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Testing For Validity in Our Assumptions in Performance Management

At Bridgeport Digital, we employ scrum methodology as a tool for problem solving in our company. In scrum, we create assumptions and enforce transparency by constructing those assumptions unambiguously by writing them down for everyone to see before testing them out. For the assumptions that we learn are incorrect, we make a point to revisit the decision it’s tied to. It’s more important to verify the assumptions we use than have a process that delays decisions and as a result, assumptions aren’t verified until the end. If our assumption is wrong, then our decision is wrong and we’ve left no space to pivot. Yet, if we verify our assumptions quickly by establishing which assumptions are true or false, we make it possible to change course (and our decisions) to produce a different outcome and we’ll have the time to do so.

“Whosoever desires constant success must change his conduct with the times.” - Niccolo Machiavelli

Changing Your Mindset to Change The Process

Let me give you an example to make it easier. Tesla wants to reduce the carbon footprint for everyone on earth. They want everyone to use renewable energies for everyday needs. This is the goal they have in mind. Tesla didn’t know if people were ready to buy and switch to electric cars, and so, they broke it down into stages.

  • Firstly, in stage 1, before Tesla decided to go into full production…they built a specialty car for the average consumer, like a sports car. (They wanted to see if rich people would buy the sports car and by doing so they tested an assumption.)

    • They asked the question, “Can we compete with regular cars first?”

  • Next, in the 2nd stage, Tesla started out with their model “S;” a luxury car. (It met all the performance requirements for all the sports cars that people buy and it was costly; the base model was 130,000 dollars.)

    • However, they were able to test the assumptions they had about the market and their customers. They learned that rich people would buy the model, despite how expensive it was.

  • Now, in the 3rd stage, they substituted a luxury car with one that’s an “EV” model and assumed people would buy it.

  • Ergo, next in the 4th stage, they tested another assumption; which stated that anyone who wasn’t rich would buy an electric car too if they made a comparable model.

  • It was still too risky, so they formed a hypothesis for stage 5.

    • Their hypothesis stated that if Tesla offered people an option to pre-order the car and enough people pre-ordered it, then they’d know the market was ready for the average consumer to buy an electric car, instead of buying a gas powered car.

    • And so, they put the option to pre-order and so many people signed up to buy the car there was a 3 year waiting list.

Again, their whole business model was based on making assumptions about what customers value and then holding tests to prove or disprove that their assumptions were correct or incorrect. Many people say that Elon Musk is a genius but what he does is conduct experiments by breaking everything down, anyone can do this.

Additionally, I’m always confronted with Apple because many people believe this legend that Steve Jobs was a clairvoyant, know-it-all who ignored all the advice he was given and just knew what customers would want and proceeded to build it. People believe this is what made Apple as successful as it is. The thing is, I live only 15 minutes away from Apple [Park], (the corporate headquarters of Apple Inc.) and I’ve been to the campus many times. The myth about Steve Jobs being a know-it-all is exactly that, a myth. On their campus, they have busloads of people who go in every week to give user feedback; Apple does this on a regular basis.

“To be successful, innovation is not just about value creation, but value capture.” - Jay Samit

The idea is, when they receive user feedback it’s because Apple makes assumptions about what customers want and form hypotheses to test them out. To further explain, what’s important is getting feedback, so companies know what their customers want. Most often, the product companies plan to build for customers isn’t what customers value the most. Once companies learn what their customers don’t value, they can stop building it.

In essence, people think that switching to scrum will make a development cycle faster but it doesn’t. It seems faster but what you do is hold experiments to figure out what customers don’t want to avoid building it. You do less scope than you would in a traditional project because in a traditional project, nothing is tested; instead, you implement the requirements. It appears faster because you do less work but that’s what makes agile so efficient.

Talking points:

  • What do you need to change in your process to use scrum? (From what we’ve talked about so far.)

  • What is the pace of your organization? Does it need improvement?

  • Does your company have people who organize everything to change the process to scrum?

In order for companies to perform scrum within their organizations, what they need to do is change their mindset. At Bridgeport Digital, what we’ve done so far is develop the way we think about what we want to deliver and how we want to test those things out. The mindset that we have is not about trying to decipher how to scale an entire situation before you’ve even visited it; it’s about the way we think.

Companies must be willing to change their mindset in order to truly implement scrum methodology; times are constantly changing and if companies want to be successful, they must be willing to change and grow with the times. As it relates to a mindset that is changing constantly, let’s think about when we follow a GPS. With a GPS, it says what direction to take and people follow wherever it leads. Sometimes because we’re distracted, we miss directions or the app glitches and it will change directions. People are typically taught that when there’s something we’re supposed to know, it’s supposed to be right or wrong. However, in this case the GPS modifies it based upon the other options that are available; many times, unless there are one-way streets or dead end streets, there are other options that are available. This is a practice that uses scrum, testing out the hypothesis and adjusting based on current information and new incoming information.

Furthermore, pertaining to the GPS, sometimes it doesn’t have the best directions. There are times we end up in a traffic jam or later on we discover there was an easier way to reach a destination. Nevertheless, there are other factors involved. Even so, it’s better to have a route with many options; it’s the same concept with scrum methodology.

“When you train your employees to be risk averse, then you’re preparing your whole company to be reward challenged.” - Morgan Spurlock

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