What happens when you don’t have the money to buy something? You have one of two options:
- Put it on layaway
- Use credit
Both of these options are undesirable. For layaway, you don’t get the item when you need it. By the time you fully pay for it, many things likely have changed that made you need the item in the first place. If you put it on credit, you get it right away, which is great, but if you don’t have a plan to pay for it you will end up spending a lot more on the item then what it originally cost you. Your goal should always be to buy what you can afford; whether now or in the future through saving yourself.
So why is it so different in business? Time and time again, teams go through the process of scoping and estimation to land in a place everyone feels a least a little bit dirty, unsatisfied, and not really any closer to the answer to the key question, will the money get the work done?
The answer to the question is, it won’t. Not because anybody it doing something wrong and bad, but because both financial principles are being applied at the same time.
Layaway
When a business team has a clear idea of what they are looking for, they fund a development team to make it happen. However, as time goes on, things change:
- The business team realizes that the need is not the same anymore
- The whole team realizes that their understanding of the need isn’t aligned
Overall, the team has invested in something that doesn’t have as much or any value to them.
Credit
When business offers visions of granger to their teams that the solution they are working on offers an investment in the collectively well-being of the them and the company’s future, they are taking out a loan.
Yes, team members get paid. However, many businesses are asking their teams to take deferred compensation in the form of long term incentives (e.g annualized bonuses, equity). Consider this credit because as time goes on, the business’ cost to retain quality talent goes up over time. How team members value their contribution over time is skewed the longer they go without liquidity of their compensation. How teams are treated has a direct impact on this; are they working off-hours to accomplish tasks, are they changing things only to change them back later, etc.
So what do we do
First and foremost, we have to trust each other. Secondly, build an environment and a process that respects change and team members time equally. First-mover advantage is real, but for many companies and teams that is not generally a valid reason why solutions are built the way that they are. Third, how the business defines value is last and not least.
Time is our greatest resource and always for all things to happen. Having a shorter term definition of value is critical to getting long-term success and productivity. Through iterative development, which allows teams to seamlessly respond to change, and good establishment of the prioritization of needs, business can always ensure the most value can be gained against the money paid. Establishing a team for consistency ensure optimal productivity and therefore the most value.
Buying things you can’t afford will either get you into trouble and not allow you to plan for a better future. For businesses, setting up teams for success both short and long-term means clarity in needs and the accountability for when things change. Calculating value based on shorter time windows and respect the fact when you can’t afford something to make better choices for everyone involved is key.