Rocks into Gold: Part 3

Read Parts 1 and 2.

Brief Bit Where Bob does Nothing
Bob went back to work updating his pointless Flitzerboing-Ultra (FBU) documentation. There was no doubt that FBU was a great product. It was a shame it would never exist.

As soon as he finished, he checked his email. His eyes were drawn to an email from his favorite online bookseller. He had ordered three books but one was delayed. They would ship the two books that were available right away—for which Bob was thankful, because two books was surely more useful than none—and they would ship the other book in a couple days, when it became available. They were going to swallow the extra shipping charge, too—a small gesture that pleased Bob.

How Could We Make this Situation Worse?
When Bob got to his desk the following day, his two books were waiting for him. He tore open the packaging with childlike glee. One was a technical book about a programming language Bob was learning in his spare time. The other was a science fiction novel. They were nothing to do with his job, but he had them posted to the office so he could enjoy moments like these without his wife asking him where he was going to put the books. His house was already full of books, as was his garden shed (his wife called it his "library"). Bob loved books. He sniffed the newness of his new books, and then put them in his carry bag. Tonight, my darlings, you are mine.

Bob logged into his computer and skimmed his emails. Nothing urgent, so he logged on to the bookseller's Web site and cancelled the book that hadn't shipped yet. It was a book about beekeeping—something Bob was interested in only on a theoretical level. He felt sad as he cancelled the book order, but he figured it was better to have that money in the bank given the current uncertainty with his job and his income.

While on his way to work, Bob had decided to learn more about the financial side of the FBU project. He called Gwendolyn, who managed KillerWattSoftware's relationship with MegaCorp, and asked if she could spare him ten minutes. (Bob didn't understand the difference between a "relationship manager" and a "salesperson.") Gwendolyn told him, in her delightful and friendly way, that she always welcomed visits from the troops.

Bob carefully avoided making small talk with Gwendolyn. He had heard she did a lot of networking in her evenings, but he was a software, not hardware guy, so he avoided the topic. Unless she was a hobby apiarist (or "beekeeper"), it seemed unlikely they would have anything in common to chat about. He came straight out with his question.

"What would have happened if the economy hadn't crumbled, the FBU project wasn't cancelled, and it took twenty-four months to deliver the project rather than twelve months?"

Gwendolyn took a few moments to parse his question, then looked at him suspiciously. Bob didn't care if the question sounded odd coming from technical staff. He was trying to solve a problem and, over the years, he had found that oftentimes the key to improving a difficult situation is to figure out what would make it worse and then do the opposite.

"Well, Bob, obviously I don't know the real numbers and neither does MegaCorp—they can't predict the future—but before the current crisis, we estimated that they would make around $2 million profit each month once it went live. So, to answer your question, if the economy hadn't collapsed but the project had run twelve months late, then MegaCorp would have lost $24 million profit."

"Maybe more, maybe less?" Bob asked.

"That's right."

"How about us? What would KillerWattSoftware lose?"

"Well, we'd have had to pay very high penalty charges. MegaCorp made it clear in the negotiations that the profitability of the FBU product depended on getting it to market as soon as possible. Now, this might sound crazy if you didn't know how much money they stood to make, but MegaCorp was willing to pay us more money if we delivered FBU in six months than we are receiving by delivering it in twelve months."

Bob wanted to say, "But that's crazy! Why would they pay more," because he knew the answer. MegaCorp was willing to pay KillerWattSoftware more because they would end up with loads more money, something like $12 million extra in their bank account. It was only a little different from paying a furniture company extra to deliver on a Saturday because it was convenient.

Gwendolyn added, "But we're not cowboys. We knew we couldn't make that commitment and keep to it, so we didn't."

Bob nodded. He had been part of the team that had put together the twelve-month estimate. They had taken the product specifications to pieces and estimated that they could deliver the project in nine to ten months. Gwendolyn and her colleagues had bumped that estimate up to twelve months. They had built in a little safety to protect themselves from the killer penalty clauses, which made sense.

"I know things aren't so good now," Bob said, "and they might not be for a while, but would MegaCorp still make money from FBU if by some miracle it did go live in twelve or even six months? I mean, apart from the cash situation, the FBU product is still commercially viable, right?'

Gwendolyn smiled. "Of course. Even if they only sold half of what they previously expected, they'd still make loads of money from the product."

Bob thanked Gwendolyn for her time. In her bubbly, salesperson way, she said, "Sure, no problem, any time." Bob went back downstairs to his desk, wondering as he walked why he had never been aware of FBU's financial implications before. Sometimes, it felt like KillerWattSoftware's left hand didn't know what its right hand was doing.

Bob's "Light Bulb" Moment
Bob sat at his desk and thought. He thought briefly about the two books he had ordered and smiled. Then he thought about the third book and frowned.

Then he had a brainwave—one too obvious to be plausible. Otherwise, everyone would already be doing it. But they weren't. Were they?

He fired up his inter-office messaging system and sent a message to Billy. "Got a minute?"

Ninety minutes later, Billy and Bob concluded that Bob's brainwave was, technically speaking, sound. They also concluded that there were only two reasons why they had never done this before. The first reason was that no one had ever asked them to do it before, so they had never had bothered to think about it. The second reason was that their jobs had never been on the line like this.

Include Others to Make the Solution Better
Bob picked up his phone and called Peter Prince. "How are things at MegaCorp?"

"Glum," said Peter. "All of my get up and go has got up and gone. And you know what? I think it took my will to live along with it."

"Same here. Imminent financial disaster does that to you," said Bob. "However, I've got an idea that might just save our jobs. I need to run it by you, off the record, first."

They agreed to meet later that evening.

Bob spent the next two hours editing a spreadsheet they had used to prepare the project estimates earlier that year. He then went to Sam's desk and asked her to join him for a coffee. As they walked to the coffee shop, Bob explained his cunning plan. Thirty minutes later, Sam, with the aid of a couple shots of caffeine, had not only bought into the brainwave but had helped Bob put a "commercial" shine on it. By the time they made it back to the office, "Bob's brainwave" had become "Sam and Bob's solution." Bob didn't mind. The more people who felt like they owned this idea, the more likely it was to succeed.

Bob then asked Charlie, their usability expert, a few pertinent questions. Charlie's answers surprised him at first, but they made perfect sense.

Just before he left the office, Bob went back online and reordered his beekeeping book.

Even Talk to the Customer!
Bob bought two beers and took them to a table in the far corner of the bar. He fired up his laptop and showed Peter the spreadsheet—a list of all FBU's features and requirements.

Peter said he understood but couldn't see what the spreadsheet had to do with saving his job.

"Am I right in saying that even in today's economic climate, if it weren't for the shortage of spending money, FBU would still be a commercially viable product?" Bob asked.

"Of course."

"Good. In that case, I want to show you how, with just a little bit of planning, you and I can figure out how to do this project with far less cash. I think that we not only can save our jobs, but, with just a little extra work this week, we can make your bosses more money than they ever expected to."

Peter looked skeptical.

Bob said, "I want to add one new requirement to your project that reads something like this: 'KillerWattSoftware shall deliver the most important features to MegaCorp in a salable state three months after the start of the project. Then, they shall deliver the remaining features in three more similarly-sized, prioritized mini-projects-one every three months."'

"Whoa there, Killer," said Peter. "That's quite a mouthful, dude. I don't know what you mean."

"Sorry, Mega," said Bob. "Let me translate from formal requirements language into normal English. What I mean is this: Instead of delivering one big project that takes a full year, I want to deliver four smaller projects, each of which takes around three months. The first mini-project delivers FBU 1.0, which you guys sell and earn money from. It will be built to the same standard we always produce—MegaCorp worthy as you say—but it will only have the most valuable features. The second mini-project delivers FBU 1.1. It has more features, attracts even more customers, and brings in even more cash. Then we do the third and the forth project."

Peter screwed up his nose. "That doesn't make sense, dude! Who'd buy a quarter of a product?"

Bob said, "According to Charlie, our usability expert, you could turn off most of the features on most of the software we've shipped at KillerWattSoftware and no one would notice or care, because no one ever uses them. He's done studies. It's called the 80/20 principle: 80 percent of the value in the software comes from 20 percent of the product." Bob pointed at the spreadsheet and said, "We think the same principle applies to FBU, too."

Peter took another slurp from his beer. "Nuts!" he said.

Bob frowned. "Why's it nuts?"

"It's not nuts. I need nuts. This beer is making me crave salt."

He got up and went to the bar. Bob figured that Peter didn't really want nuts; he just wanted time to absorb this crazy new idea. A minute later, Peter returned with a bowl of nuts. He sat down and said, "OK, I buy your argument. It makes sense technically. I mean, the first iPod didn't have half as many features as its competition, but it succeeded because it did what it did very well. They added features over time, and more and more people bought it. And Google went live with Gmail when it was still a beta. They gave their customers a good product, loads of people started using it, they kept adding features and improving the service, and, all that time, they were earning advertising revenue. I'm not qualified or authorized to judge your suggestion from a commercial viewpoint, but if your relationship manager proposes it to our business folk, I'll support you from the technical point of view."

"Great!" said Bob. He wished he had ordered two beekeeping books. "Look, how about if we run some numbers on my laptop? I don't know, and I don't wanna know what your internal costs are, nor what your revenue predictions are, so we can just make some numbers up that feel good enough."

Bob opened up the spreadsheet, and within ten minutes they had prepared a simple model of the FBU project's "bank account." Bob suggested they assume that the costs were a static $1 million each month and that FBU 1.0 earned only three-quarters of a million a month, FBU 1.1 earned a million a month, FBU 1.2 earned $1.2 million each month, and the final version earned $1.5 million each month. They had no idea if the numbers were valid, but the approach needed a whole lot less of MegaCorp's cash than the original plan, and it painted a far prettier picture than cancelling FBU. The previous plan, with just one release at the end of twelve months, meant that MegaCorp built up a $12 million "debt." With the new plan, the most the project ever owed MegaCorp was $3.75 million. That was still a lot of money as far as Bob was concerned, but it was a lot less than $12 million. Who knew how real these numbers were? Only time would tell.

Peter selected a few columns on the spreadsheet, clicked a button, and a graph appeared.
 

"Wow!" said Peter. "They say a picture is worth a 1,000 words. Well, that picture right there might just be worth a few million dollars, and it might just save both our jobs."

Bob nodded. "Your granny will be pleased."

Peter said, "Yeah, she will. But look there. The FBU project pays for itself by the fifteenth month. If we'd done it the old way, with just one release, then MegaCorp wouldn't have gotten all of its money back until the twentieth month."

Bob pointed at the screen and said, "You see that gap between the two lines. It seems to be constant. Can you figure out how much it is, Pete?"

Peter did a quick calculation with the spreadsheet and said, "Eight million, eight hundred, and fifty thousand dollars."

"Does that mean that by making one tiny little change, like we've done here, the FBU project would, for ever and ever, be $8,850,000 better off?"

"You know what, Bob? I think it does."

"And even though it's not the real number, it is real money, isn't it?"

"It is."

"Wow!" said Bob. "Would you like another beer?"

"I would," said Peter, "but let me get them."

While Peter was at the bar, Bob thought how amazing it was that he, a simple programmer who didn't know or care all that much about money, could figure out something so simple and yet so important. Bob wasn't the sort of man who would count his chickens before they hatched, but he allowed himself a tiny congratulatory smile. Numbers talked, and MegaCorp had good reason to listen.

When Peter returned, he put the two beers down on the table and said, "How do we figure out what goes into each mini-project?"

Bob asked Peter if he knew how to do a "quick sort," to which question Peter took mild offense, and told Peter that it would be far easier than doing a quick sort. They spent the next forty minutes, with help from one more beer each, sorting the spreadsheet.

They used a simple divide-and-conquer approach. They made a quick first pass through the spreadsheet, classifying each requirement and feature as either a high- or a low-priority feature. They then sorted the spreadsheet so that the high-priority features were at the top of the spreadsheet, and the lower-priority features were at the bottom.

On their second pass through the spreadsheet, they prioritized all of the high-priority features into "very high" and "high," and then, just for the fun of it, they reprioritized some of the "very highs" to "very, very highs." They decided to leave the low-priority features for another day. They weren't trying to get the list perfect, just convince themselves that the concept was sensible. FBU's product manager would need to go through this process and decide on the final prioritization.

Bob closed his laptop and put it in his bag. He asked Peter if he was still OK with the idea.

Peter said yes. "And you know what? I know we didn't sort the low-priority features, but there's little point. By the time we get to thinking about mini-project number three, we'll have had some great feedback from customers who've been using FBU 1.0 in real life. No doubt we'll replace some of the features in the spreadsheet with more useful features. That'll save our paying you guys a fortune for change requests too!"

Bob smiled. Another benefit! Not only had he figured out a simple way to rescue FBU and his job, but ... oh, drat. Bob gulped. He had figured out a way to eliminate one of KillerWattSoftware's major revenue sources. That wasn't going to go down too well back at the office.

He put on a brave face and said, "Yeah." They finished their drinks and went home.

Read "Rocks into Gold" Part 1 of 4
Read "Rocks into Gold" Part 2 of 4
Read "Rocks into Gold" Part 4 of 4