Steve Blank’s writing about startups often offers insights far beyond the startup world.  Take this post, “You Negotiate Commodities, but Seize Opportunities“:

I hadn’t just lost a potential advisor I had lost an irreplaceable opportunity. We lost him not just over a stock offer. We lost him because we had treated him as a commodity – something that was readily available from multiple sources – and that you could negotiate its price.

In reality what I had in front of me was an opportunity – a favorable combination of circumstances that rarely occurs and if seized upon would have given me an advantage.

You treat commodities and opportunities radically differently.

You might be asking what this has to do with BPM.  But to those of us for whom BPM is a profession, we know what he’s talking about.  BPM is an opportunity for your firm to seize out-sized returns on investment.  The talent pool for doing BPM “right” is limited.  When you find the right person within your organization – the person who can deliver on the promise of BPM – you have to seize that opportunity.  Don’t quibble in negotiating their role and title and salary; give them the responsibility and latitude to deliver, and generously reward them for delivering.

Similarly, when key BPM resources (aka people) are outside the organization, we have to realize that we’re not talking about negotiating the hourly rate for a couple of Java developers (who number in the millions).  These outside staff have multiple opportunities, and sometimes the difference between success and failure is just having the right people at the right time.  A few dollars an hour won’t determine success and failure, but a few less of the right kind of people very well might.

Finally, this is a lesson for us, for BP3.  When we find the right person to bring on board, who can change the game for our business, we have to seize the opportunity.

On Business Insider a few weeks ago:

Soaring healthcare costs are causing Microsoft to scale back its generous employee healthcare program.

The company told its employees today that they would have to start paying for some of their healthcare benefits in 2013, TechFlash reports.

Microsoft is one of the few companies that covered 100% of its employees’ healthcare.

We can understand why Microsoft changed their coverage policy – health insurance costs are going up much faster than underlying health care costs, and Microsoft has traditionally had some of the richest health benefits in the industry.  Sadly, we’re seeing this story repeated all over.  At many companies, including the ones I’ve worked for, employee benefits never approached the level of Microsoft’s benefit package.  At BP3 we don’t claim to live up to Microsoft’s high standard employee benefits either – but as a small business we review our benefits package every year, and we take it really seriously to provide good benefits for our employees.  This starts with running a conservative, healthy business that makes such benefits affordable.  And our core values are to take care of our team.

In our first year, we added health insurance – and as the employer, we pay the whole premium for our team members’ families.  In the current US system, we think this is the employer’s responsibility.  But we also leverage HSA accounts – so that employees are aware how much health services really cost.  It is the best balance between coverage and market forces that we can find in the market today.  We’ve been able to maintain this benefit, despite the increasing costs, because our business is healthy.  We also got a modest office to work from, so that we could take conference calls in peace and quiet and get together for team meetings.

Our second year, we added a 401k program, along with employer matching funds.  This was a commitment we made to our earliest team members- that we would get it sorted out by the end of our second year so that we could all save for retirement.  BP3 is the first company I’ve ever worked for that contributed matching funds to my 401k.  Its hard to believe that most companies in high-tech (and other industries) don’t match contributions, when it is such an obviously smart move for both employer and employee.

Our third year, we moved into a nicer office – still modest, but more professional.  It makes for a very nice home base.

This year, we’re adding group life and group disability coverage to our benefits (paid by BP3), because we’re finally big enough that we can get rated and get policies for this.  Our team members often travel – it is important to protect them, and their families, from unlikely but unfortunate circumstances.  (I remember vividly in my first winter as a traveling consultant for my first employer, one of our sales reps at that company died when his plane went down in icy weather.  It was shocking to the whole company, and we all pitched in for an education fund for his children.  Memories like this still shape the way we look at taking care of our people. )

I don’t know what we’ll do to improve our benefits next year.  But I know we’ll keep reviewing benefits; we’ll look for opportunities to get more cost-effective benefits, but also to get materially better benefits for our team.  I commend Microsoft for their progressive view on these benefits – but I fail to understand why so many startups and small companies take such a short-sighted view toward these essential safeguards.

In any business I can think of, you need people.  And the people are what differentiate your business, from every other business in your space.  Any advantage you have, that isn’t rooted in your people, is temporary and ephemeral.  Take care of your team.  Take care of your people.

Max J. Pucher always writes interesting copy on his blog.  And one of his latest, on BPM and the Jobless Recovery, is no exception:

Well, I propose that it is the efficiency and cost-cutting mindset also employed in BPMS justifications that is a major cause of the ongoing lack of jobs in the US. BPM implementations focused on automating work with flowcharted processes (and excuse me,  the majority are!!!) are only usable for a subset of work – those repeatable, low value, high-volume admin processes that ERP can’t handle. The ROI justification is virtually always about less people needed per revenue!

I’m afraid that BPM isn’t in such common usage as to affect the staffing decisions of the local bakery, the law firm, the ad agencies, and the factory floors, which have all shed quite a few jobs in the US (and, of further note, manufacturing jobs in most countries around the world are in decline, as non-BPMS automation is displacing more and more human workers in the manufacturing process).  And it isn’t relevant as an explanation for the dramatic job losses in construction, real estate, mortgage financing, and other related businesses.  (Moreover, according to the New York Times, Eurozone unemployment was steady at 10% as of May 2010… perhaps the US is more volatile, but at 9.6% it doesn’t seem to be an order of magnitude off).

While I agree with Max’s frustration with companies that are so focused on cost-cutting that they’ve cut bone as well as fat – and I agree that this extreme cost-cutting actually deepened the recession and slowed the recovery (because, in this particular recession, the primary driver has been a reduction in consumer spending, rather than in corporate investment).  But BPM is hardly the reason that home building, mortgage processing, loan origination, and other related fields were hit so hard. Quite simply, there was a bubble in that segment of the US economy that had nothing to do with BPM. The bubble led to over-investment, and the bubble bursting led to dramatic re-valuation and contraction in those sectors.

But there’s more meat to Max’s article, regarding the cost of BPM implementations:

Yes, I totally agree with Jim’s assessment of the complexity and substantial people effort need to get BPMS implemented. Some of the cost is also not process related, but caused by the technology stack being used and the resulting INTEGRATION work. Therefore I propose a consolidated platform rather than integration with others. Businesses who try to integrate existing ECM, BPM, CRM, BRM, E20 and BI suites will never achieve a truly dynamic, adaptive and financially sound BPM.

Not too much to take issue with there. Integration is usually one of the biggest costs… And later:

Because the BPMS skills are expensive and rare they are mostly provided by outside consultants. In effect that means that once the processes are implemented the people who know and understand them move on, leaving the business with unskilled workers and killing the ability to improve or innovate. This is the worst possible business proposition I can think of.

(Max’s emphasis).  Max is blaming the wrong party here.  If businesses are left with unskilled workers, then it is the business that must change – by hiring and retaining talent for improvement and innovation.  Hiring consultants as part of a strategy for change makes sense. But making outside consultants the beginning, middle, and end of a strategy for change is not the answer.  Like *all* human resources applied to projects, consultants will move on.  But so will full-time employees.  It is important to build enough critical mass and momentum in BPM efforts to create sustainable organizational learning that can survive the departure of a key team member(s).

Mainly, however, I disagree with Max’ dark view of BPM:

I hope that Jim is wrong with BPMS adoptions speeding up and that we are rather on the verge of enough people realizing that BPM as a concept that turns people in to process monkeys is a failure.  In the worst case, it won’t just be the ‘jobless recovery’ that is going to crash on top of us, but it will be the inhumane, fully automated, mass-produced, market-segmented, analytically predicted process nonsense that will make even those customers walk away that still have a job.

As I’ve argued many times before, BPM can’t be about turning people into “process monkeys”.  It has to be about removing the mundane, and enabling the real humans in the process to excel.  Once someone’s job has been reduced to “process monkey” it is truly something that will be automated.  The point is to remove the “process monkey” parts via automation and leave the judgment calls behind.

From Silicon Alley Insider, on hiring decent engineers:

Unemployment in the United States is still at a brutal 9.6%, but for software engineers the job market couldn’t look much better.
Everyone in tech knows that there is a serious engineering deficit, but apparently no one outside tech knows about it, so new talent isn’t flooding in to fill the demand.

There’s an interesting disconnect in the economy right now.  Employers think that with high unemployment, people should be desperate for work, including software engineers (and BPM experts, incidentally).  But software engineers have more leverage than they’ve ever had because:

• Young(ish) companies like Google, Facebook, Twitter, etc. have created thousands of new jobs.
• Old(er) companies like Oracle and Microsoft and IBM seem to keep growing their software staffs no matter how many hiring freezes and layoffs they might have.
• Seed capital is plentiful
• The cost of starting up has come down dramatically, at least for “web startups”

But the key issue, captured brilliantly by Evan Korth (my emphasis):

Evan Korth, a computer science professor at NYU and cofounder of HackNY, tells us that people outside of tech, and college students in particular, are largely ignorant of how lucrative the opportunities are for programmers. This partly the result of stale media narratives, he thinks. In 1999, everyone was told that becoming a computer geek was the path to riches. Then the dotcom bubble burst, and the media was writing about out-of-work coders with no options. Programming skills were in high demand again before long, but the media was more concerned with the largely make-believe narrative that programming jobs were all being outsourced to India. So opportunistic college students are still focused on Wall Street.

If you watch the news, they’re still portraying software jobs as being under great pressure from outsourcing.  While that is true, supply and demand have found some equilibrium, and corporations and startups have realized that outsourcing isn’t a panacea, though some companies have clearly made it work well for their businesses (and others have not).  The overall job opportunities and job security for software engineers is quite high, as is the earning opportunity.

In the BPM world, there’s another dimension that makes things more difficult.  MWD Advisors’ Neil Ward Dutton captures the issue perfectly here:

And that disparity was something I saw echoed around other sessions in the conference and in conversations with those attendees who were already succeeding with BPM. Right now, success quite often depends on driven individuals who feel compelled to transcend their technical backgrounds and learn unfamiliar skills and languages.

I concur – the efforts required – cultural as well as business and technical – are so great that these individual heroics are often necessary to get an organization started.  But yet, a few driven individuals aren’t enough to sustain these efforts over time.  They have to transition to creating a culture of learning new skills and languages – and surmounting barriers.

Neil continues:

Increasingly, though, as the pace of business change increases and technology platforms bundle more and more high-level capabilities, the most crucial practices for IT organisations to get right themselves [...] are probably better classed as ‘art’ or ‘craft’ than ‘engineering’ – and please note that this doesn’t make them less important.

I couldn’t agree more – I’ve long been arguing that Software is more of a craft than an engineering discipline – and the way that we approach BPM is as a craft – taught by experienced practitioners to people who are still learning the ropes.

John Reynolds takes it a step further:

It’s time for a wakeup call in the world of programming… Our collective need for custom programs is growing at a much greater rate than our supply of master programmers.  We can either continue to focus on tools for these master programmers – to make them even more productive – or we can figure out how to empower those occasional programmers to do it for themselves.

If we don’t build tools that are targeted at the “occasional” audience, then nothing will change.  Occasional programmers will continue to suck.

John’s take is that we need to focus tooling for the “occasional” audience.  I agree.  And in particular, I think this is something that a tool like IBM’s Lombardi Edition could live up to (IBM is John’s employer) if the engineering team focuses on consistency (making sure that all similar functions are rationalized in a consistent fashion to the process author – inconsistencies make the experience more complicated), simplicity (make the easy cases easier, and boil away excess feature-itis ), and appealing (address the experience of both author and end-user). Interestingly, this could be done without giving up more advanced APIs and features.  (Not everyone believes this).

There’s also an interesting opportunity to address the “not programmer”.  If we divvy up the world into “master programmers”, “occasional programmers” and “not programmers… The latter two are clearly under-served markets- particularly in BPM, despite claims to the contrary!

Update: Looks like this topic got good treatment at Forrester’s Business Process Forum 2010, in a Connie Moore session (thanks to Sandy for blogging it!)

Donna Fitzgerald of Gartner has a very thoughtful post regarding whether our businesses might have cut too far in this latest economic downturn in a post entitled “Cutting to the Bone and then Some”  I think she makes a few valid points for sure.

Now on to my point; I’m not seeing the increase in creativity or innovation I would be expecting as part of our changing economy and I’m not sure why.  I’ve got a gut instinct that says we’ve cut too far and adopted too much of an attitude that if we have enough process than any trained monkey can do the work.  The problem is that trained monkeys don’t innovate.

Part of my concern comes from a recent personal trip I took.  Almost everyone I spoke with in my travels was angry, over worked and stressed almost to the point of breaking.  Stress kills creativity.  It also kills productivity over the long haul (though not unfortunately in the short run).

I’ve observed the same in many of my dealings with businesses.  There is a lot of stress and overwork.  And I agree with her instinct that too many people think that people are like nails- that you can trivially replace them with cheaper nails.  As someone who grew up in Florida, where hurricanes are known to make landfall, I can tell you that there are nails, and there are nails (not to mention, how you apply them matters).  And there are architects and builders that are worth the money you pay them – and you know this when your neighbor’s house survives the hurricane and the rest of the neighborhood doesn’t.

Why is it so easy for people sitting in management chairs to believe that people are fungible commodities?  It is this belief that leads to endless pursuit of the lowest cost-per-hour labor, where ever it is (Too often, people mistake cost-per-hour as being the same as cost-per-unit-of-output… but the hour is not the output, it is the input).

People are the beginning, the middle, and the end of your business.

On this blog, we typically discuss leadership in the context of BPM projects, initiatives, and programs.  Because BPM efforts typically cut across departmental and organizational boundaries, they also typically require an extra measure of leadership to convince people to something when they don’t report in through the chain of command.

A recent article on TechCrunch by Vivek Wadhwa points out that leadership is often lacking in Silicon Valley firms as well.  This isn’t the popular refrain about startups (outside of the startup community itself) – mostly the popular coverage of startups is about swashbuckling risk-takers who conquer new ideas and disrupt industries. And then there are the stories about the unique management approaches of startups (queue the last 8 years of articles about Google).

But the picture Vivek paints is one of managers who aren’t prepared for the responsibility they have on multiple fronts.  This is essentially an argument about the Peter Principle writ large: because most managers in Silicon Valley startups don’t receive any management training, they’re unlikely to be good managers.  Worse, they’re unlikely to be good leaders.  They’re getting promoted into these positions because there isn’t anyone else to do it.

Vivek advocates for explicit management training.  But it is easy to get caught up in the idea that you have to get a Masters degree to learn something new.  I think the real point of management or leadership training is to get potential leaders OUT of the day-to-day grind, and IN to a setting that facilitates free thought.  When listening to leadership and management training material that has real context for a leader’s current management situation, the recipients are more likely to assimilate that knowledge into the way they think and operate. Vivek reports on research at Duke University:

The conclusion of the researchers wasn’t surprising: many high-tech companies are young, so their systems and procedures for grooming leaders aren’t well developed or firmly established.

Maybe this is why so many tech companies suffer from morale problems, missed deadlines, customer-support disasters, and high turnover. And this may be one of the reasons why so many tech startups who succeed in selling their vision and raising millions in financing are just a flash in the pan.

But lest readers in bigger firms take comfort in this, there is a lesson to learn here about how we approach developing leaders within larger organizations as well.  The first thing I’d say, for BPM leads, is read this previous post on our blog.  Secondly, realize that you can foster leadership development on your team without a formal, executive-sponsored, program. It isn’t as easy, of course, because you have to take responsibility for it at a more local, personal level.  But on the other hand, your star pupil can’t be rejected from your own leadership program, but might not be included in the corporate program.

Vivek appears to recommend several kinds of educational opportunities (MBAs, Executive MBA’s, and more creative programs).  We recommend something a bit simpler for many of our BPM colleagues – attend a small conference (like bpmCamp), and take time to invest in sharpening the saw.

TechCrunch and Vivek Wadhwa have a controversial article up about Age-ism in high-tech in the US.  TechCrunch is no stranger to controversy, having also just caused a bit of a stir around systemic gender bias in the venture-funded tech startup business.

Vivek makes a few key points. Paraphrasing, High Tech companies prefer younger workers because:

1. They are cheaper (salary, benefits, insurance, etc).
2. They have fewer competing interests (lower percentage are married with kids)
3. They are perceived to be easier to mold (into culture fit)
4. They are perceived to be “more current” on whatever the latest technologies are
5. They can be trained up on new tech more cost-effectively than older workers

I’ve certainly seen this logic play out, but more in the 90′s than today.  I see a lot of pressure from small companies to hire someone who already knows the technology in question, not someone who still has a lot to learn.  I see a lot of companies hiring someone with an existing track record.  Hiring a college recruit is a multi-year, long-term investment – which a lot of startups aren’t ready to make.  But perhaps things are a bit different in the Valley than in Austin.  Perhaps there, the pressures are more like the pressure to offshore: get the cheapest labor inputs you can get.  Certainly, one way to do that without the pain of offshoring, is to hire less experienced (or less costly) talent. In fact, in another article, it was predicted that labor (or jobs) will migrate to less expensive parts of the US (this seems logical, over time, if other parts of the country prepare people with the right skills).

My observations about experienced hires (I won’t say older) in the same order as above:

1. Usually (but not always) much shorter ramp-up time from day 0 to first fully independently productive day.
2. The competing interests are also balancing interests – keeping more experienced team members balanced emotionally, more so than some less experienced hires.  They have other positive things going on in their lives which allow them to pursue work with confidence, rather than fear of failure.
3. Whether easier to mold or not, it is easier to judge what an experienced hire’s real work values are – and to find people who already align with your values, rather than trying to mold (some might say brainwash) less experienced hires.
4. Often more experienced hires are actually more current on the new tech than students, because it takes quite some time for educational institutions to switch gears.  I remember distinctly Stanford University rolling out its C++ computer science classes (intro classes), just as Java was about to hit the scene.  It was several years before Stanford switched the curriculum to start with Java, though they did start offering a class in Java right away.  It was many years before we could hire people with Java skills learned in college that were more than trivial.
5. This last point is true, if you assume ramp-up time is equal, and that the less experienced worker is cheaper than the more experienced hire. However, as I pointed out in my comment on TechCrunch, I have come to believe that learning itself is a skill, which can be practiced and improved over time.

We run a services business at BP3, so it isn’t apples to apples comparison with the TechCrunch article, but there are a few more things that we note about our firm when we talk to candidates.  First, our business requires a lot of travel for nearly everyone on our team.  That is easier to accommodate when you’re single (it may even be a benefit) than when you have a family.  And while it may be true that younger or less-experienced people are more likely to be single, it really has to do with family vs. no family.  Because our firm is run by people with families, we take our commitment to make our job sustainable for our families *very* seriously.  Second, if we’re going to pay for experience, we want that experience to be relevant to our specific business – that of BPM.  I’ve had conversations with people who have previously made considerable salaries, and are interested in switching to focus on BPM – but they don’t know the BPM space yet, or the specific technologies we use to support BPM.  I tell those folks that they can’t expect to switch into BPM and not have a hit to salary in the short-term.  But I believe that is true for any career change -when you switch specialties, your compensation takes a (hopefully short term) hit.  If it is a good long-term change,  compensation will catch up to and surpass the old compensation at some point, but more importantly, the career change will breathe new life into working.

The Problem

A good friend, John Reynolds, has eloquently commented on a subject near and dear to my heart: Leadership.  More specifically, Project Leadership vs. Project Management:

My job lets me work with talented programmers and business people all over the world.  These folks all know their jobs – the programmers know how to write good code and the business folks know how to run their business – but when you bring them together they often can’t get a project finished.

The objective of all projects is to deploy Business Solutions. Requirements grow up to be Plans, Plans grow up to be Projects, but many Projects just don’t grow up to be Solutions. Like the Energizer Bunny, these Projects just keep going and going and going… but they never get anywhere.

I blame a lack of leaders.

John has captured the essence of the problem.  The projects that become successful solutions have leadership.  And this is something we’ve written about quite a bit. BPM especially requires leadership because you’re asking different constituencies to play nice together, despite the fact that the changes wrought by BPM will have uneven benefits and consequences.  The leader can coerce, cajole, persuade, confront… and can bring the resources and willpower to the project to get it done.

Leaders: Born or Made?

I fear that leaders are born, not made (although training certainly helps improve them).  When a project is stalled, a hero can’t just “take charge” and get a project back on track.  Leaders aren’t leaders without followers.

There have been many variants of this debate with regard to athletes, entrepreneurs, CEOs, leaders.  I come down on the side of nurture more than nature.  I’ll not deny that we are each born inheriting our own gifts, bestowed by our parents.  But how we develop and hone those gifts and shore up weaknesses it what makes us the adults and professionals we grow to be.

A Solution?
How do we develop leaders?  We might first ask, how do we develop heroes?

Step 1: expose your high potential team members to people you consider to be heroes.  Let them work in the proximity of great contributors to learn what it means to be a great contributor.  Try to awaken in them an awareness of what it is that makes the hero admirable, and an awareness that they, too, could be a “hero”.  Work with them to leverage their strengths.  Let them learn by following the example set by your heroes. Give them opportunities to succeed AND fail.

If I can distinguish between a hero and a leader – a good hero “leads by example” – not by consciously thinking about leading, but by doing all the things that we would want others on the team to do.  They work hard, they are focused on what’s good for the team, the project, the company.  They care about their colleagues and will help them.

The first step in evolving a leader from a hero, is to create self-consciousness (let me explain).  We have to wake in the hero, that self-awareness that they can lead intentionally, rather than unconsciously.  The key difference is intention.  A leader intends to have the effect of leading others.  A hero may lead others but isn’t intending to do so, and may even be alarmed and uncomortable when it happens.  There is a fear of responsibility, fear of failure, fear of letting others down.  If you want to foster that leader, give them the opportunity to succeed and fail.  And invest in teaching what you expect from leaders, and what their team will expect.  It takes a fair bit of coaching or self-awareness, but people can learn to lead.  I’ve seen it happen, and I’ve seen it happen even within our own projects among the customers we work with.  Soon, someone walking the path to becoming a leader, acting with intention, will learn from the feedback loop of consequences.  They’re on the path.

This is important because, for BPM to continue to grow and succeed, we need a lot of leadership.

John has a few more important points to make:

What we need are Project Leads… People who command the respect of both the Business and Technical folks.  We need people who have met both Business and Technical challenges in their careers, and who can show all of us “how to get there”…

That’s why we lack leaders for our projects.  There simply aren’t many Business people in the world who are respected by Techies, and not many Techies in the world who are respected by Business people.

This is not by any means an easy problem to solve – but if we want success for more of our projects, we need to find more of these leaders.

This is why, at BP3, we have tended to focus on developing our technical heroes into leaders who care about business.  But we also try to make sure that they understand the value that business leadership brings to the table, so that we’re ready to embrace it when we find it within our team or within our customers’ and partners’ teams. I agree with John: not an easy problem to solve, but sometimes the ones that are worth solving aren’t easy.

According to the Kansas City Business Journal, 40% of US Professionals want to quit.  Wow.

But lets turn out attention to why so many professionals want to quit: their employers view them as a liability rather than an asset (read the article, it is there, between the lines). And with all the layoffs over the last 18 months, there’s more work spread across fewer employees.  In an environment of more work and stress, and fewer bonuses and benefits, we can understand why people might want to quit.  I’ve heard people say that someone should feel lucky to have a job- but equally, the employer should feel lucky to have their employees stick with them through hard times. It is, after all, your best employees who can still leave when the economy is down, and find a new job.

In another post, I tried to explain the dark side of the staffing service “body shops” out there: BPM experts are not a commodity, despite their best efforts to treat us so.  The big staffing firms I previously wrote about are also not committed to their people in any meaningful way.  When a project kicks off, the firm staffs up via hiring and contracting. But what happens when the project is over?  At these big firms, they just let go of all the people that can’t immediately place on another project.  People aren’t an asset to these firms, they’re a liability:  An obligation to pay salary and benefits. This is especially true of firms based outside the US who  leveraging local resources on a temporary basis (the locals are staffed up and down for each project independently in many cases).

We recently reached out to colleagues from a previous project – and we weren’t going to be surprised if they weren’t still working with the same customer.  But you could say that we were surprised they didn’t work for the big consulting company any more.  You might be thinking, sure, some low-level programmers got let go when the project finished. But no.  We’re talking about the people who were entrusted with running the project and managing the customer relationship.  Rather than leveraging their talents in another project, they were shown the door.

It must, at times, be hard for people who work at Fortune 500 companies, with a wealth of people walking their halls that have worked more than 10 years at the firm to understand the amount of turnover that happens at a typical big consulting body shop.  Or to understand how these firms put their teams together on short notice, and disband them equally quickly.

As a small firm, we sometimes have to hire talent to meet the demands of a project, but we’re hiring talent to reach a new plateau, and we’re taking on a commitment to continue their employment beyond just the project (otherwise, we’d just offer a contract).  We just celebrated a colleague’s one-year anniversary at BP3, and he’s about to embark on his 4th project with us.   And it isn’t a burden to pay salary to these employees. They’re our only real asset as a firm – their knowledge, experience, and commitment to our customers.

I hope in this time of economic turbulence, more employers will realize how much their people mean to their success.  And I hope we never forget that at BP3.

Great post by R “Ray” Wang on Enterprise Irregulars about building a “Star Analyst” Firm.  While it is targeted at star analyst firms, most of the points apply well to any services firm that intends to trade on the idea of being “stars” in their requisite space. Tenet #1:

Almost everyone I spoke with began by saying, “Start with star talent.  Don’t make compromises on B-players.”  Then they added, “Most will fail to keep this up over time because the firm gets greedy and focused on leverage instead of client quality.  Keep in mind, if you lack stars, you won’t attract stars.  Set high standards for recruitment.”  The experts are right.  Buyers, sellers, and the media have to recognize your team as market leaders.

I couldn’t agree more.  It is exactly why, when we started BP3, that we started by thinking about who we wanted to talk to and build our team with.  It is also why we focus on what Ray refers to as “Star” potential.  Lombardi used to refer to these people as “heroes” – the people who could do it all: technology, process improvement, coaching, and thought leadership.  There was also a note about alumni.  I agree with Ray that it is important to recognize that people will leave over time – and to keep in touch with that alumni network.  By taking an active role in two previous employers’ alumni efforts, our business at BP3 has benefited directly and indirectly.  Of course, that wasn’t the goal, but it was one of the side-effects.

Mike Gammage posts the question:  is BPM ethical?

Against this background, the hard reality is that the business case for any significant BPM project is almost invariably based on job losses.

The jobs may be lost through automation, or through productivity increases.  The BPM project will typically enable the same work to be done by fewer people.  More positively, the BPM project may enable the same people to do more work – that is, there are no jobs lost immediately.  But, even so, the societal effect is not dissimilar because economic growth will now create fewer jobs.

Put crudely, and for the sake of this argument, BPM seems to be a job-killer.

Now I believe, as will many of you, that work is about far more than simply generating wealth and meeting basic needs. Work provides each of us with a role in the community, it enables us to develop our talents in service to others, and to contribute to the advancement of society.

So it’s a serious question that deserves attention: Is BPM – my work– ethical?

I commend Mike for undertaking a post on this subject.  I have a few thoughts for him to consider when he returns:

1: Competition is the Job Killer.

The first thing to realize, is that BPM isn’t the job killer.  The job killer is the competition for your customers. If you can’t win that competition for customers, you will have a massive dislocation of jobs.  That competition is faceless and unrelenting, unfortunately.  You don’t get to look into the whites of your competition’s eyes and try to agree on a reasonable pricing model – if you do in the US, it is called collusion or anti-competitive behavior (there are similar rules in other locales).

So you have to invest in improving the cost structure and performance of your business, in order to remain competitive.  BPM is a tool to do that.  Just like Microsoft Word and computers put a generation of typists/secretaries out of work, BPM and other software will put a generation of manual paper-movers out of work (or copier repairmen perhaps?).

2. BPM can Save the Jobs of the People you know

A Good BPM implementation can save the jobs of the best people in your company.  By making each unit of work more valuable, it is easier to justify paying them, even increasing their pay.  You’re increasing their economic value add to the system.

Moreover, if the people doing the work become the people improving the work, they can really maximize their positive effect on the business. It also frees up labor to focus on other value-adding areas of the economy (though, I’ll grant, that is an easier macro- than micro- argument – individually not everyone can make the shift, and not everyone has the savings to bridge the gap – which is why I’m a big fan of unemployment benefits and insurance).

Finally, if you can sell the value of these process improvements to your customers, you can actually use process improvement as a way to increase your top line, not just your bottom line.

3. Manage for More than one Bottom Line

BPM and the like can help you achieve more than just cost savings – BPM can help you more reliably achieve any outcome you set out to achieve – higher customer sat, a higher net promoter score (NPS), reducing impact on the environment, increasing customer lifetime value, etc. This is sometimes called the “Double Bottom Line” or “Triple Bottom Line”.  But realizing that your business is about more than just money, why shouldn’t you use process improvement to increase your odds of hitting ALL your business goals rather than just some of them?

Although BPM causes us to examine what we do, and second-guess the positive outcome, I believe overall it is not only ethical but necessary.

Inc. has a fantastic article adapted from Tony Hsieh’s upcoming book, it is a riveting read, to me. Tony and his CFO championed a culture as the key means of differentiation in the difficult online shoe and apparel retailer segment.  Competing against Amazon online isn’t easy.

What makes Zappos different is that they don’t compete on price:

Zappos sells shoes and apparel online, but what distinguished us from our competitors was that we’d put our company culture above all else. We’d bet that by being good to our employees — for instance, by paying for 100 percent of health care premiums, spending heavily on personal development, and giving customer service reps more freedom than at a typical call center — we would be able to offer better service than our competitors. Better service would translate into lots of repeat customers, which would mean low marketing expenses, long-term profits, and fast growth. Amazingly, it all seemed to be working.

They compete by differentiating on service.  And they’ve bet that by taking exceptionally good care of their employees, that that would translate into better customer service.  By all accounts it was working quite well, but the board wasn’t supportive of “Tony’s social experiments”, but rather tolerated them as long as things went smoothly and the risks to the business weren’t too great.

I think it would be too easy for business owners and managers to conclude that Zappos, and by inference, Tony’s “social experiments”, failed because they sold to Amazon (albeit at an attractive price).  I believe precisely the opposite is true – that they were able to command north of a $1B value precisely because of the culture they created – which made them both an interesting business for Amazon to acquire, and a separate culture which Amazon would find worth preserving (despite the normal tendency of acquirers to stamp their culture upon acquisitions instead).

At BP3, we also pay 100% of insurance premiums.  We invest in our employees’ retirement plans (through matching – not just through paying the administrative fees) – more companies should be doing this.  But we’re also looking to increase our investment in other team growth opportunities – including events like bpmCamp.  We’ve invested here in there in other personal development opportunities but if I’m honest, we haven’t done enough yet.

As a professional services firm, we can relate to Tony’s thought process on culture.  If you take care of the people who touch customers, you are, by inference, taking care of your customers as well.  If you take the people who touch your customers for granted, you are borrowing trouble and relying on people to swim upstream to provide a positive experience for their customers.  You’ll find it harder to retain the best talent, and you’ll find your competition acquiring the best talent.

Taking care of your team is job 1. My hat is off to Tony and the whole team at Zappos.  We’ve been fans, and we’ve been happy customers, here’s hoping that Zappos continues the culture crusade into the future.

Business Insider reports on wage increases at Foxconn:

WSJ reports that according to a company announcement, minimum wage workers may see a more than doubling of wages, while others will see at least a 30% hike — previously the company had indicated a 20% wage hike to deal with the problem, so this is already an expansion.

I’m curious if this is going to stick at Foxconn, and if it will affect wages in China generally.  If so, I think it is generally a good thing for China, for the potential growth of the middle class there, etc.  It may raise prices modestly here, but counter-balancing that it may also moderate downward wage pressures here as well.  Or, perhaps it will create pressure to put manufacturing in other locations around the world.  Time will tell.

Mark Suster (@msuster) makes a (somewhat) controversial argument that one should not hire job-hoppers.  Apparently what makes it controversial is the judgmental tone of the email, and the black-and-white nature of the initial statement.  The title of his piece?

“Never Hire Job Hoppers. Never. They Make Terrible Employees”

But, if you read it more carefully, and his comments below – he is quite clearly saying that some people develop a pattern of job-hopping.  If someone is a “job hopper” they will not make a good employee.  People take issues with both parts of his argument:

First, that you can determine (pattern match) on job hopping.  They argue for circumstances and exceptional situations.  But Mark really was quite clear that 2 or 3 of something does not define a pattern.  its 6-10 data points that define a pattern.  I think even if you disagree with his exact definition, you can arrive at your own definition of what a job-hopper is, and match people to that pattern (or not).

Second, that job-hoppers make for bad employees.  However, most of the arguments made on this point started by describing someone that would not meet Mark’s definition of a job hopper.  Moreover, Mark didn’t argue that these employees wouldn’t do good work, necessarily.  His argument is that you want to build a team that lasts – and these job hoppers can really undermine your company and your team’s morale when you are trying to get to exit velocity (and critical mass) at your firm.

I think Mark’s right.  Building sustainable value requires hiring people who share your values (select to the best of your ability), and who are interested in building the enterprise at the same time that they are building themselves.  When you have shared values and commitment, it is easier for the the employer to compromise to enable employees to reach their aspirations as well as aiding the firm in achieving its collective aspirations.

Some would argue that you can align long-term incentives that build with longevity – to encourage job hoppers to stick around.  But in my experience those incentives don’t work on someone in this job-hop mentality.  On the one hand, the rewards are too far in the future to motivate them. On the other, during any significant rough patch in the business, they may perceive those long-term incentives as being worthless or unattainable.

Its hard enough to retain people through inevitable troughs when they’re not job hoppers.  And employees, like investors, often buy high and sell low – joining a firm when things are great, and leaving when things are tough, but often right before the firm rebounds again to a higher plateau.

Having said all of that, I also feel that employment is not a blood pact, nor is it a marriage.  While you need people to stick around to grow your company, they also need the employer to give them enough leadership, financial reward, and emotional energy to be motivated to help you build it.  Its a working relationship based on mutual respect and trust.

Of course, lots of people follow Mark, and Paul Dix took it upon himself to have a full-blown response about hiring job hoppers.  He does make some good points, but misses the mark.  The basic argument he makes is that you should hire people that won’t stick around for more than a year, two at the most.  The most undermining point in the whole post: “…while I’m currently bootstrapping my own [company] and haven’t hired anyone yet.”  So really, Paul needs to go through the experience of hiring employees and retaining them before he can speak well to both sides of this equation.  Having been on both sides of the equation myself, I can summarize a few things nicely:

1. If you’re company is growing, it is easier to retain talent.  Sales fixes a lot of problems, because it creates opportunities for the people on your team.
2. When people stay less than a year, the company tends to burn a lot of resources on that employee without earning the investment back in revenue (or product improvements that will drive such revenue).  As a result, it is natural for companies to hedge their risk of hiring someone who is likely to leave quickly.
3. When you stay at a company longer, you definitely get the closed loop feedback of your own performance.  You can see if your customers are successful or unsuccessful.  You can see if your code performed well in production or failed miserably.  You can see if techniques you thought would scale, actually do.  You can see if organizational and hiring decisions you made actually work out – was that brilliant engineer you hired really a great employee, or just a great interviewee?  Sticking around gives you that data.
4. None of this absolves the company of the responsibility of making the firm an attractive place to stay.

I think the spirit of what Paul is missing, is that you’re trying to build something bigger than yourself – and you want to attract people to that cause that share that desire.  If you find people that fit your definition of “job hoppers” – by all means contract them if they can tackle specific problems or have specific skills you need – but don’t hire them, because it isn’t what they really want anyway.  Their goals and your goals as the company hiring, are too misaligned for it to work out well.

A conversation with a friend went something like this:

Friend: When are your HR folks going to act on “Descriptions will be added soon”

Me:  Oh, actually, I think *I’m* the HR person that needs to update the descriptions.

Friend: in that case, when will u describe the role of a process improvement consultant?

Me: Good question. I wonder if we should describe it on our site or leave it a mystery.

I mean it.  Should we really explain what we want?  If I describe it all would anyone sign up for it? Am I giving away the secret sauce?  Maybe its better to leave it open ended and just describe it as it is: a person with the objective of improving processes.  We then veered into a discussion of roles.  Some of the analysts have proposed roles like the new business process analyst or the roleplay actor.

But there’s too much discussion of new jobs and roles to hire for.  We should be focused on developing our people.  Focused on skill, capability, and competency.  Ideally, all three in one person.  Too much focus on a specialist for every niche, rather than on investing  in creating exceptional multi-disciplinary team members.

And we got to talking about “generational differences”.  If you’re to believe the majority of media coverage, all the “millenials” are using twitter and social networking sites like crazy, running circles around their elders.  I really detest this sort of generational stereotyping, because it strikes me as intellectually lazy, prejudicial, and smacks a bit of endorsed age-ism (As an aside, I just listened to a podcast on Millenials from Forrester that quite literally made me cringe.  Mere words can’t describe it).  It also misses some interesting points:  the real professional value of all these networking tools is for people aged 30+, or more precisely, people with some work history in their chosen profession who have had time to make meaningful connections with colleagues from say, the last 3 jobs.  Quite a few of my 20-something friends don’t use Twitter and don’t see the point.  But nearly every business owner I know uses Twitter (most of those business owners are too old to be “Millenials”).

I’m always on the lookout for the intersection of startups and process.  And recently Mark Suster put together yet another great post, this one about how to put your technical team together for your startup.  And specifically, the difference between your CTO and VP of Engineering.  He also has this fantastic graphic:

Engineering Team

To quote Mark:

“…In my view it is important to distinguish the difference between the CTO and the “VP Engineering.”  Because these titles are so often used I’m sure that some people will have hardened views about what they mean that are different than mine.  But for non-technical founders let me offer you a definition that you can use when you build a team.  The VP of Engineering is the person who still has great technical chops but prefers not to be a coding monkey (that term is meant in the most endearing of ways).

The VP Engineering aspires to manage teams.  They feel comfortable with C++ but also have a black-belt in Excel.  They are sticklers about managing unit tests, system tests and regression tests. In fact, they are passionate about automating testing overall.  They know how to estimate work units, how to manage the agile development process and how to get the most out of their teams.  VP’s of Engineering are essential to making sure the trains run on time.  The VP of Engineering is also your primary interface to your head of product management and often the VP of Engineering is somebody you would drag in front of clients to win big deals.

And first and foremost a VP of Engineering is a people manager….”

As Mark puts it, the CTO is your purist, a hardcore technical visionary and perfectionist.  Your VP of Engineering is about process, and values scaling the organization and having repeatable systems and processes.

One of the most anticipated sessions at bpmCamp was a discussion on off-shoring.  It had one of the highest turnouts of day 1. There were some interesting observations from the discussion :

1. Everyone agreed that daily communication across multiple mediums was a must: phone, email, instant messaging, screen sharing.
2. Structure helps: Daily SCRUM sessions, for example.
3. Bringing offshore folks onshore for a while helps – consensus is that this is more important than the reverse, though both are good.
4. Despite having productive off-site working relationships within the US, several participants reported a drop-off in productivity when going off-shore – despite no obvious logistical/infrastructure difference besides timezone.
5. Integration and collaboration among the teams is vastly more important than documentation and specifications.  The trend toward increasingly exact specifications to manage off-shore resources mirrors what happened with software development methodology in the US many years ago – with increasing gateways and overhead, and slowing velocity and innovation. (This led to a waterfall backlash, and the popularity of Agile software methods)
6. There’s a lot of potential in the follow-the-sun model, and in cost-savings.  But the challenges to productivity are real.

My own advice: when off-shoring, work with firms that do BPM deployments locally, for local market customers.  The adjustments they have to make to do a remote-BPM project are less-severe than the adjustments technical staff have to make from traditional IT projects to BPM projects.

Theo Priestley once again has me thinking with this post asking “Is This the End of BPM Centre of Excellence?“:

There are two trains of thought at play. In recent interviews on Redux, Vinay Mummigati of Virtusa said “A BPM center of excellence (COE) is an absolute must for organizations planning to adopt BPM across the enterprise. As companies adopt BPM in more than a single department they often start seeing challenges in terms of standardization, scalability, performance and governance.”

And yet there was a completely different perspective taken by Max J Pucher of ISIS Papyrus who stated “…if there is one thing that Social BPM could knock down, it is the Process Center of Excellence and the related bureaucracy overhead!“

Ever a pragmatist, I would suggest that inside any firm that can adopt “social” media techniques, the Center of Excellence has to adapt its traditional role.  Instead of being primarily a governance and gatekeeping organizations, the mission should be re-defined as:

• Providing expert resources for BPM initiatives to draw on – no matter how much participation and spread of BPM skills, there will always be process improvement specialists who have more knowledge and context than the average participant.
• Providing social infrastructure for collaboration – wikis, BPM collaboration platforms, Sharepoint sites, email lists-  whatever is most appropriate for the organization. Lower the barrier to entry for collaboration among your BPM practitioners, users, and participants.
• Encouraging and Curating the content generated from “Social” BPM and collaborative activities.  Knowledge workers need positive reinforcement for their participation in social BPM, and with the greater volume of content the CoE’s role will shift to be more editorial rather than primary authorship.
• Breaking down barriers to communication and collaboration, rather than creating new chains of command and approval.

It isn’t that there isn’t a need for experts-  there is!  But the role of those experts changes from manager-governor to coach-collaborator.  Of course, being an outside consultant, this isn’t a stretch for us to see the writing on the wall -because this is the role we already play for our customers.

Ben Horowitz writes in “Four Things Some VCs Do That I Don’t Like” one thing in particular which really resonated with me:

VCs often confuse marginal social courage with real courage. For example, they think CEOs who fire people easily are tough. I’ve fired dozens of people and laid off hundreds. None of them was easy—not a single time. Having an easy time firing your loyal employees indicates a lack of courage and a lack of leadership. More specifically, it indicates a lack of willingness to really understand the negative consequences of those actions. If you fire people easily, you likely lack the toughness to look in the mirror.

(My emphasis on the last sentence).

This statement gives me great insight into the character of Mr. Horowitz.  Because firing people *is* hard.  And when you have to do it (for performance or for financial reasons), you do it with heavy heart.  As he says, courage isn’t doing things easily.  Courage is doing the hard things even though they’re hard, if they have to be done.

Ted Leonisis of Newsweek writes about Google’s decision to stop filtering search results in China. In the first half of the article he focuses on this decision by Google and why it might be the right thing to do (for Google).  He points out, rightly, that this type of gesture would be meaningless if you couldn’t “keep the lights on,” but if you have the financial means, then he makes a persuasive argument for Google’s decision.

His take:  while Google has imperiled billions of dollars in future profit (in China), it has rendered itself “a happy company at peace with its values—and happy companies are more, not less, likely to continue being successful.”  This statement really rings true with me.  There are definitely companies that thrive on adversity and conflict, but companies in general seem to be more successful when their business and their values are in alignment.  I believe this is true regardless of what your values are – if you run a cut-throat competitive business, it is best not to shy from conflict inside the four walls of your company.  If you run a customer-service oriented business, its important to take care of your employees.

Ted also uses the example of AOL to illuminate: the mission at AOL transformed from bringing the Internet to everyone, to making the next quarter’s numbers… and many important business decisions were made that did not align with the higher calling of the company.  The separation between a company’s actions and its mission can also happen when the mission is achieved (either by your firm or others) – for example, with AOL, Internet access for everyone has happened – it just isn’t AOL that made it happen after a certain point.  For Microsoft, a computer on every desk is a reality – they’ve succeeded so well that they need a new higher calling to bind the company together.

Of course you can create motivation that lasts months or years around a competitive threat – no doubt the xbox folks could put their sites on Sony and Nintendo to motivate for years.  But what drives Nintendo is, I would argue, a better core mission.  If I had to state it, I’d call it “making gaming fun for everyone.”

Ted refers to his way of thinking as “double-bottom-line thinking.” If you expect these decisions to be non-capitalistic, then you misunderstand the logic behind his thinking.  For example, he raised prices at Washington Capitals games because he wanted to build it into a franchise that could succeed – and lower prices would only further damage its financial ability to achieve success.

This “double-bottom-line” thinking is central to the way we look at bp3′s business as well: we really believe in improved business processes, this is not just a shortcut for us.  We also focus on taking care of our team – because our team takes care of our customers.  When friends and colleagues who run their own businesses ask how we can justify paying for benefits like health insurance or 401k matching, I ask them if they are sure they can afford not to.  We believe we’re managing to our double-bottom-line, but it is something we need to revisit periodically to assess.

This “double-bottom-line” thinking is something that is not often weighed in process improvement projects, but perhaps it should be.  If we just squeeze the process without considering how to make the net result better for customers, and to align the process better with the higher calling of the company, then we might be missing something terribly important.  Aligning with both mission and the bottom line requires first, asking a question: “how does this align with our mission?”

(Note: there is a whole segment of BPM to address this, and other priorities, and how they feed into business planning: the business motivational model, or BMM )