More and more people think it’s important how their suppliers, and by extension their own company, behaves but very few have the power to influence that behaviour. This incongruence creates a feeling of unease, or even resentment. You want to proudly present your company – not excuses.

If you are in that fortunate situation where you can influence your company, it’s a whole other matter. As a company owner you have all the power but no excuses. Any crappy behaviour is on you. You have to decide on environmental policies. You have to find the worthy causes. You have to work out how your organisation should contribute to the surrounding world. This is more difficult than it sounds. There are many choices. For example, should Adaptiv focus on our game, the software business, or focus on our home town Stockholm, or should we aim higher and battle inequality, racism, poverty, environment? What?

These are difficult questions that need to be answered again and again. There are no easy answers. All I know is that we, the owners of Adaptiv, wanted our company to be more than a financial entity. We wanted it to be a decent corporate citizen at least. Here are some choices we’ve made:

• One of the first decisions we made was to act in an ecologically sustainable manner. That’s really not particularly difficult for a service organisation. For example, it means we prefer public transport over cars, trains over planes and walking/biking over most other transport means. If we go by plane we sum up our flying miles over a year and compensate for carbon emissions. To encourage biking we’ve set up a “biking benefit” to be able to buy a decent bike for commuting. Biking is great because it’s both good for your health and the environment. There is much more, of course. You can read more in our environmental policy.
• We want to encourage Swedish companies to become more competitive using Lean and Agile thinking. We believe this is good for business and therefore good for Swedish society. That’s why we often give talks or lectures for free or for a very modest fee. This also implies that we should support local events and groups. This year will be the 5th year in a row that we sponsor the “Agila Sverige” (eng. “Agile Sweden”) conference. We have also sponsored local programmer communities, like the Swedish Java user group JavaForum.
• We give 10 % of company profits after dividends and taxes to charity. This typically sums up to SEK 30 000 – 40 000 a year. We try to find a worthy cause, e.g. planting trees to battle deforestation or giving donkeys to women for taking their goods to their local market.

Of course there is a lot more we could do. I’m happy we’re doing what we do, but I also walk around with a bit of a bad conscience because there is so much more with could do. For example, we would like to take on a charity software project sometime. But there you go; you can’t do everything you want. After all, we’re just four people.

What is your company doing and are you satisfied with that? What are you doing about it?

I’m no expert on Deming but one of his most controversial statements was the so-called 95/5 rule. As I understand it, the rule suggests that 95 percent of the observed capability of a system (e.g. a business process) is determined by the design of the system, and only 5 percent is determined by the individual workers within that system. I interpret your question to mean, why focus on improving “the workers” when they only determine a very small percentage of the capability? I hope this interpretation is correct.

First of all, the purpose of the PPC is not primarily to improve the capability of a system, but to better ourselves as human beings (or not get worse). We can all improve, as individuals or as team members, don’t you think? I know I can. Sometimes I even lapse back into bad habits. When that happens, I’m very glad if I have colleagues who will remind me of how they want me to behave. The PPC is a good opportunity for that to happen.

You, or Deming’s ghost, might then argue that it’d be to no avail, since it would hardly affect the overall performance of the system. I believe this is true sometimes, but I can also think of several scenarios where this would be incorrect:

1. It differs depending on type of process. I do believe most of Deming’s experience came from employing statistical methods to defined processes, like industrial settings. And it is a controversial statement. It’s not unreasonable to imagine that the proportions 95/5 could be different in other types of work, e.g. creative work, where the processes are empirical and mostly consist of humans jamming together. This is also the belief in the agile manifesto: Humans and interactions over processes and tools.
2. The context sets the system capability, but we are far away from the capability limit due to other bottlenecks, e.g. poor teamwork or unbalanced distribution of experience. Yes, this is partly a system factor but partly also the responsibility of the team. By understanding what my peers want from me I can become a better team member and improve the team. I have experienced many times how a group of developers transforms into a team and then further into being a decent agile team, only then to hit system bottlenecks out of their control, e.g. pointy-haired managers, a ban from meeting users or outsourcing of operations.

Another thought I have is that we could use PPC on the management team. We have to remember that even if we are guided by our surroundings to a greater extent than we would like to admit, we are also the creators and maintainers of those surroundings. What if the other managers say this to their peer: “We have observed that you spend very little time observing how the work works. You are in charge of helping your people improve. How will you do this if you do not have intimate knowledge of their everyday struggles? We believe you should focus more on coaching change.” This is powerful feedback, which could lead to big ramifications.

Even if Deming was correct, he did not say that the performance of people did not matter. Even in organisations more or less run by the workers, e.g. Johnsonville Foods, they still demanded good performance from each other (at least not indifference). Perhaps a PPC every month is just about the level of attention we want to put on the individuals? The rest of the time we focus on better teamwork, better processes, improving capability. Call it an agile performance review, if you like.

To conclude: I don’t interpret Dr. Deming’s 95/5 as being against self-improvement. There is nothing wrong with trying to better one self. Rather I believe the rule should be interpreted as a wake-up call for management to stop looking only at the workers and start looking at the context; the major processes, structures, and systems within which work takes place. That’s their responsibility and I couldn’t agree more. But my performance (behaviour, attitude, focus) in the workplace is my responsibility and I need all the feedback I can get on how to improve it.

What I have experienced as an employee is the Swedish form of performance review, most often referred to as a “development dialogue”. They are similar to their Anglo-Saxon counterpart, the “performance appraisal”; typically a little bit more coaching and a little bit less assessing, but only by a margin. At heart, they’re the same. The supervisor assesses the employee and indirectly or openly link that to their yearly compensation adjustment.

At Adaptiv, we wanted to get away from the negative stuff. But how could we? Just skipping performance reviews (I’ll use that term to mean all forms) would be one way, but why throw the baby out with the bath water? To me, there is clearly some value in getting honest feedback on your performance from your colleagues at least once in a while.

Would it be possible to set things up so that you could get that without the dirt?

At Adaptiv, we’ve come up with an exercise that I think is valuable but without the negative baggage. We haven’t named them but I propose we name them peer performance conversations (PPC).

They are really very simple. They work like this:

1. You gather your peers (no supervisors) in a room. Around 4-8 people is recommended. After an introduction by a facilitator, the group creates an order between the participants. All participants will go through the same process.
2. The first person, let’s call her the focus participant, leaves the room for a few minutes, bringing pen and paper. She sits down and thinks about her work from the last period in question, e.g. a month or a quarter. Her thinking is guided by questions, for example “Where did I succeed and why?”, “Where did I fail and why?”, “What new strengths or weaknesses have I found?”, “What should I go for next?”. The rest of the group, back in the room, think about exactly the same questions about the focus participant.
3. After a few minutes, the focus participant is brought back into the room. The group and the focus participant both go through their findings and have a conversation around them. The group comments and expands on the participants findings, e.g. if they agree or not. The focus participant listens to the group’s findings, reflects and asks clarifying questions. Often, ideas and insights are generated in the process. The focus participant takes notes of important ideas.
4. When everybody’s happy, you switch. The next person leaves the room as the next focus participant. The same process is repeated.
5. Continue until everybody has been the focus participant once. Aim for about 10-20 minutes per person. The whole exercise lasts 1-2 hours, typically.

The first thing to note about a peer performance conversation is that it’s strictly coaching. There is no assessment. Hence, there are no metrics and no grading. It’s simply an exchange of questions and answers and the ideas and reflections that emerge from those.

A second thing to note is that a PPC is between peers. There are no managers involved. This makes the feedback relevant and often interesting. Peers work together, often daily. They get to know one another and learn each other’s personal strengths and weaknesses. They have insights to share, often of things of which the focus participant is unaware. This is contrary to typical performance reviews, where an employee sits down with her supervisor. In that situation the speaking partners are not equals. This makes the conversation shallow, defensive or even dishonest. Managers can also be somewhat distanced from the operative work. This makes them slightly ignorant of what actually goes on and how people behave. Consequently, they have to base their opinions on guesses, rumours, intuition, and what little knowledge they have.

Of course, there is also a form of peer review in Anglo-Saxon management tradition. In this form, you are anonymously graded by a selection of your peers. Your supervisor then presents and discusses the results with you. Sigh. Can you imagine what could go wrong with such a process? This technique supposed to lead to more accurate assessments of performance. Well, it certainly could remove some of the inequality and subjectivity, but most other problems remain. Also, new problems are added. For example, it is much easier to throw garbage anonymously at someone you don’t like.

Just to be clear, strictly coaching and no managers mean that a PPC is in no way related to compensation (salary or bonuses). This is probably the most important attribute, because without it there is very little chance of having a meaningful coaching session.

A PPC is performed as a group exercise, face-to-face. This helps keep the feedback honest and important. As the recipient we are helped by seeing who is giving us this feedback. Then we can deduce what they are really trying to say and how much is relevant. We can ask for clarifications.

I have summarised the main differences between peer performance conversations and the other forms in the table below.

Comparison of Performance Review Methods

Personally, I have really liked our PPCs together at Adaptiv. It’s still a bit tense to be the centre of attention, but they’re not threatening in any way. I find that these conversations make me a better consultant, even a better person. It gives me pointers on what I should learn next and where to take my career. Sometimes are hear things that make me think for days. And sometimes I hear nice comments about things I hadn’t thought of, which makes me feel all warm inside. And it’s fun too!

What if you work for a traditional company, can you still have a PPC? I think you can. Just make sure it’s a team thing. Or gather some engaged people that work together. At least then you’ll have a chance of hearing some honest opinions.

How often should you arrange them? It depends, but generally speaking, as often as there is feedback to share. Too seldom and there will be irritation in the group. Too often and there will be few new revelations. For us, since Adaptiv typically only meet Fridays, we need some calendar time to gather enough “data points”. Once a week would be silly. Once per quarter or six months I think is just about right for us. For people you work with daily, a higher frequency is called for. You could try once a month to start with and adjust from there.

One final word of caution. This exercise is less suitable for groups that are newly formed or where there is a lot of disharmony. You need to have reached some level of trust and benevolence. As the focus participant, you need to be absolutely confident your peers mean well.

Finally, if you’d like to try it, I’d be happy to hear how it went. Good luck!

Where to next?

We have many of the more typical benefits at Adaptiv, e.g. health insurance and a money pool for physical training expenses. It would be boring to list all of those. Instead I would like to talk about four more unusual benefits that contribute to my quality of life.

Flexible Work Day

Everybody needs flexibility in their lives. Sometimes, children have to go to the doctor and sometimes you’re waiting for a furniture delivery. Life without flexibility means everyday hell. At Adaptiv, we simply assume that the consultants work for the customer as much as their lives can tolerate and handle the synchronisation themselves. There is no one to ask at Adaptiv if you need a half day off. We do report time, but mostly for invoicing purposes. There is no control. Now and then we have a look at the time reports together, mostly to get a feeling for if somebody is working too much. That’s pretty much the main risk with engaged consultants – not the opposite.

One Day Off a Month for Personal Tasks

Many people feel stress because of the job, but adding insult to injury are all personal chores they need to do besides work, for example getting a present for your loved one, checkup at the dentist’s or having an appointment with your hairdresser. Before, on these occasions, I would normally eat a hamburger walking to the metro and then run back to work. This is unhealthy. To counter this, Adaptiv has created “Ä-dagen, short for “Ärendedagen” (literally “Errand Day” in English). It’s simple: Each consultant can have one day off each month, without using vacation days, to perform personal tasks. By collecting tasks into one day, we can relax and focus on work during the rest of the month.

Long, Flexible Vacation

Everybody needs their rest. I have personally seen the effects of burnout and work-related depression. Too many good people lose their fire. Adaptiv is fortunate to reside in a country with quite a civilised view on vacation. Swedish law mandates a payed vacation of five weeks per year. As a consultancy, Summers are pretty slow so we’ve gone one better. We have seven weeks nominal holiday. I write “nominal” because its at your individual discretion, as always. After a full year, vacation days are summed up and compared. Any major differences above the nominal are settled by pay deduction.

Act as Sales and Business Contacts to Each Other

All these perks are designed to leave the consultants with enough free time to spend quality time with their families, meet friends and to pursue hobbies and interests. Of course, it would mean little if we didn’t also have meaningful, challenging assignments. That’s where we find our core purpose, making a difference for customers. So we help and encourage each other to find good assignments and we act as business contacts for each other. The reason is simple: Very few are good at selling their own greatness. This way, the consultant can remain the nice, collaborative guy and the business contact can handle the, sometimes unpleasant, business negotiations.

That’s it! We are still tweaking this and finding new ideas, but I feel this is a pretty good start. I see few reasons why anybody would want anything less.

For many, company profits is the obvious answer. “Without profits a company cannot exist”, they proclaim. This is obvious but misleading. It’s like saying “Without water a human cannot exist”. Its true but that doesn’t mean I should always optimise my water level. As long as its over a certain level, I’m fine.

For others, shareholder return is the focus. Investors and owners are certainly important, but are they most important? Think about it. We have all seen the negative effects of management trying to inflate share prices. How good is truly the quarterly focus for a company? And how motivating are stock price increases to employees?

Some management gurus claim that everything must start with a customer focus today. Customers should pull what they need from organisations. Organisations should be designed and adapt continuously to cater to their needs. This strikes a chord with me, but what if customers don’t really know what they need? Or what if my job is to know a lot and learn what they need?

There are other thoughts on this. Some system and complexity thinkers, claim you should not optimise for one group but strive to satisfy all stakeholders, including even the families of employees and society at large. This sounds great, and I agree, but there are two problems:

1. In context, some groups are more important than others and there are dependencies between them.
2. Saying you should satisfy everybody doesn’t really provide much focus at all. It doesn’t help us attack our initial question.

From the above, we can deduce that even very smart people disagree on how to answer this question. I guess it’s because there are many true answers and it depends on context. In this post, I’d like to explain how my own company, Adaptiv, has reasoned around this. We have chosen none of the options above.

Let’s look at the context of my trade, the software consulting industry. In software consultancy, the consultants are the products, in a way, and they are used to provide complex services to customers over often longer periods of time. Services range from software delivery, to software development, as well as coaching and training. It’s not typical that customers pull services from the suppliers when needed, although that happens occasionally for smaller, bounded services, like a training course. More typically, a relationship is established and held until the need is fulfilled or the customer chooses to end the assignment for other reasons. The services are highly differentiated and not exactly repeatable.

For my company, Adaptiv, we have another thing to consider. For us, all employees are working consultants. There is no other management, nor administration. Also, it should be noted that Adaptiv is not a public company. There are no external stakeholders to care for. This puts us in multiple roles, which we need to hold separate.

So as an example; should Adaptiv focus on profits, owners, customers or employees? Well, as a life-style company we certainly won’t follow the money. We would certainly like to have a customer focus, but considering the nature of our services and customer relationships, this simply feels wrong. Of course we want to satisfy our customers and make a difference, no doubt about that, but as long as we offer services that are in demand, we’re fine. This can be seen, for example, when we refuse to accept silly, unrealistic assignments even if a customer is ready with the check book. Also, we won’t let an engaging assignment take over a consultants life, leading to burnout, family problems and possibly worse. Always letting the customer ride you can lead to a very exhausted horse.

Instead, in our reasoning, we have said that we should strive to optimise the lives of the consultants first. We believe that motivated and competent consultants are essential to providing great services. A consultant that is uninspired and tired cannot do that. Great services almost always lead to satisfied customers. It’s no guarantee, of course, but it certainly increases the probability. Happy customers means longer relations as well as more important and interesting assignments, which in turn feeds back to consultants’ satsifaction and stable company profits, which is great for the owners (i.e. the consultants). Although it may sound egoistic at first, I think there is some logic to this.

Why do we say “the lives” (of the consultants)? Why not something more catchy (geeky?) like “employee happiness”? First of all, to me happiness is often a fleeting feeling that I experience quite seldom, e.g. when looking at my sleeping son. Secondly, not everything that makes you feel great is good for you and in the long run and vice versa. Cocain is an example of the first and exercise of the opposite. Exercise is certainly inevitable for a long and healthy life, but you may expericence a slight resistance when you change clothes for that Sunday night run in the dark and -7 C. Optimising for happiness is not bad but still a sub-optimisation to my mind. Instead, I think we need to create sustainable, systemic conditions which maximize the potential for moments of happiness as well as encourage people to take care of their bodies and minds.

So this is our reasoning. It may not be true for you. But if you work in a consultancy, try to notice where your company optimises for something else and how that affects you, your motivation and your performance.

The first thing to know is that Adaptiv has four owners and four employees. All employees are majority shareholders, i.e. each owns more than 10% of the company. There is nothing original about this, I mention it only as a background. This setup is great, though, because it ensures that all employees regularly think about what’s good for the company – not only what’s good for them personally.

Compare that to an umbrella company, i.e. a setup where everybody is self-employed but pay a share of their profits or a fixed amount to the umbrella each month for services rendered, e.g. sales and invoicing. In that situation, given I have to choose between earning more money for me and helping the umbrella company, it’s not exactly clear how to choose. Of course, people help out with common tasks in that situation as well, but they don’t really have to. It’s exactly that, “helping out”, being nice. In that system it’s quite rational to look to my own situation first, then helping others. It’s important to have a system, which encourages good behaviour. Of course, by making everybody a shareholder in the umbrella company, you have created (almost) the same situation as ours.

Perhaps more original, but more as a remark, is that Adaptiv doesn’t have a CEO. This might seem strange, but since all four of us are on that board, what point is there to have a CEO? A CEO is appointed by the board of directors and for us everybody on the board is employed as well. Many people think a company needs a CEO, but that’s not correct, at least not in Sweden. I have nothing against CEOs per se, but I think a CEO for Adaptiv would start us down a treacherous path of managers and hierarchies. It creates an opening for unnecessary overhead. Side note: We’re open to having a CEO in the future.

More originally perhaps, Adaptiv doesn’t use budgets. We think it’s important to live as you teach. We help our clients with systems thinking and continuous value flow. Company, departmental, or project budgets are often the root causes of evils we meet daily in our projects. We have a practice of giving a copy of Implementing Beyond Budgeting to most managers we work with. It would simply feel strange to have a budget. A budget is a set of financial goals and as I mentioned in the previous post, financial results are an outcome of many parameters. We fail to see the value in a financial goals for us.

Instead, we have a continuous, empirical follow-up of finances. We track each month how we are doing and what we can afford. We might even, occasionally, compare numbers with previous years. Investment decisions are taken continuously, as needed, not artificially every year or quarter. In our company, a consultant has a lot of discretion when it comes to buying work stuff (remember, the company money is partly the partner’s money). For bigger investments, like a new computer or a conference abroad, we are required to suggest it to the partners for discussion. However, so far, the others have never said no.

We teach our clients that transparency is good. How does that show? Adaptiv follows the rules of Open Book Accounting This means we publish our result and balance sheets openly (sometimes we’re a bit behind with the publishing). We also try to comment on items in the reports that might look odd or simply to explain what they contain. We want our customers to know how we spend the money they pay us for our services. If they like, they can have a look at our reports and give us feedback. We want them to see that even a successful consultancy does not imply a life in luxury like the myth says.

Which brings me nicely to to topic of salary and benefits – a sensitive one. We had some debate around this when we started out. I remember advocating a differentiated salary based on business experience and perhaps other things. However, the idea of equal pay and benefits for all partners had most supporters, even our accountant! I have to admit I didn’t know what to think of it. I was the oldest and felt entitled to a higher salary. It seemed, well, a bit socialistic and naïve. What can I say? I was wrong.

I now think equal salary was one of the best decisions we’ve done. I don’t think I have even begun to identify all the positive outcomes from this decision yet. For example, it takes all the individual hassle off the table, e.g. preparing for the salary talk, gathering statistics, getting worked-up etc. At the same time, from the company side, it removes the need for preparing and holding salary discussions and negotiations, which expends a lot of time for managers. It eliminates the risk of bitterness and envy, e.g. someone getting bitter about how much more some other guy is making. Finally, it frees time to do more productive stuff, e.g. helping our clients.

So how does it work in practice? It’s simple. The salary stays the same until it is adjusted after discussion. A partner can bring salary adjustment as a topic any given Friday and then we all discuss and agree on what we should earn. We all have different life situations; two of us have small kids, one has teenagers and one partner has no kids so we need to balance everybody’s needs. That’s when knowing each other deeply and talking in person so often comes in handy. Only by meeting and having an honest dialogue about it can we resolve these tough questions without sour notes. Of course, we also have our financial history to guide us.

On to the juicy stuff, what do we earn? We started out in 2009 with a totally flexible salary based on the financial results of the whole company the last months. After that, we made part of the salary flexible, based on results the last six months. Gradually, we could move the salary range upwards. After a few years we removed the flexible part entirely. At this point, everybody seems fine with their compensation, even though on paper we make considerably less than our employed consultant friends. Today, we earn a fixed salary of SEK 40 000 (USD 6,255) before taxes. But in addition to that, we distribute some of the profits as dividends. Furthermore, we have generous benefits including a seven-week holiday, compensation for planned as well as unplanned parental leave or caring for an ill child, health insurance, SEK 4 000/month to retirement funds, and more. Of course, some money we also keep in the company, as a buffer for harder times.

Could we earn more? Yeah, a bit more, I guess, but that’s not really very interesting at the moment. As a life-style company, we have to look at the whole picture, not just the basic salary. This would include all monetary remuneration, but also our Fridays together, flexible work hours and some other perks I will talk about in upcoming posts.

So that’s how we’ve attacked the tough issues surrounding power and money. I would love to hear stories of how other, small companies have thought. Of course, this setup is made possible by the fact that the company is small and all consultants are working partners, but as long as we are in that fortunate situation, I think it has worked out beautifully. So if having equal pay makes me a socialist then count me in.

It doesn’t have to be like that. You see, there are numerous downsides and sacrifices you need to do in such an enterprise. For some, it might be worth it. For us, well, no. We’re committed to Adaptiv because we feel our lives would be a bit grayer any other way.

In this post and hopefully a few others I want to share some ideas that I think may be a bit original about Adaptiv. If you are starting your own company or if you are in a position to affect the basic thinking in your company, I hope these ideas can provide some inspiration.

Lost in the forest?

Many consultancies struggle with weak employee loyalty. It’s not uncommon to hear consultants mention how they feel more loyalty and togetherness with their customers and their staff. It’s almost like they consider them their real colleagues. That’s no wonder, given the fact they spend almost all their time there. Typically, the only time a consultant visits the home office is to go to a company meeting or event. Perhaps the horrid, yearly performance chat?

That’s not what we wanted. Hence, we needed to spend time together. A bit inspired by Google we set our goal early to spend at least one day a week together. 80% with customers, 20% with ourselves on Fridays. It’s not exactly like Google’s 20% time because our time is not for personal pet projects. It’s for the company, even though there is often time to work on personal projects as well.

Consultants often think it is difficult to get part time assignments. We haven’t experienced much of that. At the outset, all customers agreed to 80-90%. After a while, some agreed to 80%. Now, all of them have agreed to 80%. Why? Because it makes sense to them too. They don’t have to worry about us spending our days with them doing internal stuff. We don’t need to run errands. We don’t arrange travels and we don’t prepare talks for conferences. We work for them. Because we know that on Friday there is time for all that internal stuff. And that’s important when your fees and expectations are high.

This also means Adaptiv does not strive to maximise its profits. Weird, huh? That’s when it’s handy to own your own company. Not to say we underestimate the value of profit. We need it as much as any other company, of course. It’s just that we don’t seek to maximise it, thereby lowering the standard for other things. We believe profits are a result of a hundred things we do. It’s an outcome and settings targets for outcomes is poor management. We settle for just enough profit to lead a good life and also giving us the time to actually do just that. Isn’t that what most of us want, really?

So, what do we spend Fridays doing? Many people have asked me that. We have grown into a form that we all like. One part administration and other necesseties, one part developing the company, and one part fun. Here is a typical agenda: We start with a breakfast together at 9.00. We share war stories from the week. After that, we conduct a Temperature Reading (a group exercise) to dig deeper into what’s going on with everyone. Then we gather at our desks and look over the company board to see what has happened during the week and what tasks to do today. The rest of the time before lunch is usually spent at administration; invoices, salaries etc. Around 11.30 we have lunch together at some local restaurant. Sometimes the indian at the corner, sometimes a bit more upscale. We often invite lunch guests. If we have an invited guest they normally take the stage directly after lunch. Otherwise, we continue with company matters, e.g. business development, marketing events and lead development. We might look at developer conferences during the next six months or so. Then its time for the fun part of the program. That part is often the toughest to come up with, but we have many options to choose from now. It could simply mean hacking on our mobile app. Or we might watch a talk from TED on conducting or analyse an article on organisation together. Another option is to try out some unproven group exercises on each other, before taking them to our clients. As I said earlier, we also invite guests to talk on some subject. For example, we’ve had people talking about lean supply chains and visualization. We have also visited some high-profile companies to see what they’re up to, e.g. Spotify and Cint.

How is it organised? One partner is responsible for the program of the day. He is also the facilitator of the day. Another partner is responsible for the fun part of the program. Hence, it’s a pairing thing. The agenda is created in a few minutes in Google Apps some time during the week and may be amended by anyone of us.

Together we have agreed on the following guiding words for our Fridays: Openness, Inspiration, and Fellowship.

• Openness reminds us to be as transparent as we want our software teams to be. Only by being open do we invite understanding, feedback and collaboration. We want to move beyond the common professional courtesy and deeply understand each other as humans. If we are struggling at our client’s or at home we should be able to share this.
• Inspiration means we want to spend as much time as possible learning and studying – not only our own specialities but broader. We share knowledge and insights with each other. We recommend books, articles, and videos. My colleagues inspire me by telling me what worked great last week.
• Fellowship means we’re in this together. We’re all in the same boat. There’s a reason the famous trilogy isn’t called “The Social Network of the Ring”. What’s good for my colleagues is good for me. As change agents we naturally experience a lot of setbacks and, in a way, my colleagues also function as my therapists and advisors. That means I can get back to work the next week, full of energy and new inspiration, which benefit my clients.

Openness, Inspiration, Fellowship. These words sum up why I gladly sacrifice 20% of our possible income to be able to spend Fridays with my friends. Because Adaptiv is not about making some company group, investors, owners or share holders richer; it’s about making a difference and in the mean time making our lives richer.

THE PULL AND THE SHRUG

Scottish guy: I hereby proclaim that I am the 1st in the world to apply some TPS concepts that I like to the development of software. I will call it Kanban so that no one would get it mixed up with kanban, the TPS pull mechanism.

World: Ooh, shiny! Behold: The Kanban Software Development Process. Scottish guy, we will now follow your example. It seems new. And shiny.

Scottish guy: It’s not shiny! It’s based on a solid theoretical foundation. Anyway, I think three principles are not enough. Policies and collaboration seem important too. Oh, and leadership. Very important.

World: We mostly have big-ass whiteboards. That’s Kanban, right? We don’t want to go all-in with WIP limits and stuff.

Scottish guy: (sighs) Well… we certainly don’t want to exclude anyone. But wait! Stop! It’s not a development process at all. It’s more like a change process… I know! It’s an organizational transition meta-model. Yes, that’s it.

World: Yes, absolutely! Whatever you say, Scottish guy. We like the Kanban Software Development Process and it’s frivolous use of whiteboard space. That is what we use. Please certify us.

Scottish guy: Uneducated morons!

World: – (shrugs, fingers shiny process)

THE END

First, some modern business history. There was a time, not long ago, when the leisure travel market in Sweden was more or less divided between three tour operators (Ving, Fritidsresor and Apollo). Together they accounted for the lion’s share of the market (75-85 %). In the public eye, and looking at official numbers, they still do, but in fact this is not true anymore. If you include all leisure travelling, counting privately booked trips through travel agencies on the internet, known as OTAs, the numbers look radically different. Over the last 10 years the big tour operators have been overtaken and now hold about 40 % of the market together. In other words, their market share has halved in a decade.

How is that possible? How did it happen? In just 10 years? What adds insult to injury is that this has occured on a market that has been growing. (We travel more than ever before.) Was it because of bad management? Probably not. These companies are still showing profit. The answer is, of course, because of a disruptive technology: The web.

How could the web be considered as a disruptive technology for leisure travels? Travelling is about people and services, not software, right? And travel agencies make money by bringing new cool resorts in exotic countries to the market while at the same time milking the well known resorts, not by IT, correct? Well yes, some of that, but that’s not the point. The point is that the web has levelled the information playing field.

Before the web, tour operators had all the information. They had connections and deals with airlines to charter planes at volume rates. Same thing with hotels, which they could reserve years in advance. They knew the culture and ways in many foreign countries and cities and had researched and tracked the most price-worthy places for decades. They were the experts on the conditions in the foreign country and travellers were glad to pay for their guidance.

This information imbalance has been almost eradicated during the last decade. Now most computer-literate people research places and find great family hotels all by themselves, thank you very much. Then why not go ahead and book the plane and hotel yourself as well, using simple online agencies? Heck, its even cheaper too! So most people do just that.

So even though the total market has grown and even though the big tour operators still shuffle millions of Swedes to foreign countries every year, another market has grown behind their backs: The informed, internet-based holiday. “We don’t need no annoying guides, we’ve got iPhones!”, people seem to say.

Of course, the market leaders are no fools. For example, Fritidsresor opened their first online booking back in 2001. Not that they really wanted to, mind you, but everybody else had it. And sure, it would be another sales channel. I think it is fair to say that the web sales channel was seen as an add-on, programmed by the weird guys in the basement. Management did not understand just how game-changing the web was. That’s understandable. Nowadays they do understand better, but they aren’t doing much about it, which brings us back to Christensen. That is the typical symptom of a disruptive technology, which is why I believe that the web is a disruptive technology in leisure travelling.

Let’s be clear. The problem is bigger than fixing a better online booking dialogue. Much bigger. The tour operators are web-based travel agencies now, not catalogue-based, but not everybody at the top has realised it. Sure, the tour operators are reachable online, but they seem unable or unwilling to exploit its full potential. Their reservation systems are dinosaurs, which basically turn travel searching and exploring into palaeontology. Travel offerings are still collected into seasons. They don’t have an app that could help their guests onsite. They allow crappy wifi at the hotels. The most advanced way of getting in touch with guides is through texting. Let’s be honest, being online is simply not in their DNA.

Furthermore, their marketing and sales departments are perfectly geared towards selling package travels using ads and campaigns, often with an air of quiet desperation. The price structure is complex, even deemed too complex for customers to understand. So it’s hidden from them. The delivery organisation is a lean, well-oiled machine serving an identical experience, week after week, to people looking for something that is adapted to them. These firms view the development of their web software more as an IT support function to sales than like a business process in its own right. In fact, you could regard it as the business process, since 60-70 % of sales today originate from it.

The market for package deals is shrinking. Nowadays, a bit simplified, one could say that they generally reach customers with poor internet skills or people who want as little adventure as possible on their journey. To generalise further, this means beginning travellers, families with kids and older travellers. This is not a big enough market for these companies. To make matters worse, it will continue to shrink as the older customers stop travelling with age.

So what should they do?

Imagine you are the CEO of one of the major tour operators. What would you do? You would probably come up with three obvious strategies:

1. Stay on course. Keep the company as it is and hope the wind turns with the next generations of travellers.
2. Rewire the company. Transform it into a modern company where online services are core.
3. Create a separate department or project to start a truly online travel agency from scratch.

The 1st option is more or less religious in nature. You are basically praying for higher powers to make it right for you. It’s not a real option for a decisive CEO. The 2nd option is certainly possible, but it would mean very hard work over many years. You need to change everything, from leadership team, business model, and culture. It’s probably not even doable for a publicly traded company, where a year or two is as far ahead as anybody looks. The 3rd option certainly sounds the most promising. However, knowing your “Innovator’s Dilemma” you remember that these attempts almost always fail. Christensen lists numerous examples in his book.

There is a 4th strategy, however. It is not intuitive, but it is the one which has met with most success according to Christensen. When disruptive technology strikes, a market leader’s best choice is to take some of its best people and create a separate organisation, financially isolated from the mother company. It should have a separate product line, business model, culture, and leadership. If and when the disruptive technology upsets the market and if you’ve been successful, you may gradually move people over from the old (and marginalised) company to the new (and growing) company.

This would be my choice. I would set up a new company with some great business people, domain experts, a visionary CEO, and a couple of development/operation teams. We could probably leech off the large network of travel and lodging suppliers as well as local guides of the mother company. This company would have an online, mobile, social focus from the beginning. We would start with the assumption that everybody is or wants to be online before, during, and after their holiday trip. We would use web technology as a base instead of something glued on afterwards.

How our business model would look, I don’t know, but I bet we could utilise our main differentiator; having both great local presence as well as great online presence. To my knowledge, there is no such company today. Perhaps we could offer both innovative travel searching and personal pickup from home. Perhaps we would crowd source a lot of the web content, interact a lot with customers online and be transparent and guarantee your transport home when war or disaster hits paradise. Perhaps we would have downloadable apps that you could bring to the trip with all you need to know about your trip and destination. Perhaps even an augmented reality app, for that walk in that serpentine, arabic town and a human guide you could call on demand, lying pool side, when you are planning an outing next day. The adventure would be there, gently guided, for those who want it, on demand, but without much of the hassle and anxiety of leaving for a foreign, unknown location.

I don’t think any of these ideas are new. It’s just that a traditional tour operator never seems to have time to try them and an online agency is not interested in tour operating. Will the giant tour operators transform and survive? Or will the OTAs take over completely? According to this analysis, there could be room for a 3rd option, a fresh middle ground. Will someone go there? Only time will tell.

If you are into User Experience (UX), you may be using effect maps, also known as impact maps or goal maps, to guide software development towards the intended effects. These maps are used to describe how your business goals will be achieved by helping important target groups fulfill their goals of using your product or service.

If you are using agile software development, you are probably using user stories to describe your features for development using some common template. In this post I will suggest a new user story template, specifically designed to be combined with effect maps.

New Template

The template I suggest looks like this:

In order to <achieve business effect>,
As <target group representative>
Wanting/Needing <goal or need>,
When <use scenario>
I want/need <feature>

The first line describes the business effect, to which this story will contribute. The 2nd line describes a representative of the main target group affected, e.g. a user role or persona. The 3rd line describes the main goal the user has when using the system. For example, when using a cash machine, my main goal is probably to withdraw some cash. The 4th and 5th lines describe the process and a step to achieve my goal. The idea here is that a series of features, each described by a user story, will be used in a scenario, cf. Story Mapping. A scenario may lead to my ultimate goal or it may just represent a sub- or side-process.

The order of the lines are important, primarily because they move from the important and large (the intended, long-term business effect) to the less important and small (the feature). This makes it necessary to use three parts, hence the commas after line 1 and 3. These are inserted only to improve readability.

Some examples are in order. Let’s say you run a poetry publishing house. It’s not lucrative, to say the least, but you have high hopes for your new app. The main idea is that people will read a “Poem of the day” and if they like it they can easily buy the book from you.

In order to increase poetry book sales,
As an avid poetry reader
Wanting to acquire great poetry books with ease,
When ordering a book
I want to view the cover of the book in which the poem is published

The marketing department are keen on finding out how well the app is doing so they wish to track if a visitor came from the app:

In order to use our marketing budget optimally,
As a market analyst
Wanting to make market decisions based on facts,
When reading a web statistics report
I want to view a record showing number of visitors from the app

Effect Maps

Some readers may have recognised effect maps in the description above. This is a tool part of effect management in the use-centred school of user experience design. Although all UX is about achieving business effects through users, effect maps were first presented by Ingrid Domingues and Mijo Balic in their groundbreaking book Effect Managing IT. Effect maps are well known in the UX community, but are now also getting attention in agile circles, mainly because of their usefulness in connection with BDD/Specification by Example.

Effect maps are based on the notion that there is often a wide gap between what a business wants and the techniques to achieve it. This gap needs to be filled with people, because only people can use the tools you supply and it is only when they use it that business value may emerge.

Effect maps typically contain four levels:

1. Desired business effects, possibly with measurements (answers “Why do we want this?”)
2. Target groups (answers “Who can help us achieve it?”)
3. Needs or goals (answers “What do they need for this?”)
4. Actions (answers “How will we achieve this?”)

The observant reader may have noticed that the user story in the suggested format passes through each node and arc on a line going from a business goal to the actions.

User Stories

User stories were popularised in the Extreme Programming (XP) development method by Kent Beck. The main idea was to put the customer (user) back in the centre – not the person paying for the software, but the one most affected by it.

In its general form its simply a one or two sentence description of something that we want. A software feature, typically. It is deliberately very short to keep people from specifying too much. The intention is to work more like a memory note, reminding us to have a conversation later about this thing that we think we want.

The original user story was free format. However, two popular story templates have emerged. These templates are helpful, especially to beginners, since they remind us to think of important parts of a story.

The first template, developed by a team at Connextra (2001), looks like this:

As a <role>
I want <goal/desire>
So that <benefit>

for example,

As a poetry reader
I want to see the origin of a poem
So that I know which book it was from

This template puts the user role in the forefront. Its value part typically describes value as seen from the user. Sometimes, value from the business’ point of view is used, but it may be hard to make that coherent.

The second template was developed by Chris Matts as part of Feature Injection to put more emphasis on business value. To develop some feature we are striving for some business value. This template looks like this:

In order to <receive benefit>,
As a <role>
I want <goal/desire>

for example,

In order to increase poetry book sales,
As a poetry reader
I want to see the origin of a poem

The two popular templates are both conceived without regard for effect management. I want to use a format that takes effect maps into account. Both the old templates have placeholders for value and role, which are similar but not the same as business effect and target group here, which are more specific and related to the effect map.

Pros and Cons

I believe this user story format has some of the same advantages as effect maps. It gives us a good overview. It clearly shows what we’re looking for, who’s going to help us, and what these people want in connection with this. Another advantage is traceability. Each user story clearly maps to your effect map. A third advantage is that it test drives your effect map. If your map is incoherent, your user story won’t make any sense. Example:

DON'T DO THIS!
In order to increase uptime of our servers,
As a system administrator
Wanting stable systems,
When migrating book ordering to our new platform
I want to view the cover of the book in which the poem is published

The downside of the template is that it is long and therefore hard to remember. The smaller formats are more elegant. However, if you know your effect maps, it should not be hard to remember. If you are not using effect maps, I would suggest using a simpler template.

The user story templates are like little checklists that help us remember to work with needs instead of technical solutions. Like all checklists you adapt it to your situation.