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Dunbar’s barrier

We know quite a couple of companies which are growing quite fast, and often we end up talking about difficulties in scaling up.

One particular scaling milestone that we discuss is at about 150 employees.

Looking back, many firms at that point made major decisions on what to do next, often selling themselves to larger corporates (eg. amg.net), which is one way out of scaling problem, since corporation has all the necessary processes already in place.

Number around 150 is often described as a maximum number of social interactions that person can comfortably handle. Above that number employees cease to know others in the organisation and personal relations have to be unfortunately replaced with more formal processes and procedures.

The number is brought up in Gladwell’s “Tipping point”. It was defined (actually it’s an approximation of a range from 100 to 230) by Dunbar in 1992.

Gladwell quotes one firm (Gore Associates) which for this reason splits itself whenever it approaches 150 employees.

Thinking of Goldenberry, which now has around 15 team members and fast approaching 20, we are about 3 years away from the barrier, assuming annual growth rate of about 100%.

More:




Goldenberry in 2010

Officially, we started in February 2010, when our Ltd was finally registered.

Frozen above Crater Lakephoto ? 2007 Powderruns | more info (via: Wylio)

First projects started in May.

We don’t need to do annual reports just yet, but here are some highlights:

  • We started with a team of two, finished the year with a team of 7
  • We worked for 8 different clients during the year
  • We derived 75% of revenues from projects for new clients
  • 70% of revenues was generated in most challenging Financial Services sector
  • We completed our first project abroad

Next year… is going to be exciting!




Paul Rand’s identity works

Paul Rand is perhaps America’s most famous identity designer, who developed logos such as IBM’s or NEXT’s.

Therefore it might be a shame to admit that it was only recently that I became aware of his works, nevertheless, I wanted to share appreciation of his identity document for Steve Jobs’ NEXT:

On the webpage, you need to scroll down to “identity presentations” section. Reading from photos is not comfortable but doable, especially if you are on a mac and can zoom easily.

One might find his approach to design problems rather intellectual if not pedantic, with all the detailed discussion of why this font and not another, why in italics and why in this color, but I find it quite fascinating, personally.

In fact, I found my way to this document passing from Steve Job’s record of his relationship with Rand:

Note the fragment when Jobs describes Rand’s way of working with his clients:

I asked him if he would come up with a few options. And he said, “No, I will solve your problem for you, and you will pay me. And you don’t have to use the solution – if you want options, go talk to other people. But I’ll solve your problem for you the best way I know how, and you use it or not, that’s up to you – you’re the client – but you pay me.”

This reminds me, by the way, of a common dilemma in consulting of whether we solve problems for the client or with the client.

But to finish the episode with Steve Jobs and Rand, here is the account of how the cooperation started:

Jobs had always had an eye for good design. He was especially taken with the logos of ABC, IBM, UPS, and Westinghouse, all of which were created by Yale professor Paul Rand. Rand offered to create NeXT’s logo for $100,000, but only if IBM consented.

This was an outrageous price, many times more than what Rand had charged IBM for its now-iconic logo. Two months later, Rand sent Jobs a copy of the logo and a brochure explaining every detail. For the sake of a more interesting design, Rand even renamed the company NeXT, saying the ‘e’ stood for education. The new logo (and the name behind it) lent prestige and clout to a company without customers or a product.

Random thoughts about winter and the coming year

We spend winter holidays in Warsaw, looking after all details for setup of our brand new consulting vehicle.

Details include registering company (in fact two companies), selecting accounting firm, developing company’s brand and identity.

We are trying to be quite innovative and perfectionist in each of these, except for maybe the accounting.

Everyone left for skiing and all, but we are managing these details and it’s actually kind of fun.

Ogito, on the other hand, is closed for the time when I have time for another experiment.

I guess I should be more concerned about investing lots of time and then switching to something else without obvious return, but I’m really not. I guess I like experiments.

Jokes about global warming are probably tired already, but the fact is, I can hardly recall a winter like that. I mean the situation when you lost track of how long the snow has been around – it’s been so long.

I have a feeling that a proper winter spells a very good year. I don’t have anything tangible to back up this expectation, except perhaps how the frost is killing all the wormies etc.

In any case, this year for us is about pumping all the startuping experience into consulting, which is something we know best, and we have lots of ideas how to make it even better, therefore we are quite excited about it.

This post is due to the fact that I feel like writing rather than reading on this lazy Saturday.

Just updated goldenberry page

http://www.goldenberry.eu/

Trying to make it more respectable.

Thoughts on best approach to consulting

I’m just coming out of a fairly intensive period, and of what? Consulting work. Who would have thought.

In the last couple of years I tested relation with consulting industry from three different angles: as an employee of a large international company, as a freelancer, and now as an operator of a stand-alone consulting practice. Each has its set of pros and cons.

As an employee you get comfort, stability and benefits, and initially you can learn a lot. However, you don’t have any control over your life, you are not rewarded for managing projects unless you are a manager, and you are not rewarded for selling projects unless you are a partner (and I love selling projects).

As a freelancer, you get control over your time, you have incentives to sell and most likely you earn more money. You don’t have direct responsibility for projects, so I was thinking you would be under less stress, too. However, I discovered that watching some people managing projects and having little influence over them is more stressful than having the whole responsibility for the project myself.

Which brings me to third mode of operation, negotiating and selling projects oneself. It’s a hell of a fun so far. It’s like having a startup, but in area when you have the most expertise, so it’s like a ride downhill. You make all decisions. You can invest in research and development to improve the way things are delivered. Or hire people you want to work with.

Sure, it might be just a honeymoon period, but I’m enjoying it enormously.

Changing the game: fee structures

There is an interesting story of Boies Schiller at law.com.

Boies Schiller is a legal firm, so how can it be interesting?

What is interesting is that they are very successful due to their willingness to use flexible fee structures. For example, they agree with the client to cap his legal expenses, or base their remuneration mostly on success fees.

On the other hand in consulting success fees are also used sometimes (restructuring jobs, which can be quantified with relative ease), but not very often, so I’m thinking if finding some areas in which risk could be shared with the client would not reveal interesting opportunities.

Must be a better way to do business process documentation

The last project was all about process documentation. To be honest, these are not exactly my favorite kinds of projects, mostly because they can be easily associated with long hours of unthankful, tedious work.

Why tedious? Well, one reason is that process documentation tends to have large volume, while efforts required to produce it are mostly not automated.

I was wondering if there is any simple way to streamline this kind of jobs, aside from hiring more analysts or investing in a some BPM software package, which would probably be an overkill for most of the projects I did.

Making any amendments to the processes is especially pita, due to all the custom diagrams interlinked with detailed textual content.

(that is if you use diagrams + text – sometimes just slides are used, especially for high-level documents – I think text is much more flexible if you need to accommodate more information)

While in fact, amending the design based on remarks from business users is the core of process-related projects.

Process-related projects shouldn’t be such a chore – if you take away all the time wasted with Microsoft Office, these projects allow to get the best idea of how the business really works.

Looking back, projects involving deep understanding of processes provide most powerful references today.

The kind of customized process work that is done during relatively short strategy project shouldn’t be mistaken with implementing whole “process-driven” approaches in the company, for which elaborate business process management IT solutions exist.

The idea is to store process designs in central repository, where they can be easily versioned, accessed by large groups of employees (which can be assigned different access rights), monitored, and modified.

Truth is – maybe it’s because it’s Eastern Europe and we are backwards – I never saw any of these system in real world use at any of the clients. Perhaps they are more popular in production company than the financial sector. I remember one Russian client mentioning before the project started that they had one, and that deliverables (processes to a large extent) would eventually have to be integrated in it somehow, but it was the only time the topic emerged.

I think there are plenty of good reasons for such solutions to have difficulties in real life adoption.

Enabling new users (like external consultants) to access the system requires at least creating new logins, in worst case it might require to buy additional licenses. Hardly easier that just emailing process documents.

People are used to work with Word or Powerpoint documents, but might need time to master unfamiliar interface of the process application.

Even though usually it should be possible to export process information in format like PDF, it might not be possible to export in format that is editable, so ad-hoc participants can contribute remarks.

The reason are many and truly converting organization to be managed around a consistent BPM system must be a daunting task. And partial implementations often leave orphaned systems that are not used.

For now, I was rather thinking if there was any way to improve the way stand-alone process documentation is created, rather than an end-to-end system.
(read more…)

Just finished my first commercial project

Ogito is fun to work on and all, but it’s not going to be a huge money maker in a foreseeable future, so sooner or later there’s going to be liquidity problem.

I saw two obvious solutions: find an investor or do freelance consulting.

Finding investors is something I don’t have much experience in, and moreover the timing is not too good, crisis and what not. I was lucky to have some friends declare to invest if necessary (which was not necessary yet), but as far as investment funds are concerned, I talked to just two of them and that was it.

Consulting, on the other hand, is a proven and quite manageable (I hope) revenue engine. Having commercial activity in form of consulting, in which I have experience, would allow to finance all the other activities, in which I don’t have so much experience just yet.

A week ago on Monday I woke up to see an email which could go as an rfp, and voila, till the evening my first freelance project was sold (why bother to execute your strategy if you can just let it happen).

The client: an investment fund. Ironic.

Actually it’s not really my first freelance consulting, but I’m taking into account just post-corporate period.

We managed to cover quite a lot of ground in less than a week, and both sides are happy. Three sides even, since I don’t really like to work alone.

Maybe more will come. Will see. Need some business card eventually, if more are supposed to come.

Travel bag finally at rest

After two years of continuous traveling on different consulting engagements, at last I was able to fully unpack my weathered travel bag and put it in its resting place, hoping it will not have to be used for at least couple of weeks:

It’s was a nice feeling.

But still no luck with the backpack, which is missing after the Cuban adventure… I’m losing hope of seeing it again.

Manage scary issues on the (consulting) project

I just followed Google Reader’s recommendation to Lost Garden. It’s a blog about game development. Some time ago I was interested in the topic, but I consider it frozen for a while, so I didn’t expect to find anything of immediate interest on this blog.

But this article proved I was wrong:

In every project, there are issues that that frighten the bejesus out of the team. They are so frightening that no one wants to talk about them publicly. The schedule might be impossible. There might be the lurking suspicion that Management does not believe in the project. More commonly, there is a major technical flaw that no one is handling.

The article relates to game development, but the issue is relevant for any other project. The urge to keep sensitive issues under the carpet is familiar enough.

Here are some steps I recall from the latest consulting project that helped in management of the “scary” stuff:

  • Carefully store and process remarks sent by the client (there is good chance that sensitive issues are among them): store all remarks in one document, color-code them to distinguish difficult ones, dedicate a meeting with a client for walking through the remarks to ensure that they are understood properly and agree the solution
  • When sensitive issue is identified, create dedicated approach to solve/mitigate it: brainstorm possible solutions, create issue tree to structure the thinking, identify constraints related to the issue (e.g. define most pessimistic scenario and start from there)
  • Dedicate resources to follow the agreed approach to resolve/mitigate the issue

Some issues may really seem scary, but it turned out that solving them (or at least addressing them and mitigating related risk as far as it was possible) raised client’s confidence in the overall direction and justified all the effort that went into sorting them out.

Creating new markets with “blue ocean” strategy

I might appear to have been living under the rock, because it is only now that I read the famous “Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne. The main idea behind the book is to focus on creating new market space, instead of getting entangled in deadly fight for existing one.

Red oceans are existing markets. Red from competitive blood. Blue oceans are (usually) undiscovered market spaces. No competition there.

It is well described how to operate on red oceans. Strategic positioning, benchmarking, etc. Red ocean strategy is heavily inspired by the military (zero sum game). I’m afraid that we consultants work usually on red oceans.

The book might well be inspiring, even if it simply reuses some concepts supporting individual creativity in the corporate setting. Concepts like “out of the box” thinking, identification of hidden constraints, taking unusual point of view for inspiration etc. is repackaged for use in the enterprises.

Remarks related to improving corporate planning process itself by turning it more into “strategic conversation” remind me of Kees van der Heijden approach, which used scenarios to facilitate uncovering hidden drivers and communicating the strategy.

Clustering

I have this rather large file with loan data and I’m playing some statistics on it. During the day it was standard pivoting. But now in the evening I decided to check whether I can get anything by a fancy black-box clustering.

The best thing to get, of course, would be a set of clusters with significantly different loan performance (i.e. share of bad loans) that the others.

I’m using Cluto.

It is not particularly user-friendly. It requires input files that I need to kind of manually generate from Access and then fine-tune. And it is not excel add-in, but a command line program. But thanks to this it can handle my 100k records (my Excel version has 64k rows limit).

So far no results. But wait… just finished computing using the graph method. It took 17 minutes.

Nope. At the moment most distinctive cluster is ca. 6.5% better that the average in case of defaults. And ca. 11% in case of defaults considered fraud. I’m not impressed.

Guess they need to give me more data from the application. Currently I test on 6 variables and some are loan and not customer related so there is a field for improvement.

Or maybe I should read the manual some more and figure what what are the different optimization methods.

Web 2.0 consulting project?

Wow, my company still surprises me sometimes.

Recruiting in Lviv, Ukraine

I came back from Lviv yesterday. We were attending jobs fairs in the city.

Key lesson from the event: in Ukraine, technical universities, like one where fairs took place, often do without heating. Inside it is only slightly warmer that outside and people go around in coats.

Result: I am sick and one of my ears have not recovered yet from the pressure stress test on the plane and tomorrow I go to a concert.

On a different topic, even though recruitment potential seems promising, technical people in Lviv have serious problems with English. In fact even linguistics students had problems with English, which is quite ironic.

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