How To See What Is Really Going On In Your Business

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Wednesday, 10:00pm

Sheffield, U.K.

All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes. – Taiichi Ohno

I was lucky enough to attend a masterclass by the Vanguard team recently, led by Professor John Seddon about going beyond traditional command and control management and the insights in there are still sinking in.

So much of what we do can only be described as waste – time spent filling out forms, commuting, collecting figures for reports, filling in surveys or sending emails.

At the heart of the Vanguard method is learning how to see what is going on around you.

That’s something worth understanding how to do and it might make sense to work through an example.

I’m still learning this – so this might not be right, but it’s a start anyway.

1. Start with understanding purpose in customer terms

Do you really understand what your customer wants?

For example, if you’re meeting with a prospect what is it that he or she is looking for?

Are they looking for your product?

Or are they looking for a product that meets their needs?

It’s probably the latter so before you say anything about your product you should probably take the time to really understand what they need.

That might seem obvious but I have yet to see a salesperson who knows how to do that properly.

It’s an easier thing to appreciate if you look at it in the context of a break-fix archetype – a situation where something you have is broken and you need it fixing.

Essentially, you want it fixed, you want it fixed right and you want it fixed as soon as convenient.

Not it’s not as soon as possible – it’s when it’s convenient for you and that might be right now if it’s the middle of winter and your heating has broken down or in a week’s time when they’re back home from a holiday.

The reason why it’s important to get clear on purpose is so you know what isn’t contributing to what the customer sees as their purpose.

For example, none of the calls you make or reports you write or review meetings you have with your manager have anything to do with fixing the customer’s problem – from their point of view.

They just want things fixed right.

2. Understand the type and frequency of demand

The next thing you do in the Vanguard method is to study what’s happening in terms of demand.

That means starting at where the calls are coming in – a service centre for a break-fix system or anywhere else where customers call in and ask you to do something.

When they call in they usually want to talk about one of two things.

Either they want something – a product or a service – the kind of thing that makes them happy and that’s called value demand.

They want to buy something.

Or they’re calling to complain about something – because the fix hasn’t been done, the goods aren’t right or someone hasn’t turned up.

That’s a call about something going wrong and it’s called failure demand.

So, how many types of demand do you get and how many of each type come through?

3. Study the capability of your system

Now it’s time to start measuring how you respond to the demands on your system.

There’s all that demand coming in so how long does it take you to satisfy that demand?

For example, if a customer calls in wanting you to fix a problem how many days does it take from when they called to when the problem is fixed for good?

Or, how long does it take from when they place an order to get it to them?

The faster you get either of those things done the better the capability of your system.

Just think about how Amazon and Ebay have changed the buying process.

Amazon suggest that when someone buys off you that, even though you could take a couple of days to post something, you should get it in the mail as soon as possible.

For one thing, once the order is dispatched they can’t change the order.

But, more importantly you have a customer who expected to get something in three to five days getting it the next day and being delighted.

4. Map the flows and identify value work and waste

Now, if the customer isn’t delighted that’s because something is going wrong – you’re doing work that’s a waste.

Worse still you’re paying someone to first do work that the customer wants – value work and then if it’s not done right paying someone else to fix it – wasted work.

The thing to note is that in the Vanguard method you start mapping flows of work only after you’ve done the analysis of the types and frequency of demand and measured how your system responds at the moment.

After all, you need to know if you get better or not when you start to try and improve the system.

5. Start examining the system conditions

Most of the problems your customers are facing have to do with the system – not your people.

The system is almost always the problem.

The controls and structures and processes you have put in place are probably what get in the way of your employees making your customers happy.

What they’re doing is working to serve the system rather than the customer – working to meet targets, fill quotas, get bonuses and all the other things that either demotivate them or suck the intrinsic value of doing a good job out of what they’re doing.

The fact is you need to get rid of almost all that stuff that you use to control and monitor what’s going on.

In manufacturing at least you use that information to monitor the work.

In a service business all you’re doing is spying on your staff.

Instead – just help them do a good job and watch what happens to your failure demand figures and how quickly your team meets customer purpose.

6. Change management thinking

This is the hardest bit and you won’t get to it by telling the managers to change.

I learned about intervention theory at the masterclass.

This is the idea that there are two types of interventions.

Rational interventions are where you tell people why they’re being stupid.

And when you do that you shouldn’t be surprised that they get angry and offended and stop listening

The other type of intervention is a normative intervention where you help them to see what’s wrong for themselves and realise that they need to change the way things are.

That takes longer but it is a change that sticks – because they’ve decided it for themselves.

Hard to summarise, hard to do

The thing with this kind of systems intervention is that it’s a non-trivial task.

We’re so conditioned by a particular kind of goal oriented, target driven culture of organisations that it’s hard to imagine any other way.

Each step in the process is something that needs to be learned and practised and reflected upon.

And many organisations just don’t have the appetite or willpower to do that.

But if you can you could create an advantage – a competitive advantage that actually does endure.

Because if you have a business that meets the needs of your customers and your competitor has a business that meets the needs of the business – which one do you think is going to prosper?

Which one would you rather work in?

Cheers,

Karthik Suresh

How To Program Your Life And Business

programming-world.png Saturday, 8.37pm

Sheffield, U.K.

But if thought corrupts language, language can also corrupt thought. – George Orwell, 1984

When it comes to dealing with the complexity of the world around us, thinking in terms of machines and computers seems to provide some useful approaches worth considering.

Philosophers have wrestled with questions of matter and mind for millennia.

Is matter something that exists out there independent of all thought?

Light and trees and animals and movement?

Or, since everything we perceive is actually reconstructed inside the dark chamber that houses our brains, does everything really exist only in our minds?

Such questions are perhaps best left to the philosophers.

From a practical view whether a tree exists in the material world or exists only in our minds is less important than what we spend our time doing in the world we inhabit.

Most of our existence is a search for control of the world around us.

So, we build houses, create factories and form societies.

But we don’t always think about or recognise the different kinds of thinking that go into doing those things.

So, if we think of ourselves as machines – maybe as computers – what kind of programming are we following and are there ways in which we could do things better?

Let’s start with the physical transformation of the world around us.

That comes down to having tools – tools that help us change material from one state to another.

That seems a pretty obvious first step for the species and it’s something that we’re pretty good at now.

The next step is about putting different physical tranformations in a process – arranging them so that they result in something bigger than the individual things themselves.

The classic example here is a car factory – whether the gigantic integrated facility designed by Ford which ushered in the age of mass production or the lean facilities pioneered by Toyota that run to a heartbeat set by customer demand.

The task here is of saying what must be done to change from one state to another – something that is called imperative programming.

Imperative programs tell you how to do something – what the steps are that you need to follow in order to make something happen.

If you have a morning routine or insist that your staff complete their tasks in a particular way you are doing imperative programming.

Most things work just fine if you approach them with an imperative programming mindset – knowing how to do things is important most of the time.

As you go from problems of matter to problems of mind, however, there comes a point where it stops being enough.

And this usually happens when what needs to be done is not clear and the people involved look at things in different ways and have different thoughts.

This is called a pluralist situation – and things start to get fuzzy and messy and a little complicated.

Maybe even complex.

At this point what you need to do is shift from thinking about how something should be done to what needs to happen.

In programming terms the easiest one to appreciate these days is css – the cascading style sheets that govern how a web page looks.

css is a programming language – one in which you set out how you want things on your page to look and then it all happens at once – your page goes from simple html to being displayed in whatever style you wanted.

In other words you describe what you want and the programming language takes care of the details.

This kind of programming is called declarative programming and it’s closer to the idea of a mental model than a process model – what rather than how.

So, why might this be useful?

The U.S military, for example, does declarative mission planning – it sets out what needs to happen and lets its units work out how to make things happen.

That’s the essence of business and life strategy as well – without having a clear model of what needs to happen there is no point in spending time working on the how because the chances are you won’t make the right things happen.

The problem in the modern world is that there is lots of knowledge on how to do things and much less insight into what needs to be done.

A programmer or programming shop, for example, can build you anything you want as long as you can tell them exactly what you want.

Most of the time clients don’t know.

And that’s the secret – nobody really knows – bosses don’t, managers don’t and workers don’t.

And that’s because they have been trained for years to program their lives and business using imperative programming techniques but never been exposed to declarative ones.

Even the whole neuro-linguistic programming stuff seems to be (on a cursory reading) imperative programming.

Of course there are lots of discussions in the programming world about the precise definitions of these terms and which languages you should use.

For the purposes of my argument here you can ignore all that.

The point I’m making is that you should consider thinking about what you do before working out how to do it.

That’s pretty obvious really.

But what’s not obvious is how to go about doing that – how to think about the what that’s in your mind.

Perhaps you will notice the slight irony in using an imperative approach to illuminate a declarative activity.

A paper that might help you get started if this is of interest is Thoughts on learning and taking action which is about how to construct declarative mental models.

And if you’re too busy to read the paper the answer to why you might do this is to get peace of mind.

Because that is all that matters.

Cheers, Karthik Suresh

How To Only Do Work That Matters

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Thursday, 9.11pm

Sheffield, U.K.

Price is what you pay. Value is what you get – Warren Buffett

I was reminded today that most of what we do during the working day is entirely pointless.

For example, why do you check your emails, take phone calls, attend meetings create reports, update trackers, enter data into systems or sit in traffic waiting to get somewhere?

Presumably all this activity is in aid of something – but what?

If you ask most people what they do you’ll probably get some kind of role description.

I’m an engineer, a doctor, I work in accounts payable.

But what does that actually mean in terms of value?

I design bridges for places that need a bridge and don’t have one, I treat sick people, I make sure our suppliers get paid when they send us stuff.

We all have customers for our work, either paying customers who get something from us in exchange for money or internal customers who get what we do to help them what they do for their customer.

Some of that work is value work, but what’s that?

One way to think of value work is that it’s what customer wants when that customer wants it.

So, for something like a broken boiler – the customer wants a working boiler and because it’s the middle of winter they want it fixed now.

Value work, in that situation, is all about fixing the boiler – getting an engineer and parts to the situation where they can be used to fix the broken machine.

Anything that does not directly contribute to a fixed machine – all the paperwork, incidentals, reporting, timekeeping – all that is simple wasted effort.

In situations like that value work is relatively easy to design – the problem is changing the system so you don’t need to do any of the other rubbish.

But the core task really is to work out what a customer needs – because that is what they express as a want and get the expertise in time to get it sorted.

Sometimes, perhaps often, wants and needs get confused.

Sometimes a customer says they want an expensive computer system when what they need is to spend a little more time talking to the customer so they can fix the problem the first time.

But it’s easier to get all excited about buying a new system than spending time listening to customers – that’s just not as much fun.

And it gets more complicated when stakeholders get involved.

Most organisations are not really there to serve customers – they’re there to keep stakeholders happy.

People exist and do the jobs they do so that their managers can look good and in turn make their senior managers look good.

It’s all about looking good inside the business – which is why everyone spends so much time creating reports and sitting in meetings.

It’s the equivalent of baboons showing their red bottoms or peacocks displaying their tails – showing off.

And actually you can throw all of that away and spend the time you’ve freed up giving customers what they want and still have time to get home and have dinner with your family.

When it comes down to it value work is about effecting a transformation – going from recognising a need exists to filling that need.

Everything that contributes to that transformation adds value.

Everything else is waste.

It’s simple to say but very hard to do.

And that’s because people in charge need to feel like they’re in charge by getting you to make reports and play the organisational game.

What you’ve got to do is spend some time thinking about who your customer really is – and spend some time with them – study their situation so you can figure out what value work looks like to them.

Then you need to organise yourself to do only that and simply drop everything else.

If you’re really doing value work your customer is going to love you and stay with you forever.

If you aren’t – then you need to change your customer’s mind or fire your customer and get a new one.

Because life is too short to spend it doing wasted work.

Cheers,

Karthik Suresh

How To Get Market-Product Fit

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Wednesday, 8.46pm

Sheffield, U.K.

If your desk isn’t cluttered, you probably aren’t doing your job. – Harold S. Geneen

If you have a profession, are developing a technology, founding a business, creating a product or just living you probably spend a lot of time thinking about yourself.

If you were to take a minute and list all the things that are rattling about in your brain right now you’d quickly come up with a pretty long list.

How many things on those lists have to do with other people’s products or services?

So, looking at this from someone else’s point of view what are the chances that they’re thinking about your product right now?

A while ago I wrote about the concept of product-market fit and likened it to evolution – a way to survive and fit in.

But have we got the words the wrong way round?

If we start with the idea of a product then we have something already and what we’re trying to do is figure out who will buy it or whether they will buy it if we change something about it.

By putting the word product at the start then we are inevitably promoting it – marking it out as the important part – as the prime mover.

So what happens if you look at it from the other side – look at trying to get market-product fit.

In that situation, what is a market?

Well, it’s not a statistic or a demographic or a psychographic.

It’s a person.

More importantly, it’s the inside of one particular person’s brain – your potential customer.

And what does it look like in there?

If you look at the picture above it’s quite possible that a lot of people would say that’s what their brain looks like.

It’s full of all kinds of things – layers upon layers of thoughts and worries and frustrations and plans.

So, how do we make sense of all that stuff that’s in there – it’s not like there’s much room and all these thoughts are squished together and jostling for space and attention.

Your attention.

We make sense of things through story – through narrative.

A story links concepts together, creating a plausible whole that we can believe.

“Reality is a shared narrative we agree to believe”, said the librarian.

So when we talk about a market what we’re really talking about is a story that someone agrees to believe.

Maybe it’s a story you tell – a story that people choose to believe.

Or, best of all, it’s a story that they come up with.

When someone creates their own story about what their problems are and what they need to do to solve them – you have just found a market.

What’s emerged from that cluttered mess we call our minds is a story, a concept, a cluster of related ideas, first dim and then increasingly clear until it’s an obvious way to go forward.

And, if that story matches what your product does you’ve just achieved market-product fit.

Now, you would argue, if you were in an argumentative mood, that this is exactly what validation does in the lean startup / business model canvas world.

But, being pedantic, those approaches still put the product first and, in the guise of being open ended questions their primary aim is to determine whether you need the product or not.

If you put the market first, what you’re doing is putting the person in front of you first – and making your first task understanding what’s in their mind.

Or, helping them understand what’s in there.

One way to do this is by creating “rich pictures”, freeform drawings of ideas and thoughts as they come up in an interview.

There’s a little bit about rich pictures in this article and I’ll try and put up some examples at some point.

If you do this for long enough, you’ll find that patterns emerge – areas that you need to look at start to become clear and things that you need to do become obvious.

What happens is that a market starts to define itself as a result of your discussions.

Then all you have to do is see if you have a product that fits.

Or create one if you don’t.

And it’s possible that a market first approach is a little like shaping your environment to fit you rather than fitting yourself to the environment.

There’s a good change it’s an easier way to create something profitable.

Cheers,

Karthik Suresh

How To Construct A Program That Actually Works

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Monday, 6.27pm

Sheffield, U.K.

There are two ways of constructing a software design: one way is to make it so simple that there are obviously no deficiencies and the other is to make it so complicated that there are no obvious deficiencies. – Tony Hoare

Too much in life is about compromise.

If you work in a business, for example, do you think you’ll get the best tools and finest training available on the planet to help you do your best work?

That question isn’t worth answering but it is interesting to ask why that doesn’t happen.

Take the practice of programming, for example.

A program, in its most general sense, is a plan, an algorithm, a set of steps which, if followed, reach a specified end.

And a good question to start with in any problem situation is to what end?

What end are we hoping for by following this program.

Perhaps it’s a program to help us lose weight, to become less anxious, to market our company more effectively or get a particular product to market.

Or, of course, it’s a program that does something – a web application, for example or a spreadsheet.

In all these cases what approach is going to help you construct a program that works?

Tony Hoare’s observation in the quote at the start of this piece can also be looked at as a matrix, as in the image above.

Some things are obviously wrong – obviously a bad idea.

Like stepping into a puddle on the road or leaning too far over a deep hole.

A small number of things are obviously right.

Given a set of choices about what to do next one of the options is often a fairly clear next step.

The fifth step or the fiftieth step might be harder but the next action, the next move can sometimes be obvious.

This situation where it’s easier to be certain about the short term and much harder to be certain about the long term means we can make the right decisions for right now – but they are also almost always compromises.

When we work in groups anyway.

That’s why so much business is done using spreadsheets when almost any other alternative would be better.

We use spreadsheets not because they are the best tool but because they meet the requirements for a lowest common denominator.

It allows the largest number of people to collaborate on a project that involves numbers where they can understand and manipulate both the tool and the data it holds.

In many software packages you can manipulate the data but not the software itself.

And, in a sufficiently complex package, your ability to change the data is also limited until eventually you grind to a halt, stuck in the equivalent of a digital swamp.

The approach many people take is to take refuge in complexity – creating more complicated programs that try and address their complicated needs.

The problem with this complexity is that it also makes what’s going on much less obvious.

You don’t know if this particular approach is going to result in your falling off a cliff or making a successful moon shot.

These two extremes – between obvious and not obvious – dominate our thinking and so we go for safe solutions because we don’t want to take the risk of doing something more ambitious.

Unless you’re working on your own, of course.

If you’re doing things your way – ignoring what is happening everywhere else then you have a chance to create something new.

Or fail, of course, but on the whole you’ll learn something whatever happens.

If you want to break through this the challenge is to get the right perspective.

And that really comes down to the number of lines in your program.

As humans we can really only hold five to seven things in working memory and think through whether the way in which they are connected works or not.

If your plan or program is a hundred items long you need to group them and keep grouping them until you can describe them using five to seven lines that cover the major things you’re trying to do.

That’s the point where you can differentiate the wood from the trees – where the big picture emerges from the detail.

Okay – those are cliches but they make a point.

But, if you want to go past the cliches and look at how you might actually do this this article has a go at distilling a long Wikipedia article into its main points and comes up with a model that you can look at for yourself and see if it meets the need to be obviously right or wrong.

I suppose the point is this – thinking in terms of programs is a very powerful approach.

Once you’ve written a program that sets out what you need to do to reach a specific end you can run that program and see what happens.

And you can change it if the results aren’t what you want.

Because the secret to constructing a program that works is not just about making a great design.

It comes from running it, testing it and debugging it.

And if you do that enough times you’ll end up with a program that makes a difference.

Cheers,

Karthik Suresh

How To Train Yourself To Think In Terms Of Modules

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Friday, 9.52pm

Sheffield, U.K.

At times, the solution to a maze is to reduce it to embers and walk straight through the ashes. – Mary Doria Russell, Children of God”

There’s a chicken and egg sort of thing that also applies to creative work – does structure emerge from the work or is it imposed on the work?

I was listening to The Tim Ferriss Show podcast today and he mentioned that he had written the ultimate guide to writing a book – effectively setting out a playbook that you just needed to follow and he went on to say that hardly anyone ever actually followed the steps in there.

One of the points he made in the talk was that you should think about your book in terms of modules – so you could run excerpts for people to see.

The module stuff interested me.

I’m also reading a book published in 1986 called Programmers at Work.

It’s slightly strange to think that the tools I’m using to write the way I do were first written in the late sixties and early seventies – close to half a century ago.

So, researching this area is like uncovering history and learning stuff that you can use right now all at the same time.

It’s as if you unearthed an ancient cache of Saxon swords and they all turned out to be still bright and razor sharp.

Anyway, one of the people in the programming book, Butler Lampson, talked about the importance of interfaces.

If you do want to think in terms of modules there are two things you need to consider.

The first are the interfaces between the system and the outside world and the second are the interface between the main parts of the system itself.

A book, for example, has quite a simple interface.

Another now ancient book that I’ve picked up recently is Document Formatting and Typesetting on the UNIX System which talks about three major logical parts to a book – the front or preliminary matter, chapters and the end or reference matter.

If you were building a web application, on the other hand, you’d need to think about the login screens and the main pages you’d need for users depending on their roles.

The interfaces between the main parts of the system have to do with how information flows through and creates insight as a result.

The structure may be invisible in a book or an application but the quality of what you read and use will very probably depend on whether it exists or not.

At the moment, I’m working my way through another book that seems like it’s a random collection of sentences thrown together with headings sprinkled in to create a sense of order.

I’ve stopped reading and started skimming as a result.

Now, I shouldn’t judge because I’m not someone who starts with structure.

Structure tends to emerge from what I put down – it’s more organic and natural – for me anyway.

I remember a while back being taught in an English class how to use brainstorming to create a short piece.

What emerged from the logical arrangement of those ideas was a flat piece, a dead piece.

Something that had no life or rhythm or feeling.

It was writing by numbers, building with blocks and it just didn’t work.

So I ripped it up and started again and let things flow.

And that worked better – the teacher didn’t believe I’d written both pieces – but that didn’t matter.

The point is that starting with structure doesn’t work for me.

However, it does work for others and that leads to an interesting thought.

In some cases, people come up with a structure and then fill in the details.

In other cases, people start with details and work away until when they take a step back and look at what they have done a structure emerges from the work.

For both, the trick is making the structure invisible – either erasing the pencil marks after the drawing is done or moving things around to ensure that the elements are balanced and harmonious.

It’s hard to hold a lot of stuff in your mind.

It’s better to work on small pieces at a time.

Ideally five to seven pieces.

Which is why if you look at the diagram above you have 7 external interfaces and 7 system components for each external interface.

If you were to write something of consequence, you’d need around 49 pieces.

If each piece was around 1,000 words long you’d end up with around 50,000 words which interestingly is the size of most non-fiction books these days.

So I guess the trick to modular thinking is to reduce the number of elements at whatever level you’re looking at to a handful you can keep in your mind.

Each time either build up or break down the parts you need to construct each module.

That will make it easier to assemble the pieces – to create the interfaces that glue everything together.

And which, in the long run, will mean you’ll end up with something you can ship.

And maybe even be proud of.

Cheers,

Karthik Suresh

Why You Should Figure Out How To Pay For Abstraction Layers

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Thursday, 8.07pm

Sheffield, U.K.

The brain is a wonderful organ. It starts working the moment you get up in the morning and does not stop until you get into the office. – Robert Frost

I am not a fan of suits.

I feel like I have to wear them at certain times, because that’s what people do.

But really, there is very little reason in stuffing oneself into polyester or cotton, wearing uncomfortable shoes and constricting the flow of blood to your brain.

The same goes for offices. Why would you leave one box to travel in another box on wheels to then spend the day in a third box?

Wouldn’t it be easier just to stay in the first box and get on with work?

Clearly none of these questions have a right answer – the rules are made by the people who pay you and so you must follow them in order to be paid.

But what if you’re making the rules – how should you arrange things so that they are good?

If you watch a craftsperson at work – say a good joiner constructing a wardrobe – you’ll notice something about them.

They’re not on the phone chatting with their phones held between shoulder and ear, while marking off their gear or fitting a door.

They work in silence, perhaps with some music on in the background, but on the whole fixed on the task – taking care and watching to make sure edges line up and doors close smoothly.

Much of the work we do is craft – and craft nearly always benefits from periods of silence and focus.

The single biggest problem for anyone at work is being interrupted.

An interruption is like an explosion going off in the monastery of your mind.

It stops you doing whatever you’re doing and forces you to pay attention to something else.

If you’ve hired someone to do work for you the best thing you can do is get out of their way and let them do the work.

If they’re young or inexperienced you need to spend time teaching them – and then get out of the way while they practice.

In most organisations there are people who do the work that customers pay for – this is your talent and it creates revenue generating work.

You need to protect and nurture your talent and one way to do this is to think, as Joel Spolsky writes, in terms of abstraction layers.

An abstraction layer is everything you put around your talent to help them focus on the work they need to do.

In programming, for example, that means a comfortable space that they want to spend time in, good machines, and all the books and software tools they need.

Everything else – ordering stationery, sorting out the cleaning, fixing snags – all that sort of stuff needs other people to manage and solve.

Managers need to agree what needs doing with the talent then leave them alone.

That can be hard, because everyone wants to feel like they’re doing real work – but much of the time it’s as important to get the system around the real work working nicely for everything to work.

In your computer, for example, if the hard drive is down and the power supply is failing there’s no point in having a fabulous processor because it just won’t work.

The point is that in any system you need all the components to function – because the one that fails will bring down everything.

If the heating fails and the temperature falls to zero the talent can’t do its job – they need the people who enable them to work just as much as the other way around.

Now, if you work for yourself you’ll still want to think in terms of abstraction layers.

What is it you do that is revenue generating?

What else do you do that isn’t – and how can you get others to do it for you – in effect creating an abstraction layer around yourself?

The fact is that the abstraction layer is a cost – you need to pay to put it in place, just like insulation.

But like insulation it saves your energy.

So the question to ask is not whether you need it but how you can afford to put it in place.

How much do you need to earn to add someone to your staff to help you with certain things.

It’s easy to add talent – it pays for itself because it adds to revenue.

It’s less easy to add the support functions you also need just as much.

In the long run, however, that’s what makes it possible to keep talent.

Whether it’s talent you’re hiring or whether it’s your own talent you’re trying to develop.

Because when it comes down to it what you need is time to do real work without being interrupted.

Or having to wear a suit.

Cheers,

Karthik Suresh

What Is The Right Question To Ask In A Problem Situation?

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Wednesday, 8.44pm

Sheffield, U.K.

The best things in life make you sweaty. – Edgar Allan Poe

Simon Sinek gave a very popular TED talk where he talked about his theory that great leaders “start with why.”

He talks about how people don’t buy what you do – they buy why you do it.

And he also links this theory to a biological model, perhaps a systems one – and it sounds a little like something called a viable systems model – which I still need to get my head around.

But first, I’m wondering if Simon’s model is one that makes sense.

And the reason for that is the examples he gives seem a little too neat and tidy and don’t seem to tie up with other sources or with first principles reasoning.

Take Apple, for example. It’s set up as a company that believes in making stuff that is beautifully designed and easy to use.

And, of course, Steve Jobs came up with that.

Except he didn’t.

Jobs had a personality, a view, an affection for Zen and simplicity.

But it was Johnny Ive, a British designer, who had the ideas and he, in turn, was influenced by the Bauhaus tradition and its focus on the essence of things.

So is Apple’s “Why” the root from which everything grows or is it one manifestation of a particular way of thinking.

Another example Simon gives is that of the Wright brothers – and that they were driven by a belief “that if they could figure out this flying machine, it’ll change the course of the world.”

But seriously, who thinks like that?

Who sits down and looks at a problem and sees what it’s going to do far into the future?

Of course, some people do, and they dream up possible futures – and some of them turn out to be right because one of those futures might actually happen.

For many of us, however, we’re working on a particular problem that happens to be interesting.

Flying, as Simon says, was the dot com of its day.

Lots of people were playing with mechanical machines just like lots of people are playing with code now.

The brothers were working on problems of torque, propeller length, differential drag and a host of other things that needed solving.

So, were they driven by a dream or by an interesting problem that they were hooked on?

Now, of course, everyone has different views but I wonder whether the Sinek Golden Circle – which starts with why, then asks how and then asks what – is a little overdone.

A different question I came across recently is to ask “to what end?”

Asking why tends to lead to fuzziness – to hopes and wants and wishes and dreams.

An end seems more tangible.

It seems like something people can aim for.

Steve Jobs, for example, wanted a Macintosh to be like a Cuisinart – all you needed to make everything you wanted.

That was what led to the Mac having a closed system – one it completely controlled and within which it was perfect.

But that’s also why the Intel and Windows world pulled ahead.

And these days it plays the same way, trying to make it very hard for anyone else to interoperate with its devices.

So, if you ask to what end did Apple build its devices, maybe a better answer is they built them to be closed systems – so that they could make them as perfect as possible.

We don’t know.

But if you were to do something now – start a new project or a business, say.

Do you think you would be better off starting with why – and listing your motives and purposes.

To be independent, rich, have time with your family… etc.

Are those whys any different from the whys of your mate next door?

Or would you be better off asking “to what end” are you starting that new project or business?

What’s the problem you’re solving, the need you’re meeting?

What actually happens in the end?

I feel I know which approach I’d prefer.

Cheers,

Karthik Suresh

What Is The Main Thing That Will Get People To Notice You?

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Tuesday, 7.14pm

Sheffield, U.K.

The ball you need to keep your eye on here is the underlying principle that wealth is what people want. If you plan to get rich by creating wealth, you have to know what people want. – Paul Graham, YCombinator

I’ve been reading some of the older essays that Paul Graham, the co-founder of YCombinator, has penned over the years and one of them has answered a question that has bugged me for a while.

Why is it that companies that make no money are sold at such astonishing valuations?

Facebook, LinkedIn, Twitter, Google, Snapchat, Instagram are all examples of billion dollar companies that were making no money at one time.

I grew up reading the essays of Warren Buffett, which in turn pointed me to the work of Benjamin Graham, the father of value investing who pointed to even earlier works that defined value in terms of the present value of future cashflows.

If you wanted to buy a company, for example, that made a good, steady product and you figured that it would keep selling for the next ten years, you might buy that stream of money at a discount today.

As a rule of thumb, for example, you might pay between 6 and 10 times earnings for such a business.

What if you thought that business was likely to grow?

Well, if you were bullish on that, you might go up to 20 times earnings.

And to protect yourself, you might actually work that out on the average of the last three years of earnings.

But the ideal, in those days of Graham and the early work of Buffett, was to pick bargains – to go shopping for discounts.

So I tried that first, when I was trying my hand at investing, and my picks turned out to have a disappointing tendency to go to zero fast.

Companies like JKK and Aquarius Platinum and Herbert Brown pawnbrokers don’t hold good memories for me.

Fast forward a few years and Buffett started listening to Charlie Munger and talked about buying great companies at a good price.

That tied in with the ideas of Peter Lynch, who suggested buying what you knew.

The increases I experienced buying into Superdry and Drax at particular times when they were cheap but still were good are a better memory of those times.

My early adventures at stock picking were more about the learning than the result really and so when it came to more serious investments I went with passive index funds – which have never really caused the kind of anxiety and euphoria that came with the active picks I made.

But in all that time one thing remained constant – the companies I bought made money.

So, how do you value a company that is making no money?

The answer, when you read Graham, is astonishingly simple.

Simply crowdsource the question.

What does that mean?

It means letting people tell you who the winners are.

Graham says that investors, venture capitalists and potential acquirers really have little to no idea of how good your plan is or whether your technology is really light years ahead of the competition.

So they turn to the market and ask what users think of your business.

They figure that users must have the good sense to select services and products that work for them.

When you tried to set up your first email account, for example, you probably tried rocketmail, hotmail, msn among others.

Do you now use gmail?

And if millions of people are making the same choices all you have to do is meet all the providers of such services and ask them how many users they have.

The most successful service will be the one that has the most users.

That’s why google pulled ahead in search, despite starting after Yahoo.

Now there is a danger in looking at large startups for all the examples of a successful approach because that makes you think only software businesses need to think of this.

It’s really about systems.

The question to ask is which “system” is most favoured by users.

McDonalds, for example, is a system, just like Google is a system.

And your construction business is also a system, anyone looking at your business can work out how successful you are by how many users you have.

And that means you need to ask yourself what your business is doing to get more users.

That’s a different question from selling – how many sales you’re making.

If you’re selling a service, for example, the price is immaterial – you could sell it for free and lose nothing but your time.

If you can’t get users, even if you’re giving it away, then you have a real problem.

If they’re signing up in droves, you can make money later on – you’ll figure out a way to do that because you’re giving people what they want.

Think about this for a second – what is the one thing you need to have if you want to persuade someone to work with you?

You need examples of work you’ve done with previous clients.

No one wants to be the first to try you out – most people are conservative and will pay more for something that is proven.

And there is no better proof than existence and growth of other users of your service.

And so, focus on users, because having them is the thing that will get you noticed.

And you can only get users by giving them what they need and want.

Which is why the number of users you have seems to have become the investment valuation rule of thumb for the digital world.

Cheers,

Karthik Suresh

What Does A 20 Year Old Business Plan Look Like?

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Monday, 9.23pm

Sheffield, U.K.

In preparing for battle I have always found that plans are useless, but planning is indispensable. – Dwight D. Eisenhower

In 1996 Sabeer Bhatia and Jack Smith had an idea – they wanted to access their email accounts through a web browser and Hotmail was born.

20 months later, in less than two years, Microsoft bought them for $400 million.

If you listen to what Bhatia says about that time a few things stand out.

The first is that he knows he was lucky, in the right place at the right time with a good idea.

The timing was right.

Looking back, he was also prescient about what might happen next – his other ventures have not seen the same kind of traction.

A second point is that it was hard work.

The team faced rejection from VCs, politics, competition and technology failures.

They found themselves fooled by legal trickery, double crossed by partners and didn’t make any money.

But they kept at it – and that seems to be another feature of successful entrepreneurs.

They keep going.

Then there is the paradigm that is a unique feature of the internet.

What matters is growth in users, not growth in revenue.

If you have people signing up to use your service quickly enough then that’s all that matters in the short term.

Because what matters is owning the user.

That’s something that people who use free services don’t always realise.

When you get something for free what’s happening is that you’re the product.

Or, actually, the asset.

Eventually, those assets can be sold to someone else who has the ability to monetise them.

Or you can figure out how to make money from them later.

The important thing for such a business is to own its customers.

But the sobering thing, looking back at examples of success like Hotmail, is that so much is impossible to predict at the start.

How do you know if you’ll get the timing right or create something viral?

How do you know if you’ll be able to keep going even when everything looks like its failing?

To some extent it’s pointless asking those questions before you have to.

The starting point, according to Bhatia, is to write a business plan.

The reason you do this is to “crystallize your thoughts to communicate with someone else.”

The point of the plan is not just for you to read or to send off to someone else.

It’s a way for you to talk to others and persuade them to work with you or invest in your business.

What you’re trying to do is answer the questions they will have and the very natural fears they have about whether you can do what you say.

And those questions, if you look at the picture above, haven’t changed since Bhatia first answered them.

They probably haven’t changed in a century or so actually.

And the point is you have no idea what will happen in the fullness of time.

But you can put in the thinking needed to get a good start right now.

Cheers,

Karthik Suresh