Discover Your M&M Early Warning System

Dan and Chip Heath, the authors of the best selling "Made to Stick" and "Switch", wrote a clever article in this month's Fast Company titled: "Business Advice From Van Halen." The famous rock band developed their very own early warning system for detecting problems (especially big ones). As the article states it "was the canery in the coal mine." How did they did do it?... by requesting a "brownout" of M&Ms. The article is definitely worth the read. The ingenuinity of Van Halen, and the Heath brothers' point, was determining problems early on with your projects can be simple and effective.

In keeping with my theme of my last two posting regarding agile approaches to technology development, I have my own set of tools that detect early warning signs of tactical or strategic problems with the project(s) and/or the organization. Tactical warning signs detect a team's trouble with their immediate deliverables. Solutions for addressing these issues can usually be easily solved. Strategic warning signs reveal more serious organizational problems with either the team or the overall larger company and are more difficult to address. These issue can stem from cultural differences, management weakness, and lack of focus. Here are some examples of tactical and strategic warning signs:

Tactical Warning Signs for Projects:

• Decreasing scope/committments during iterations, or worse under-delivering to your customers/sponsors.
• Tasks that span longer than the planned effort, especially those that were estimated to be relatively simple.
• Impediments to the iteration's committments revealed during daily stand-ups and retrospectives.

Strategic Warning Signs for Projects and the Organization:

• Missing vision/goals for the project and it's iterations.
• Velocity for the highly prioritized features of the project are considerably low (regardless of the overall velocity for all work completed by the team, which may include effort spent on items outside of the focus of the particiular iteration).
• Large spikes of scope increases over the course of several iterations during the project.
• Lack of consistency in following/practicing the agreed to agile practices.
• Morale, team dynamics, organizational changes, and other soft management issues discovered during team retrospectives and/or one-on-ones with individual team members.

Tools such as leveraging velocity tracking, release goals, and prioritization are great ways to quickly assess the state of your projects. More importantly though is maintaining the pulse of your teams. At the end of the day, the two most effective ways to measure a team's strategic success is through your retrospectives and individual one-on-ones. Nothing replaces the human aspect of building rapport with your team members. I've personally witnessed managers lose entire teams through a domino-effective of voluntary attrition for lacking this crucial element to their management approach. All your hard reporting and tracking methods in the world will never provide you with the health status and morale of your teams without relationships built through conversations.

Israel Gat, The Agile Executive, shares his own thoughts on early warning signs for agile projects. Definitely a recommended read.

Successful Blue-Collar Jobs Employ Agile Practices

Inc's magazine February 2010 cover has Nick Sarillo, a blue-collar millionaire who owns Nick's Pizza & Pub. To create a successful business with high profits, low turnover, and very satisfied customers he instituted a framework akin to the lean principles of Agile. He compares his model to that of Navy Seals, where they're self-managed teams.

Created a backlog of daily tasks:

Nick was excellent in managing the daily tasks of activities to handle the huge volume of orders. But in order to scale he needed to successfully duplicate himself. As the interview in Inc states:
"So what did he do? 'I built a system to replace me,' Sarillo says. 'I put together a checklist of things that had to be done by 4 p.m., so we could handle the volume. It took about four weeks until it could work without me. Now we're nailing it."

Established their own form of a task board:

If you have a self-managing team the team becomes responsible for the work, not a specific supervisor who you are dependent on to make things happen by telling everyone what to do. Mr. Sarillo instituted his own form of a task board to get the process of opening and closing the kitchen down to a science, and something anyone on the kitchen staff can do:

"Take the process of opening and closing the kitchen. In a typical restaurant, a supervisor is responsible for both, has a long checklist of things to be done, and tells everyone what to do. At Nick's, by contrast, the whole kitchen crew is responsible. To help people keep track of what needs to happen, there is a laminated "ops card" for each task involved. Each ops card is red at the top and green at the bottom and has its own slot in a converted timecard holder. In the morning, when staff members come in, the ops cards are in the slots with the red end showing. Whenever a task is completed, someone turns over the corresponding ops card so the green end is showing. By closing time, all the cards are showing green. It's then the manager's job to make sure they are all red again before people arrive the next morning."

Trust & Track versus Command and Control:

Many business owners claim that no one cares about the company as much as an owner. In the successful Agile frameworks I've instituted in the past, the best way to get the team to care about the work and the business is by empowering them. Encourage self-organization and that the team is smart enough to know what's best. It's what'll keep them coming back every day to the office, because they know they have a direct impact on the decisions and direction of the projects they're undertaking. Nick Sarillo understood this fact and instituted his system, albeit unknown to him akin to an Agile framework, to create a trust and track culture:

"The system is an important mechanism for creating a trust-and-track culture and for breaking the habits of command and control. 'Managers trained in command and control think it's their responsibility to tell people what to do,' Sarillo says. 'They like having that power. It gives them their sense of self-worth. But when you manage that way, people see it, and they start waiting for you to tell them what to do. You wind up with too much on your plate, and things fall through the cracks. It's not efficient or effective. We want all the team members to feel responsible for the company's success."

Nick Sarillo's story is another example of how of lean principles and practices found in Agile, especially with Scrum in my experience, are frameworks that can work with almost any team in almost any industry or environment. What you find are highly motivated, self-managed, high-performing teams.

Click here to read the entire Inc interview with Nick Sarillo.

But the Business Doesn't Care How Successful IT Works!

In my experience most business managers are more concerned with getting results out of their IT resources than how to get them. There was a time that I wanted to zealously evangelize the business about the benefits of Agile and other lean concepts that lead to high-performing engineering teams and quality IT development. I'd receive the invisible rolling of the eyes, the gentle long sigh, or the blank stare with a merciful yes-nodding of the head out of kindness. As an eager, sometimes naive, and ambitious young professional I tried not to let these reactions dissuade me from continuing. I thought to myself, "...eventually someone will listen to what I'm saying and help me make it happen."

These business leaders, of some the companies I've worked for, heard my words but didn't necessarily listen to them. They're all fine with following the latest proven productive trend if it lets them claim that they're a better organization for it. But the bottom line is that most don't really care how a successful IT project is implemented so long as it gets done with the results they expect. My answer to this problem is don't worry about explaining the "how" to them...just show them. Nowhere is this even better expressed, in my experience and that of my other professional colleagues, than within the financial industry. Everything here is about "P&L". Profit and Loss.

Now for those of you reading my past posts, you know I have a bias towards leveraging an Agile approach to successful software development. The problem that I and other Agile advocates face is that some business managers hear all the Agile jargon and perceive it as "touchy-feely", or even downright confusing. Here are some of the reactions I find to some of the Agile/Lean concepts I present to them. Heck, some are just plain good management practices:

Concept 1: Self-managing & self-organizing teams

• "We're losing control by doing this. Some times you need a top-down approach to getting things done."
  
• "It's no wonder there isn't focus on the work that needs to get done...we've got everyone acting like chiefs since they're self-managing."
  
• "How will we know who's working on what?"

Concept 2: Estimating in Points, Using Velocity & Burndown Charts

• "How the heck am I going to know when something is going to be done if there aren't days and hours attached to each and every task!!"
  
• "Points are meaningless. This kind of talk is childish and full of garbage."
  
• "Where's my Gantt Chart, the critical path tasks and the assignees for each?"

Concept 3: Priorities and Identifying Release/Sprint/Iteration Focus

• "We already told you what's important, and what we're trying to sell/build. Just get started and get it done ASAP!"
  
• "We've got a lot of contracts pending on all of these projects, so they're ALL IMPORTANT!"

Concept 4: Motivating & Empowering Your Teams

• "If we get this product completed by year-end, we'll be able to close on a $3 million deal. Isn't that motivation enough?"
  
• "These engineers get a guaranteed salary and generous bonus every year without having to worry about making any sales numbers. What more do they want?"

In the coming days and weeks, I'll be writing about my past experiences with the issues surrounding these concepts and the solutions I implemented to address them. The main point is I started to walk away from the jargon (Agile-speak). To make successful IT development work at these organizations I began focusing exclusively on just doing it and showing them the results they wanted.

Have you had some notable quotes and reactions to any Agile/Lean concepts you presented like the ones listed above? If so, what was said and how did you manage it?

Risk Management Applications Win on SEC Vote to Propose a Ban on Naked Sponsored Access

Today the SEC votes on publishing a 'concept release' on high-frequency trading, dark pools and the structure of markets. The concept release document lists the SEC's concerns, and proposals on how to remedy them.

In a previous posting I wrote about the business of sponsored access, and the SEC's and Congress' concerns around 'naked' sponsored access. The SEC is officially proposing today that brokers would be required to implement "risk management controls" before trades are made and design them to ensure orders to not exceed a "pre-set credit or capital threshold." This positions NYSE Euronext's division, NYSE Technologies, perfectly as they've built out a hosted solution that provides risk management controls for anyone trading on a number of different markets not just the ones they own (NYSE, Arca, Euronext, but Nasdaq, Bats, and others.).

This concept release document is basically a feeler to see how the industry reacts, solicit and review feedback from industry experts, and refine the proposed new rules before finally approving them. In the meantime, there's no question that the SEC plans on instituting new rules that tackle the concerns around credit or capital thresholds for brokers' sponsored clients. With that truth well understood in the minds of all market traders, NYSE Technologies and other risk management developers like them are going to be in huge demand. Their customer base has now expanded beyond just high-frequency traders, but to anyone trading on any US market through sponsored access.

Click here to read the SEC Press Release: SEC Proposes New Rule to Effectively Prohibit Unfiltered Access and Maintain Market Access Controls

Click here to read WSJ's article: "SEC Proposes Banning 'Naked Access'

Secuities Industry News article to "...Set Risk Management Standards"

Click here to read the Bloomberg article on today's SEC vote.

In the Digital Age: Paying for Quality Independent News

The Wall Street Journal published Rupert Murdoch's December 1st remarks to the Federal Trade Commission's workshop on journalism and the Internet in today's paper. It's clear Murdoch is running headstrong through new frontier. He stated that there are two principles media companies need to come to grips with:

• Provide the people with news they want.

• Quality content is NOT free.

There have been some rumblings the past couple of weeks around the topic of paying for quality news content online. It was recently reported that News Corp has been in talks with Microsoft in making all their online news content available on exclusively on Microsoft's Bing search engine, for a price. This leaves Google and other search engines out in the cold. Perhaps a bold move by Microsoft to disrupt Google's dominance by taking away some prevalent and respected news content. News Corp owns a slew of media outlets, such as: The Wall Street Journal, The New York Post, The Times of London, the The Sun, etc.

In a move to appease the likely move by more media giants, and avoid legal wrangling, Google has just recently made it possible for companies to avoid turning up on their search engine by embedding some special tags in their web pages.

In my opinion, Murdoch delivered a compelling argument in his remarks before the Federal Trade Commission.

• The experiment with online advertising is not bringing in the revenue that media companies have been looking for, and quite frankly need to sustain the independent and quality content being delivered.

• People will only pay for content if they believe that they're receiving value. With this, media companies can support their business model to deliver this quality content to the people.

• The need to protect and recognize the professional investments of time, effort, and resources of distinguished journalists to provide this quality.

Without what Murdoch is proposing, think of the alternative. Unable to manage a profitable business model, more and more print media are closing their offices. There are several reasons for this, but part of it has to do with trend towards digital media. Without reputable and independent media sources to provide quality content, it will be difficult to discern what digital news is worth noting and listening to in the massive sea of the web. Just search the blogosphere. You won't need to search too far to find a ton of misinformation being spewed on there today. Wikipedia has already had trouble keeping their entries clean, not to mention maintaining incentives for volunteer contributors to continue to contribute their content.

To stay ahead of the technology curve, News Corp and other media outlets are also pursuing an innovative mobile strategy to provide their print and televised content on any number of mobile devices. (I plan on following up on the potential impact of this for the Amazon's Kindle, Barnes & Noble's Nook, e-readers, Blackberrys, iPhones, etc., in another posting.) This strategy I believe will be the catalyst for these media moguls to find the balance between a sustainable and profitable business model, and delivering independent quality content to customers at a modest price.

To read the WSJ's article on Rupert Murdoch's remarks to the Federal Trade Commission on December 1st, click here.

An Answer for the 'Naked' Sponsored Access Controversy

With my current work in technologies within the financial market, I see low-latent risk management software applications as an answer for the controversy surrounding 'naked' sponsored access. But before I delve into the details of how such a solution would work, let me set the context of this posting with some background.

For those of you unfamiliar with some of the intricacies of the financial market, here’s a quick summary of what you see in the picture to the left regarding sponsored access. Brokers, like Bank of America and Goldman Sachs, are members of exchanges (ie. NYSE, Nasdaq, etc.). Brokers go through registrations, pay considerable fees, and are regulated to have access to these markets. Clients of these brokers who are interested in high-volume trading, for example in some cases hedge funds, want access to these markets.

Traditionally clients would pay the brokers a fee to access the markets via the broker’s own internal systems. It’s a win for the broker, who generates extra income in charging for access, and a win for the exchange which makes its money with the increase in trading volume.

The problem arises as more and more clients, who are also interested in high-frequency trading, want faster access to the markets. Using the broker’s internal systems to access these markets only increases the latency. The clients already have their own networks, usually optimized to meet their performance objectives, whereas the brokers may or may not. Either way, the broker’s systems will only add to the latency by adding an additional 'hop' to reach the market. (Again for those of you unfamiliar with high-frequency trading and the sensitivity surrounding latency, performance is measured in milliseconds and microseconds.)

To address latency concerns among their clients, brokers have given them 'naked' access to these markets (NYSE, Nasdaq, etc.) by providing their broker 'market-participant IDs.' The client (ie. hedge fund) directly accesses the market as if they were the broker (Bank of America, Goldman Sachs, etc.). The advantage is that the client bypasses the broker’s internal systems, directly connecting to the actual exchange, and avoids the additional latency.

Two problems, among others, that arise from naked sponsored access are:

• Since clients are using the market-participant ID of the broker, the market is unaware that the trader is not the actual broker but a client of that broker. This therefore puts to question transparency (one major purpose of exchanges).
  
• The broker is also held responsible for all trades made on behalf of those clients, since it’s their market-participant ID being used on that exchange. This puts brokers at risk of a client over-leveraging. Multiply the risk of over-leveraging by the number of clients trading with naked sponsored access, and there are legitimate concerns of another financial crisis.

This past November 20th, Senator Ted Kaufman urged the Securities and Exchange Commission (SEC) to stop sponsored access all together. The issue argued by many against the senator’s move is that sponsored access accounts for more than 50% of the daily trading volume that occurs on exchanges today. Sponsored access has also created more liquidity for buyers and sellers, essential for trading.

A variety of firms have explored and invested in building a low-latent solution to address the concerns surrounding naked sponsored access. The solution they’ve built is a low-latent risk management application which sits on top of naked sponsored access. A division at NYSE Euronext, NYSE Technologies, calls their solution a Risk Management Gateway (RMG).

What does it provide? Sponsoring brokers can manage the risk of their clients through a web-based user interface that allow them to:

• Manage a set of trade filters, that are configurable, and controls the level of risk for each of the sponsoring broker’s clients. Once a threshold is hit, the RMG can block further trading activity until a risk manager/administrator removes the block or resets the limits.
  
• A means to visually monitor the level of risk based on all client order activity pre and post trade.
  
• Cancel all orders, or specific orders, for a given client.

RMG, and other low-latent risk management products like it, may be a way forward to keeping the practice of naked sponsored access alive with secure enough safeguards to prevent abuse by high-frequency traders.

Technology is moving so fast that it’s hard for the SEC to keep up with deciding what the right amount of regulation is needed while understanding all the ramifications with or without it.

Click here to read more about the Wall Street Journal's article on 'naked' sponsored access.

Barnes & Noble Strikes Back

Besides opening up it's eBookstore back in July of 2009, Barnes & Noble is now striking back at perhaps its strongest competitor, Amazon and its Kindle. The Wall Street Journal has announced that B&N will be unveiling their own eReader, produced by E-Ink. It is widely speculated that the product launch will be on October 20th. Now B&N understands that an existing customer of the Kindle is a lost customer to them, basically because the Kindle funnels the customer to Amazon. I speculate that some of the tactics B&N will use to attract customers who don't already have eReaders today, as well as enticing those who currently use Kindles, are:

• Leveraging B&N's existing partnership with Plastic Logic and Irex, announced a few months back. This deal gives their devices access to B&N's eBookstore. Making B&N's book content not exclusive to just their own eReader and potentially establishes an "open device/source" policy for all e-book devices. Perhaps eventually pressuring Amazon to open their device up to using content not just from their store, as well as Amazon's content to be available on devices other than the Kindle (like the eReader). This may be B&N's strongest long-term strategy in potentially gaining some of those lost customers back from Amazon.
• Promoting B&N's Book Club membership deals and expanding this into the eReader content. Customers may want to seize on the savings, and will be reminded of it by B&N's in-store promotions and shopping experiences.
• Exploring an "e-book loaner" program to get non-eReader and Kindle users to take advantage of their new device. Users would be able to recommend a book to a friend, and electronically allow him/her to read the book from their own device. Details on how the program would work are still in the works (as per the New York Times' article), but the strategy could give the eReader an edge.
• Lastly, besides using AT&T's cell network to download materials onto the eReader, B&N's device will also work on Wi-Fi (currently not available on the Kindle). This will allow B&N's daily 14 million in-store customer walk-ins to try out the eReader, further promoting the device.

Sony is still trying to edge its way into this market, but I believe Barnes & Noble has the ability to win a sizable market share if their new strategy gains traction. Anyone with other ideas for B&N to try?