Articles

imageSynergy is the idea that the whole is greater than the sum of the parts. It is the driver for nearly all product development efforts, the presumption behind most business mergers, and the motivation behind many top-down efforts that encourage independent groups to work together. But true synergy is not easy, free, or even possible without the right environment. Consider this cautionary note:

Barry Diller, the chairman of IAC/Interactive Corp., was at Harvard Business School explaining the rationale behind the mosaic of interactive commerce companies he had assembled at IAC, such as Ticketmaster, Hotels.com, Match.com, and LendingTree.com. One of the students pointed out that these various businesses seemed to be operating independently, not in a coordinated synergistic fashion.

imageThe leadership and team members involved in development projects often use language whose meaning is ambiguous. This vagueness may be convenient for some stakeholders at selected points in a product's lifecycle. However, unraveling the possibilities which lie underneath alternative interpretations can be quite challenging for those that need to choose between them. Unless development teams confront and resolve this uncertainty early in a project, such abstractions can cause considerably more pain later, since they result in significant rework that must eventually be reconciled.

Dollar with shocked president

In the summer of 1982, large American banks lost close to all their past earnings (cumulatively), about everything they ever made in the history of American banking - everything. They had been lending to South and Central American countries that all defaulted at the same time - 'an event of an exceptional nature.' So it took just one summer to figure out that this was a sucker's business and that all their earnings came from a very risky game. All that while the bankers led everyone, especially themselves, into believing that they were 'conservative.' They are not conservative; just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug. In fact, the travesty repeated itself a decade later, with the 'risk-conscious' large banks once again under financial strain, many of them near-bankrupt, after the real-estate collapse of the early 1990s in which the now defunct savings and loan industry required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense: when 'conservative' bankers make profits, they get the benefits; when they are hurt, we pay the costs.

Person aiming arrow at targetThe term health care reform has diverse meanings for the many stakeholders involved in the US health care system. The underlying issues associated with implementing such reforms are quite complex, but pressures for reform are high. In this context, such reforms are similar in nature to many large improvement initiatives which are pursued within large businesses (though these are each dramatically different in scale).

In 2005 alone, the United States spent more than two trillion dollars on health care, or over $7,100 per person, and are growing at over twice the rate of growth of our overall economy. Government and private insurance fund about 80 percent of those costs, and the rest largely comes directly (rather than indirectly) out of our pockets. About a third of these expenditures occur within hospitals; clinicians get another third, and the rest is spread across nursing homes, prescription drugs, and the costs of administering our insurance system.

Easel with graph of growthMicrosoft gets over 100,000 suggestions each year from their users for changes to their Office suite. Approximately 75% of these requests are for features that are already in their products - a revelation that led to the latest version, Office 2007, implementing significant changes to the user interface.

Five hundred million people use Office world-wide, yet estimates from various sources scope the size of the development team at between 500 and 1000 people. Thus, with as many as a million licenses in the marketplace for each member of the team, the revenue per developer which Microsoft receives for this product is substantial, and their collective efforts are clearly one of the highest value-producing ventures in business today.

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System dynamics is a branch of systems engineering which seeks to understand the emergence over time of properties in complex systems. These properties result from interactions among the parts of these systems. A causal loop diagram is a way of describing these interactions, and can be used to gain insight into how these properties emerge when they might otherwise seem counter-intuitive.

The term 'competency' is used in many different situations. Workers are considered competent if they are qualified to successfully complete their assignments. American law considers defendants competent if they can understand the proceedings in which they are participating, and can rationally deal with their counsel. Organizations rely upon developing and protecting their core competencies, which enable them to focus on the fundamental factors specific to achieving their business's operational objectives.

Consider the BP, the third largest energy company in the world. After the Deepwater Horizon Oil Spill, few would consider it competent; yet throughout its spotted history, its leadership claimed that financially, it was not only competent, but was one of the premier companies in the world. At the same time, it's environmental and human rights records were widely regarded as abysmal.

Bathroom scaleMany manufacturing industries have made great gains by utilizing lean principles in the factory. These principles, which have perhaps been most successfully applied in the Toyota Production System, can be summarized as follows:

Ladybug walking on narrow blade of grassWhen a highly anticipated and popular new product like Windows Vista is released, over the course of it's first few months in the field, tens of millions of users can rapidly migrate to it and begin to use it. Their 'first impressions' will have a profound impact on the future success of the product.

When such a products are large and complex - and especially when they are software-intensive - there are three simultaneous trends underway during this period. First, many on the team which has been working on the product while under development will begin to move to new assignments, or take on new features for future releases or products (especially the most highly rated members of the team). Second, the number of hours of execution per day that the product's code base is being subjected to grows exponentially, thus increasing the likelihood that latent problems will be uncovered. Third, your call center personnel (because of the need to spin up large numbers of new people to provide support) will likely have less knowledge and experience than at any other time in the product's lifecycle. This is a knowledge management challenge for the development and support team, to say the least, as well as a stress on the maturity of issue management processes.

Introduction

This writing provides an example process for risk management, to describe the behaviors that can be considered 'best practice' according to industry frameworks, and to highlight additional features that should also be considered in order to fully realize a 'best practice' accreditation. The level of detail of this writing is adequate for demonstrating assignment of responsibilities for individuals involved in the risk management process, providing a basis for assuring compliance, and clarifying expectations regarding use of common terminology, approaches, criteria, and triggering events. It is not expected to be adequate for individuals previously inexperienced in risk management, without supplementary training or mentoring.

In this example, references are provided to the requirements for risk management established by one particular framework, to demonstrate the level of documentation and analyis which may be necessary when external certifications are required. In this example process, roles are identified in italicized text, inputs and outputs are delineated in a blue font, and footnotes are used to highlight traceability to framework requirements.

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