Wednesday, February 16, 2011

Patterns of Success - Ed Yourdon

I went to work at Yourdon Inc as a seminar instructor in 1983. My adventures are documented here.
During the 1980's the software development industry was looking for a combination of methodology and tooling to improve the way it built applications. I guess the same is true today.
Back then the radical idea was "structured". Structured Programming, Structured Design, Structured Analysis.
Ed collaborated with other thought leaders like Larry Constantine, Tom DeMarco, Stephen Mellor, Paul Ward, Tim Lister, etc. to create a loosely coupled method ecosystem of books and courses.
He sold the company in 1986 and continued to write books and published American Programmer.

John - Thanks for taking the time for this interview. Before we get into the Patterns of Success core questions, could you tell us what you have been up to these days?

Ed - Currently I am working on a book that I plan to publish this summer. It will be called "CIOs at Work". I am speaking with a number of CIOs (e.g. Microsoft, Google, NYSE). I think the book will be informative for a lot of people in IT because they have limited contact with a CIO to see what goes on in that position.

John - So what are you asking these CIOs?

Ed - I ask them what they think is important, what is coming down the road, what their problems are. Questions like that. They have a lot of common ground but on the other hand the CIO of a software development company deals with some unique problems compared to the CIO of a company that manufactures tangible products.

The other thing that I am doing is acting as an expert witness on lawsuits dealing with failed IT projects and lawsuits involving IP or Trade Secrets.

John - Ha! In my psuedo-random selection of people to interview, I have spoken with Capers Jones who has been an expert witness for failed IT projects and an interview with Bob Zeidman who has been an expert witness for IP litigation.

Ed - Every so often Capers and I have sometimes been on the same side and once or twice on the opposite sides of cases. Being an expert witness is something I never planned on in my career but it is profitable and lets me work a lot from my home office, which is nice.

John - You have done so much in your career, what would you like the focus to be for our discussion of Patterns of Success?

Ed - I have done a lot of work in recent years with software start-up companies. I have been on several  boards of directors or advisory boards and I think that would be a good place to focus.

John - OK. What have you seen these start-ups do to be successful. Any commonalities that surface?

Ed - To ask the question that way almost assumes that the successful companies had some strategic plan from the begining that was well executed. In my opinion, there is a surprising amount of serendipity involved for a company to be in the right place, at the right time, with the right idea, and the right people. So many factors that have to come together for success. When it works you look at the successes like Microsoft or Google and think they were geniuses, but we don't hear much about the companies with a similar idea that did not have one element in place.
I think one of the really big changes in software development has been that successful applications can now be developed very quickly with little effort. I did a lot of work a few years ago talking to the Web2.0 startups. These small companies could often develop and launch their product with very little money. They did not have to go to venture capitalists and turn operational control of the company over. Because of the modern development environments and cloud computing services, these companies did not need a large capital outlay to produce their product.

During the early days of a start-up it really helps to be physically located in an area that has other start-ups. You have immediate access to employees, to a community of entrepreneurs for advice, to sources of support services. Also having a major research university in the area helps. Silicon Valley is the classic example of this type of incubator environment. Another example is the 128 Beltway outside of Boston.

John- What else characterizes a successful start-up?

Ed - Being able to change directions when the first version of the first product is a dud. When I helped guide Requisite Software through its start-up phase, the leaders of the company originally wanted to develop an object modeling tool. But the market was not very excited about that. So they had the ability to change directions and re-purpose the code base that they had been developing to support management of textual requirements. There was a real need for that in the market and the company was able to respond to that need.

John - After the phase in a start-up where the charismatic leadership has been successful and they have taken on some professional management. What happens next?

Ed- Well one thing a startup has to start worrying about is that if they are successful they get on the radar of large competitors. These competitors might decided to squash the start-up or perhaps acquire them. In either case the management should have some strategy on what they should do. As a defense against being squashed a start-up can keep its product feature set ahead of the larger companies. At Requisite we had developed the product using Smalltalk and could come out with a new release every two months. The larger competitors could only release on an annual cycle. That was back in the 1990s and today, with modern languages and development environments almost any company can produce continuous releases.

Another factor in a larger company deciding to squash vs. buy is if the startup has a loyal customer base. However, there is this "Crossing the Chasm" phenomena of the start-up acquiring the early adopter customers segment. The larger companies may want to enter the market only after it has attracted fast followers.

Finally, a start-up could affect the squash vs buy dynamic by effective IP protection. However, this does require substantial investment, possibly giving up equity to a venture capitalist. Even if you have patents the larger competitor may replicate your IP asserting it is not an infringement. To defend the patent may require a multi-million dollar lawsuit. Alternatively you may try to keep your IP a trade secret. Unfortunately, in the software business the main concepts of your product are often visible on the UI, and the competitor can replicate the code fairly easily.

This phase of a start-ups life is probably the most treacherous. To be a long term winner, the start-up needs to figure out how to go from being the first on the block with an interesting idea to being an established player.

John -  Now lets look at some Failures to Llaunch. It seems in all my interviews for each successful pattern there is an opposite failure. Do X = Success. Not Do X = Failure. What have been some of the more dramatic failures in your experience.

Ed - I agree that the failure is almost always the inverse of the successful pattern. I do think that the most common failure for a start-up is a combination of arrogance, or blindness of the founders. They often will not listen to advice or consider alternatives. This is a delicate balance. On the one hand you almost have to be fanatical about your devotion to the big idea that is at the core of your start-up.There will be any number of people, starting with your family... your spouse saying that the idea will never take hold. It is even more humbling to talk with a venture capitalist who has heard it all, seen it all, and shows you the door. So to be successful you have to be a dedicated fanatic. So one type of failure would be someone who listened to bad advice and gave up on a great idea and the other type of failure is someone who never listened to advice and tried to make a bad idea successful. Since ultimately there are many more bad ideas then good ideas, the most common failure is the second type.

There is another thing I want to emphasize. There is an enormous world between success and failure and that often is the saddest, the world of the mediocre. In the software business an example of this is shareware. We see two clever guys in a garage develop what they think is a great product, but for whatever reason it languishes and only sells a few copies a month. This could change with the advent of new marketplaces like the Apple App Store. I heard of one guy who was selling a couple copies a day of his product. Then he got into the App Store and in the first day sold 10K copies.
But I think that there are a lot of companies, where the founders wanted to be like a Google or a Microsoft and they are just barely staying alive after several years. I think that that is worse then trying hard for a year or two, running out of money, and closing down that business to try something new.

John - OK. The final topic. What do you think the NEXT BIG THING will be?

Ed - I find this type of question very humbling because so many of the things we talked about today as successes I never saw coming. I started using Google in 1998 but never thought they would dominate the market.
That being said, I think what will be a particularly transforming technology in three years will be mobile computing. What form that will take, what products will be leaders, I do not know. I think we are just beginning the journey in our use of this technology. Based on what I am seeing in conferences like PopTech I think mobile technology will have an enormous impact on emerging countries in places like Africa. There are some examples of some amazing things being done with limited technology. Things that we might shrug and ignore. If Moore's law continues for another 3-4 years then trans formative technology will be affordable to a much larger population of people in these countries.  We will see uses of mobile applications in economically depressed areas that will vastly improve the quality of life for these people. The political landscape will change radically with these types of applications. Imagine what China will be like if all 1.3 Billion of its citizens had a smartphone in their pocket and could collaborate on social issues.

John - Look what happened last year in Iran.

Ed - Or most recently in Tunisia and Egypt.

John - It seems that the combination of technologies (battery life, screen size, cpu, network bandwith, etc) are all providing a  more sophisticated platform for a 24x7 constant digital companion.

Ed - Perhaps even more important to my point, is that the more basic phone with internet access is getting cheaper and cheaper so the poorer demographic can get access.

John - If all the products get cheaper and cheaper how do the companies make money?

Ed - The business model will have to shift towards fractions of a dollar from billions of people. Often, the new innovation will come from a college kid with a passion to transform the world. It is not even on the Microsoft sized companies radar.

John - That reminds me of when you were writing the American Programmer back in the 1990's. Back then your audience worked for a large corporation like an IBM or Microsoft. Today, more and more, the developer is an individual... forget the college student, he/she is a high school student who wants to get the next iPhone or Android app into the market. So the next gen start-up for the next gen technology is a high school kid working to crank out quick to develop, cheap to sell, apps that will impact a demographic able to afford a cheaper platform.

Ed - Exactly. Look for apps used in Africa, developed by Africans, using commodity technologies.

John - I appreciate you sharing your insights with us in this Patterns of Success series.

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