PSF – Professional Services Firm

I am currently reading the book Re-Imagined by Tom Peters. He says that people who are only doing their work from 9 to 5 will soon be replaced by a computer that can do the same job at a lesser price for the company. He gives an example of a chip developed by GE which can read ECG graphs better than the average doctor. Very soon hospitals who had a doctor to read ECGs will replace the doctor with this computer.

 

Software engineers believe that their jobs are safe as what they do involves solving problems and thinking logically. No computer can replace them. However, with the development of Visual Workflow( Pivotal product), even non-programmers will be able to do the same. Why would someone pay you when the sales or marketing person can write “flow-chart” like diagrams and solve his own problems?

 

The only way for the employees to keep their jobs is to do something extra. That extra is generating ideas for the company. My manager,Sachin Jain, described the process in a very nice way the other day – “It is like darts, its our duty to keep throwing the darts at the board, someday one of the darts will hit the bull’s eye!”

 

Similarly, companies also cannot just provide boring products. Tom Peters says every company and every department in a company has to re-fashion itself.  He gives an idea of professional services firm. The idea is that every employee and his department should act as a PS firm providing services to other departments or customers of the company.  The idea of a PSF is to make every department in a company be a profitable part and not a cost center.

 

A company should consider every department and see if they are doing the best job in the world. If they are, then why not provide it as a service to other companies? If the company has an excellent admin department, why not try to sell the skill to other companies that may not have a great admin. Admin will soon cease to be a cost and will generate revenues. The company should outsource any department that it is not good at. 

So, basically outsource everything you are not good at and provide services in all departments you are good at.

 

Currently, all companies have a services department. Cisco which was selling routers about a decade back now sell “Networking solutions”. These networking solutions might involve selling  a router or two,but emphasis is on providing a complete solution to a customer’s needs. 

 

A birthday party would have cost less than a dollar 100 years back. Grandma would buy the ingredients required for a cake and bake the cake herself. Then birthday parties became costlier with bakeries selling special cakes at 10$. That is a 10 times increase for providing ready-made solutions.

However, Tom Peters believes solutions era is also over. The current era is an era of “experience”.A birthday party would at McDonald’s or Pizza Hut would mean at least 100$ where they provide a complete birthday “experience” with clowns, balloons etc. Oh, they also include a birthday cake for the kids to eat.

 

I like this idea as it ties in nicely with my thought that every individual should think of himself as providing a service to the company and in return the company pays you a salary. If you do not provide satisfactory service, the company can replace you with another service provider who can provide better service. 

 

Are you the best service provider that the company can get? Do comment.

 

Why Agile is a step in the right direction

This post was written after CDC introduced Agile development methodology to do software development. After more than a year, I can confirm that the methodology works. We released two releses on time. CDC(Pivotal) had a dismal record of delaying releases before agile.

Before I start, I have to make a confession… I love Agile. I like the fact that the team can decide how much work to take up. I like the fact that the communication between various disciplines are very open. I love the fact that we all sit together and I can shout out to someone “Hey, you know I thought of a scenario…Can you try out and see if it works?”. He would try it out and tell me if the things work as expected or not. In fact,it makes me think “Why were we not following this before? It’s such a simple idea” . Anything that sounds like a simple idea in retrospect is a hallmark of a brilliant idea.

Peter F Drucker is considered to be father of management. I read one of his books “Essential Drucker”. This is not a book in the traditional sense, but a collection of essays Peter had written during his career on various subjects. This book is not for anyone looking for an easy read.I recommend this book only to the “seriously interested in doing MBA” category of people.I am hesitant to buy his other books as I fear I will not understand most of it.

 Anyway,one of the chapters in this book is about challenge of managing a knowledge worker. By the way, Peter coined the word “knowledge worker” in 1959 when there were almost no scope for a knowledge worker. He says, the primary contribution of management is to increase the productivity of workers.

The main issue is measurement.It’s a human tendency…If humans can measure, humans will improve in those aspects.

 How do you measure manual work? By the out put generated. ex:How many cars were produced in this shift? How many days does it take to build a house? All these factors are easily measurable.

Result – 

In the 20th century, management did very well, there was a 50 fold increase in productivity in manual labour. That is 5000 % increase in productivity in 100 years.They brought in a lot of innovations like assembly line, just-in-time parts delivery etc.

However, the main challenge of 21st century is to increase the productivity of knowledge worker.

How do we measure knowledge worker’s contribution?Can you measure a teacher’s productivity by the marks her students get? Can you measure a scientist’s productivity by the number of inventions he makes?

 Lets take software industry

Can you measure the productivity of a coder by number of lines of code he writes? I can write same logic in 2 lines or 10 or if I use some creativity in 100 lines. Can you measure quality assurance by number of defects he finds?All the QA people would want to test a fresher’s code since he is more likely to find bugs.

This has been the problem. Since it is not easily measurable, productivity levels have not increased the way it increased for manual workers.

 Peter says solving it would be the biggest contribution a manager can make in this century.

 I believe agile is the first step in measuring this productivity.

 Agile the first step

 I believe agile provides a way to measure productivity = in terms of velocity or story points. The points are associated with a user story by the team beforehand. So a team may commit to do work corresponding to 100 points this week. Now, managers can track this velocity and provide inputs to increase this to say 110 points by next release. That is a 10% increase in productivity. Now, manager can concentrate on a number… it is measurable, hence it is improvable!!

Managers should provide an incentive for the team to  increase its productivity. Maybe a nice bonus to the team that has consistently increased its productivity? This incentive would push  everyone in the team to develop more as a team. An individual cannot get this bonus by improving his own productivity. He would have to suggest changes to the way others work aswell for the team’s productivity to increase.

 I can think of a few flaws –

1)The team might increase the points associated with a user-story just to meet the increased point target.
2)One cannot measure productivity of a single member. The productivity can be measured only as a team.
3) The team can not change. If the size changes, it would be impossible to measure productivity till a baseline is set again.

I think the first flaw will sort itself out. The team members might be able to boost their velocity to 110 by bumping up their estimate. But, if they do, their target for the next release would be 120. I am sure at some point it would be impossible for the members to meet the target without improving their actual productivity.

 As for the other two flaws, I am not sure how they can be fixed. I am sure someone will think up another process which solves them. Maybe someone from India?   I am still not sure how we can measure productivity of a school teacher though… We cannot divide up her work into small chunks. Or can we?

I was wrong on the first flaw. I believe the teams are increasing velocity without actually delivering more to the customer. Hence, velocity cannot actually be used to measure productivity. We need to think up of some other way to measure productivity. However, I still love agile :-). Is there any move to measure productivity in your company? Is it Dilbertian or does it make sense?