by Gene Kim
Wes snorts. To Sarah, he says, “You’re kidding, right? Do you understand what we just achieved with Unicorn, and how fast we did it? What you’re describing isn’t that difficult, compared to what we just pulled off.”
The next day, Wes walks in wearing an uncharacteristically glum face. “Uh, boss. I hate to say it, but I don’t think it can be done.”
When I ask him to explain, he says, “To do what our competitor is doing, we’d have to completely rewrite our manufacturing resource planning system that supports all the plants. It’s an old mainframe application that we’ve used for decades. We outsourced it three years ago. Mostly because old people like you were going to retire soon.
“No offense,” he adds. “We laid off many of our mainframe people years ago—they were making salaries way above the norm. Some outsourcer convinced our cio at the time that they had the gray-haired workforce that could keep our application on life-support until we retired it. Our plan was that we would replace with a newer erp system, but obviously, we never got around to it.”
“Dammit, we’re the customer and they’re our supplier,” I say. “Tell them that we’re paying them not just to maintain the application but also to make any needed business changes. According to Sarah, we need this change. So find out how much they want to charge us and how long we’ll have to wait.”
“I did that,” Wes says, pulling out a ream of paper from under his arm. “Here’s the proposal they finally sent after I managed to get the stupid account manager out of the way so I could actually talk to one of the technical analysts.
“They want six months to gather the requirements, another nine months to develop and test, and if we’re lucky, we might be able to put it into production one year from now,” he continues. “The problem is, the resources we need aren’t available until June. So, we’re talking about eighteen months. Minimum. To even start the process, they would need $50k for the feasibility study and to secure a slot in their development schedule.”
Wes is bright red now, shaking his head. “That worthless account manager keeps insisting that the contract just won’t allow him to help us. Bastard. Obviously, his job is to make sure that everything that can be billed for is, and to dissuade us from doing anything not on the contract, like development.”
I exhale loudly, thinking through the implications. The constraint preventing us from going where we need to go is now outside our organization. But if it’s outside the organization, what can we possibly do? We can’t convince an outsourcer to change their priorities or their management practices as we’ve done.
Suddenly, a glimmer of an idea hits me.
“How many people do they have allocated to our account?” I ask.
“I don’t know,” Wes says. “I think there are six people assigned at thirty percent allocation. It probably depends on their role.”
“Get Patty in here, along with a copy of the contract, and let’s work through the math. And see if you can grab someone from Purchasing, too. I have an audacious proposal that I’d like to explore.”
“Who outsourced the mrp application?” Steve asks from behind his desk.
I’m sitting in Steve’s office with Chris, Wes, and Patty, with Sarah standing off to the side, whom I try to ignore.
I explain our idea to Steve again. “Many years ago, we decided that this application wasn’t a critical part of the business, so we outsourced it to cut costs. Obviously, they didn’t view it as a core competency.”
“Well, it’s obviously a core competency now!” replies Steve. “Right now, that outsourcer is holding us hostage, preventing us from doing something that needs to be done. They’re more than just a roadblock. They’re now jeopardizing our future.”
I nod. “In short, we’d like to break the outsourcing contract early, bringing those resources back into the company. We’re talking about approximately six people, some of whom are still onsite. To buy out the remainder of the contract two years early would be almost one million dollars, and we would regain complete control of the mrp application and underlying infrastructure. Everyone on this team believes this is the right thing to do, and we’ve even got the initial blessing from Dick’s team.”
I hold my breath. I just threw out a very a big number. It’s considerably bigger than the budget increase I asked for two months ago when I got thrown out of this office.
I quickly continue, “Chris believes that once this mrp application is back in-house, we could build an interface to Unicorn. We would then start building the manufacturing capability to move us from ‘build to inventory’ to ‘build to order,’ which would enable us to provide the custom kits as Sarah requested. If we execute everything flawlessly, and the integration with the order entry and inventory management systems goes as planned, we could match what our competitors are doing in about ninety days.”
Out of the corner of my eye, I can see the wheels turning furiously in Sarah’s head.
Steve doesn’t shoot down the idea down right away. “Okay, you have my attention. What are the top risks?”
Chris takes this one. “The outsourcer may have made big changes to the code base that we don’t know about, which would slow down the development schedule. But my personal belief is that this risk is minimal. Based on their behavior, I don’t think they made any significant changes to functionality.
“I’m not worried about the technical challenges,” he continues. “The mrp was not designed for large batch sizes and certainly not batch sizes of one that we’re talking about here. But I’m sure we can make something work short-term and figure out a long-term strategy as we go.”
When Chris finishes, Patty adds, “The outsourcer could also decide to make the transition back to us difficult, and there could be animosity from the affected engineers. There were a lot of hard feelings when we announced the contract—among other things, their pay was cut the instant they switched from being Parts Unlimited employees to being a vendor.”
She continues. “We should get John involved right away, because we’ll need to take away access from all the outsourcer staff that we’re not bringing back in.”
Wes laughs, saying, “I’d like to personally delete the login credentials of that jackass account manager. He’s a jerk.”
Steve is listening attentively. He then turns to Sarah and asks, “Your thoughts on the team’s proposal?”
She says nothing for several moments but eventually says imperiously, “I think we need to check with Bob Strauss and get full board approval before we undertake a project this big and risky. Given the previous performance of it, this could jeopardize all of our manufacturing operations, which is more risk than I think we should take on. In short, I personally do not support this proposal.”
Steve studies Sarah, saying with a thin-lipped smile, “Remember that you work for me, not Bob. If you can’t work within that arrangement, I will need your immediate resignation.”
Sarah turns white, her jaw dropping, obviously realizing she’s badly misplayed her hand.
Struggling to regain her composure, she laughs nervously at Steve’s comment, but no one else joins in. I furtively look at my colleagues, and see that, like me, their eyes are wide, watching this drama unfold.
Steve continues, “On the contrary, thanks to it, we may no longer need to consider all the onerous strategic options that you and Bob are preparing, but your point is well taken.”
To the rest of us, Steve says, “I’m assigning you one of Dick’s best people and our corporate counsel. They’ll help you flawlessly execute this project and make sure we use every trick in the book to get what we need from the outsourcer. I’ll make sure Dick gives this project his personal attention.”
Sarah’s eyes widen even further. “That’s an excellent idea, Steve. That would significantly reduce our risk here. I think Bob will really like it.”
The expression on Steve’s face suggests that his patience for her theatrics is nearly at an end.
He asks us if there’s an
ything else we need. When there isn’t, he excuses everyone but asks Sarah to remain behind.
As we leave, I sneak a peek behind us. Sarah is sitting down where I previously sat, nervously watching everyone file out. Catching her eye, I smile at her and close the door.
CHAPTER 35
• Friday, January 9
I grip the steering wheel nervously as I drive to Steve’s house. He’s throwing a party for everyone who has worked so hard on Phoenix and Unicorn, inviting people from both the business and it. The roads are uncharacteristically icy, with no melting even after weeks of sunshine. It was treacherous enough that Paige and I decided to stay at home for New Year’s Eve instead of celebrating with her family as we usually do.
It’s been over a month since that last meeting with Steve and Sarah. We haven’t seen much of Sarah since then.
As I’m driving, I contemplate how quiet it’s been. I keep expecting someone to call in another Sev 1 incident. Instead, my phone just sits in the cup holder, completely silent—like yesterday—and the day before that.
I can’t say that I miss all of the excitement, but there are times now when I literally have nothing to do.
Thankfully, I’m now coaching all my managers through our two-week improvement cycles, according to the Improvement Kata, which keeps me from feeling totally useless. I’m especially proud that for an entire month, my group hit our target of spending fifteen percent of our time on preventive infrastructure projects. And it shows.
We’re using the entire budget we’ve been allocated. We’re closing our monitoring gaps, we’ve refactored or replaced our top ten fragile artifacts so that they’re more stable, and the flow of planned work is faster than ever. Against my expectations, everyone jumped enthusiastically on Project Narwhal otherwise known as the “Simian Army Chaos Monkey” project. Like the legendary stories of the original Apple Mac os and Netflix cloud delivery infrastructure, we deployed code that routinely created large-scale faults, thus randomly killing processes or entire servers.
Of course, the result was all hell breaking loose for an entire week as our test, and occasionally, production infrastructure crashed like a house of cards. But, over the following weeks, as Development and it Operations worked together to make our code and infrastructure more resilient to failures, we truly had it services that were resilient, rugged, and durable.
John loved this, and started a new project called “Evil Chaos Monkey.” Instead of generating operational faults in production, it would constantly try to exploit security holes, fuzz our applications with storms of malformed packets, try to install backdoors, gain access to confidential data, and all sorts of other nefarious attacks.
Of course, Wes tried to stop this. He insisted that we schedule penetration tests into predefined time frames. However, I convinced him this is the fastest means to institutionalize Erik’s Third Way. We need to create a culture that reinforces the value of taking risks and learning from failure and the need for repetition and practice to create mastery.
I don’t want posters about quality and security. I want improvement of our daily work showing up where it needs to be: in our daily work.
John’s team developed tools that stress-tested every test and production environment with a continual barrage of attacks. And like when we first released the chaos monkey, immediately over half their time was spent fixing security holes and hardening the code. After several weeks, the developers were deservedly proud of their work, successfully fending off everything that John’s team was able to throw at them.
These are the thoughts going through my head as I wind my way toward Steve’s house. The sprawling grounds are all covered by snow, hiding the immaculately manicured lawns.
When I ring the doorbell an hour early, as Steve requested, I hear loud barking and then the sounds of a very large dog slipping on a hardwood floor, crashing into the door.
“Come on in, Bill. It’s great seeing you again,” Steve says, holding the dog’s collar and gesturing toward the kitchen with a skewer of vegetables in the other hand. When we get to the kitchen, he points to the counter in front of him, where a large metal bucket of ice sits, full of bottles. “You want anything to drink? Beer? Soda? Scotch?” Looking around, he adds, “Margarita?”
I grab a beer out of the bucket, thank him, and then give him a quick summary of my somewhat boring day as he moves me to the living room.
Steve smiles. “Thanks for coming over early. We’re going to have a record-breaking quarter. We couldn’t have done it without you and Chris. For the first time in years, our market share is up! You know, I wish I could see the looks on our competitors’ faces. They’re probably scrambling, trying to figure out how we did it.”
Steve is smiling broadly. “I actually saw Dick crack a smile the other day. Well, he showed his teeth, at least. Project Unicorn and that new project, Narwhal, are helping us understand what are customers actually want. Our average order size just hit a record last week, and Dick said that Unicorn had the fastest payback of any project we’ve done in recent memory.”
He continues, “The analysts are starting to love us again. One told me last week that if we execute well, it’ll be very difficult for our nonintegrated competitors to follow us. No doubt, they’ll be raising our stock price targets, and Bob is finally withdrawing his support to split up the company.”
“Really?” I say, raising my eyebrows in surprise. “I thought that Sarah was convinced that splitting up the company was the only way for us to survive.”
“Ah, yes…” he says. “She’s decided to look for other options elsewhere and is on a leave of absence.”
My jaw drops. If I’m hearing this correctly, Sarah is being eased out of the company. I smile.
“By the way,” Steve says. “Project Narwhal? Project Unicorn? Can’t you guys come up with better names than that?”
I laugh. “No one is more upset about it than Maggie. She’s convinced that all her product managers are laughing at her. She’s told her husband that if the next project is called ‘Hello Kitty,’ she’ll quit.”
He laughs. “As you can guess, though, I didn’t ask you to come early to critique your project names. Have a seat.”
As I settle into a cushy armchair, he starts to explain. “We’ve had an open position for the cio for months. You’ve been a part of that interview process. What have you thought of the candidates?”
“Honestly? I was disappointed,” I say slowly. “They were all senior people with a lot more experience than me. They kept talking about tiny parts of the problem. They proposed only a fraction of what we’ve done in the past couple of months here at Parts Unlimited. I feel that if they signed on, we’d be at considerable risk of going back to all the bad old ways.”
“I agree with you, Bill. Which is why I’ve decided that we should fill this position internally. You have any suggestions on who we should promote?”
I go through the possible candidates in my mind. It’s not a long list. “I think Chris is the obvious choice. He was the driving force behind Unicorn, as well as Narwhal. If it weren’t for his leadership, I’m pretty sure we’d still be stuck dead in the water.”
He smiles. “You know, it’s funny. Everyone thought you’d say that. However, I won’t be following your recommendations.”
He continues, “This is going to take a while to explain. You were everyone’s unanimous choice to become cio. But to be brutally candid, I don’t want you there.”
Reacting to my obvious distress, he says, “Hey, relax. Let me explain. My board holds me responsible for making the best use of company resources to achieve the goals that maximize shareholder value. My primary job is to lead my management team to make that happen.”
He stands up, walking over to the window, looking out at the snow-covered yard. “You’ve helped me see that it is not merely a department. Instead, it’s pervasive, like electricity. It’s a skill, like being able to read or do math. Here at Parts Unlimited, we don’t have a centrali
zed reading or math department—we expect everyone we hire to have some mastery of it. Understanding what technology can and can’t do has become a core competency that every part of this business must have. If any of my business managers are leading a team or a project without that skill, they will fail.”
He continues, “I need each and every one of my business managers to take calculated risks, without jeopardizing the entire enterprise. People everywhere in the business are using technology, so it’s like the Wild West again—for better or for worse. Businesses that can’t learn to compete in this new world will perish.”
Turning back to me, he says, “In order for Parts Unlimited to survive, the business and it can’t make decisions exclusive of each other. I don’t know where this is all going, but I know the way we’re organized now, we’re not firing on all cylinders.
“I’ve been discussing this with my board for the last couple of months,” he says, sitting down, staring right at me. I know this expression. It’s like my first meeting with him last year. This is what he looks like when he’s trying to seduce someone. “I’m impressed with your performance and what you’ve done with it. You used the same skills that I would expect anyone leading one of our large manufacturing divisions to use.
“Now I want to see you grow and learn, and build new skills to best help all of Parts Unlimited. If you’re up to it, I am prepared to invest in you. I want to put you on a fast track, two-year plan. You’ll do rotations in sales and marketing, manage a plant, get international experience, manage the relationships of our most critical suppliers, and manage our supply chain. Trust me, this will not be a vacation. You’re going to need help—a lot of it. Erik has kindly agreed to mentor you, because we both believe this will be the most difficult thing you’ve ever done.
“But,” he continues, “if you achieve each of fifteen specific performance targets we’ve laid out for you, we’ll move you into a provisional Chief Operating Officer role in two years, where you’ll work closely with Dick while he gets ready to retire. If you work hard, get results and play your cards right, you’ll be the next coo of the company in three years.”
