I find that many organisations have a myopic over focus on the immediate term. This over focus drives poor return on investment over the longer term. In this episode I revisit the analogy of technical debt and how this is related to an over focus on the immediate. I will also pull from the three horizons example from the book The Alchemy of Growth on a way of avoiding that over focus.
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Published: Wed, 15 Apr 2020 16:18:40 GMT
Transcript
I've talked many times about how I see product thinking being better for ROI than project thinking.
Product thinking has us consider the entire life of the software - the creating, the maintaining and even the end of life.
Project thinking has us consider a very finite portion of that. Generally a very thin slice of the entire life of the software.
Thus, can encouraging us to think poorly in our decision making.
We focus on getting that job done - generally to the expense of all else - including the longer term viability of the software.
In episode 16, I talked about the term Technical Debt which helps us to talk about this trade off.
It draws an analogy between the well understood concepts of financial debt and the long term overhead we may acquire for the software product for the benefit of expediting some critical task.
And sometimes this maybe the correct thing to do.
For example;
Maybe we have a trade show or major customer meeting where we need to dazzle.
We pull out all the stops to provide the most presentable version that we can.
All the while knowing we are incurring technical debt for our future selves.
And as I say, like financial debt, this can be the correct approach.
Maybe that trade show was the make or break for the organisation.
Without the dazzle, the organisation would simply no longer be viable.
So it would be correct to accept that future debt to achieve the goals - or indeed, the continuation of the organisation.
But, once we've all congratulated ourselves and celebrated for an outstanding trade show success, we must still remember we have that debt to pay down.
Otherwise it just becomes a matter of time before we receive the figurative knock on the door from the technical debt collector.
What we may have seen as an organisation saving event - becomes simply a stay of execution.
So again, while taking on this debt is a perfectly acceptable business action - it should be used with great caution and with the understanding of the future obligations.
Unfortunately, I see too much overuse of accepting technical debt while largely ignoring the future obligations.
And largely this is being done without conscious thought.
We are simply too focused on achieving our current aim.
Too often we are focused on the immediate short term:
- "We need this now"
- "We need to meet monthly targets"
- "We don’t have the current budget"
When an organisation is focused on the short term, then there is a drive throughout the organisation to focus on that to the exclusion of almost everything.
You find that the executive team will push for those short term objectives, the project management will push for those, and the development teams will be expecting to work to them
I’ve seen it get to such a point where professional developers will actively not follow industry best practice due to the perceived notion that the business wants them to “get it done”.
And that's when you start to acquire technical debt at a phenomenal rate - generally unseen by anyone in the organisation.
Now this focus on the immediate - the short term - is hardly constrained to just software development.
Its a common problem with many organisations today.
They have a myopic culture - everything is generally about the current month, quarter or year. There is generally very little effort or thought put into what is beyond that.
The consultancy McKinsey and Company talk about this in terms of 3 horizons.
Originally from the book The Alchemy of Growth, the 3 horizons aims to help organisation beyond the immediate term. While the organisation has to attend to the existing day-to-day activities, it also need to look to the future ways of maintaining growth.
The general take away being that an organisation has to find ways to continue to grow - the alternative is effectively stagnation and ultimately atrophy.
And to continue to grow, the organisation needs to continually assess potential opportunities for growth while not neglecting the activities that keep the lights on.
The book described horizon one as representing the core activities most readily identified with the organisation and those that provide the greatest profits and cash flow.
It describes horizon two as encompasses emerging opportunities, including rising entrepreneurial ventures likely to generate substantial profits in the future.
And it describes horizon three as ideas for profitable growth down the road.
The horizons are used to categorise the organisational focus.
Organisation focus on horizon one activities should be on improving performance to maximize the remaining value. Largely the activity of keeping the lights on.
Organisation focus on horizon three should be thought as small bets on the future - for instance, small ventures such as research projects, pilot programs, or minority stakes in new businesses.
Organisation focus on horizon two should be taking promising ideas from horizon three - putting more investment into them with a view to preparing them to move to horizon one if they prove approriate.
Over focus on any single area is not healthy for the long term health of the organisation.
Too much focus, as I often see, on horizon one - the immediate - the day-to-day - the keeping the lights on - means that little to no focus is being put into ideas for future growth - the horizon two and three work.
The advice is, that for healthy growth, an organisation should be distributing its focus across all three horizons.
It should be using Horizon three to be making many small bets - many of which will fail - very much like the Minimum Viable Product theory I've discussed previously.
Of those bets that pay off, we move them into Horizon two where the idea can be refined and developed further. Again, the expectation is that more of these will fail at this stage.
And only those proven winners should make their way into horizon one - becoming a key aspect of the organisation.
Its effectively an innovation funnel.
Personally, I have some concerns over how this approach can be interpreted.
It can easily be seen as running three organisations - the core for horizon one, an incubator for horizon two and research & development for horizon three.
And while this would certainly be better than the myopic over focus of most organisation on the immediate - the here and now - the horizon one; it puts all of that growth expectation into that Research & Development organisation.
I prefer to think about the organisation as a whole and empowering the entire organisation to be able to assist in that growth.
For some organisations, it maybe easier to think in terms of splitting the focus three ways - across the three horizons.
And maybe its a good stepping stone to easing an organisation into empowering the entire organisation as I'd prefer - as long as its seen as a step along the journey rather than the end destination.
In this episode, I've highlighted that many organisations have a myopic over focus on the immediate term.
I've talked about how that over focus will not result in good long term ROI from your software development - or indeed the organisation.
I've equated it to the technical debt analogy I've previously talked about and re-iterated my advice to use technical debt in a responsible sustainable manner.
I've also introduced the three Horizons described by the book The Alchemy of Growth. While I worry that the approach could introduce dysfunctional silos - I do believe it can be a useful stepping stone to move away from that myopic thinking.