UPDATE 4/4/15 You can find the raw data I’ve used here at the bottom of the post.
I made an interesting discovery recently while spelunking in our time tracking system. The distribution of sick time, over all the people we’ve ever employed, very closely follows a logarithmic distribution.
All Atomic employees track their time on all activities, whether billable client projects or internal work. We’ve been doing that since we started, so our time tracking tool has nearly 13 years worth of data (679,263.25 hours, over 86 people). We find this data invaluable for analyzing our business, making staffing decisions, estimating, planning, and juggling responsibilities.
The graph below shows total sick time (blue bars) for all past and current employees, sorted by largest to smallest, left to right. The smooth blue curve is a logarithmic function. It has an R2 of 0.989 with the data. The red bars show absolute variance of each blue bar, versus the log function, at each point.Read more »
Atomic Object launched a new website back in November. While I believe the end result is very good, the time and effort it required surprised me. In the process I think I figured out why it is difficult to market companies like Atomic, and why it’s often done poorly.
I’ve come up with a HierArchy of Relative Difficulty (HARD). Where your company exists on the HARD scale determines how much time, money and expertise you’ll need to effectively market, or conversely, how likely you are to be marketing your company poorly.
No slight on the widget makers of the world, but their marketing challenge is pretty straightforward. The picture below illustrates the situation. Companies that make a concrete product have a straightforward marketing challenge. Describing the product isn’t difficult. It has known features, materials, quality, costs, and benefits of use. The marketing can be directed to the person who will both buy and use the product.
A service is inherently more abstract than a product. Service companies therefore have a tougher job in telling their story. The features and benefits of their service are less concrete. Pricing may be more complicated, and the relationship with the customer is more intimate and less transactional. Quality is more subjective. There are no materials.
I’ve always believed that innovation comes from people who care. When you care about your profession, your clients, your peers, and your company, you’re never entirely happy with the status quo. You ask questions like, Can this be done better? Quicker? Cheaper? Is there a different product that would help or delight people? The self-applied pressure to improve, combined with creativity, brains and experimentation, drives innovation.
Transparency is a cultural attribute of a company that, when exhibited by managers and leaders, engenders trust in employees. Trust is a critical element to nurture caring people. After all, caring makes you vulnerable, and if you don’t trust the company or the people you work with, your caring is likely to wither, or you’re likely to move on.
Transparent environments have some downsides. I’ve previously written about their ability to spread anxiety, sow confusion, and slow decisions down. These negative outcomes of transparency reflect my viewpoint as the leader of Atomic Object. Research reported in the Harvard Business Review this month helped me see some negative aspects of transparency from an employee’s perspective.
In the Transparency Trap, Ethan Bernstein, an assistant professor at Harvard Business School, describes a simple, powerful model for understanding the downsides of a transparent environment. Bernstein observed four types of boundaries in companies that effectively balance transparency and privacy:
- Boundaries around teams
- Boundaries between feedback and evaluation
- Boundaries between decision rights and improvement rights
- Boundaries around time
A company can’t reach the milestone of celebrating its 100-year anniversary unless it can out-live its founder. In fact, it can’t even get to the lesser goal of outliving the founder’s retirement unless it pays attention to succession planning. This blog post is about the path Atomic took to reach this point.
A Multiyear Effort
Handing over responsibility and daily operations for our first and largest office was a multiyear project. We’ve now achieved the significant milestone of replacing me as founder in the managing partner role for Grand Rapids.
To be clear, I’m giving these phases names, durations, and significance retrospectively; the only “plan” I made was to achieve the goal, and the initial impetus to start was feeling overwhelmed.
In 2008 we were seven years old with about 20 Atoms in the molecule. I was selling all the work we did, planning capacity, actively involved in billable work (35% of my time that year), managing people, networking, marketing, wrestling with issues around growth, and working on broadening ownership. I got some help on some of these things, but what was on my shoulders was more than a full-time job (2,370 hours that year), more than I could do well, and pretty stressful. Read more »
My company is 13 years old this month. We’ve reached the average age of US corporations. We’ve succeeded in replacing me — our Grand Rapids headquarters has been more than ably run by Mike and Shawn since January of this year. Heck, we even recently outlived our first dishwasher.
And yet, like our age in human years, we’re a gangly teenager in some ways. We’re still growing into our recently expanded Michigan presence — Detroit and Ann Arbor still have plenty of unmet potential. We’re adapting our internal operations to multiple offices, and we’re refining how an Atomic office at full scale operates.
A few years ago I realized our short-term future was secure, so I started thinking more about the long-term. My initial long-term goal was to have Atomic outlive my involvement in the company. That goal drove me to work on succession, ownership, and governance. Last year at Path to Craftsmanship, I shared a revised long-term goal: I want Atomic to be the first 100-year-old software design and development consultancy. Read more »
Keeping up with the 150 or so emails I get every day is a challenge, one that I fail at quite regularly. Happily, I’ve recently had a breakthrough on this thorny problem. Pairing with Jamie Lystra, our incredibly able assistant, has tamed the email beast. I’ve improved my responsiveness, reduced my mail-induced anxiety, and found an implementation that balances the conflicting forces of leverage, confidentiality, and privacy.
My first experiment with getting email help from an assistant didn’t go very well. I didn’t get the leverage I’d hoped for, and having full access to my email account proved to be a problem in the end. I wish Alexandra Samuel’s HBR article on delegating email to an assistant had been written a year ago. She has some great ideas and advice, and it could have helped me avoid some pain.
While the first experiment failed, the need for help didn’t diminish. A new approach was called for. My colleague Shawn Crowley suggested that rather than share full access, I think about a filtering and forwarding approach. Read more »
When I started Atomic Object with my co-founder in 2001, I followed my instincts and engineering training, as I had no formal business education and very little business experience. I wish I’d known about the knowledge funnel back then. Reading about this simple model in Roger Martin’s book, The Design of Business, was an “ah ha!” moment; he explained so well, and so simply, the process we more or less bumbled our way through in getting Atomic up and running. If understanding is a prerequisite to solving any problem, Martin contributes a simple, visual model and vocabulary to discuss and therefore increase the odds of creating value and improving your business.
The knowledge funnel has three stages: mystery, heuristic, and algorithm.
I’ve lately come to appreciate what people at Atomic Object call the “worry gene”, especially in the people I work with. Pushing the genetic metaphor a bit, the worry gene encodes for proteins which, in turn, cause behaviors and actions that directly improve the outcomes and results of projects. Having a strong worry gene is a really great attribute for working at a consultancy.
Some people interpret the phrase “worry gene” in a negative light. I think this stems from the assumption that worrying is bad and unproductive. What this interpretation misses is the critical part of what we mean by the phrase. It’s not the worry, but the actions taken, that matter. If you had a faulty copy of the worry gene, and your cells didn’t create the proteins that resulted in positive action, then I guess that would be bad. But that’s not a properly expressing worry gene. I like to work with people who pay attention and turn their worry into positive, productive action.
What kind of positive actions come from a properly expressing worry gene? Here are some I’ve noticed:
Read more »
Can a company really be anything like a family? Is drawing the comparison naive, or a selfish attempt at employee manipulation by a cynical CEO? I use the word “family” for Atomic Object both casually and seriously, but I’ve always had a small degree of discomfort with the comparison. This post is my attempt at thinking that through.
Here are the salient characteristics of families, as I see them:
- care deeply about each other
- sacrifice for each other
- play together
- work together
- support, protect, and help each other
- share food and other resources
- show up at significant life events
- know each other well, and in many dimensions
- socialize and celebrate together
- seek to perpetuate themselves
- have a strong sense of identity (name, crest, etc)
- have shared values, history, and rituals
- tolerate each others shortcomings
- drive each other nuts, sometimes
- have both living and dead members
- don’t chose their members
I think it’s pretty clear that any group of people, as they grow larger, exhibit fewer of these characteristics. It’s probably safe to say that no large companies operate like families, at least across their entire organization. I’ve also heard plenty of stories of small companies that don’t exhibit many of these traits, either. Read more »
What is an innovation services firm worth? I had to answer this question when we started broadening the ownership of my company beyond its co-founders.
The traditional answer to the question of what a service firm is worth is, “not much”. All the assets walk out the door at the end of each day. Since talent is portable, a change of ownership could result in a mass exodus, destroying much of the purchased value. There are usually very few hard assets in a services firm. Who would buy such a thing, or if they did, pay very much for it?
Yet the last few years have seen numerous transactions in which software development consultancies have been purchased for significant sums. This is partly explained by the general shortage of software talent, and by the value which such talent can create in a product firm. Rapidly growing product companies buying their vendors, and private equity investments in services firms, exemplify these transactions. I was not interested in an outside investor, but I still needed to establish our value.
My goal was to transfer ownership in the company to our employees. I believed then, and continue to believe strongly, that ownership should be purchased, not gifted. Ultimately, my quest for the correct answer ended in the realization that there is no “truth” to be discovered here, and that my ownership is worth what I’m willing to sell it for, and what someone is willing to pay for it. The best way I could determine to find that mutually agreeable valuation was to calculate it from financial first principles.