Studio Operations & Forecasting: The Good, the Bad & the Ugly - NYC 2019

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Rob Harr STUDIO OPERATIONS & FORECASTING: THE GOOD, THE BAD & THE UGLY @robertharr

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GOOD MORNING!!

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#DaytonStrong

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Digital Diversity Days. November in Dayton

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SSID: harvest_guest Password: getharvest W iﬁ

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Workshop Guarantee.

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Studio Operations & Forecasting: The Good, the Bad & the Ugly

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Studio Operations & Forecasting: The Good, the Bad & the Ugly Or… What I wish someone had told me about running a studio 10 years ago.

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YMMV!

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I AM NOT A LAWYER! This is really small print that Rob Harr is not a lawyer. All of the things that he says should be checked with an actual lawyer who know what the heck they are doing. This is not a time that I would suggest that you “Better call Saul”.

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Speak Up

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Collaborative Notes Link in slack.

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Why are you here?

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Agenda Part 1: Backstory Part 2: Designing Operations Part 3: Lunch! Part 4: Forecasting Part 5: Outcomes Part 6: Anything goes

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What is this?

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THIS IS NOT A TOOLING TALK!

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THIS IS NOT A PRICING TALK!

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Hourly web work for hire.

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So what is this then?

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THIS IS A STUDIO OPERATIONS WORKSHOP!

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What is operations?

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Figure out what you make, then spend less than that!

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Operations is the HOW between SALES and PROFIT.

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Operations is more of a discipline then it is magic.

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Discipline > Motivation TAN GEN T!

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I believe the single biggest win for operations is forecasting.

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For us, all of our operations centers around accurate forecasting.

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GIANT SPOLIER!

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Studio Operations & Forecasting BACKSTORY

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Become a Real Company™ Find a great client Get some computers

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Become a Real Company™ Find an event to speak at Figure out a vacation policy Become a Real Company™

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Writing the codes.

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FORGE

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Employee #1

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Failure?

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Story

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Web software studio specializing in development and design.

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Hourly work for hire.

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“You won’t be in control of your business until you can accurately predict it.” ~Geoff Mandeville

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I am a HOW Person.

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Rob Harr Ben Callahan

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Rob Harr Ben Callahan

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PM Buddy.

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PM Buddy.

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Optimized for sustainability and sleeping at night Goal

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Running a business is hard.

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Running a proﬁtable business is even harder.

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Running a proﬁtable business while treating people like humans is a constant struggle.

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Our Craft What we believe. Business

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Our Craft The Truth. Business

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Our Craft It’s all about the people. Business People

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Project don’t fail for technical or design reasons, they fail because of the people involved.

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There is no “One Way.”

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Why I do this.

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Genuinely take  care of our people

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Genuinely take  care of our people Genuinely succeed  in our business

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Genuinely take  care of our people Genuinely succeed  in our business

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Succeed in business by taking care of our people.

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Studio Operations & Forecasting DESIGNING OPERATIONS

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To not be needed at Sparkbox. Goal

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Autonomy. Goal

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Under a 10 handicap. Goal

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“A company can seize extraordinary opportunities only if it is very good at the ordinary operations.” -Marcel Telles

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This is a cash intensive business.

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Good Operations is everyones job.

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Resources Talent

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I am in the talent business.

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People are our biggest asset.

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2 kinds of Companies: Talent Producers Talent Consumers

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The employee arrangement Sarah 2080 hours a year Developer Salary Vacation Beneﬁts

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Our Fake Team $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly cost

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Our Fake Team - Individual rates - 4x $84 $152 $192 $112 Bill Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost

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Blended Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average   Hourly Cost 4x Multiplier $135 Bill Rate Our Fake Team

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Value Hourly Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average   Hourly Cost ? Fuzzy Math $185 Bill Rate Our Fake Team

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People have different values in different contexts. TAN GEN T!

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20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising 20% Net Margin

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20% 5% 6% 11% 58% Your Budget 58% Compensation

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Growth costs $$$$

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Apprenticeships.

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6 months

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For most of us it comes down to staff utilization.

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Hours per week?

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32 or More?

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What gets measured gets done. TAN GEN T!

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Different target utilization by role.

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80%

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Devs 95% Designers 95% PMs 60%

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Slack Projects and Maintenance Agreements TAN GEN T!

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Investment projects. TAN GEN T!

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There are seasons for things.

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Surviving Growing Thriving

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Surviving Growing Thriving

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The people and clients you start with will not be the people and clients you end with.

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Ending well.

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The end of things often colors how they view the whole.

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Treating people like humans should not be a differentiator in our businesses. But it is.

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Alumni.

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Designing efﬁcient companies.

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Maximizing overhead value.

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Freedom is not free.

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I am a simple man. I love simple solutions.

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Design your week.

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Process is for people.

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Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s All-Team Demo Forecasting updated

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Monday

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Weekly Breakfast M onday

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Hit list M onday

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Timesheets M onday

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Projects Stand-up M onday

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Invoicing M onday

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Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices

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Tuesday

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Late Invoices Tuesday

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Sales Report Tuesday

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Tuesday

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Proﬁtable Projects vs Proﬁtable Portfolio TAN GEN T!

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Monday Tuesday Wednesday Thursday Friday Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices

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Wednesday

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MicroCash W ednesday

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Micro-Cash ﬂow

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Micro-Cash ﬂow

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Future P&L W ednesday

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Micro-Cash ﬂow

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Micro-Cash ﬂow

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$$$ Meeting W ednesday

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Humans Meeting W ednesday

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Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices

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Thursday

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Director 1:1’s Thursday

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Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices

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Friday

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All-Team Demo Friday

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Forecasting Updates Friday

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Selfcare TAN GEN T!

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Monday Tuesday Wednesday Thursday Friday Morning yoga Coffee Afternoon Golf league Morning Lifting Coffee Morning Lifting Coffee Weekly Breakfast Blocked Lunch TAN GEN T!

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Smart Hours TAN GEN T!

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Lifestyle Hires TAN GEN T!

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Executive Assistant TAN GEN T!

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Director of Humans TAN GEN T!

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You will always have something to do. TAN GEN T!

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TAN GEN T!

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It is ok to punt to future you. TAN GEN T!

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Monday Tuesday Wednesday Thursday Friday All-Team Demo Forecasting updated MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices

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The other 20%

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Last year. Story

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✈ LA -> SF -> Seattle ✈ Story

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Storey

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Spirit Week. Story

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Story

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Story

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Story

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Story

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Story

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Story

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Wearing in the rut.

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“Luck has the smell of Perspiration” -Mark Schlereth

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“Luck is what happens when preparation meets opportunity.” -Oprah

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Month Close Client Strategy Meetings OPS Team Meeting M onth

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Estimated Taxes Semi-Annual Tax planning Q uarter

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Year End Close Staff Retreat Owner Retreat Year

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Optimized for Sustainability and Sleeping at Night

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What are you optimizing for?

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OPS Cadence Exercise

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Studio Operations & Forecasting LUNCH TIME!

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Studio Operations & Forecasting FORECASTING

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image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at

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What we think of as magic is what we have yet to completely understand.

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Forecasting is more of a discipline then it is magic.

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Discipline > Motivation

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Three simple steps.

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Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust

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Step 1: Measure Yesterday

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The ﬁrst step in developing this superpower is to be able to measure what happened yesterday.

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You have to get this right.

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Metrics

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Capacity

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Utilization

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Step 2: Predict Tomorrow

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How many hours, on which projects during the week, and time out of the ofﬁce.

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This is a team effort.

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Forecasting is an operations exercise, not a project management exercise.

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Develop a forecasting cadence.

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I think weekly works best.

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Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business

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Step 3: Grade and Adjust

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Using letter grades.

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Ask good questions.

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Accuracy vs Precision TAN GEN T!

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Context Matters TAN GEN T!

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TAN GEN T!

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It is really that simple…

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It is really that simple… Except it’s not.

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“Don’t confuse simple with easy.” -Dan John

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Bring on the pain.

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Start with a small group.

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Stick with it.

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Wear in the rut.

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Celebrate the small wins.

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Rolling it out to the team.

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Remember the humans.

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Transparency

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Clearly setting expectations.

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What gets measured gets done.

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Forecasted Work vs Actual Work

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Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business ForecastBot runs at 9:00 am Individual sheets updated

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No one will watch things more closely than the humans being measured.

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Where we are now.

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The truth about time.

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Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust

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PM Buddy.

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Operations Team

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It takes a team to not be needed.

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PEOPLE WHO WORK   ON THE BUSINESS. PEOPLE WHO WORK   IN THE BUSINESS.

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LEADERSHIP TEAM OPERATIONS TEAM OUTREACH TEAM

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DIRECTOR OF PROJECTS DIRECTOR OF HUMANS TECHNICAL DIRECTOR X 2 CREATIVE DIRECTOR

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COMMUNICATIONS DIRECTOR

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Biggest win for 2019: Communications Team TAN GEN T!

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Story DIRECTOR OF BUSINESS DEVELOPMENT

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COMMUNICATIONS DIRECTOR DIRECTOR OF BUSINESS DEVELOPMENT

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Accountant

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My Job Now

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Focusing on a single client.

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Coaching

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Shit rolls uphill.

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It is ok to punt to future you.

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Metrics

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OPS Team Goals O PS

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Give backs O PS

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Team Utilization O PS

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Long term partnerships O PS

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Outreach Team Goals O utreach

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No whammies O utreach

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Sales Targets O utreach

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Combined Goal Com bined

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To not be needed at Sparkbox. Goal

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The biggest risk to Sparkbox. TAN GEN T!

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OPS RACI Exercise

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Studio Operations & Forecasting OUTCOMES

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Forecasting Cashﬂow

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Micro-Cash ﬂow

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Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business ForecastBot runs at 9:00 am Individual sheets updated MicroCash updated

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Most of our costs are fairly consistent and predictable.

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This may be the single biggest win.

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Accurate Forecasted P&L

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Micro-Cash ﬂow

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Micro-Cash ﬂow

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When to Hire

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When you can accurately forecast cash and future needs, these decisions become much easier.

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Winning in business is when our capacity for sales is bigger than our capacity to do the work.

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Accurate Sales Report

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Future Available Capacity

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Good forecasting helps with current negotiations.

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Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business ForecastBot runs at 9:00 am Individual sheets updated MicroCash updated Weekly sales report

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Sales

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People buy people, not process or brands.

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A good portfolio is merely table stakes in ﬁnding work. TAN GEN T!

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The best predictor of project success is how our stakeholders feel about it. TAN GEN T!

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Client Happiness = A small delta between project expectations and project reality. TAN GEN T!

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Client TAN GEN T!

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Managing Client Expectations TAN GEN T!

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Setting Client Expectations TAN GEN T!

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Research Vendors Vendor Selection Negotiation Project Expectations Set TAN GEN T!

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Research Vendors Vendor Selection Negotiation Project Expectations Set Expectations Managed TAN GEN T!

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There is no silver bullet with sales. TAN GEN T!

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Setting Goals

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Achievable Goals vs Aspirational Goals

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“A goal is not always meant to be reached, it often serves simply as something to aim at.” -Bruce Lee

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One of the ways to make you have regrets in life is only to chase things you are sure to catch.

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Being ready for slower times.

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Shovel-Ready Tasks

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Q4 2016 Story

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Estimating New Projects

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Estimating software projects at the beginning is irresponsible and impossible.

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I believe the biggest risk for software projects is building the wrong thing. TAN GEN T!

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Reason 1: Estimating software projects is impossible because: Clients are really bad at describing their actual needs.

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We are bad at estimating work because we are optimistic. Reason 1: Reason 2: Clients are really bad at describing their actual needs. Estimating software projects is impossible because:

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We are bad at estimating work because we are optimistic. Reason 1: Reason 2: Clients are really bad at describing their actual needs. Business needs change over time. Reason 3: Estimating software projects is impossible because:

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But…

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We can compare future estimates to projects in the past that feel the same.

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People Over Process

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Embrace your staff’s super powers.

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Clearly set team expectations.

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There are no shortcuts.

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Embrace the “Ofﬁce of the Presidency”

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The best part of our companies is that they are made up of humans. Humans sometimes suck. The worst part of our companies is that they are made up of humans.

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Accept the fact that you will be completely wrong about things that you are sure you learned.

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Make better mistakes.

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Rob’s two basic rules for happiness in business:

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Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:

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If you ever become annoyed by a client, it is only because you’re not charging them enough money. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1: Rule 2: