The other death spiral

I think many of us know about the financial “death spiral” (the most popular version in the Valley these days is attributed to Sequoia Capital – see slide 49 in particular). While this is scary and real, I am referring to a more internal problem to people and organizations. One that anybody involved with the company’s strategy should be particularly wary of.

This death spiral is where you start to believe too much of your own thinking. We’ve all done it to some degree or another. But the best of us see it and work hard to break it.

It often starts with simple statements like:

  • “We’ve always done it this way”
  • “This has been working”
  • “Oh, I just know this is the right way”
  • “It’s not worth changing now”

Over years of experience — particularly within a single organization — a kind of inertia builds up. We have seen it before and figured out an answer so we just assume away elements of our decisions that perhaps we should not.

I think it is important to make a point of continually asking yourself and your colleagues the question you learned as a two year old: “Why?” Why did we do it this way? Why should we keep doing it?

It is quite likely that the status quo is that way for a reason. It really was the most efficient or most popular with the customers or best performing or whatever.

However, it’s also entirely possible that it is not.

Let’s take some examples from technology products:

First let’s look at the case with a product that has been established and successful for a few years. Over time the technologies that it is built on become old. Or perhaps the model or approach taken five or ten years ago is no longer state-of-the-art.

The natural bias is to see this as the basis of the past success and keep going with it. The team questions why to burn precious development resources reworking what is already done.

Most of the time, this is good thinking. It preserves your advantage and gives you a chance to move ahead.

However, let’s consider some cases where it isn’t:

Platforms and Technology

What about the case where new entrants into the market have jumped on a new technology/architecture/whatever and are using that to win deals. Your installed base is happy to keep going but new customers get harder and harder to win. The competitor takes advantage of “NewTech” to whip out snazzy new features or just more modern UI elements that make their product feel better to your prospects. Meanwhile, your engineering team is bogged down with “OldTech” and says that those features are hard/costly/slow to implement. Are you spending more on maintaining and extending than it is worth?

Third party tools

How about where you are reliant on some third-party tool – say a reporting engine – for some functions and it is no longer providing competitive functionality. Or worse, it is no longer supported. Again, the tendency is to let it be. It works, it’s done. But what about when you need an extension?

I use reports as an example because many enterprise software products are “sold” on the quality of their reports (and other visualizations of information). While it is tempting to say that the information is there and isn’t worth re-doing, maybe your competition is out there using the same information to tell a more compelling story. Once again, you have to ask whether the ongoing, incremental costs are really better than a re-do, as painful as that would be.

Architectural issues

Sometimes the decisions made early in a product’s life haunt it forever. For example, a lack of multi-tenant design makes it very difficult to even consider business models like SaaS or lack of proper Internationalization makes it hard to properly enter other markets (see post). Often, these are such fundamental decisions that it really never is practical to re-do the work. However, the question should be asked from time to time. Because, as the conditions change, it might become the right answer anyway.

What to do

  • Make periodic “assumption questioning” part of your routine process – No need to torment yourself or your team with endless ‘navel gazing’, but when the questions come up, don’t just take the status quo for granted.
  • Take a step out side of your comfort zone – Ask the tough questions. “Is this right?” “Why is it right”
  • Really do a scenario analysis of how the options will play out over time – If you continue down the path what will be the consequences? What opportunities would be opened up downstream if you make changes? While change might not make sense in the short term, the advantage next year might be huge. Then again, this year may be so important that you can’t afford to gamble on next year. Your milage may vary.

Oh, and if you do come to the conclusion that the past assumptions no longer hold, how do you make a change. You might not be looking at a “kitchen remodel” but something closer to a “teardown” project. How do you change the proverbial tires on the moving racecar? I’ll leave that for another post.

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