The effectiveness of an organization in fulfilling their stewardship responsibilities across the full lifecycle of their products can be evaluated in two ways:
- by considering how effectively resources are being utilized in the near term
- by reviewing the quality of information available for strategic and tactical decision-making for longer time horizons.
Once a product has been designed, manufactured, and has been placed into service within a particular operational environment, the robustness of it's engineering definition and the maturity of the integration, manufacturing, assembly, and verification processes used to replicate it at scale come into clearer focus. Then, as flaws with the product's heritage are found, customers have a legitimate expectation that they will be resolved quickly and satisfactorily.
In 1911, the economist Joseph Schumpeter wrote his classic work, Theory of Economic Development, offering the insight that "Carrying out a new plan and acting according to a customary one are things as different as making a road and walking along it." New product development endeavors rely on orchestration of many parallel efforts, each marching to different cadences, but integrated into a value stream that is highly integrated, yet still able to respond to emerging conditions. These value streams must enable replication of larger and larger quantities of the same design, while learning to produce each incremental batch faster and more efficiently than the last, while satisfying quality and delivery commitments. It is a long and narrow road.
The engineering efforts involved in this creation require teams to harmonize inputs from many different perspectives, and incorporate those inputs into work products required for product management. Thomas Sowell describes the challenges of synthesizing and balancing these different perspectives as follows:
An economic system is a system for the production and distribution of goods and services. But what is crucial for understanding the way it functions is that it is a system for rationing goods and services that are inadequate to supply all that people want. The classic definition of economics is that it is the study of the allocation of scarce resources which have alternative uses. If resources - the ingredients of production - were not scarce, there would be no economics. We would be in an Eden or a utopia...
Given the enormous cost of consensus, it is unlikely to be achieved, except on something of overwhelming urgency to an overwhelming majority of people. We easily provide ourselves with food and clothing precisely because there is no consensus needed as to what is the best food or the best clothing. If we had to reach a consensus first, we might destroy ourselves in the process of trying to meet simple basic needs...
Because economic systems are essentially systems of rationing, any successfully functioning economic system would have "unmet needs" everywhere. The alternative would be to completely satisfy all of some category of needs-the most urgent, the moderately important, and the trivially marginal-thereby leaving still more unsatisfied (and more urgent) needs unmet elsewhere in the economy.
We think about complicated things with fluffy abstractions because we want to hide details, so we aren't overwhelmed with more detail than we can absorb within short attention spans. Yet the abstractions and mental models are but mental shortcuts that are quite far apart from what it really takes to design and build a bridge, especially a complex one. The Donghai bridge, pictured above, can provide an example of what is necessary to bridge this gap, and avoid the irrational behavior of oversimplifying complexity. It now connects the new Yangshan port with mainland China. Shanghai was already a major ship transport center, moving thousands of containers into and out of port each day, long before the Donghai bridge was designed, manufactured, and installed. But new merchant vessels (such as the Maersk Triple E class) were a disruptive innovation emerging in the industry, since they provided economies of scale sufficient to render other ships uncompetitive and obsolete. Unfortunately for the legacy port, these new ships were too big to be serviced within the existing constraints and infrastructure of the legacy port.
To respond to this emerging situation, China committed to constructing a new port facility near Yangshan. This site was previously just a small island chain, but was envisioned as a man-made hub that would become the 'ultimate port' for shipping freight around the world. For this vision to be realized, new infrastructure had to be developed and connected to the mainland by what would become the world's longest bridge. There were many characteristics and constraints that this new bridge would need to satisfy. The bridge had to be wide enough for 6 lanes of traffic, high enough to allow massive new container ships to pass underneath, and strong enough to withstand typhoons and 18 foot waves. The bridge's entry portal into the harbor had to provide access at the optimal angle for heavy ocean currents and atmospheric conditions. The bridge even had to be designed not as the shortest distance between the two points, but with a series of long curves so that drivers would be less likely to fall asleep while traveling over the bridge's 20 mile span. Herbert Simon described the deceiving simplicity of this particular problem as follows:
A bridge, under its usual conditions of service, behaves simply as a relatively smooth level surface on which vehicles can move. Only when it has been overloaded do we learn the physical properties of the materials from which it is built.
Construction of the Donghai bridge was a logistics nightmare, since all the materials, energy, and tooling had to be transported to the site for assembly and integration. The optimum design thus had to consider many different stakeholder needs, including environmental, safety, and maintenance considerations for the expected service life of the new facility. Each of the bridge's pillars had to be uniquely configured for the location into which it would be be installed. Because there were schedule constraints, the means of producing the bridge had to be developed concurrently with the elements of the bridge themselves. Ideally, a clever engineering team can come up with ways to produce required components in large quantities, and incorporate learning into their way of working. In this way, each succeeding component can be produced more cost-effectively than the previous one. It isn't necessary for each component to be identical, or for the circumstances of each installation to be routine, in order for this learning curve to be possible. However, learning does require there to be a way to capture baselines from which to evaluate the changes and problems over time. There must be a model of the parameters that are critical to the success of the endeavor. Once engineers can use models to analyze various properties of the designs, materials and the structures being employed, they can produce blueprints so others have a sequence and procedure from which to construct the needed solutions from these specifications. Once a rigorous set of models is produced, it also becomes possible to use data from these models to steer and focus the design efforts to deliver more value in each iteration, within the constraints of what economists call return to scale.
For the creation of any solution to be economical, the search and pursuit of the solution space must be bounded and grounded in a robust and well-written requirements. These requirements should communicate the information critical to shaping and steering this search, and must be reconciled with business needs, logical concepts, available technology, architecture descriptions, as well as the constraints inherent in the value proposition itself. Candidate solution elements must then be identified, evaluated, and verified against these requirements through combinations of analysis, inspection, and testing. These evaluations should produce additional information on the effectiveness of the creation, arrangement, and replication of components, products and services. It then becomes possible to analyze the fitness of the information and processes form the non-recurring engineering and recurring production activities within their respective contextual environments.
The communications of this information enables teams who are not physically or temporally located to coordinate acquisition and development of functional capabilities, transport elements, and transactional exchanges. Such coordination is essential to the distribution of control, stress, power, and computation, while accounting for the partitioning of knowledge and the protection of intellectual property. Unfortunately, when layers of approval are introduced to perform this coordination, the chosen methods often inject involvement by new actors with competing interests. The complexity can also push some towards adoption of a one-size-fits-all approach to managing change. This results in a mismatch between the rate at which changes can be authorized and the rate at which they can be delivered. usually slows down, rather than accelerates.
If a product or service that we seek to create already existed, we would not have needed to design it; we would simply replicate it. Yet such replication may not be reliable without adequate controls being designed into the production methods, systems, and products being produced, across the entire supply chain. This discipline enables the ingredients from each assembly step to play together well, and provide more utility to customers as a whole solution than available from the separate parts. Expecting such desirable properties to just emerge from a collection of independent designs (regardless of how laudable they each may be) is like expecting a sparkling city park to emerge from the independent actions of citizens who buy grass, fertilizer, and plants, then just drop them off at random parts in the neighborhood, without attention to how they can thrive within their installation environment. It is not that such ends never materialize, but I wouldn't schedule my family's picnic at such a park without independently validating their fitness for use first.
Experimentation offers different leverage to the engineering, manufacturing, and operational aspects of developing and sustaining systems, especially when compared to abstract concepts or high level goals. The utility of the resulting information is dependent upon the creative synthesis that can be formed from exploring and analyzing alternatives, and transforming the resulting decisions into a meaningful set of actionable viewpoints for the systems of interest. Since one person's requirements are often just another's design in masquerade; too many requirements can be just as hazardous to a project's health as too few. Too many requirements may overly restrict the degrees of freedom of a designer in creating innovative solutions. Sowell emphasizes the transactional costs associated with such exchanges:
Decision making through any kind of process involves costs created by the decision-making process itself, quite aside from those costs created by the particular decisions reached. Achieving agreement or resolution of opposing views is never free. Nor should these "transactions costs," as economists call them, be thought of as minor incidental expenses. The transactions costs of choosing a new emperor of the Roman Empire often included tens of thousands of lives and the destruction of whole cities and surrounding countrysides in battles among contenders. The devotion of many rational and public-spirited men of later times to the principle of royal succession, which might seem at first to be only an irrational special privilege, is more easily understood against an historical background of astronomical transactions costs in choosing national leaders.
Stewardship obligates the owner of the assets to safeguard their value over a long period of time. The assets in question may be physical or intangible. Fulfillment of these responsibilities may require extended commitments of resources over long time horizons. The lifecycle of these assets may involve many phases. Throughout these phases, a designated steward should have a fiduciary responsibility to provide the ways and means for the corresponding activities from a lifecycle perspective. To assure this responsibility is fulfilled, these stewards should periodically perform capability assessments to verify the resources they are assigned are being used effectively. Such assessments involve a thorough analysis of the inventory to identify specific, closeable gaps between existing capabilities and those needed by stakeholders. These gaps should then be prioritized within the context of the ways of working necessary to close such gaps, and identify the opportunities that offer the best investment options to the business. Sponsors and investors are obligated to assure that these gaps will be closed by the most efficient and effective means possible, and respond appropriately when this convergence is not being achieved.
When products are produced in large volumes, such as in our example of the support pillars of the Donghai bridge, different 'way of working' are required for the product development, manufacturing, and product support "realms". Yet each should still provide a demonstratively economic advantage over the do-nothing alternative, whether within a capability, or across multiple capabilities that collectively are woven into a value stream. Each of these phases often requires a unique focus on the work which must be performed to successfully implement the requirements of that phase and avoid transferring work to subsequent phases.
A faithful steward should approach the necessary integration of these methods through active unification and orchestration, rather than pursuing symbolic classification, while fragmentation, and isolation. Such unification allows the costs of the core and stable part of each system of interest to be amortized over all instances used across the value stream. the unfortunate alternative often transferring risk onto future customers without their acceptance, and accumulates technical debt that inevitably results in a collapse of the symbiotic relationships between producers nd consumers.
The development of new and desirable attributes of systems and subsystems thus requires us to discover the best opportunities for improving how the system will be used by its customers, and reconcile these opportunities with knowledge of economics and application of scientific principles. Economics is critical to these formulations since the non-recurring cost incurred through shaping better ways of working must be estimated and reconciled with their lifecycle implications. Alterative product configurations, customer scenarios, and ways of working must be evaluated to determine whether the overall endeavor can be profitable for all parties, rather than a few.
With enough time and diligence, patterns begin to emerge from within each of these realms. There are likely to be multiple cadences required for lifecycle phase of a product. One is the heartbeat of securing resources for each business planning cycle. Another is capturing, prioritizing, and authorizing work on the emergent needs of customers in different points of their usage. Adopting the perspective of the total cost of ownership provides a steward's perspective of the lifecycle cost and benefits across all areas which are impacted by these decisions. The following principles must be taken into account to adopt this perspective successfully:
- Any decision made in the past may so longer be economically viable. Consider the one cent coin in the United States. The metal content of a penny produced prior to 1982 is currently worth $0.023, and the post-1982 coin having a value of $0.006. However, the manufacturing and distribution costs of each penny is now $0.167, so even with this reduction in manufacturing, pennies cost more than a penny to put into circulation (though once they are there, they suffer little deterioration). There continue to be efforts to eliminate the penny in the United States, yet despite such rationale arguments, use continues.
- Transferring costs to others is less successful over the long term than eliminating the things which driver those costs.
- Sometimes the lowest cost option is good enough, so allocations additional resources was only limited marginal benefit. We go to McDonalds because they provide their customers with a timely and consistent product for a known price, not because we expect an excellent dining experience.
- The most expensive solution is one that fails to deliver the quality needed within the timeframe available.
- Not all elements contribute to the costs of end item deliverables in the same way. For example, consider the true cost of different crimes. To reduce the average costs of all crimes in the most effective way possible, one must tackle the ones costing the most first.
At the end of the day, the mindset of a steward should be to leave each asset in better shape at the end of their period of duty than they found it when first they were given those responsibilities, with full knowledge of the risk of infections by the cost disease.