Monthly Archives: January 2010

Hollrr and Innovative Products

A new website Hollrr makes it much easier to track consumer products that are getting traction. Hollrr works by people identifying products they love and others then adding their own views, it serves as a social forum to evaluating often new and innovative products. Since project management is often focused on driving innovation, Hollrr can provide ideas of tools to use and concepts to consider:

The Science of Motivation and ROWE

Very interesting on the science of motivation from the TED series. It goes against conventional wisdom as is well presented. The comments at the end regarding Results Oriented Work Environments (ROWE) are a unique way to think about the workplace.

Outsourcing trends and project management

The internet is changing the trade-off between outsourcing and doing work in-house. It is important for project managers to be aware of this trend. Previously, there were many reasons to do work in-house and only outsource in a very limited set of situations, but now a number of the problems of outsourcing have been either reduced or eliminated by the internet. Project managers should reevaluate when they want to outsource, as there are now many more opportunities than even 5 years ago, primarily driven by technological changes.

The Nature of the Firm

In 1937, Ronald Course, first published his seminal article on the Nature of the Firm and the debate has being ongoing within the field of economics ever since. Basically, there is debate over why firms exist and what efficiencies (if any) they provide over having everyone just work individually on a freelance basis. Some of the reasons for firms to exist include:

  • Reputation – firms have brands and reputation that would be costly for individuals to create and maintain.
  • Search costs – its pretty expensive to launch a Request For Proposal process every time you need make a legal decision, and having an in-house legal team might be more efficient.
  • Friction causes by external contracting – every time you contract with someone outside the firm there are legal costs and a risk that the contract may not be executed as expected. Whereas, within the firm the process is likely to be much smoother.

The impact of technology on outsourcing

The internet is changing this. All of the problems above that justify the existence of firms are starting to be solved by the internet. Reputation used to be relatively hard and costly to measure, but now sites like Amazon can provide informative product reviews, whilst sites like Yelp  in the US, do the same for businesses. Search costs are reducing as sites like Google and Bing make it much easier to find anything. Friction costs haven’t gone away, contracts still exist, but intermediaries now offer services that make this process easier – Mechanical Turk, Elance and Seed are all example of this. Mechanical Turk is Amazon’s tool for having individuals do low level work, such as checking if a photo is correctly titled and getting paid $0.02 per photo. Elance offers outsourcing of larger tasks like preparing a PowerPoint presentation. Seed is AOL’s effort to outsource content creation, Seed submits the description of what sort of news article or photograph is required, for example an article on ‘When Following Warren Buffett is a Mistake’ and anyone can then submit that article and receive a share of the advertising revenue it generates. In all of these cases, the technology is prompting greater outsourcing:

Solution Benefit Previous Solution
Mechanical Turk Outsource low-level analytics Hire the capability in-house
Elance Outsource discrete pieces of work Hire the capability in-house
Seed Outsource writing of online articles Hire the capability in-house

There are still barriers to outsourcing, notably that the quality of what is delivered remains hard to measure objectively in many cases, but there are significantly less blockers than previously and project managers should (re)consider the new opportunities in this area. 

Business Models and Technology

In 1998 it cost $270 to stream a 2 hour movie over the internet, today it costs $0.05 (see here for the analysis).

It’s interesting to think about how that plays out in the context of YouTube, YouTube is often called out as being a money pit for Google, with an estimated $470 million loss last year from Credit Suisse. However, much of that loss was bandwith costs which are falling exponentially (see above) and revenue is growing c. 20%.

Therefore, as with much of the internet today the business model is dynamic. Online video may not be economic today, but with falling costs and growing revenues, entering today and establishing market leadership may be a smart move to establish a credible position for when the economics of the industry turn.

Batch vs. Job Processes – Becoming More Efficient

Projects, and project managers, can sometimes learn from the operations and process literature. One key distinction is between a batch and a job process. A job process is one-off, whereas a batch process groups a number of items together and processes them at once. For example, a lot of people read email as soon as it comes into their inbox (job processing) whereas waiting a few hours and reading a group of emails together (batch processing) can be more efficient. The same can be true of administrative functions such as budget approvals and timesheeting.

It’s worth thinking about the activities you do and understanding whether they make more sense done on ad hoc basis, or rather grouping similar items together and using batch processing. Of course, there’s no right answer, since it depends on the nature of the task (time sensitivity, whether economies of scale exist etc.) however, I would suggest that without taking a step back sometimes job processing is used when batch processing might be more efficient.

2010 US Census and Project Management

We know that many projects fail, perhaps the more interesting follow-up question is why this happens. Following on from investigations of project failure at the Sydney Opera House and the H1N1 Vaccination Program this post examines the 2010 US Census which has experienced several project management problems in recent years. The US Census occurs every ten years to count the number of people in America so as to inform policy discussions, allocate budget and apportion seats to the House of Representatives.

Whilst it’s true that the US Census will happen (a delay to the program would be illegal) elements of the project are a failure. One of the goals of this census was to use automation to “improve coverage accuracy and efficiency”, in part by providing 500,000 handheld computing device to eliminate the need for those walking the streets collecting census data to print out questionnaires and maps. This process was “relying as never before on contractor provided technology”. $3 billion of the $11.5 billion census budget was to be spent on automation including the devices, which cost approximately $600 million. However in early testing in certain locations these devices experienced 27% downtime as well as other issues.

Reports from the US Government Accountability Office showed “an increased probability that the system would not be delivered on time and within budget or perform as expected.”

This situation occurred for the following reasons:

Lack of clear requirements

“The contractor is overwhelmed by a substantial increase in requirements having thousands of unreconciled (that is, not validated) requirements.”

Poor risk management

Some risks have been identified some risks, but there is no formal process or resource allocation to mitigate them should they occur. “Because they did not develop complete mitigation plans, the project team could not ensure that for a given risk, techniques and methods would be invoked to avoid, reduce and control the probability of the occurrence.”

Partial cost management plan

The program had initiated Earned Value, but not selected detailed performance measures to implement full cost management.

Executive reporting and communication gaps

The review calls for reporting on a “periodic and event driven basis”, but there was no evidence to document that risks were discussed with executives.

Of these issues the primary one appears to have been requirements management, because of the reliance on a vendor to provide the technology, this was a critical part of the process. It is not enough to give the vendor requirements, this was happening. Indeed the vendor received thousands of requirements, the need is for consolidation and validation of requirements.

It is likely that imprecise requirements is what caused cost overruns. Precise requirements could also have supported risk management because the timing of requirements and the mitigation strategies if they were not met could have been part of the process.

Whilst project management is a complex and interconnected discipline, it appears that similar to the example of the Sydney Opera House, imprecise requirements and scope management were a significant part of the problem.

Good Slate Article on Medical Innovation

A good article in Slate on driving innovation through incentives, the research it references focuses on medical research, but the theme is familiar. You get the behaviour that you incentivize.


“Put all your eggs in one basket, and watch that basket.” Mark Twain

“[Diversification is] the only free lunch in this whole gosh-darned business.” Jim Cramer

Mathematics proves that for a set of risky projects, a combination of projects will offer a greater return for the same risk than a single project. Financial theory also suggest that after adding 20 stocks to a portfolio the benefit of diversification tapers off significantly, I haven’t seen the same analysis performed for projects (the data would be much harder to obtain), but conceptually it is also true that there is a number of projects beyond which diversification ceases to add value.

Is your portfolio taking advantage of this free lunch? Are you undertaking a sufficiently large, sufficiently diverse set of projects?

Dunbar’s Number: 150

British anthropologist Robin Dunbar believes that humans can only maintain about 150 relationships due to the constraints of neocortex size. To be precise, he actually reached the number 148, but rounded it – and the statistical margin of error on his research means the true value could lie anywhere between 100 and 230.

As the size of many people’s social networks on Facebook, Orkut and other tools expand well beyond 150 are we sacrificing quality for quantity?