by Gene Kim
The Phoenix Project
The Phoenix Project
A Novel About IT, DevOps,
and Helping Your Business Win
Gene Kim, Kevin Behr & George Spafford
25 NW 23rd Pl, Suite 6314
Portland, OR 97210
Copyright The Phoenix Project, 5th Anniversary Edition
© 2018 by Gene Kim, Kevin Behr, and George Spafford.
First edition 2013. Second revised edition 2014.
Copyright The DevOps Handbook excerpt “The Three Ways”
© 2016 by Gene Kim, Jez Humble, Patrick Debois and John Willis.
All rights reserved. For information about permission to reproduce selections from this book, write to Permissions, IT Revolution Press, LLC, 25 NW 23rd Pl, Suite 6314, Portland, OR 97210.
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THE PHOENIX PROJECT, 5TH ANNIVERSARY EDITION
The Phoenix Project
PARTS UNLIMITED
Parts Unlimited: Business Executives
Steve Masters, ceo, acting cio
Dick Landry, cfo
Sarah Moulton, svp of Retail Operations
Maggie Lee, Senior Director of Retail Program Management
Bill Palmer, vp of it Operations, former Director of Midrange Technology Operations
Wes Davis, Director of Distributed Technology Operations
Brent Geller, Lead Engineer
Patty McKee, Director of it Service Support
John Pesche, Chief Information Security Officer (ciso)
Chris Allers, vp of Application Development
Parts Unlimited: Board
Bob Strauss, Lead Director, former Chairman, former ceo
Erik Reid, Board Candidate
Nancy Mailer, Chief Audit Executive
FOR IMMEDIATE RELEASE
Friday, August 29
Company: Parts Unlimited (PAUD)
Rating: SELL
Price Target: $8 (current $13)
Effective immediately, Parts Unlimited CEO, Steve Masters, is stepping down from his role as chairman after eight years of holding that position. Board Director Bob Strauss, who served as company chairman and CEO two decades ago, is returning from retirement to assume the role of chairman.
Parts Unlimited stock has tumbled 19 percent in the last 30 days under heavy trading, down 52 percent from its peak three years ago. The company continues to be outmaneuvered by its arch rival, famous for its ability to anticipate and instantly react to customer needs. Parts Unlimited now trails the competition in sales growth, inventory turns and profitability.
The company has long promised that its “Phoenix” program will restore profitability and close the gap by tightly integrating its retailing and e-commerce channels. Already years late, many expect the company to announce another program delay in its analyst earnings call next month.
We believe that institutional investors such as Wayne-Yokohama pressured Bob to reconfigure the board as the first of many actions to right the ship in Elkhart Grove. A growing number of investors are pushing for more significant leadership changes and strategic options, such as splitting up the company.
Despite Masters’ past achievements that transformed Parts Unlimited into one of the top automotive parts manufacturers and retailers, we believe splitting up the chairman and CEO roles is long overdue. Parts Unlimited needs fresh leadership, either from the outside or from within. We believe Sarah Moulton, SVP of Retail Operations, and a rising star at the company, could just be what the company needs.
According to our sources, the board has given Strauss and Masters six months to make dramatic improvements. If they can’t pull this off, expect more changes and turbulent times.
—Kelly Lawrence, Chief Industry Analyst, Nestor Meyers
###
Part 1
CHAPTER 1
• Tuesday, September 2
“Bill Palmer here,” I say, answering my cell phone on the first ring.
I’m late, so I’m driving ten miles per hour over the speed limit, instead of my usual five. I spent the morning at the doctor’s office with my three-year-old son, trying to keep the other toddlers from coughing on us, constantly being interrupted by my vibrating phone.
The problem of the day is intermittent network outages. As the Director of Midrange Technology Operations, I’m responsible for the availability and smooth functioning of a relatively small it group at Parts Unlimited, a $4 billion per year manufacturing and retail company based in Elkhart Grove.
Even in the technology backwaters I’ve chosen to make my turf, I need to track network issues closely. Because these issues disrupt the services my group provides, people will blame the outages on me.
“Hi, Bill. This is Laura Beck, from Human Resources.” She’s not the person I usually deal with from hr, but her name and voice sound familiar…
Holy crap. I try not to swear out loud when I remember who she is. From the monthly company meetings. She’s the vp in charge of hr.
“Good morning, Laura,” I say with forced cheer. “What can I do for you?”
She responds, “When will you be in the office? I’d like to meet as soon as possible.”
I hate vague requests to meet. I only do that when I’m trying to schedule a time to chew someone out. Or fire them.
Wait. Is Laura calling because someone wants to fire me? Was there an outage I didn’t respond to quickly enough? As an it Operations guy, the career-ending outage is the joke my peers and I tell one another daily.
We agree to meet at her desk in a half hour, but when she doesn’t share any more details, I say in my most cajoling voice, “Laura, what’s this all about? Is there a problem in my group? Or am I the one in trouble?” I laugh extra loudly, so she hears it over the phone.
“No, it’s nothing like that,” she says breezily. “You could even say this is good news. Thanks, Bill.”
When she hangs up, I try to think of what good news would even look like these days. When I can’t, I turn the radio back on and immediately hear a commercial from our largest retailing competitor. They’re talking about their unparalleled customer service and a breathtaking new offering that allows people to customize their cars with their friends online.
The ad is brilliant. I’d use the service in a second, if I weren’t such a loyal company man. How do they keep bringing such incredible new capabilities to market while we remain stuck in the mud?
I turn the radio off. Despite all our hard work and late nights, the competition keeps leapfrogging us. When our Marketing people hear this ad, they’ll go ballistic. Because they’re likely art or music majors, not people with a technology background, they’ll publicly promise the impossible and it will have to figure out how to deliver.
Each year, it gets harder. We have to do more with less, to simultaneously maintain competitiveness and reduce costs.
Some days, I think that it can’t be done. Maybe I spent too much time as a sergeant in the Marines. You learn that you argue your case as best as you can with your officer, but sometimes you have to say, “Yes, sir,” and then go take that hill.
I pull into the parking lot. Three years ago, finding an empty parking spot was impossible. Now, after all the l
ayoffs, parking is rarely a problem.
When I walk into Building 5 where Laura and her staff reside, I immediately notice how nicely furnished it is. I can smell the new carpeting and there’s even classy wood paneling on the walls. Suddenly, the paint and carpet in my building seem decades overdue for replacement.
That’s it’s lot in life. At least we’re not in a dingy, dimly lit dank basement, like in the British tv show, The it Crowd.
When I get to Laura’s office, she looks up and smiles. “Good seeing you again, Bill.” She extends her hand, which I shake. “Have a seat while I see whether Steve Masters is available to meet.”
Steve Masters? Our ceo?
She picks up and dials her phone while I sit down, looking around. The last time I was here was a couple of years ago when hr notified us that we needed to dedicate a room for nursing mothers. We were critically short of office and meeting space, and we had big project deadlines looming.
We merely wanted to use a conference room in a different building. However, Wes made it sound like we were a bunch of 1950s Mad Men Neanderthals. Shortly afterward, we were both summoned here for a half day of political rehabilitation and sensitivity training. Thanks, Wes.
Among other things, Wes is in charge of the networks, which is why I track network outages so closely.
Laura thanks the person on the other end of the phone and turns back to me. “Thanks for coming down on short notice. How is your family doing these days?” she asks.
My brow furrows. If I wanted to chitchat, there are many people I’d rather talk to than someone in hr. I force myself to banter about our families and kids, trying not to think about my other pressing commitments. Eventually I say, without much grace, “So, what can I do for you this morning?”
“Of course.” She pauses, and then says, “Effective as of this morning, Luke and Damon are no longer with the company. This went all the way to the top, with Steve getting involved. He’s chosen you to be the vp of it Operations.”
She smiles broadly, holding out her hand again, “You’re our newest vp in the company, Bill. I think some congratulations are in order?”
Holy crap. I numbly shake her hand.
No, no, no. The last thing I want is a “promotion.”
Luke was our cio, or Chief Information Officer. Damon worked for him and was my boss, in charge of it Operations across the entire company. Both gone, just like that.
I didn’t see this coming. There wasn’t any chatter on the subspace radio. Nothing.
For the last decade, like clockwork, new cios would come and go every two years. They stay just long enough to understand the acronyms, learn where the bathrooms are, implement a bunch of programs and initiatives to upset the apple cart, and then they’re gone.
cio stands for “Career Is Over.” And vps of it Operations don’t last much longer.
I’ve figured out that the trick to a long career in it Operations management is to get enough seniority to get good things done but to keep your head low enough to avoid the political battles that make you inherently vulnerable. I have absolutely no interest in becoming one of the vps who just give each other PowerPoints all day long.
Fishing for more information, I joke, “Two executives leaving at the same time? Were they stealing money from the stores late at night?”
She laughs, but quickly returns to her hr-trained deadpan, “They both chose to pursue other interests. More than that, you’ll have to find out from them.”
As the saying goes, if your colleague tells you they’ve decided to quit, it was voluntary. But when someone else tells you they’ve decided to quit, it was mandatory.
Ergo, my boss and his boss were just whacked.
This is exactly why I don’t want a promotion. I’m extremely proud of the team I’ve built over the last ten years. It’s not the largest group, but we’re the most organized and dependable, by far. Especially compared to Wes.
I groan at the thought of managing Wes. He doesn’t manage a team—he’s barely one step ahead of a chaotic mob.
As I break out in a cold sweat, I know I will never accept this promotion.
All this time, Laura has been talking, and I haven’t heard a single word. “—and so we’ll obviously need to talk about how we’re going to announce this transition. And Steve wants to see you as soon as possible.”
“Look, thanks for the opportunity. I’m honored. But I don’t want this role. Why would I? I love my current job, and there are tons of important things that still need to be done.”
“I don’t think this is optional,” she says, looking sympathetic. “This came straight from Steve. He chose you personally, so you’ll have to talk with him.”
I stand up and reiterate firmly, “No, really. Thanks for thinking of me, but I’ve already got a great job. Good luck finding someone else.”
Minutes later, Laura is walking me to Building 2, the tallest building on campus. I’m angry at myself for getting sucked into this insanity.
If I run now, I’m pretty sure she wouldn’t be able to catch me, but then what? Steve would just send a whole squad of hr goons to fetch me.
I don’t say anything, definitely not feeling like small talk anymore. Laura doesn’t seem to care, walking briskly beside me, nose buried in her phone, occasionally gesturing directions.
She finds Steve’s office without ever looking up, obviously having made this walk many times before.
This floor is warm and inviting, furnished just like it was in the 1920s, when the building was constructed. With dark hardwood floors and stained glass windows, it’s from an era when everyone wore suits and smoked cigars in their offices. The company was booming then—Parts Unlimited made various widgets inside almost every make of automobile, when horses were being vanquished from daily life.
Steve has a corner office, where a no-nonsense woman is keeping guard. She’s about forty, radiating cheerfulness and a sense of organization and order. Her desk is tidy, with Post-it notes everywhere on the wall. There’s a coffee mug with the words “Don’t Mess With Stacy” by her keyboard.
“Hi, Laura,” she says, looking up from her computer. “Busy day, huh? So, this is Bill?”
“Yep. In the flesh,” Laura replies, smiling.
To me she says, “Stacy keeps Steve in line. You’ll grow to know her well, I suspect. You and I can finish up later.” Then she leaves.
Stacy smiles at me. “Pleasure. I’ve heard a lot about you already. Steve is expecting you.” She points to his door.
I immediately like her. And I think about what I’ve just learned. It’s been a busy day for Laura. Stacy and Laura are on very familiar terms. Steve has hr on speed dial. Apparently, people who work for Steve don’t last long.
Great.
Walking in, I’m a little surprised to find Steve’s office looks just like Laura’s. It’s the same size as my boss’ office—or rather, my ex-boss’ office—and potentially my new office if I’m stupid, which I am not.
Maybe I was expecting Persian rugs, water fountains, and large sculptures everywhere. Instead, there are photos on the wall of a small propeller airplane, his smiling family, and, to my surprise, one of him in a US Army uniform on a runway somewhere tropical. I note with surprise the insignia visible on his lapels.
So, Steve was a major.
He is sitting behind his desk, scrutinizing what appear to be paper spreadsheets. There’s a laptop open behind him, displaying a browser full of stock graphs.
“Bill, good to see you again,” he says, standing and shaking my hand. “It’s been a long time. About five years, right? It was after you pulled off that amazing project to integrate one of the manufacturing acquisitions. I trust life has been treating you well?”
I’m surprised and a bit flattered that he remembered our brief interaction, especially when it was so long ago. I smile in return, saying, “Yes, very well, thank you. I’m amazed you remember something so far back.”
“You think we give out awards like that t
o just anyone?” he says earnestly. “That was an important project. To make that acquisition pay off, we needed to nail it, which you and your team did superbly.
“I’m sure Laura has told you a bit about the organizational changes I’ve made. You know Luke and Damon are no longer with the company. I intend to fill the cio position eventually, but in the meantime, all of it will report to me.”
He continues, brisk and businesslike, “However, with Damon’s departure, I have an organizational hole I need to fill. Based on our research, you’re clearly the best candidate to take over as vp of it Operations.”
As if he just remembered, he says, “You were a Marine. When and where?”
I announce automatically, “22nd Marine Expeditionary Unit. Sergeant. I was in for six years but never saw combat.”
Remembering how I joined the Marines as a cocky eighteen-year-old, I say with a small smile, “The Corps really straightened me out—I owe them a lot, but I sure hope neither of my sons join under the same conditions I did.”
“I bet,” Steve laughs. “I was in the Army for eight years myself, slightly longer than I was obligated to. But I didn’t mind. rotc was the only way I could pay for college, and they treated me well.”
He adds, “They didn’t coddle us like they did you Marines, but I still can’t complain.”
I laugh, finding myself liking him. This is the longest interaction we’ve had. I suddenly wonder if this is what politicians are like.
I try to stay focused on why he summoned me here: He’s going to ask me to undertake some kamikaze mission.
“Here’s the situation,” he says, motioning me to have a seat at his conference table. “As I’m sure you’re aware, we must regain profitability. To do that, we need to increase our market share and average order sizes. Our retail competitors are kicking our ass. The whole world knows this, which is why our stock price is half what it was three years ago.”
He continues, “Project Phoenix is essential to closing the gap with the competition, so we can finally do what the competition has been doing for years. Customers need to be able to buy from us from wherever they want, whether it’s on the Internet or in our retail stores. Otherwise, we’ll soon have no customers, at all.”
