Book review: “Principles” by Ray Dalio

“Principles” is the latest book by Ray Dalio – founder of Bridgewater, the world’s largest hedge fund. In this rather hefty tome of a book, Dalio offers an insight into the principles which he’s applied throughout his life and work, and his underlying reflections. He kicks off the book by explaining that “Good principles are effective ways of dealing with reality” and that “To learn my own, I spend a lot of time reflecting.”

 

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“Principles” consists of three parts. In the first part, titled “Where I’ coming from”, Dalio looks back on his career and the founding of Bridgewater. “Life Principles” is the name of the second part, and covers Dalio’s approach to life’s challenges and opportunities. Finally. part three covers Dalio’s “Work Principles”. Let me share the key things I’ve taken away from “Principles”, starting with Dalio’s Life Principles:

  • Embrace reality and deal with it – Dalio shares an important equation which in his view makes for a successful life: Dreams + Reality + Determination = A Successful Life. For the ‘reality’ component of this equation to work, Dalio encourages his readers to be radically open minded and radically transparent.
  • Pain + Reflection = Progress – Dalio’s point about “going to the pain rather than avoiding it” resonated with me (see Fig. 1 below). It’s easy to dismiss this statement because it’s coming from a highly successful investor, but I’d flip that as I can see how someone like Dalio has gone through his own share of pain to get to where’s he gotten to, and learned along the way.
  • Using the 5-step process to get what you want out of life – Start with having clear goals (step 1), followed by identifying but not tolerating the problems that stand in the way of your achieving those goals (step 2), then you accurately diagnose the problems to get at their root causes (step 3), design plans that will get you around them (step 4) and, finally, do what’s necessary to push these designs through to results (step 5). Dalio depicts this as a continuous process and people can benefit from applying this model to achieve their goals (see Fig. 2 below).
  • Understand that people are wired very differently – Dalio stresses the fact that all people are wired very differently, and zooms in on the differences between left and right brained thinking (see Fig. 3 – 4 below).

 

Fig. 1 – Going to the pain instead of avoiding it – Taken from: Ray Dalio – Principles, p. 154

  • Identifying, accepting, and learning how to deal with your weaknesses.
  • Preferring that the people around you be honest with you rather than keep their negative thoughts about you to themselves.
  • Being yourself rather than having to be strong where you are weak.

 

Fig. 2 – Ray Dalio’s 5-step process – Taken from: Ray Dalio – Principles, p. 171

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Fig. 3 – Differences between left and right brain – Taken from: https://visme.co/blog/left-brain-right-brain-marketing/

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Fig. 4 – Understand the differences between right-brained and left-brained thinking – Taken from: Ray Dalio – Principles, p. 223

  1. The left hemisphere reasons sequentially, analyses details, and excels at linear analysis. “Left-brained” or “linear” thinkers who are analytically strong are often called “bright.”
  2. The right hemisphere thinks across categories, recognises themes, and synthesises the big picture. “Right-brained” or “lateral” thinkers with more street smart are often called “smart.”

 

Dalio’s Work Principles are dominated by the concept of an Idea Meritocracy – i.e. a system that brings together smart, independent thinkers and has them productively disagree to come up with the best possible collective thinking and resolve their disagreements in a believability-weighted way (see Fig. 5 below). Dalio successfully implemented an Idea Meritocracy at Bridgewater and shares the components of such a system in his book:

Idea Meritocracy = Radical Truth + Radical Transparency + Believability – Weighted Decision Making

  • Radical Truth – Talking openly about our issues and have paths for working through them.
  • Radical Transparency – Giving everyone the ability to see everything. Radical transparency reduces harmful office politics and the risks of bad behaviour because bad behaviour is more likely to take place behind closed doors than out in the open.
  • Believability – Dalio defines believable people “as those who have repeatedly and successfully accomplished the thing in question – who have a strong track record with at least three successes – and have great explanations of their approach when probed.”
  • Thoughtful Disagreement – The concept of Believability is closely linked to the art of Thoughtful Disagreement; the process of having a quality back-and-forth in an openminded and assertive way to see things through each other’s eyes.
  • Weighted Decision Making – At Bridgewater, employees have different believability weightings for different qualities, like expertise in a particular subject, creativity, ability to synthesise, etc. Dalio explains that in order to have a true Idea Meritocracy one needs to understand the merit of each person’s ideas.
  • Prerequisites for an Idea Meritocracy – To have an Idea Meritocracy three conditions need to be in place. Firstly, put your honest thoughts on the table. Secondly, have thoughtful disagreement (see above). Thirdly, abide by agreed-upon ways of getting past disagreement.
  • Mistakes are part of the game – Dalio has a refreshing outlook on the role and value of mistakes, which he treats as “a natural part of the evolutionary process”. It’s important in this respect to assess whether people recognise and learn from their mistakes. Dalio distinguishes between people who make mistakes and who are self reflective and open to learning from their mistakes and those who are unable to embrace their mistakes and learn from them.
  • Get people to focus on problems and outcomes – Assign people the job of perceiving problems, give them time to investigate, and make sure they have independent reporting lines so that they can convey problems without any fear of recrimination. To perceive problems, compare how the outcomes are lining up with your goals. Dalio also offers some valuable tips on how to best diagnose problems (see Fig. 6 below).
  • Avoid the “Frog in the boiling water” syndrome – Apparently, if you throw a frog into a pot of boiling water it will jump out immediately, but if you put it in room-temperature water and gradually bring it to a boil, it will stay in the pot until it dies. If one uses this syndrome as a metaphor for professional life, it signifies people’s tendency to slowly get used to unacceptable things that would shock them if the say them with fresh eyes.
  • Don’t just pay attention to your job – Instead, pay attention to how your job will be done if you’re no longer around. Dalio talks about the ‘ninja manger’ as “somebody who can sit back and watch beauty happen-i.e. an orchestrator. If you’re always trying to hire somebody who’s as good as or better than you at your job, that will both free you up to go on to other things and build your succession pipeline.”

 

Fig. 5 – The Idea Meritocracy as is the best way to make decisions – Taken from: https://twitter.com/RayDalio/status/1066357616350253057

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Fig. 6 – Diagnose problems to get at their root causes – Taken from: Ray Dalio – Principles, p. 484 – 490

To diagnose well, ask the following questions:

  • Is the outcome good or bad?
  • Who is responsible for the outcome?
  • If the outcome is bad, is the Responsible Party incapable and / or is the design bad?

 

Main learning point: Whilst “Principles” feels a tad repetitive at times and some of Dalio’s ideas might not be easy to implement, I feel that Dalio’s principles can provide great direction for all people working in organisations, big or small.  His reflections on things such as transparency and decision-making will be valuable to anyone reading this great book.

 

Related links for further learning:

  1. https://youtu.be/c1OoWdqbKdg
  2. https://www.ted.com/talks/ray_dalio_how_to_build_a_company_where_the_best_ideas_win
  3. https://www.youtube.com/watch?v=B9XGUpQZY38
  4. https://www.youtube.com/watch?v=S7hNda9DVxo

 

Book review: “Autonomy”

Lawrence Burns is a veteran of the automative industry. Having worked his entire professional career in the car industry – in Detroit, the birthplace of modern car manufacturing no less – you might expect Burns to be apprehensive about ‘change’ and modern technology. The opposite couldn’t be more true of Burns, since he’s been an advocate for driverless cars for the past 15+ years, starting his foray into this field whilst at General Motors.

In his latest book, “Autonomy: The Quest to Build the Driverless Car – and How It Will Reshape Our World”, Burns and cowriter Christopher Shulgan paint a picture of driverless cars dominating our streets and roads, and having a positive impact on the environment and transportation as a whole. For those sceptics out there who dismiss driverless cars as science fiction, I recommend they read “Autonomy” and take note of the technology and societal developments Burns describes:

Getting started, the DARPA Challenge and Google’s “Project Chauffeur”:

The book starts off with the story of the “DARPA Challenge” in 2004 and how this helped shaped learning and development with respect to driverless cars. Burns gives the reader a good close-up of the experiences and learnings from one of the teams that took part in this challenge. At this first DARPA challenge, every vehicle that took part crashed, failed or caught fire, highlighting the early stage of driverless technology at the time.

Image taken from: https://www.wired.com/story/darpa-grand-urban-challenge-self-driving-car/

Driverless cars are the (near) future:

Bob Lutz, former executive of Ford, Chrysler and General Motors, wrote an essay last year titled “Kiss the good times goodbye”, in which he makes a clear statement about the future of the automotive industry: “The era of the human-driven automobile, its repair facilities, its dealerships, the media surrounding it – all will be gone in 20 years.” There’s no discussion that driverless cars are coming, especially that both car and technology giants are busy developing and testing. When I attended a presentation by Burns a few months agogo, he showed the audience  examples of both self driving cars and trucks:

Image taken from: http://www.autonews.com/article/20170316/MOBILITY/170319877/bmw-says-self-driving-car-to-be-level-5-capable-by-2021

Image taken from: https://newatlas.com/volvo-vera-self-driving-truck/56312/

In “Autonomy”, Burns brings Lutz’ predictions to life through the fictitious example of little Tommy and his family. In this example, Tommy steps into a driverless which has been programmed to take him to school in the morning. Tommy’s grandma will be picked up by a driverless two-person mobility pod to take her to a bridge tournament. Burns describes a world where car ownership will be a thing of the past; people using publicly available fleets of self driving cars instead.

Image taken from: https://www.thenational.ae/business/technology/autonomous-pods-the-future-of-city-driving-1.730283

Together with Chris Borroni-Bird, Burns has done extensive research into the potential impact of an electronic self driven car, looking at metrics such as “total expense per mile”, “cost savings per mile” and “estimated number of parts”. Borroni-Bird and Burns provide some compelling stats, especially when contrasted against conventional cars. Reading these stats helps to make the impact of driverless technology a lot more tangible, turning it from science fiction or future music into a realistic prospect.

Main learning point: “Autonomy” by Lawrence is an insightful book about a driverless future, written by a true connoisseur of the car industry and the evolution of driverless technology.

Related links for further learning:

  1. https://spectrum.ieee.org/cars-that-think/transportation/self-driving/auto-consultant-lawrence-burns-dishes-the-dirt-on-waymo
  2. https://www.youtube.com/watch?v=-pLM-2bxNMc
  3. https://www.youtube.com/watch?v=SJVKY1DtZ84
  4. https://www.forbes.com/sites/greggardner/2018/08/23/an-interview-with-self-driving-visionary-larry-burns-co-author-of-autonomy/
  5. http://www.autonews.com/article/20171105/INDUSTRY_REDESIGNED/171109944/industry-redesigned-bob-lutz
  6. https://lucidmotors.com/
  7. https://electrek.co/2017/01/02/lucid-motors-autonomous-tech-all-electric-sedan-mobileye/
  8. http://www.thedrive.com/opinion/9024/who-is-really-1-in-self-driving-cars-you-wouldnt-know-it-from-navigants-controversial-report
  9. https://news.stanford.edu/2017/05/22/stanford-scholars-researchers-discuss-key-ethical-questions-self-driving-cars-present/
  10. https://www.thenational.ae/business/technology/autonomous-pods-the-future-of-city-driving-1.730283
  11. https://www.wired.com/story/darpa-grand-urban-challenge-self-driving-car/
  12. https://spectrum.ieee.org/cars-that-think/transportation/self-driving/google-has-spent-over-11-billion-on-selfdriving-tech

Book review: “Powerful”

“Radical honesty” is easier said than done. In her latest book “Powerful; Building a Culture of Freedom and Responsibility”, former Netflix’ Chief Talent Officer Patty McCord delivers a great plea for the importance and benefits of a culture of “radical honesty”, one of the many things McCord helped put in practice whilst at Netflix. This element of always speaking the truth is one of the tenets of the Netflix culture which McCord was instrumental in shaping and which she writes about in “Powerful”.

McCord looks back on the Netflix culture as one of freedom and responsibility, and describes Netflix’ approach to creating “the leanest processes possible” and “a strong culture of discipline.” I’m keen to unpick the main elements of Netflix’ culture and McCord’s approach to co-creating a ‘powerful’ culture:

  1. Transform organisational culture – McCord outlines where to start with transforming organisational culture: “identifying behaviours that you would like to see become consistent practices (…) then instilling the discipline of actually doing them.” This is very much an evolutionary process, consisting of lots of small steps. The book lists the core set of practices that underpinned the Netflix culture McCord co-created (see Fig. 1 below).
  2. Great teams contribute to success – McCord singles out contribution to success as the greatest motivation for the majority of people and teams. She talks about the energy teams get from meeting a challenge and states “great teams are made when things are hard.”
  3. Hire ‘high performers’ only (1) – My simple adage when recruiting is that if I’m not sure about a candidate or if I / we feel a persistent doubt about the candidate, it’s probably best to refrain from hiring that person. McCord goes one step further by saying that one should only hire high performers; people who do great work and challenge each other. This made me wonder whether this introduces a barrier to entry for less experienced or more junior hires? These people might become very good at their job and will – eventually – benefit from an environment that is both challenging as well as supportive.
  4. Hire ‘high performers’ only (2) – McCord’s point about the importance of “having a great person in every single position on the team”, and how this makes for a highly performant team, reminded me of Steve Jobs’ famous quote. “A players hire A players, but B players hire C players and C players hire D players. It doesn’t take long to get to Z players. The trickle down effect causes bozo explosions in companies.” Perhaps it’s because I don’t know the exact traits of an A player and how to best look out for them, but I struggle with the A player concept. As a result, I felt that the makeup of great teams was the least convincing aspect of McCord’s book. I wondered what McCord make of some of the thinking by Andy Rachleff, a well-known VC and founder, who argues that “when a lousy team meets a great market, the market wins.”
  5. Treat people like adults – McCord also makes the point that we should treat all employees like adults. I know this sounds obvious, but I’ve seen plenty of environments where people aren’t being treated as such. At Netflix, McCord and her colleagues got rid of a whole lot of process, and instead relied much more on people’s own good judgment. For instance, at Netflix they stopped onerous processes such as annual budget and roadmap planning. This introduces a large dose of “trust” into the mix which I believe is invaluable for any business or team.
  6. People don’t want to be entertained at work; they want to learn – McCord’s makes a point about how employees want to learn things at work; they want to solve problems and deal with challenges. Instead of employees spending a lot of time away from their jobs for off-sites or formal training classes, McCord argues, employees benefit from truly learning on the job. She also covers the importance of all employees fully understanding how the business works; this being “the rocket fuel of high performance and lifelong learning.”
  7. Radical honesty (1) – As mentioned above, “radical honesty” plays a key role in Netflix’ company culture. Whether it’s about telling the truth about the company (e.g. its challenges, problems, etc.) or to each other, it’s important that the truth is being shared at any given time. For example, McCord encourages people to be fully transparent about their decisions and where they went wrong.
  8. Radical honesty (2) – The power of asking questions is another important hallmark of the Netflix culture of freedom and responsibility which McCord describes. At Netflix, people were taught to ask questions such as “how do you know that’s true?” or “can you help me understand what leads you to believe that’s true?” People thus learned first hand about what McCord refers to as “the ethic of asking”.
  9. People have power, don’t take it away – McCord dismisses any talk of empowering people. Instead, she argues that people have power and companies shouldn’t take that power away from them. The company’s job isn’t to empower people; companies need to make sure all conditions are in place for people to exercise their power. As a business leader, McCord explains, your job is “to create great teams that do amazing work on time.” She mentions the importance of great leaders ability to spot people’s growth potential and to nurture this potential.
  10. Build the company now that you want to be then – When recruiting people, McCord advises company to focus on future, as opposed to just hiring for the here and now. Can the people you’ve got in your team now do the job at scale? Are you going to need them to do tomorrow the same job they’re doing now? What’s your plan for them? McCord shares a “fast-forward six months forward” exercise which she uses to shape teams for the future of the company (see Fig. 2 below).

Main learning point: I can see how some of the elements that McCord describe describes in “Powerful” might not be applicable to all companies or to specific challenges that readers might be facing. However, I believe that we can all learn from the underlying mindset which McCord describes in her book; whether it’s the importance of ‘radical honesty’ or letting people exercise their power.

 

Fig. 1 – Core set of practices that underpinned the Netflix culture – Taken from: Patty McCord, “Powerful: Building a Culture of Freedom and Responsibility”

  • Open, clear and constant communication: across the entire company about the work to be done and challenges being faced.
  • Radical honesty: telling one another, and management, the truth in a timely fashion and ideally face to face.
  • Debating based on fact based opinions: at Netflix, employees are expected to have strong, fact based opinions and to debate them avidly and test them rigidly.
  • Customer and company first: people to base their actions on what’s best for the customer and the company, not on attempts to prove themselves right.
  • Preparing teams for the future: hiring managers take the lead in preparing their teams for the future by making sure they’ve got high performers with the right skills in every position.

Fig. 2 – “Fast-forward six months” exercise –  Taken from: Patty McCord, “Powerful: Building a Culture of Freedom and Responsibility”

  • Imagine six months from now, you have the most amazing team you ever assembled and you’re saying to yourself, “Wow, those guys are awesome! I can’t believe what they’re accomplishing.”
  • First write down what the team will be accomplishing six months from now that it’s not accomplishing now. now. Use all the figures you want.
  • For those different things to be happening, what would people need to know how to do? What kind of skills and experience would it take for the team to operate the way you’re envisioning and accomplish he the things you’ll need to do in that future?

 

Related links for further learning:

  1. https://jobs.netflix.com/culture
  2. https://www.slideshare.net/reed2001/culture-1798664
  3. http://pattymccord.com/netflixs-patty-mccord-on-being-a-great-place-to-be-from-protect-the-hustle-ep-1/
  4. https://visualsynopsis.com/uncategorized/powerful-by-patty-mccord/
  5. http://firstround.com/review/this-is-how-coursera-competes-against-google-and-facebook-for-the-best-talent/
  6. https://recruitloop.com/blog/steve-jobs-top-hiring-tip-hire-the-best/
  7. https://daedtech.com/a-players-dont-hire-a-players-they-partner-with-a-players/
  8. http://web.stanford.edu/class/ee204/ProductMarketFit.html
  9. https://medium.com/parsa-vc/7-lessons-from-andy-rachleff-on-product-market-fit-9fc5eceb4432

 

Book review: “Radical Focus”

Christina Wodtke’s latest book, “Radical Focus”, is probably the most valuable ‘business’ book which I’ve read thus far this year. The full title of the book reads “Radical Focus – Achieving Your Most Important Goals with Objectives and Key Results” and Wodtke provides a great story – literally – as well as useful tips about the importance of goal setting. The book starts with a fable about a Silicon Valley startup, and offers a good narrative about how (not) to use of objectives and key results (‘OKRs’). This fable, which felt very close to the reality of being in startups – sets the scene for the practical tips that Wodtke offers with respect to using OKRs effectively, irrespective of whether you work in a startup or at Amazon.

 

 

What are some of the most common reasons why key things don’t happen? Wodtke offers a number of insights here:

  1. No prioritisation or stack ranking of goals – Everything is deemed important and critical things don’t get done as a result.
  2. No obsessive and comprehensive communication of the goal – Wodtke suggests that for key goals to be achieved, it’s important to reiterate the goal daily and having regular commitment meetings, where the team talks about the key goal and commit to specific activities directly related to the goal.
  3. There’s no plan to get things done – Often, companies will have lofty goals but no plan or process to actually achieve these goals. Wodtke introduces a number of useful ceremonies which teams can use to keep goals relevant and top of mind: commitment meetings, check ins and celebrations.
  4. No or insufficient time carved for what really matters – Love how Wodtke refers to the “Eisenhower Box” which helps identify and prioritise those things that must be done (see Fig. 1 below).
  5. A tendency to give up instead of iterating – Business often give up at the first attempt, canning a goal if it isn’t achieved (fully) first time around. Instead, Wodtke urges, try to avoid a lack of followthrough by iterating constantly.

Fig. 1 – The Eisenhower – Taken from: https://jamesclear.com/eisenhower-box/eisenhower-box-2

As the book title clearly suggests, Wodtke advocates the use of OKRs to achieve focus and making sure that key goals are being realised:

  • Objectives are bold and qualitative – Set a bold, inspirational and qualitative Objective each quarter. Wodtke provides examples of both good and poor Objectives (see Fig. 2 below).
  • Key Results are tangible and quantitative – Each Objective will have three quantitative Results that let you know when you’ve hit your Objective (see Fig. 3 below). Wodtke stresses that Key Results are “hard goals, the kind where you only have a 50/50 shot of achieving.” These ‘stretch goals’ are hard to achieve but not impossible, and you indicate for each Key Result how confident you are of achieving it.
  • OKRs and health metrics – In the book, Wodtke makes a helpful distinction between OKRs and health metrics. OKRs are “the thing you want to push, the one thing you want to make better.” I’d add an emphasis on the word “one” here as I find working with a single business Objective to be most effective. In my experience, having multiple business Objectives starts muddying the water in terms of focus and prioritisation. Instead, start with setting one Objective for the company. Secondly, set OKRs for each team that ty back to the company goal. Health metrics are the key things to continue to watch, these metrics are more concerned with ‘hygiene’.
  • Set OKRs together, pick Key Results as a team – Identifying and agreeing on Objectives and Key Results is a collaborative process. Clearly articulating and sharing the business Objective is a critical first step. The different teams can then set those Key Results which they believe will contribute to the business Objective.
  • Progress monitoring – I particularly liked the 4×4 matrix that Wodtke suggests as a way of monitoring progress with respect to achieving your business and associated team OKRs (see Fig. 4 below). This matrix is a very simple but effective way of committing to (weekly) priorities and capturing progress.
  • Setting a rhythm of execution – Wodtke introduces a number of weekly ceremonies which you can use to keep OKRs relevant and to ensure that you keep to them (see Fig. 5 below). The risk with goal setting is that it remains a one off exercise and I believe that having weekly ‘commitment’ and ‘win’ sessions will help massively keeping OKRs front of mind.

Main learning point: In “Radical Focus”, Christina Wodtke does a great job of explaining the role and value of OKRs. Not only does she provide valuable tips on how to best define OKRs, Wodtke also offers useful methods of keeping track of progress against OKRs. If you feel that you and your business are doing too much of everything, or not achieving anything, then Radical Focus is a must read!

Fig. 2 – Examples of good and poor Objectives – Taken from: Christina Wodtke, Radical Focus, self-published, 2016, p. 110

Here are some good Objectives:

  • Own the direct-to-business coffee retail market in the South Bay.
  • Launch and awesome MVP.
  • Transform Palo Alto’s coupon using habits.
  • Close a round that lets us kill it next quarter.

and some poor Objectives:

  • Sales numbers up 30%.
  • Double users.
  • Raise a Series B of 5M.

Fig. 3 – Key Results – Taken from: Christina Wodtke, Radical Focus, self-published, 2016, pp. 111 – 112

Key Results can be based on anything you can measure, including:

  • Growth
  • Engagement
  • Revenue
  • Performance
  • Quality

For example, if your Objective is to “Launch an Awesome MVP” you could have the following Key Results:

  • 40% of users come back 2X in one week
  • Recommendation score of 8
  • 15% conversion

Fig. 4 – Example of Christina Wodtke’s 4×4 OKR matrix – Taken from: https://medium.com/@cwodtke/one-objective-to-rule-them-all-1058e973bfc5

Fig. 5 – Setting a rhythm of execution – Taken from: Christina Wodtke, Radical Focus, self-published, 2016, pp. 120 – 123

Monday Commitments

Each Monday, the team should meet to check in on progress against OKRs, and commit to the tasks that will help the company meet its Objective.

  • Intention for the week – What are the 3-4 most important things you must get done this week toward the Objective? Discuss if these priorities will get you closer to the OKRs.
  • Forecast for the month – What should your team know is coming up that they can help with or prepare for?
  • Status toward OKRs – If you set a confidence of five out of ten, has that moved up or down? Have a discussion about why.
  • Health metrics – Pick two things you want to protect as you strive toward greatness. What can you not afford to eff-up? Key relationships with customers? Code stability? Team well-being? Now mark when things start to go sideways, and discuss it.

Fig. 6 – OKR Fundamentals – Taken from: Christina Wodtke, Radical Focus, self-published, 2016, pp. 109 – 112

Your Objective is a single sentence that is:

Qualitative and Inspirational

The objective is designed to get people jumping out of bed in the morning with excitement. And while CEOs and VCs may jump out of bed in the morning with joy over a 3% gain in conversion, most mere mortals get excited by a sense of meaning and progress. Use the language of your team.

Time Bound

For example, doable in a month, a quarter. You want it to be a clear sprint toward a goal. If it takes a year, your Objective maybe a strategy or even a mission.

Actionable by the Team Independently

This is less of a problem for startups, but bigger companies often struggle because of interdependence. Your Objective has to be truly yours, and you can’t have the excuse of “Marketing didn’t market it.”

An Objective is like a mission statement, only for a shorter period of time. A great objective inspires the team, is hard (but not impossible) to do in a set time frame, and can be done by the person or people who have set it, independently.

Fig. 7 – Quick tips on OKRS use – Taken from: Christina Wodtke, Radical Focus, self-published, 2016, p. 153

  • Set only one OKR for the company, unless you have multiple business lines. It’s about focus.
  • Give yourself three months for an OKR. How bold is it if you can do it in a week?
  • Keep the metrics out of the Objective. The Objective is inspirational.
  • In the weekly check in, open with company OKR, then do groups. Don’t do every individual; that’s better in private 1:1s.
  • OKRs cascade; set company OKRs, then group’s/role’s, and then individual’s.
  • OKRs are not the only thing you do; they are the one thing you must do. Trust people to keep the ship running, and don’t jam every task into OKRs.
  • The Monday OKR check in is a conversation. Be sure to discuss change in confidence, health metrics and priorities.
  • Encourage employees to suggest company OKRs. OKRs are great bottom up, not just top down.
  • Make OKRs available publicly. Google has them on their intranet.
  • Friday celebrations is an antidote to Monday’s grim business. Keep it upbeat!

 

Related links for further learning:

  1. http://eleganthack.com/the-art-of-the-okr/
  2. https://medium.com/@cwodtke/one-objective-to-rule-them-all-1058e973bfc5
  3. https://www.youtube.com/watch?v=8aW5gdRRn_U
  4. http://fortune.com/2018/05/21/john-doerr-measure-what-matters-okr/

Book review: “Inspired: How To Create Tech Products Customers Love”

About four years ago I read and reviewed Inspired: How To Create Products Customers Love by Marty Cagan, who I regard almost as the ‘founder’ of modern tech product management – along with Steve Jobs of course 🙂 Cagan has now released a second edition of “Inspired” in which he captures two aspects he’s uncovered since writing the first edition.

The first aspect is a critical need to focus on the specific job of the product manager, aiming to clarify which elements constitute the role of a product manager in a tech company. The second aspect is the importance of creating the right product culture for success, and understanding the range of product discovery and delivery techniques available to solve customer and business problems.

Whilst the book contains a wealth of valuable content about product management and how to create great products; in this review I’ll primarily focus on Cagan’s recommendations with respect to product discovery and delivery. Before I do that, it’s important to first look at Cagan’s take on the “root causes of failed product efforts” (Fig. 1).

Fig. 1 – “Root Causes of Failed Product Efforts” by Marty Cagan  – Taken from: https://www.mihneadb.net/notes-on-craft-conf-2015/

Cagan sees a very sequential, “Waterfall” type approach as the underlying reason why many products fail. This approaches comes down to companies using a ‘feature heavy’ and preplanned roadmaps, as well as and using regular planning sessions to negotiate and prioritise the roadmap. Cagan shares some home truths to explain why this approach is now obsolete (Fig. 2).

 

Fig. 2 – 10 problems that companies using a Waterfall type approach suffer – Adapted from: Marty Cagan, Inspired: How To Create Tech Products Customers Love, pp. 17-21

  1. Stakeholder-driven products: It’s a top down approach which leads to stakeholder-driven products and teams that don’t feel empowered
  2. Business cases are mostly fictitious: I couldn’t agree more with Cagan when he argues that the two main business case inputs – how much money we’ll make and how much it will cost – are complete unknowns. We can’t know how much money we’ll make because that depends entirely on how good the solution turns out to be. In contrast, a lot of products end up making no money whatsoever! One of the most critical lessons in product, Cagan explains, is “knowing what we can’t know.”
  3. Product roadmaps –  There are two problems with traditional, feature led product roadmaps. Firstly, the reality is that half of our product ideas are simply not going to work. I always cringe when I see product roadmaps that contain detailed features prioritised prioritised for an entire year … In my experience, until you start discovering, implementing and launching product ideas, you’re not going to know whether your product is actually going to work. Secondly, even when ideas do prove to have potential they’re likely to need several iterations to reach the point where they deliver tangible business value. Cagan introduces the term “time to money” to refer this evolutionary process.
  4. It’s not about gathering requirements for engineers to implement – I recently came across an organisation where they employed an entire team of project managers and business analysts whose main job it was to gather stakeholder requirements, and document them for designers and engineers to implement. Cagan rightly makes the point that “this is 180 degrees away from the reality of modern tech product management.”
  5. UX designers are getting involved way too late – Don’t involve designers only once the requirements have been gathered, it’s simply too late as the designer won’t be able to add much value add this stage.
  6. Engineers are getting involved way too late – If you’re just using your engineers to code, you’re only getting about half their value. I love the ‘little secret’ that Cagan shares with us: “engineers are typically the best single source of innovation.” He’s totally right!
  7. Agile for delivery only – Cagan talks about “Agile for delivery”, whereby product development teams work in an Agile fashion, but the rest of the organisation isn’t.
  8. Project-centric processes – The company usually funds projects, pushes projects through the organisation, and finally launches projects. Unfortunately, projects are output and product is all about outcome. I’d add that most projects are one-off pieces of works whereas products have a continuous lifecycle, until the product is being discontinued.
  9. Customer validation happens way too late – Cagan points out the biggest shortcoming of the old waterfall process, which is that all the risk is concentrated right at the end and that customer validation happens way too late. Instead, customer validation or discovery should be continuous and needs to happen early and often.

 

Cagan offers three overarching principles which help overcome the aforementioned root causes of failed product efforts:

  1. Risks are tackled upfront, instead of at the end
  2. Products are defined and designed collaboratively, rather than sequentially
  3. Finally, it’s all about solving problems, not implementing features

“Continuous Discovery and Delivery” is a great way to translate these three principles into a process and mindset for people to adhere too (Fig. 3). You can see how Cagan has taken the eight steps involved in the traditional waterfall approach (Fig. 1) and condensed them into to three, continuous stages: Objectives – Discovery – Delivery (Fig. 3).

 

Fig. 3 – Continuous Discovery and Delivery – Taken from: Marty Cagan, Process vs Model, https://svpg.com/process-vs-model/, 7 August 2017

 

Ultimately, this process enables you to to get answers to four critical questions:

  1. Will the user buy this (or choose to use this)?
  2. Can the user figure out how to use this?
  3. Can our engineer build this?
  4. Can our stakeholders support this?

Apart from these four critical questions, I like the emphasis Cagan puts on business context over a traditional product roadmap. In the book, Cagan covers two main components that provide this business context:

  1. The product vision and strategy
  2. The business objectives

The “risk” aspect feels like a crucial one to me, and thinking about ways to identify and mitigate risks early and often. For example, I’ve found the pre-mortem technique to be a great  way to unearth key risks right at the outset. Cagan describes some common risks to consider:

  • Financial risk – Can we afford this solution?
  • Business development risk – Does this solution work for our partners?
  • Marketing risk – Is this solution consistent with our brand?
  • Sales risk – Is this solution something our sales staff is equipped to sell?
  • Legal risk – Is this something we can do from a legal or compliance perspective?
  • Ethical risk – Is this solution something we should do?

Cagan then goes on to describe three of his favourite discovery framing techniques:

1. Opportunity Assessment

The idea is to answer four key questions about the discovery work you’re about to undertake:

  1. Objective – What business objective is this work intended to address?
  2. Key results – How will you know if you’ve succeeded?
  3. Customer problem – What problem will this solve for our customers?
  4. Target market – What type of customer are we focused on?

2. Customer Letter

Cagan refers to Amazon and their working backward process, where you start the product effort with a fictitious press release.

3. Startup Canvas

The “Startup Canvas” is particularly useful when you work at an early stage startup and are staring from scratch, both with the business and your product or service. There are lots of these canvases around for you to have a closer look at; I’d suggest having a look at the Business Model Canvas (by Alex Osterwalder) and the Lean Canvas (by Ash Maurya; Fig. 4).

Fig. 4 – Ash Maurya’s “Lean Canvas” – Taken from Ash Maurya, “Running Lean”: 

Cagan explains how you can use a canvas for any product change, no matter the size, but you would likely quickly find a risk of duplication once you’ve got an existing business and product. I agree that the law of diminishing returns kicks in once you’ve already established your business and products, since you’ll have already figured out things like your cost structure or distribution strategy.

Finally, Cagan explains about “testing value” as a key thing to consider when planning your customer discovery. The main thing here, Cagan stresses, is to learn whether customers perceive your product to be substantially better than the competition. So many companies and product teams think all they need to do is match the features of the competitive alternatives. This idea of “feature parity” being enough to woo customers has proven to be a false one. The reality is that for customers to switch from an existing product, they need to  perceive the new product as a much better alternative.

For example, sometimes it’s not clear whether customer want what it is that we’re going to build and it can be very risky to simply think “we’ll build it and customers will come.” In the book, Cagan talks about how you can quickly and cheaply test whether there’s demand for instance through launching just a landing page. On the landing page, we describe the new offering exactly as we would if we were really launching the service. The difference is that if the user clicks the call to action, rather than getting the expected outcome, the users sees a message that explains that you’re thinking of launching the new service and that you’d love to get initial input from the user. It all falls under the mantra “Do Things that Don’t Scale”, first introduced by Y Combinator Founder Paul Graham. A good example is this one from Buffer:

Fig. 5 – Buffer example of a ‘smoke and mirrors’ landing page – Taken from: Christopher Bank, 15 ways to test your minimum viable product, https://thenextweb.com/dd/2014/11/12/15-ways-test-minimum-viable-product/, 12 November 2014

Main learning point: Marty Cagan has written a great followup to his first edition of “Inspired”. In this edition, he offers valuable tips and examples in relation to important themes as product discovery and delivery. Whether you’re new to product management or have got some good product management experience under your belt, “Inspired: How To Create Tech Products Customers Love” is a great and valuable read.

Book review: “Product Roadmaps Relaunched”

Over the last few years, I’ve noticed how people can cling on to product roadmaps. Some people seem to derive the same sense of certainty and predictability from a roadmap which they used to get from a Gantt Chart. One could argue that a detailed roadmap is a remnant of the traditional Waterfall approach to product management, an approach which favours detailed documentation upfront.

As a result, a lot of roadmaps tend to be very detailed; filled with specific features and timings, with product managers getting hung out to dry if they fail to deliver on features promised in their roadmaps. The hard everyday reality is that both business environments and product development are too unpredictable and volatile to be able to plan an entire roadmap upfront. This is one of the reasons why great product people like Marty Cagan and Brad Murphy argue that OKRs are a viable alternative to (traditional) roadmaps. Instead of focusing on outputs, product teams should be given the autonomy to focus on critical business outcomes instead.

Product Roadmaps Relaunched, a book published in 2017 by C. Todd Lombardo, Bruce McCarthy, Evan Ryan and Michael Connors, aims to achieve a bit of a reset of flawed perceptions of what a roadmap is and isn’t. Lombardo et al. start “Product Roadmaps Relaunched” with the following statement:

“A good roadmap is not so much a project plan as a strategic communication tool, a statement of intent and direction.”

And the authors subsequently set out requirements for Roadmap Relaunch — A product roadmap should:

  • Put the organisation’s plans in a strategic context
  • Focus on delivering value to customers and the organisation
  • Embrace learning as part of a successful product development process
  • Rally the organisation a single set of priorities
  • Get customers excited about the product’s direction

A product roadmap should not:

  • Make promises product teams aren’t confident they will deliver on
  • Require a wasteful process of up-front design and estimation
  • Be conflated with a project plan or a release plan

I found it very refreshing seeing a roadmap as a two-way communication device, steering your company to delivering on a company strategy to achieve an overarching vision.

In the book, the authors distinguish between primary and secondary components of the roadmap. The primary components are necessary for an effective roadmap (see also Fig. 1 below):

  • Product vision — This is the overarching vision that guides the product roadmap.
  • Business objectives — Having well defined goals on the roadmap, will help you and your organisation to measure progress.
  • Broad timeframes — Broad timeframes like calendar quarters or Now, Next and Later offer guidance about timings without committing to very specific deadlines.
  • Themes — I like the authors’ suggestion to ask the question “What would need to be true for our product to realise its vision and attain its business activities?” Themes can be defined as customer needs or problems for the product to address.
  • Disclaimer—Roadmaps can have a caveat just to make it very clear to any stakeholders, other team, etc. that anything in the roadmap is subject to change and evolve.

Secondary components:

  • Features — Personally, I’m not a big fan of having lots of features on a roadmap, mostly because it will limit you and your team to come up with solutions, with people expecting whatever is on the roadmap to get delivered. The book explains that “features and solutions are the specific deliverables that will fulfil the needs and solve the problems identified in the roadmap themes.
  • Stage of development — By including labels such as “discovery”, “design”, or “prototyping” on a roadmap, stakeholders and other people not close to day-to-day product development — should be able to see at a glance where the product is at.
  • Confidence — Indicating the level of confidence you have in your availability to address each item or theme on the roadmap in the next release is a great way to help offset the sentiment that once it’s on paper, it’s a promise.
  • Target customers — Highlighting which customer segment(s) your product is looking to address, really helps with the ‘communication’ aspect of your product roadmap. Instead of just seeing a bunch, you can now tell more of a story about upcoming themes and impact on specific customers.
  • Product areas — A large and complex product — or a new product where basic functionality is still being laid down in many areas — many benefit from a roadmap where themes or features are annotated per specific area of the product.

Fig. 1 — A roadmap helps manage outcomes, underpinned by primary components — Taken from: “Product Roadmaps Relaunched”, p. 25

It’s worth highlighting the book’s chapter on ‘Themes’, which I’ve written about previously. Themes are described as “an organisational construct for defining what’s important to your customers at the present time.”

The difference between themes and subthemes is granularity, or level of detail:

Theme: a high level customer need; “content access across devices” for example

Subtheme: a more specific need; “visibility of which device is in use” for example

One can link specific features to these themes and subthemes on the roadmap, but it’s worth considering first whether features should be added to the roadmap in the first place. The book contains a number of useful questions to consider in this respect:

  • Do we have enough understanding of the need and possible solutions to feel confident in a particular solution?
  • Do we have any validated solutions from previous release plans that did not get completed and need to be carried over?
  • Do we have any validated infrastructure needs?
  • Do we have any mandates from decision-making stakeholders that must be addressed?
  • What is the likelihood that this solution will be changed, postponed, or dropped from the schedule (i.e. what is your confidence)?

In the light of the roadmap acting as a two-way communication tool, the authors make some valuable point about the different stakeholders, and how they benefit from and contribute to roadmaps. For example:

Customers — benefit: Get excited about how they will benefit in the future

Customers — contribute: Provide feedback on value and priorities

Executives — benefit: Understand how resources are being used and potential ROI

Executives — contribute: Provide strategic context for product direction and priorities

These stakeholders are likely to work with what the authors call the “Product Core”. This is a small group consisting of those who work directly on the product: product manager or product owner, designers, and engineers. The book introduces the “Shuttle Diplomacy Canvas”, as a practical way to plan and conducting “shuttle diplomacy”, tracking stakeholder meetings and moving one toward to final roadmap buy-in and alignment.

Main learning point: I’d highly recommend Product Roadmaps Relaunched  to anyone keen to learn more about how to best communicate product vision, business objectives and associated themes. Lombardo, McCarthy, Ryan and Connors offer some useful insights and practical pointers if you’re looking to relaunch your product roadmap!

Book review: “The No Asshole Rule”

Do you consider yourself an asshole at times? Can you pinpoint moments where you felt – in retrospect – where you acted like an asshole? Apologies for the profuse use of the word “asshole”, I blame it on a great book I read recently: “The No Asshole Rule” by Bob Sutton. First published in 2007, Sutton describes what makes an asshole and offers tips on how to stop yourself from acting like one!

These are the main things I took away from reading “The No Asshole” book:

  1. What makes an asshole? – Sutton refers to a valuation by Bennett Tepper who studied psychological abuse in the workplace and introduced a useful definition for asshole behaviour: “the sustained display of hostile verbal and non verbal behaviour, excluding physical contact.”
  2. Do the asshole test – In the book, Sutton suggests two ways to test whether there’s an asshole at play or not. Firstly, after talking to the alleged asshole, does the ‘target’ feel oppressed, humiliated, de-energised, or belittled by the person. In other words, does the target feel worse about him or herself as a result? Secondly, does the alleged asshole aim his or her venom at people who are less powerful rather than at people who are more powerful?
  3. “Handle with care!?” – I like how Sutton cites research which shows how constructive arguments over ideas – NOT nasty personal arguments – drives greater performance. In order words, interacting effectively with others doesn’t mean that you’re not allowed to have a constructive debate or pose a constructive challenge. Harvard Business School professor Amy Edmondson talks a lot about how to best create psychologically work space. A strong sense of fear among employees or people feeling uncomfortable to speak up (especially with more senior people) can be signs of work spaces which don’t feel fully safe to the people that work in them.
  4. What to do when facing an asshole? “Small wins” – Research has shown that a feeling of control – even over the smallest aspect of your fate – can have a big impact on your wellbeing. Psychologist Karl Weick contends that aiming for ‘small wins’ is often a more comforting and ultimately more effective strategy than aiming for ‘big wins’. In the case of being exposed to assholes, Sutton suggests looking at small ways to reduce the interaction with assholes or other wise to seize a sense of control.

Main learning point: “Assholes are us” is one of the closing comments in Sutton’s book. If you want to create an asshole-free environment, you need start with having a long, hard look at yourself. A good friend of mine once encouraged me to think “how is that true of me?” every time I’d judge someone else or their behaviour. It means being able to stop your ‘inner asshole’ from coming out or you avoiding working at places with lots of assholes 🙂

 

Fig. 1 – “The Dirty Dozen – Common Everyday Actions That Assholes Use” – Taken from: Bob Sutton, “The No Asshole Rule”, p. 10

  1. Personal insults
  2. Invading one’s ‘personal territory’
  3. Uninvited physical contact
  4. Threats and intimidation, both verbal and non verbal
  5. ‘Sarcastic jokes’ and ‘teasing’ used as insult delivery systems
  6. Withering email flames
  7. Status slaps intended to humiliate their victims
  8. Public shaming or ‘status degradation’ rituals
  9. Rude interruptions
  10. Two-faced attacks
  11. Dirty looks
  12. Treating people as if they are invisible

Fig. 2 – What’s your Total Cost of Assholes to Your Organisation; factors to consider when calculating the total cost of assholes to your organisation – Examples taken from: Bob Sutton, “The No Asshole Rule”, pp. 44-46

  • Damage to victims and witnesses – For example: distraction from tasks; reduced psychological safety and climate of fear and loss of motivation;
  • Woes of certified assholes – Victims and witnesses hesitating to help; retaliation from victims and witnesses and long term career damage.
  • Wicked consequences for management – Time spent appeasing, calming, counselling or disciplining assholes; time spent ‘cooling out’ employees who are victimised and managing burnout.
  • Legal and HR management costs – Anger management and other training to reform assholes; legal costs for inside and outside counsel and health-insurance costs.
  • When assholes reign: negative effectives on organisations – Reduced innovation and creativity; reduced ‘discretionary’ effort and and dysfunctional internal cooperation.

 

Related links for further learning:

  1. http://bobsutton.typepad.com/my_weblog/the_no_asshole_rule/
  2. https://hbr.org/2007/03/why-i-wrote-the-no-asshole-rule
  3. http://journals.sagepub.com/doi/abs/10.1177/0149206307300812
  4. https://www.youtube.com/watch?v=4STnZm21–E