There are no quotes and estimates in Tech Product Development
Product Development in tech is about continuously ideating, designing, building and improving a tech product that solves real problems, that you then sell many times, for years to come.
It is an extremely expensive venture, and it comes with an disproportionate amount of uncertainty and risk, that is very hard to manage.
No one can quote or estimate how much time and money it takes to build a tech product.
- deal with it.
Founders who set up tech companies, who don’t implicitly understand software product development, (i.e. non-technical founders, and a bunch who are technical) will almost certainly fall into any number of traps managing the risk of their tech business. Wherein, they will fallback to using tools and techniques that they likely learned from other kinds of businesses to manage the risks in the discovery and development of their software product.
These tools and techniques are outright destructive to the process and business within which these people now find themselves in control of.
The short story is that: these kinds of tech founders need to change their mindsets and behaviors. Not try to force change on the product development process, nor the behaviors of the people skilled in doing the product development. Instead, the founders have to embrace the risk that they necessarily carry, and use a different set of tools and techniques to embrace and manage these risks.
The top risks we are talking about here are predominantly all the risks associated with building the wrong product. Which in this game, means that you end up spending all your money on building a product that no one wants to pay you for, and then slowly killing your tech company because of that.
Setting yourself up for success
Nobody wants that of course, and no body sets out to do that. However, inadvertently, over the course of months to years, misapplying the wrong mindset, processes and techniques compromises the integrity and quality of the product, the ability to innovate as a business, and forces those involved in your company to start running away.
This poor management of the company is all too common, and pervasive in small startups and businesses. But what is at the heart of it?
To understand that, you have to understand how risk is minimized and mitigated in medium to large corporate businesses. The businesses and companies where theses founders are likely to have come from, and where they likely learned their management skills prior.
The key to understanding this, is understanding the fundamental difference between your startup and an established company.
Startups versus Established Businesses
Essentially, an established business has a stable business model. It knows how it makes its money, and its been doing that for a while now. It has already minimized most of its risk, and is on the way to, if not already maximizing its profits. It is stable and likely sustainable business, and this stability affords it the ability to focus on optimizing and incrementally improving the scope and scale of the business. Those established processes are slow and carefully managed. Why? because the business simply cannot afford to take large risks with how it already makes its money. It has numerous, and formidable, checks and balances, bureaucracy and mitigations in place to prevent that ever happening. Ever wondered why it was so hard to innovate new ideas in them? That’s your answer. You might know it as the corporate immune system.
The tech founders startup has none of the things above, and won’t have them for years to come. This is why startups can move fast and effectively change their business models on a daily basis. In return, you necessarily carry larger risk.
Now, to the management techniques of the startup founders.
Old Habits Die Hard
Q. How do established businesses manage and minimize risk?
A. They create comprehensive plans and refine them long before they move anywhere. These plans include budgets, timelines, risk mitigations, etc.
But the important part of these plans, in general, that is overlooked by those forging them, is that they are largely based on highly predictable quantities and outcomes. Those making them know that their “business case” will be scrutinized and reworked many times by more senior people in their organisation, and so the risks that are not predictable are almost entirely eliminated from those plans. What the business wants and desires is new business that carries ideally zero risk, and ideally, at zero capital expenditure to boot!
In those environments, the people making the plans use traditional “project management” techniques that are fabulous at seeking out predictability through, predominantly techniques like: up-front planning and simulation resulting in solid estimates for known materials and known labor cost from those doing the work in their stable business, or from partners with their stable business. The result is a predictable solid plan that only requires senior approval to execute. After which, budget, resources and oversight are assigned. And, it just a matter of delivering it in the promised timeframe. Everything about this kind of venture is almost entirely predictable.
Projects are for Digging Holes
It’s just like “digging a hole in the ground”. My favorite metaphor for project work.
Before you start digging, you create a plan for a known hole of a known size in a known location. You know how long it takes one spade to dig it, and what that spade costs you. You can add more spades to dig it faster of course.
Its entirely predictable to define, to resource and to measure. There are standard tools, standard materials, standard practices, and standard ways to measure progress.
You can easily answer questions like: “how long does it take?”. You can use the “iron triangle of project management” beautifully to manage whichever constraint you would like to optimise for: time, cost or quality.
The bad news for tech founders, and one that takes them on average about 2-3 startups to get over and learn the hard way, is that: you have none of this predictability when it comes to building a tech product!
No solid plan. No standard materials. No standard practices, and no standard resources. And you are likely playing a game that you have little to no experience in. Building something that has never been built before, and with no certainty about what it needs to be nor what it is even going to be!
With that much uncertainty, these project management tools, outdated techniques and Edwardian mindsets simply don’t work. Stop using them!
