by Gene Kim
He continues, “I wonder if we can re-skill everyone on my old team and find new roles for them without driving up operating expenses. There’s going to be a bunch of new positions in the Innovation effort. I want them to have a shot at it. They have so much domain expertise and institutional knowledge. It’d be a huge loss if we lost them. Same with Kirsten’s project managers …”
Bill continues to think in silence as he walks. Which is fine, because Maxine is feeling even more troubled than before. Has her old MRP group become inhabitants of their own Galapagos Islands too?
“I think this all sucks,” Kurt says, brooding.
For the rest of the day and into the next, Maxine and Kurt tag along as Bill, Chris, Kirsten, and their teams struggle to come up with a plan to deliver the needed headcount reductions. Although Steve told Dick that his job is to help both sides of value and growth, Dick assigns two of his direct reports, the director of business operations and the corporate controller, to help them.
Maxine is very impressed by them. They are two hard-nosed business people who seem to know every nook and cranny of the company.
But it’s still very grim work.
Maxine is often tempted to take a walk or skip these meetings entirely, because she sometimes feels overwhelmed at the human toll that all of this has put into motion. But she knows that this is important, even critical, to get right. And she absolutely wants a say in what happens.
At first, each department manager divided their people into three categories: critical, desired, and RIF. Of course, only a few people ended up on the third list. Seeing the three names, it was clear that managers were using this as an opportunity to get rid of people that should have been eased out long ago.
But that wasn’t nearly enough. So Chris and Bill started turning the screws on each manager, scrutinizing and comparing people on their managers’ “desired” lists. After nearly an hour of this exhausting wrangling, Maxine is reminded of something Erik said.
“Wait. Erik cautioned us on the need to examine things from the perspective of flow,” Maxine says. “We can’t do this by department or by some popularity contest. If we take random people out of a value stream, we could do as much damage as what the bean-counters did in Dwayne’s story of the three manufacturing plant network switches.
“And in our world, where we currently don’t have sufficient locality in our decision-making,” she says, “it’s actually our managers who are figuring out how to expedite the most important work. Erik called them the traffic cops and prioritizers.”
Both Bill and Wes stare at her. Bill says, “Good idea. Let’s put this aside for a moment and instead focus on trying to distinguish Core versus Context. What are the broad areas of technology that we can eliminate?”
Maxine is acutely aware that the ultimate goal of this exercise is to reduce operational expense. They need to reduce the number of people on payroll.
Obviously, unhappy at being asked to figure out how to dismantle the empire that he’s helped build over the last decade, Wes mutters, “This feels so wrong, Not so long ago, these were things we were arguing we needed.” But even he acknowledges that there is an urgent and important business imperative to do this. When he sees Bill put up his old mid-range group on the list of candidate technologies to eliminate, he groans.
“Holy crap. I’m sorry, Bill. That’s rough,” he says, staring at the whiteboard. “Sure, I’ve made fun of them for being frozen in time like Encino Man, but they’re good people. And I sure haven’t had any reason to complain about their work.”
“Thanks, Wes,” Bill acknowledges. “But honestly, there are SaaS vendors out there who we can pay to do much of what we’ve built. And that will give us five people. And we’d eliminate a whole technology stack, along with all the software licenses and maintenance contracts associated with it. That’s another $100,000 of annual spend, which is another half of a head right there.”
Wes sits in silence. “Well, if you put it that way … I’d pay anyone in duffel bags of unmarked bills to get rid of our helpdesk system. Of course, we’ll have to get a replacement service, but I’d rather have a vendor managing it anyway. And our email servers. And Lotus Notes, which we still have pockets of, believe it or not, because a couple managers complained loudly. I think we finally have the clout to override their objections.
“Combined, the workload of managing all those things is easily three people,” Wes says. “Of those, two I’d want to keep around. All I’d want is the opportunity to take a sledgehammer to some of those servers before we haul them out.”
Maxine stares at Wes and Bill. They’re not exactly being magnanimous, but they aren’t being cold-hearted bastards, either. In fact, she much prefers this approach to comparing lists of names between departments.
Inspired, Maxine gathers up her courage and says, “Maybe we should take a look at the Manufacturing Resource Planning group too.” When Chris looks at her in surprise, she says, “There are certain pieces that are absolutely critical for competitive advantage, such as the scheduling module that we’re changing from ‘build to forecast’ to ‘build to order’ to support on-demand manufacturing. But the rest of it could be moved onto a commercial package … I’d keep five developers on the team to finish the transition, but that would free up ten developers and QA people, and maybe two other Ops people …”
She feels ill. The people she’s reduced to numbers are the wonderful people who wished her well when she was exiled. This was the system she helped build and maintain for nearly six years. Even Erik said it was an architectural marvel.
She quickly adds, “These are some of the best engineers in the company. I personally vouch for each and every one of them. If they could work on projects like Unicorn or in the Innovation areas, their contribution to the company would be much higher than on the MRP system …”
“You’re right,” Chris says, looking proudly at Maxine. She feels relieved to finally suggest this, which is something she’s been dreading all day.
Bill adds Maxine’s old MRP group to the whiteboard, joining midrange financials, cafeteria POS, helpdesk, email, and Lotus Notes on the list. Together, they identify eighteen positions that they can eliminate. The software services to replace them would cost $500K annually.
Bill adds another column. “If the Innovation effort is fully funded at $5 million, that could potentially create thirty-three technology positions in Core. We could potentially hire all these people back, as Maxine pointed out, doing work that is far more valuable.
“So, let’s keep pushing. Come on, what else might we want to unshackle ourselves from so that we can reallocate more people to Core? What are things running in our datacenters that customers will never pay us for? We’ve already outsourced payroll. What other back office functions might we want to consider?”
“We have three ERP systems,” Maxine offers. “It’s a pain to have to integrate with all of them. In fact, all three of them are owned by one company now. Maybe now’s the time to bite the bullet.”
Wes nods. “If we switched to one, that would free up another two or three Ops people to do something else.”
“I like where this is going,” Bill says. “How about our HR systems. And sales commissioning tools and compensation planning … and our timecarding systems in plants …”
At the mention of the timecarding systems, which were at the epicenter of the payroll failure that led to her exile, Maxine mutters, “Good riddance.”
“Yeah, and our desktop backup systems,” Wes adds. “Maybe even our telephone systems and PBXes. We’re a manufacturer and retailer, not a phone company …”
Wes’ face lights up. “And there’s two datacenters that we should have shut down years ago. Between them and what’s in them, they probably cost us a million dollars annually to run. And if we actually got rid of them, that’s another four people … Oh, and those damned Kumquat servers … Let’s get rid of them once and for all. That’s another $100K in maintenance costs.”
Looking at the growing list of ignoble Context on the whiteboard, Maxine doesn’t feel dread. Instead, she feels inspired thinking about how jettisoning these things will liberate the company from things that slow it down and present the opportunity for engineers to work in areas of far higher value. There is one more thing bothering her, though.
“Our Unkitty CI cluster is on its last legs,” Maxine says. “It’s important Context, but still Context. We have our best people working on Unikitty. It’s made a world of difference elevating developer productivity, but we should find a commercially supported SaaS vendor and get our best people working on things that we can’t find commercial vendors for. Come on, Kurt, how much time have Dwayne and Brent spent propping Unikitty up?”
“Damn,” Kurt says. But after a moment, says, “But yeah, add it to the list.”
Dick’s finance team presents their tabulations. Everyone stares. They’ve identified nearly $4 million of expenses that could be reduced, with twenty-six positions being eliminated.
But if they opened up thirty-three positions in Innovations, they could hire almost all of them back. If they were willing to learn new things.
Maxine smiles.
Maxine is amazed by how quickly Bill is able to get on Steve and Dick’s calendar, impressed that he has that type of working relationship with the CEO. They are presenting to both of them by the end of the day. In contrast, there are times when it takes weeks for Maxine to get on Chris’ calendar. She briefly wonders if the problem is her or Chris.
When Bill presents their plan, Steve and Dick take notes, ask questions, and eventually nod in approval.
Steve especially liked how the team identified areas to eliminate by value stream while maintaining flow. But when Bill talks about their desire to move talented engineers and retrain them so they could contribute to the Innovation efforts, Steve becomes visibly excited.
“During my manufacturing days in the 1990s, I had to oversee a massive reskilling of the workforce,” he says. “We made huge investments to make sure every worker could survive and thrive in a new era where everyone was being paid not to just use their hands but also their heads. It was one of the most fulfilling and rewarding things I’ve ever done. We must do the same with the technology workforce.
“And I don’t mean just putting up posters on the wall,” he says. “I mean we really invest in our people. Maybe we create a Parts Unlimited University or some other long-term training where we create the next generation of leaders and engineers we need for the long-term survival of the company. We pay them to get the skills they need.”
Steve looks excited and alive in a way that Maxine has never seen before. Even Dick looks excited.
“I need your help on this one already, Steve,” Bill says. “Take my old mid-range team that I used to manage only four months ago, before you put me in this role. Through no fault of theirs, they’re in a business process that is Context, not Core. We need to do right by all our people and help make sure that we prepare those people to have long and productive careers. They have valuable knowledge that we’d be idiots to let walk out the door.”
“You bet,” Steve says. Maxine breathes a sigh of relief. Maybe this whole thing can be a force for good after all, Maxine thinks. Even though it was Sarah who lit the fuse.
Dick has been taking notes and occasionally tapping on his calculator. “We need $15 million in cost reductions. With the numbers you provided, we’re nearly there,” Dick says, looking at his staff, who nod in return. “In manufacturing, we’ll be shutting down production of our lowest-margin category of products. This affects fifty workers, of which fifteen will be filling currently open positions.
“The head of supplier management plans on saving another $2 million by reducing our number of suppliers,” he says. “We’re using this to negotiate higher discounts and reduce logistics overhead, and it shouldn’t create much hardship at all.
“On the retailer front, we’ll be shutting down ten of the lowestperforming stores, which will save us about $3 million,” Dick continues. “And the rest will be gained through early retirement and some elimination of positions.”
Dick pauses to look at the spreadsheet. “I think this is a pretty good plan. The biggest risk I see is the operational risk from transitioning to these new systems. They’re Context, but they’re mission-critical. We’ve never changed this many business processes, let alone all at the same time. And I’m sure we’re going to have a bunch of very unhappy people who will come up with a bunch of reasons why we can’t.”
“Just so you know, some of those objections are undoubtedly correct. This is just a working list, created by us, a bunch of spreadsheet jockeys,” Bill says. “At our level, we don’t really know what the implications of shutting these systems down are and what it takes to transition. We need time to work with our teams to figure out what’s even possible and come up with a realistic timeline.”
“That’s a good plan, Bill,” Dick nods. “Steve, you need to find a way to buy him some time.”
Steve looks at the spreadsheet on the screen. “Maybe we ask the board that instead of the three percent cut they asked for, we deliver a plan to cut two percent in January before the quarterly earnings announcement and get to four percent by the end of the next year. That should satisfy them …”
“Not bad,” Dick says with a smile. “That will make Alan and his voting bloc very happy.”
“Okay, I’ll work on socializing this with the board,” Steve says. “Once we get approval, I’d like to announce this to the company and be as open about it as possible, so people can prepare for it.”
To Dick, he adds with a small smile, “Sorry, Dick … We may need a couple more quarters of that financial engineering to keep the numbers going in the right way.”
Maxine is so relieved that her worst fears about the cost-reduction plan haven’t come true. However, she doesn’t feel carefree. Instead, her acute fears of the worst happening are replaced with a dull, constant, gnawing sense of unease.
For the rest of the day, she feels utterly spent and exhausted, her left eyelid keeps twitching and her stomach constantly hurts. Sometimes she can’t quite look people in the eye. A quick Google search confirms that this is probably all due to prolonged stress. All these types of people management issues are why she always veered clear of management roles.
That night, she forces herself to relax, having a couple of glasses of wine and watching the “Red Wedding” episode of Game of Thrones with her husband, eager to be distracted from anything related to work. She’s stunned by the ruthless cruelty and senseless violence of the massacre at the end, and she and Jake laugh about how lucky they are that modern work environments don’t involve wholesale slaughter—even though Sarah had certainly given it her best shot.
CHAPTER 18
• Thursday, December 18
When she wakes up on Thursday morning, she feels well-rested and excited about the day. Part of it is from having gotten a full night of dreamless sleep. But it’s also because today is when the finalists for the Innovation ideas will be pitching the entire Innovation Council. As promised, Bill picked fifty of the most respected people from across the company, making them responsible for choosing the first three Innovation ideas to be staffed and explored.
Those three winning submitters would each have a team handselected by Maxine, and they’d have ninety days to explore the viability of the idea, investigating market risk, technical risk, and business model risk, and hopefully achieving some fantastic agreed-upon business outcomes. This would be the Horizon 3 work that they were fighting so hard to protect.
Maxine was astonished that back when Steve announced to the entire company that anyone could submit an idea, within a week they had hundreds of submissions. Being on the committee, Maxine read all of them and was inspired by their creativity and thoughtfulness. Almost all of them attempted to address real problems that their customers had, and many of them displayed ingenious ways that Parts Un
limited could help.
She marveled at how strong people’s intrinsic motives were to explore these problems. The committee deliberated and picked the top thirty proposals, and today, all of them are pitching the entire Innovation Council in the big auditorium where they normally held the Town Halls.
Each of the pitching teams had been able to rehearse with some of the committee members during the week, getting any desired coaching and guidance. Maxine loved how committee members were so generous with their time, especially right before the holidays. For the people pitching, these interactions would help create useful networks and would likely help advance their careers.
Maxine walks to her desk, eager to get the most urgent work done so she can go the auditorium and help with the Innovation pitch preparations.
As she sits down, she sees a text message from Cranky Dave:
Holy crap. Check your email.
When she pulls up her email and sees the subject line, she breaks out in a cold sweat, whispering, “Oh, no …”
From:
Sarah Moulton (SVP, Retail Operations)
To:
All IT Employees
Cc:
Company Executives
Date:
8:05 a.m., December 18
Subject:
Changes to personnel and responsibilities
Effective immediately, Maggie Lee (Sr. Director of Retail Product Marketing) has been reassigned to assist with an urgent inventory audit at our retail stores.
Because of the time-criticality of these issues, she is relieved of all duties, including any Innovation Council work. Please direct all those communications and decisions to me.
Furthermore, Kurt Reznick (QA Manager) is suspended of all responsibilities, for reasons I cannot responsibly disclose. Please direct all Innovation Council related issues to Rick Willis (QA Manager) and all other issues to Chris Allers (VP R&D).
