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No one really knows how to measure software productivity

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I just ran across this article on how consultants (mis-)measure productivity in software development.

http://www.joelonsoftware.com/items/2006/11/10b.html

Sad to say, I couldn’t agree more with the article. I started my career as a software engineer, and I’ve met very few people who understood what software is or how to measure it. When it comes to measuring productivity of software development, give it up entirely. The best software engineers can be 100x to 1000x more productive than merely “good” engineers, if you measure productivity as debugged-line-of-code-written-per-hour. If you measure ability-of-code-to-meet-business-goals, the best engineers can be ten thousand times more productive or even more. Much, much more.

The problem is that software is the codification of a business process. The best engineers take the time to understand the business, so what they codify can meet business goals. People Express airline ($1Bn in sales in year 2) went out of business, according to its CEO, because their reservation software had constraints that kept them from strategically changing their pricing. If their original programmers had understood the link between their software and the business, a single design decision would have had multi-billion-dollar implications and saved the business. What would the productivity be of the engineer who made that connection?

Similarly, the best managers understand that software development is, itself, a business process. The engineers hired, their skill sets, the languages they use, etc. all affect the speed to create, deploy, and support the software. As it is, I’ve only seen one manager (an ex-engineer) who understood the connection enough to use a specific programming language for business reasons. He made a couple hundred million from that decision, by the way… (It was Paul Graham of Viaweb. Read about it here.)

So if you’re a manager, take the time to understand the strategic implications of who you hire and how you have them design your product.

If you’re a programmer, you might be amused by learning to connect your coding with the business implications so you can save your company two billion dollars. But unless you work for the manager in the previous paragraph, don’t even expect anyone to understand your contribution, much less appreciate it. Even if your manager “gets it,” expect at most .01% of the bonus that she gets. Sadly, the business world is built to reward them, not you. (You can find the Harvard Business School admissions office by clicking here.)

Long-term thinking: Water shortage may bring business opportunity

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I was just reading an article on the impending water shortage. Most of us are totally in the dark about it, but for years, people who track such things have been warning that our water usage is coming close to surpassing the world’s available fresh water supply. MIT’s Technology Review magazine was writing about it a decade ago.

If you’re a forward-looking entrepreneur, there’s tremendous potential here, and still some time to do something about it.

You can try to be part of the solution:

  • Develop new desalinization technology.
  • Create distribution systems to help water most quickly move to where it is needed most.
  • Reduce the cost of waste treatment.
  • Breed less water-intensive crops.

If you’d rather be part of the problem:

  • Buy up water rights and start jacking up the prices.
  • Heck, buy up water itself and store it away where you can later sell it for high prices.

This is a long-term strategy, but since we don’t seem to be looking ahead as a race to solve this problem, we’ll have to do it as individuals and businesses.

Insurance is just community for a profit

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Insurance is a weird beast. Basically, we all band together and put in money so if any of us hits misfortune, the pooled money can be used to help out. It works because typically, most of us do fine, and we can cover the misfortunates.

This is basically what communities do. We take care of each other. We all pitch in, with the expectation that we’ll all be able to fall back on each other should misfortune strike.

The weird part is that when you’re talking insurance, it’s not emotional commitment, it’s financial. And since the insurance companies are for-profit enterprises whose first duty is to their shareholders, not their policyholders, the have incentive to refuse participation to anyone they think might collect, they want to charge premiums as high as possible, and pay out as little as possible. In short, the profit motive directly acts to make them oppose the slightest movement in the direction that insurance was designed to provide: a safety net provided by a mutually interdependent community.

Bizarre stuff. Gotta run. Five more pages of paperwork to fill out…

Even our “best and brightest” aren’t doing so well in actual ability.

Wow. I knew we were in deep sneakers when it came to the preparedness of our next generation to become productive members of society. I had no idea how bad it’s become.

“According to scores on the 2006 ACT college entrance exam, 21 percent of students applying to four-year institutions are ready for college-level work in all four areas tested, reading, writing, math and biology.

For many students, the outlook does not improve after college. The Pew Charitable Trusts recently found that three-quarters of community college graduates were not literate enough to handle everyday tasks like comparing viewpoints in newspaper editorials or calculating the cost of food items per ounce.”

Check out the rest of the article at http://www.nytimes.com/2006/09/02/education/02college.html. The big question is: what can we do?

There’s more to life than funding and taxes.

We’re approaching our state primary for Governor here in Massachusetts. All the commercials I’ve seen simply tell how each candidate will cut taxes taxes taxes. “I’ll cut the gas tax.” “I’ll push to roll back the income tax.” “I’ll cut all taxes.”

I can’t help feeling rather discouraged by all the talk, mainly because it’s all such crap. Let’s think about the business equivalent. What would you think if someone came into your office wanting to be put in charge of an important project (say, running the entire state of Massachusetts) and this was their business plan:

1. I’m going to reject equity funding and fund with debt.

Would you put them in charge of anything? Of course not. Because frankly, deciding how to fund a project is something you decide after you decide what the projects will be, what the expected benefits will be, etc. In fact, it makes no sense to even think about financing before you know the ROI (in whatever currency is important to you) of the various projects. Some things have such a high return, you’re happy to finance them with high-interest-debt or with high taxes. Other things have a low return, and you only want to finance them if they’ll pay for themselves in 3 months.

Running a state is much more complex than running a business, and at some point we’ve been brainwashed to care about nothing but knee-jerk rejection of taxes.

Let’s see a return to sanity and recognize that taxes, like bonds and foreign borrowing, are nothing more than a funding choice. We will pay for the cost of government one way or another–borrowing eventually must be repaid (with interest!) from dollars raised through taxation. So the focus should be on what programs we want to use money for, and only then should we discuss where that money will come from.

It bodes ill that candidates from both parties today worry only about tax promises, and so much less about policy and governance.

How do you charge for your products or services?

I just read a great article on the difference between a consultancy and a body shop. The author does an excellent point of laying out how perverse the incentives are at a body shop that charges time + materials, versus a consultancy that is very clear about providing value by bringing capability to the table, rather than time.

As a culture, especially a business culture, we persist in sticking to the decades-outdated idea that hours worked are somehow related to value. Sometimes the relation holds, say for an assembly line worker. Or a retail store clerk. But for most business jobs, there’s no link at all between hours worked and value created. In fact, anyone who has gotten rich by owning a company has made all that money through a market mechanism that completely disconnects hours from value. (If you doubt it, let’s film Bill Gates as he brushes his teeth, quiz him as to his thoughts during those moments, and see if those thoughts are directly worth the $100,000+ he earned during those moments.)

So when you find yourself obsessing over hours, yours or others’, let it go. Concentrate instead on the value you’re creating, and how you can create more of it faster, so we can all leave work early and go play.

Fantasy football costs business $1.1 billion/year. NOT!

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Reading Fortune Magazine’s “Leading Indicators” in the September 4, 2006 edition, I ran across this tidbit:

$1.1 billion. Projected value of work hours used for playing fantasy football this season. The player (there are 36.8 million of ’em in the U.S.) earn on average about $36 an hour and will spend about 50 minutes playing each workweek.

This kind of projections are sneaky, because the next step is to claim that Fantasy Football is “costing” business $1.1 billion/year. But that “cost” assumes that if they weren’t playing fantasy football, the people playing would be happily producing, producing, producing.

This is bull pucky, for two reasons:

First off, it assumes that if people weren’t playing fantasy football, they’d be making money for the business. Why do we believe that? It may be that people spend 50 minutes each workweek relaxing, and at the moment, that relaxation happens to take the form of Fantasy Football.

Second, people can’t work continuously. We need breaks. The Power of Full Engagement documented that thoroughly. Insisting people work during the time they currently play Fantasy Football would likely not increase productivity, because they wouldn’t be getting the breaks they need.

Second and a half, unless you work on an assembly line, productivity isn’t tied to time. Though that attitude pervades our collective psyche, it’s idiotic. White collar work depends on creativity, insight, and thought. Sometimes those happen in sudden flashes of inspiration. Other times, they require long dry spells. In no event are they proportional to hours.

Third, and most deeply, it simply isn’t the case that everyone should be working all the time. In an efficient business, the only person or system working continuously should be the bottleneck. Everyone else should experience times of calm and no needed work. In that case, working when the business doesn’t need you to actually reduces efficiency by creating excess inventory or worse, scattering energy into irrelevant projects that take on a life of their own. (See The Goal for a detailed discussion of this point.)

(For a sample article on the topic, see here. If employers really want to help employees recapture 10 minutes a day, I’ll bet simply requiring meetings to have an agenda and firm end time would have far more effect than eliminating Fantasy Football.)

Thinking ahead. How far? And how certain?

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At a recent physical exam, my weight was a tad above what I want it to be (probably all muscle, but you can never be too sure). So I went web surfing a bit about weight gain trends and found an article proclaiming that obesity is becoming a world-wide problem. It seems the availability of cheap processed foods combined with less physical work is part of the problem.

What amazes me is that both of those are fully and completely under our control. There’s no reason our food companies have to produce food that’s bad for us. But they do, because that’s what we want to buy. Why do we want to buy it? Because our bodies are programmed to love the processed stuff, since back when we evolved, it was really hard to find usable carbohydrates, etc. It worked great on the tundra, but now, it drives us to crave things that create a market that is bad for us.

We weren’t thinking ahead when we developed our food production industry or laying down the rules of the market. We didn’t know. We didn’t look very far into the future, and if we could have, we didn’t have the knowledge or even the suspicion that our food production would have bad dietary consequences. And now, we look increasingly like little round beach balls. I suppose it makes clothes easier to design; all we need is a big circle.

So the question is: when we make decisions, how far ahead do we look? How certain do we have to be of the answers to take action? And what action do we take?

“Scenario planning” was all the rage in the late-80s and early 90s. It seems Shell had use future projections to predict the fall of the Soviet Union and they were all ready to take smart business action when they saw it coming. Which scenarios should we be considering? How likely do we think they are? And when do we decide we should prepare, given that we generally don’t know which scenario we’re living in until it’s too late to take action?

The part of the article I wasn’t expecting was the last two paragraphs, which point out that global warming, overfishing, and climate change could severely disrupt the food supply, even with a “modest” temperature increase of 2 degrees Celsius (and that’s below the lowest-end projections of the MIT climate scientist I asked about it).

So this time, we have the chance to think ahead. Other than speculating in food companies, what can we as businesspeople do to help prepare for something like that? Right now, we stick our heads in the sand and ignore the problem. Last time we did that, we turned into beach balls. This time, let’s think ahead, and not turn into something worse.

Focus days are heaven!

Ok, so I’ve been totally busy the last few weeks. I’ve been traveling, and a thousand little things have backed up and consumed my time. I’m lunching, working, running errands, starting some great new business relationships … everything except my high-thought projects. My newsletter, a white paper I’m writing, and a proposal are all receiving short shrift. My dry cleaner, though? She’s seen me twice in the last two days.

So today will be a focus day. I will shut off my email, turn off my phone, and set all my little “to do”s aside. Then I’ll walk around a bit, stretch and get my mind in gear, and do to activities that require focus.

Be good to yourself. If you need to focus, take a day now and then and really give yourself that time. You’ll be glad you did.

How much privacy should businesses guarantee?

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Andy Wibbels reports that AOL has released data on hundreds of thousands of users’ queries. Reasonable? Of course, since they include no personally identifiable information.

But how reasonable is it? When you type in a search query, do you expect that search will be completely anonymous, not even matched up with other searches you do?

We’re in a world now where we leave electronic trails all over the place. Many aren’t even intentional. Toll booths, for example, use FastPass to provide the convenience of not stopping to pay cash. But the FastPass records who went where and when. Presumably, those records could be subpoena’d and used as evidence in a court case.

“So what?” you cry, “I’ve done nothing wrong.” Nope, you haven’t. Which is why you should be concerned that those FastPass records are unhackable, completely accurate, and unforgeable. But they aren’t. To the extent we even have legally enforced standards for data integrity, companies rarely even mention when they have security leaks, much less pay any kind of penalty for it.

My credit card number was one of the ones that got accidentally leaked last year. That could have resulted in identity theft. But the company wouldn’t be liable for the direct or indirect costs to me, despite it being their own negligent information protection that caused the problem.

So when someone trusts you with their information, be worthy of that trust. Either take the steps to keep their info private, and really use tight security so you know it’s private, or destroy it completely when you’re done with it. The issue isn’t whether people have done something wrong; it’s whether someone could be harmed by a misuse of their data.

Privacy isn’t just about hiding what you do. It’s about confidence that collected information can’t be falsified, forged, or misused.