the titans.”

For instance, people rarely predict that a business or economic trend will peak and then decline. If sales of a product are growing rapidly, the forecast will be for continued growth, with the rate of growth gradually declining to “normal” levels. Such a prediction may be valid for a frequently purchased product, but it can be far off for a durable good.

An industry attractor state describes how the industry “should” work in the light of technological forces and the structure of demand. By saying “should,” I mean to emphasize an evolution in the direction of efficiency—meeting the needs and demands of buyers as efficiently as possible.

Inertia due to obsolete or inappropriate routines can be fixed. The barriers are the perceptions of top management.

Chief scientist David Kirk put it this way: “There is a virtually limitless demand for computational power in 3-D graphics. Given the architecture of the PC, there is only so much you can do with a more powerful CPU. But it is easy to use up one tera-flop of graphics computing power. The GPU [graphics processing unit] is going to be the center of technology and value added in consumer computing.”

The benefit of a faster cycle is that the product will be best in class more often. Compared to a competitor working on an eighteen-month cycle, Nvidia’s six-month cycle would mean that its chip would be the better product about 83 percent of the time. Plus, there is the constant buzz surrounding new product introductions, a substitute for expensive advertising. As a further plus, the faster company’s engineers will get more experience and, perhaps, learn more about the tricks of turning the technology into product.

Whenever a company succeeds greatly there is a complementary story of impeded competitive response. Sometimes the impediment is the innovator’s patent or similar protection, but more often it is an unwillingness or inability to replicate the innovator’s policies.

A surface reading of history makes it look like 3dfx did itself in with too many changes of direction. The deeper reality was that Nvidia’s carefully crafted fast-release cycle induced 3dfx’s less coordinated responses.

To generate a strategy, one must put aside the comfort and security of pure deduction and launch into the murkier waters of induction, analogy, judgment, and insight.

In praising America’s “deep and liquid” financial markets, the herd conveniently skipped over the giant bag of flammable gas keeping those markets buzzing—easy credit, overleveraging, a vast expanse of unpriceable derivative securities, long-term assets financed with overnight borrowing from trigger-happy counterparties, and huge top management bonuses for taking on hidden risks.

Although there were some voices cautioning that these new financial vehicles were new and untested, the dominant position was that the economy was growing and the finance industry was prospering, hence these new financial innovations must be doing something beneficial.

Social herding presses us to think that everything is OK (or not OK) because everyone else is saying so. The inside view presses us to ignore the lessons of other times and other places, believing that our company, our nation, our new venture, or our era is different. It is important to push back against these biases. You can do this by paying attention to real-world data that refutes the echo-chamber chanting of the crowd—and by learning the lessons taught by history and by other people in other places.

Highlights for The Coaching Habit

When you use “And what else?” you’ll get more options and often better options. Better options lead to better decisions. Better decisions lead to greater success.

There’s a place for giving advice, of course. This book isn’t suggesting that you never give anyone an answer ever again. But it’s an overused and often ineffective response.

Which is why people in organizations like yours around the world are working very hard and coming up with decent solutions to problems that just don’t matter, and why the real challenges often go unaddressed.

The simple act of adding “for you” to the end of as many questions as possible is an everyday technique for making conversations more development- than performance-oriented.

Stick to questions starting with “What” and avoid questions starting with “Why.”

We often don’t know what we actually want. Even if there’s a first, fast answer, the question “But what do you really want?” will typically stop people in their tracks.

I was not a successful law student. I remember almost nothing from my classes, and I ended my studies by being sued by one of my lecturers for defamation. It’s a long story.

“Are you more important or less important than I am?” is the question the brain is asking, and if you’ve diminished my status, the situation feels less secure.

T is for tribe. The brain is asking, “Are you with me, or are you against me?”

E is for expectation. The brain is figuring out, “Do I know the future or don’t I?”

A is for autonomy.

If you believe you do have a choice, then this environment is more likely to be a place of reward and therefore engagement.

A way to soften this question, as with all questions, is to use the phrase “Out of curiosity.”

Other phrases that can have a similar softening effect on the question being asked are “Just so I know…” or “To help me understand better…” or even “To make sure that I’m clear…”

You’re giving the solution, you’re providing the answer, you’re adding something to your to-do list. You’re assuming you know what the request is, even though the request hasn’t been clearly made. In short, you’re taking responsibility.

The more direct version of “How can I help?” is “What do you want from me?”

the wheel is spinning but the hamster is dead.

In fact, “strategic” has become an overused qualifier, something we add to anything that we want to sound more important, more useful, more thoughtful, more… good.

Why are you asking me?

Whom else have you asked?

When you say this is urgent, what do you mean?

According to what standard does this need to be completed? By when?

If I couldn’t do all of this, but could do just a part, what part would you have me do?

What do you want me to take off my plate so I can do this?

What is our winning aspiration?

Where will we play?

How will we win?

What capabilities must be in place?

What management systems are required?

You want them to learn so that they become more competent, more self-sufficient and more successful.

Academic Chris Argyris coined the term for this “double-loop learning” more than forty years ago.

But “What was most useful for you?” is like a superfood—kale perhaps—compared with the mere iceberg-lettuce goodness of the other questions.

“Is my manager useful?” the question asks. And thinking back over the last year, he’s struck by the fact that every single conversation with you has proven to be useful.

Answering that question extracts what was useful, shares the wisdom and embeds the learning. If you want to enrich the conversation even further—and build a stronger relationship, too—tell people what you found to be most useful about the exchange.

Highlights for Financial Strategy for Public Managers

Boeing’s executives expect their managers to know this information, in real time, if the company is to remain profitable.

Managers need good information about costs to set prices, determine how much of a good or service to deliver, and to manage costs in ways that make their organization more likely to achieve its mission.

Public financial resources are finite, scarce, and becoming scarcer.

CVP is a powerful tool that can directly illuminate many important management decisions.

For most public organizations personnel costs are the largest and most visible budget inputs. That’s why effective budgeting for public organizations starts, and often ends, with careful attention to budgeting for personnel.

Public managers must know what portion of the costs for which they’re responsible are fixed, variable, and step-fixed. They must also understand how different cost items connect to service delivery outputs, and how their cost center is assigned indirect costs. And perhaps most important, they must understand how their program’s cost structure and cost behavior will change under different performance scenarios.

For instance, for organizations with mostly fixed costs one of the best approaches to manage costs and bolster profitability is to “scale up.” Since fixed costs are fixed, one way to manage them is to spread them across the largest possible volume of service. However, for organizations with mostly variable costs, scaling up will simply increase variable costs. The better approach in that circumstance is to invest in new technology, procurement processes, or other strategies that can drive down variable costs.

The best we can do is understand these trends, forecast them to the best of our ability, and help policymakers understand the trade-offs these trends put in play.

But fundamentally, budgeting is a form of politics. Resources are scarce, and budgeting is the process by which organizations allocate those scarce resources. As such, budgeting is about managing conflict.

For budget policymakers, conflict and compromise is often around that annual percentage change, or increment. This assumes, of course, that last year’s budget – or base budget – was a fair representation of the organization’s goals and priorities. If this is not true, then debating incremental change will only amplify that disconnect between resources and priorities. In fact, for most public organizations, that disconnect is persistent and pervasive.

Legislators and board members are generally willing to appropriate small amounts of money to try “innovative” approaches. With time, many of those small experiments morph into large-scale programs.

Highlights for UX for Lean Startups

Nothing will bias a session faster than you trying to sell him on your ideas. You’re not there to talk. You are there to listen.

Nobody in the world can possibly tell you whether some abstract concept you just explained will solve a problem that they have. Even if they could somehow understand the wild abstractions you’re presenting them with, they couldn’t honestly tell you whether they would pay money for your solution.

They hear “listen to your customer” and think that we want them to blindly accept every ridiculous feature request made by somebody with a credit card and an opinion.

The point was, whatever changes we made, we had an objective way of determining whether or not the design was a success.

You see, if you’re designing something interactive, you need to design it to be…well…interactive.

One of the most common problems, and possibly the toughest one to overcome, is the tendency to accept solutions from users without understanding the underlying problem.

If you trust your engineering team to make some interaction design decisions, then you can present them with lower fidelity mocks and work through things like corner cases with them as they build.

I’ll just mention that, if you’re working with an outside agency of any sort, it is almost certainly spending time making its deliverables attractive. I

It may not be immediately clear how that relates to UX, but in my experience, Agile, iterative, efficient teams create better user experiences every time.

Design is not art. If you think that there’s some ideal design that is completely divorced from the effect it’s having on your company’s bottom line, then you’re an artist, not a designer. Design has a purpose and a goal, and those things can be measured.

The best alternative is the cross-functional team.This can be a tough change for people who are used to working in their own little silos, but combining people into one product team lets you go much faster.

The reason this works is that everybody is working on the same thing at the same time, which means that there are no handoffs where information gets garbled or lost.

Highlights from Alibaba: The House That Jack Ma Built

The idea is that by sharing orders, delivery status, and customer feedback each member company can improve efficiency and service quality, while remaining separately owned.

Alibaba encourages a sense of informality at work. Every employee is asked to adopt a nickname.

With its constant emphasis on culture and ideology, people at Alibaba refer to HR informally as the “Political Commissar” (zheng wei).

reducing “time to market,” launching products that they can perfect later, an approach some refer to as “running with short steps.”

“English helps me a lot. It makes me understand the world better, helps me to meet the best CEOs and leaders in the world, and makes me understand the distance between China and the world.”

Then trotting out one of his favorite sayings: “Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful. However, the majority of people will die tomorrow night. They won’t be able to see the sunshine the day after tomorrow. Aliren must see the sunshine the day after tomorrow.”

Because schools teach knowledge, while starting businesses requires wisdom. Wisdom is acquired through experience. Knowledge can be acquired through hard work.”

Taobao.com’s tagline was “There is no treasure that cannot be hunted out, and there is no treasure that cannot be sold.”

But this contrarian stance is vintage Jack.

Highlights from What Got You Here Won’t Get You There

Successful people consistently compare themselves favorably to their peers.

People who believe they can succeed see opportunities where others see threats. They’re not afraid of uncertainty or ambiguity. They embrace it. They want to take greater risks and achieve greater returns. Given the choice, they will always bet on themselves.

Successful people have a unique distaste for feeling controlled or manipulated.

If you press people to identify the motives behind their self-interest it usually boils down to four items: money, power, status, and popularity.

That’s the fallacy of added value. Whatever we gain in the form of a better idea is lost many times over in our employees’ diminished commitment to the concept.

It’s obvious that the best course of action for dealing with people like this is to not let them make us angry. Getting angry doesn’t improve the situation and life’s too short to waste on feeling bad.

But once you appreciate the payoff of saying nothing—that if you’re silent, you cannot make an ass out of yourself or make an enemy out of someone else—then you might have a chance of getting better.

I also suspect that’s a big reason why so many of us withhold information. It’s not that we want to keep people in the dark. It’s simply that we’re too busy. We mean well. We have good intentions. But we fail to get around to it.

If the answer was “yes” he gave them some very quick recognition, either by phone, e-mail, voice mail, or a note.

Stop blaming others for the choices you made—and that goes with double emphasis for the choices that turned out well.

No one expects us to be right all the time. But when we’re wrong, they certainly expect us to own up to it.

It’s not about you. It’s about what other people think of you.

Basically, we accept feedback that is consistent with our self-image and reject feedback that is inconsistent.

1. Let go of the past.  2. Tell the truth.  3. Be supportive and helpful—not cynical or negative.  4. Pick something to improve yourself—so everyone is focused more on “improving” than “judging.”

It’s my contention—and it’s the bedrock thesis of this book—that interpersonal behavior is the difference-maker between being great and near-great, between getting the gold and settling for the bronze.

Even though we may be able to deny our problems to ourselves, they may be very obvious to the people who are observing us.

Some of the best feedback comes from what you observe. If you accept it and act on it, it’s no less valid than people telling you the same thing at point-blank range.

In each phase you must target a different constituency. In phase 4, you woo up—to get your superiors to approve. In phase 5, you woo laterally—to get your peers to agree. In phase 6, you woo down—to get your direct reports to accept.

All I’m saying is that you cannot rely on other people to read your mind or take note of the changed behavior you’re displaying. It may be patently obvious to you, but it takes a lot more than a few weeks of behavioral modification for people to notice the new you.

There’s the part where we actually listen. And there’s the part where we speak. Speaking establishes how we are perceived as a listener. What we say is proof of how well we listen. They are two sides of the same coin.

Asking, “Is it worth it?” engages you in thinking beyond the discussion to consider (a) how the other person regards you, (b) what that person will do afterwards, and (c) how that person will behave the next time you talk.

The ability to make a person feel that, when you’re with that person, he or she is the most important (and the only) person in the room is the skill that separates the great from the near-great.

Eventually, you’ll come to see that expressing gratitude is a talent—a talent that goes hand in hand with wisdom and self-knowledge and maturity.

But injecting Jim into the mix—a friendly sympathetic human being whom, on the one hand, I do not want to disappoint (that’s human nature) and who, on the other hand, provides constant encouragement and input—brings it more in line with the follow-up process I’ve been describing here

Successful people have a high need for self-determination and will tend to accept ideas about concerns that they “own” while rejecting ideas that feel “forced” upon them.

What’s interesting (and reassuring) about this story is that it’s an example of a boss accurately assessing his shortcomings and his employee agreeing with him. That isn’t always the case. Sometimes the gap between what a boss says about himself and what the staff believes is wide, very wide.

Your memo has to be brutally honest. Your employees have to believe it is accurate. And most important, they must believe it matters.

Let them figure out what they should be doing on their own. Let them tell you where you’re not needed.

If you manage your people the way you’d want to be managed, you’re forgetting one thing: You’re not managing you.

Most leadership development revolves around one huge false assumption—that if people understand then they will do. That’s not true. Most of us understand, we just don’t do.

I tell people that change is a simple equation: Stop the annoying behavior and you’ll stop being perceived as an annoyance.

The smart ones believed that their corporation would “drop them in a flash” when they no longer met the company’s needs, so they in turn were willing to “drop the company” when it no longer met their needs.

As a general rule, people in their 20s want to learn on the job. In their 30s they want to advance. And in their 40s they want to rule.

Let that be your model for dealing with needy, demanding, allegedly “selfish” employees. To ignore them and resent them is to misunderstand them—and eventually lose them. You’re committing the corporate equivalent of a hate crime.

Managers at smart companies are catching on. They’re beginning to see that their relationship with top talent resembles a strategic alliance rather than a traditional employment contract.

Stop trying to change people who don’t think they have a problem.

Highlights from The Principles of Product Development Flow

“I believe that the dominant paradigm for managing product development is fundamentally wrong.”

In practice, sensible behavior prevails, despite the presence of a dysfunctional formal procedure.

Third, with a little help from option pricing theory, we will discover that we can actually design development processes such that increases in variability will improve, rather than worsen, our economic performance.

We favor highly granular planning because we don’t understand the statistics of variability.

We value flexibility, and we pay for it. In contrast, most product development organizations exclusively reward specialization.

One of the most interesting examples of decentralizing control without losing alignment is the way the military deals with the uncertainty of warfare.

If you only quantify one thing, quantify the cost of delay.

As this book progresses, you will see that the economics of flow is almost always dominated by the cost of queues. If we cannot quantify the cost of a queue on the critical path, then we cannot quantify the benefit of reducing this queue. If we cannot quantify the benefit, we can’t generate support for major changes.

Reducing risk, which is the primary mission of testing, clearly creates economic value for product developers. In fact, reducing risk is so centrally important to product development that it is indispensable for us to quantify its economic impact.

In product development, our greatest waste is not unproductive engineers, but work products sitting idle in process queues.

In product development, our problem is virtually never motionless engineers. It is almost always motionless work products.

We can create enormous improvements in decision making with surprisingly imperfect answers. Do not let fear of inaccuracy prevent you from creating economic frameworks.

This leads to what we might call the Pareto Paradox: There is usually more actual opportunity in the undermanaged 80 percent than the overmanaged 20 percent.

Some product developers aspire to use the same approach in product development. They prepare a minutely detailed plan at the beginning of the project and measure performance against this plan. When they deviate from this plan, they take corrective action. They aspire to front-load their decisions. While this is a superb strategy in repetitive environments like manufacturing, it is a terrible one in product development.

Not only do these emergent opportunities arrive continuously and randomly, but they are also quite perishable. Opportunities get smaller with time, and obstacles get larger.

It is always useful to look for a way to reshape a bad choice into a better one. Decompose the choice into its pieces and keep the good parts.

The general principle is that we should make each decision at the point where further delay no longer increases the expected economic outcome.

The value of information is its expected economic value.

Low-cost activities that remove a lot of risk should occur before high-cost activities that remove very little risk.

Such aggressive filtering, before acquiring sufficient information to make a good economic choice, would eliminate all uncertain and poorly understood opportunities. However, it is precisely these uncertain opportunities that have large payoff asymmetries, making them the best sources of new drugs. Opening the filter to pass these asymmetric opportunities actually increases economic value.

In my experience, most managers make amazingly fast decisions when they are presented with compelling economic arguments.

Product development inventory is observable through its effects: increased cycle time, delayed feedback, constantly shifting priorities, and status reporting.

The more projects we have in process, the more projects we have to track and report status on.

This is actually a more serious problem than most developers realize because the waste created by following a bad path typically increases exponentially, not linearly, as we progress down the path.

Widespread queues demotivate workers and undermine initiative.

Managing the process upstream of the bottleneck is a valuable tool for improving flow at the bottleneck.

We simply cannot rely on randomness to correct the problems that randomness creates.

Waiting for complete information improves efficiency, but it leads to queueing.

Product development creates economic value by producing the recipes for products, information, not by creating physical products.

Risk-taking is central to value creation in product development.

We frequently encounter strongly asymmetric payoffs in product development. The value of a success can be much higher than the cost of a failure.

Either excessive or insufficient probability of failure reduces the efficiency with which we generate information.

Repeating the same failures is waste, because it generates no new information. Only new failures generate information.

Product developers should clearly distinguish exploratory testing, which should be optimized for information generation, and validation testing, which should be optimized for high success rates.

When our task list becomes very granular, the noise in each estimate is very high compared to the signal. Granular estimates produce good estimates of aggregate scope, but we should never schedule tasks at this level of detail. Instead, it makes more sense to aggregate many small tasks and to schedule them as a group.

The irony of this is that many companies try to reduce the risk of poor forecasts by taking more time to do a careful forecast.

A buffer converts uncertain earliness to certain lateness.

In product development, “left side” outcomes represent bad variability, but “right side” outcomes represent good variability.

Each engineering decision acts as a predecessor for many subsequent decisions. The number of dependent decisions generally grows geometrically with time. Consequently, a single incorrect assumption can force us to change hundreds of later decisions. When we delay feedback, rework becomes exponentially more expensive.

When engineers are experimenting with a new idea, rapid feedback is enormously energizing. Rapid feedback quickly supplies the positive reinforcement of success, and fast positive reinforcement always increases motivation.

It is generally safe to assume that we really don’t know where the optimum point is on the batch size response surface. As a result, we must test the response of the product development process to batch size reduction by reducing batch size and measuring the results.

Sequence activities to create maximum value for minimum cost, and remember that removing risk from a project is a key way to increase the expected value of the project.

Since it takes almost equal effort to ask for a big bag of money as a small one, people prefer to ask for big bags of money.

the practice of working in one phase at a time is so devoid of common sense that engineers seldom follow it, even when it is required by their procedures.

If a simple kanban system was trying to limit the WIP between two processes to 30 items, it might use six pallets that could each hold five parts as physical kanbans. The downstream process would take parts off a pallet and when it was empty, send it back to the upstream process. This empty pallet would signal the upstream process to make more parts. The upstream process is not allowed to make parts unless it has an empty pallet to put them on. This sets an upper limit on the amount of WIP between the two processes.

Toyota further enhances the effectiveness of this WIP constraint by cross-training workers at adjacent work stations.

A smaller batch size approach to WIP purging is to shed requirements during periods of congestion.

It is best to identify in advance which requirements we would consider eliminating or relaxing. We do this for two reasons. First, we can make a more well-reasoned decision before the pressure of a congestion crisis occurs. Second, if we preplan which requirements might be jettisoned, we can structure our product architecture to make it easy to jettison them. We do so by loosely coupling these elements to the rest of the system, so that we can cut them loose quickly.

A simple way to do this is for the development team to pay for variances during manufacturing ramp. Once the product has been in manufacturing for a fixed amount of time, responsibility for these variances can be transferred to manufacturing.

Which project activities are most suited for part-time resources? Those that are most prone to expensive congestion. These are high-variability tasks on the critical path. Activities that are more predictable can be handled with full-time resources, since such activities experience less congestion.

Unfortunately, most organizations love to load these highly productive resources to very high utilization rates. We need to change this mind-set. The big guns are not most valuable as an efficient substitute for small guns, they are most valuable for handling situations that the small guns cannot handle.

Experts allow us to apply tremendous problem-solving power to a bottleneck. Generalists can be easily shifted to any place they are needed. Is there a way to get both these benefits from the same person? Some organizations believe this is possible, and they characterize the people they are trying to create as T-shaped resources.

The ideal resource is a jack-of-all-trades and a master-of-one.

It takes advanced planning to do cross-training and to create T-shaped resources. It takes discipline to load experts to less-than-full utilization. The decision to use part-timers must be made early.

Detailed planning is very perishable, and this perishability increases with the distance to the planning horizon.

When we cram too many projects into the product development pipeline, we create queues. These queues create a frictional drag on throughput as developers spend more time expediting and less time adding value. The added load reduces output instead of increasing it.

Whenever we have any flexible customers, we can use pricing to reduce congestion. Because of the steepness of the queueing curve, even a small shift in demand can make a big difference in flow time.

We monitor the queue and intervene to restore it to the center of its target range, not to simply bring it back within bounds.

Cadence inherently makes activities automatic and routine. This lowers transaction overhead and makes it economical to use smaller batches.

This is an interesting case where the heirs of a brilliantly designed system failed to understand the underlying logic of the system.

When all jobs have the same delay cost, the preferred scheduling strategy is to do the shortest job first (SJF).

Projects should only visit nodes that add economic value. They should visit these nodes in the specific sequence that adds economic value most cost-effectively.

As a general rule, any inexpensive step that eliminates a lot of risk should occur early.

Instead, it is usually better to maintain a trickle flow of work through the alternate route, even when the primary route is under-utilized.

Decisions are made at a synchronous, cadenced meeting where people from adjacent processes can easily interact.

The curtain between adjacent processes does not have to be completely opaque. As work nears completion, we should make its character visible to downstream resources.

They assume that the plan is correct, and a deviation is always bad. Therefore, they try to close the gap between the two by making results closer to the plan. They often discover it is cheaper to prevent deviations than it is to correct them, so they also emphasize preventing deviations.

When goals are dynamic, we need different control systems. If we have stable goals, we try to prevent deviations, often by increasing inertia and avoiding risk. If we have dynamic goals, we try to quickly correct deviations, often by decreasing inertia.

Not all deviations have negative economic consequences.

By accelerating feedback, we can design processes with less WIP, thereby lowering delay times.

Whenever we have a short turning radius and a quick reaction time, we can proceed safely at a higher speed.

This develops a culture of magical decision making, where everybody feels they can make great decisions unencumbered by either analysis or facts.

When people see that their actions cause consequences, it changes their behavior. They feel a sense of control, and this causes them to take even more control of the system.

Under dynamic conditions, we need to pay attention to the timing of the revenue associated with the inventory. When revenue is growing rapidly, we may need more DIP to support this growth.

The Marines believe orders are incomplete without this information. They believe that intent needs to be understood deeply through the organization. They believe that when intent is clear, Marines will be able to select the right course of action.

In product development, we can change direction more quickly when we have a small team of highly skilled people instead of a large team. We can change direction more quickly when we have a product with a streamlined feature set, instead of one that is bloated with minor features. We can change direction more quickly when we have reserve capacity in our resources.

Since the Marines expect plans to change, they focus on simple, modular, and flexible plans. Simplicity leads to fast adaptation. Modularity solves the problem of adaptation because different modules can be configured many different ways. Flexibility is achieved by preplanning “branches” and “sequels.”

There is no substitute for moving to a quick proof-of-concept. There is no substitute for early market feedback.

They believe that one of the biggest mistakes a leader could make is to stifle initiative.

Highlights from Managing Humans

”You must see the people who work with you.”

The presence of rigid, e-mail-based status reports comes down to control, a lack of imagination, and a lack of trust in the organization.

The courage it takes to stop this meeting five minutes into the scheduled hour because there is no discernible way to make progress.

It’s great that your freak has chosen to freak out. The alternative is that they’re not saying a thing and have decided to leave the company.

A meeting agenda would help, but as most meetings proceed without one, you’re on your own.

It’s a noble act, speaking your mind in front of all your peers. But it’s also a waste of time.

Roles and agendas in these meetings are simple. Talkers are talking and listeners are listening. Get it? There is no problem to be solved other than the transmission of information. The quicker it happens, the sooner everyone is back to work.

Exhibiting your power and knowledge as a manager isn’t always the best method of communicating.

Blindly landing process without considering the culture it needs to support it is a recipe for disaster.

Each additional person levies a communication tax, and unless we figure out how to constantly improve our communication, we’re just going to get slower.

Bright-and-shiny inflection points are full of energy, but unless that energy is carefully channeled back into the building and immediately acted upon, all an off-site represents is a frustrating opportunity to dream, but not to act.

Use the development environment to build the product. This means you must be familiar with your team’s tools, including the build system, version control, and programming language.

Process is the means by which your team communicates.

What I am saying is that any big decision, any big problem, deserves time and consideration.

I know there is no controlling the world, but I will fluidly surf the entropy by constantly changing myself.

The game here isn’t just overcommunication and Grapevine eradication; I’m still worried I missed something in the plan, and the status spamming is another means of vetting both the plan and the progress.

These people, called managers, don’t create product. They create process.

We all get shit work, but it’s the responsibility of the guy or gal in charge to dole this work out fairly and consistently.

Each week that passes where you don’t share the joy, despair, and discovery of software development is a week when you slowly forget what it means to be a software developer.

A strategic hire is someone who is going to push their agenda, their opinion.

A tactical hire is a person who is filling a well-defined need.

Your job interview isn’t over until you’ve changed to become part of a new team.

There are chronically negative nerds out there, but in my experience with nerd management, it’s more often the case that the nerd is bitter because they’ve seen this situation before four times, and it has played out exactly the same way.

Yeah, they’re going to argue, but it’s the argument you want your teams to have. It’s not a fear-based “Should we or shouldn’t we?” it’s “Let’s do this thing, let’s make sure it gets done, and let’s make sure it gets done right.”

As an aside, let me stress how bad of a career move it is to not know who you are going to be working for when you arrive. The 30-minute interview you have with your future manager is a critical piece of information when you decide whether or not to make a move.

My personal favorites are mechanical organics. These folks have all the slick tricks of organic information gathering, but they’ve got the astounding organization skills of the mechanic. They know everything and never forget a bit. I mean it. Organic mechanics are frightening. They have extreme depth of knowledge, but there is no obvious organic thread that ties it all together. Here’s the scary part. There is a thread. There is a purpose. They just aren’t letting you see it. Organic mechanics will keep you on your heels and just when you think you’ve figured them out, they’ll change everything. I hate that. I mean, I love that.

Wait, don’t these holistics have product to ship? No, they have multiple products, but they’ve hired rock-star inwards to get the products built to specification and on time so they can focus on figuring out what to build next and who they’re going to need to build it.

I’m not suggesting that outwards don’t care about the daily professional shenanigans within the company; they do, but they’ve also hired a group of rock-star holistics to run their company. The rub is this: while it’s not their job to run the company on a daily basis, they are accountable for it.

What you need to know about your manager is how much he cares about this growth and, more importantly whether he sees this as his growth opportunity or the team’s.

You are not that person, because once you are rewarded for releasing crap, you begin a blind walk down a path of mediocrity that ends up with you working at Computer Associates on a product no one has heard of and that no one cares about.