bos2015 rich mironov - the four laws of software economics
TRANSCRIPT
FOUR LAWSOF SOFTWARE ECONOMICS
RICH MIRONOV@richmironov
@richmironov
4 Laws of Software Economics
#1Your development team will never be big enough
Development can never build as fast as we can dream
Magical Thinking
“CEO says it’s really important.”“We already promised it to a big prospect.”“How hard could it be? Probably only 10 lines of code.”“We’ve been talking about this for months.”“We’ve gone agile, which gives us infinite capacity...”“My neighbor’s kid could do this in an hour.”
#1Law of Ruthless Prioritization
• AND requests but EXCLUSIVE-OR decisions• We succeed by finishing a few critical things
Executive’s Job• Make hard trade-offs• Battle magical thinking and one-offs
4 Laws of Software Economics
1. Your development team will never be big enough
Law of Ruthless Prioritization
2. All of the profits are in the nth copy
For Software
All of the profits are in the nth copy
Revenue Implications
Goal is not to minimize costs but to maximize revenue
• Your development team of 6 costs…• Implied revenue commitment…• Incremental cost per user?
$1M/year$6M/year
Software Tiers/Bundles
There’s nothing more wasteful than brilliantly engineering a product that doesn’t sell.
#2Law of Build Once, Sell Many• Segmentation: strategic art of choosing customers who
want the same solution
Executive’s Job• Focus on segments, not deals
4 Laws of Software Economics1. Your development team will never be big
enough Law of Ruthless Prioritization
2. All of the profits are in the nth copy Law of Build Once, Sell Many
3. Software bits are not the product
Naked without• Deep customer understanding• Positioning, messaging, awareness • Sales & channels• Support, evangelism
Software Bits < Whole Product
@richmironov
Commercial Software Failure Modes*
Undifferentiated or poorly positioned
Marketing/sales/channel failures
Late deliveryPoor quality
Wrong problem, wrong solution
*In my personal experience
Most of the success / failure of a product is determined before we pick our first developer or fill out our first story card
#3Law of Whole Products• Customers buy solutions (include software)• Mean-Time-To-Joy
Executive’s Job• Watch for organizational silos• Make sure incentives are aligned
4 Laws of Software Economics1. Your development team will never be big
enough Law of Ruthless Prioritization
2. All of the profits are in the nth copy Law of Build Once, Sell Many
3. Software bits are not the productLaw of Whole Products
4. You can’t outsource your strategy
Input < Decisions
• Voice of the Customer• Surveys• Crowdsourced feature
ranking• Showcase customers• Industry analysts• Competitor data sheets
• Smartest customers• Smartest developers• Executive Survey-of-
One• Investment banker• Your mother-in-law• Inflight magazine
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Kano Model
Baseline
• Business value error bars >> engineering error bars
• Bottom-up prioritization ugly products
• Biased trade-offs among unlike items
Analytics < Strategy
• Hard to rank-order unlike items• Instead, group similar requests• Cross-bucket trade-offs reflect our
biases
Prioritizing Within BucketsPrioritization within buckets
“I skate to where the puck is going to be”
Strategy Requires StrategyStrategy requires judgment
4 Laws of Software Economics
1. Your development team will never be big enough
Law of Ruthless Prioritization
2. All of the profits are in the nth copy Law of Build Once, Sell Many
3. Software bits are not the productLaw of Whole Products
4. You can’t outsource your strategy Law of Judgment
Rich Mironov
Mironov ConsultingSan Francisco, [email protected]
twitter.com/richmironovlinkedin.com/in/richmironov