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

Rob
August 30, 2019

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

“You won’t be in control of your business until you can accurately predict it.” One of Rob Harr’s early mentors and business advisors must have said that a thousand times during their time together—and it’s true. Join Rob for a deep dive into studio operations and forecasting. Take a guided tour through the good, the bad and the ugly, and uncover actionable strategies to help you take control of your business.

Get an inside look at how you can put forecasting at the heart of your business to improve project planning, cash flow, hiring, sales and more. Discover a relatively simple weekly cadence to implement (that doesn’t lose sight of your people), and dig into metrics to determine what you should track and what’s just noise. Before long, you’ll actually be in charge of your business.

Rob

August 30, 2019
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Transcript

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

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  2. GOOD MORNING!!

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  3. #DaytonStrong

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  4. Digital Diversity Days.
    November in Dayton

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  5. SSID: harvest_guest
    Password: getharvest
    W
    ifi

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  6. Workshop Guarantee.

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

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  8. 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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  9. 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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  10. Collaborative Notes
    Link in slack.

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  11. Why are you here?

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  12. 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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  13. What is this?

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  14. THIS IS NOT
    A TOOLING TALK!

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  15. THIS IS NOT
    A PRICING TALK!

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  16. Hourly web work for hire.

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  17. So what is this then?

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  18. THIS IS A
    STUDIO OPERATIONS WORKSHOP!

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  19. What is operations?

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

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  21. Operations is the
    HOW between
    SALES and PROFIT.

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  22. Operations is more of a
    discipline then it is magic.

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  23. Discipline > Motivation
    TAN
    GEN
    T!

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  24. I believe the single biggest
    win for operations is forecasting.

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

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  26. GIANT SPOLIER!

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  27. Studio Operations & Forecasting
    BACKSTORY

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

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

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  30. Writing the codes.

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  31. Web software studio specializing
    in development and design.

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  32. Hourly work for hire.

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

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  34. I am a HOW Person.

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  35. Rob Harr Ben Callahan

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  36. Rob Harr Ben Callahan

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  37. Optimized for sustainability and
    sleeping at night
    Goal

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  38. Running a business
    is hard.

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  39. Running a
    profitable business
    is even harder.

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

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  41. Our Craft
    What we believe.
    Business

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  42. Our Craft
    The Truth.
    Business

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

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

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  45. There is no “One Way.”

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  46. Why I do this.

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  47. Genuinely take

    care of our people

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  48. Genuinely take

    care of our people
    Genuinely succeed

    in our business

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  49. Genuinely take

    care of our people
    Genuinely succeed

    in our business

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  50. Succeed in business
    by taking care
    of our people.

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  51. Studio Operations & Forecasting
    DESIGNING
    OPERATIONS

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  52. To not be needed
    at Sparkbox.
    Goal

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  53. Autonomy.
    Goal

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  54. Under a 10 handicap.
    Goal

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

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  56. This is a cash
    intensive business.

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  57. Good Operations is everyones job.

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  58. Resources
    Talent

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  59. I am in the talent business.

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  60. People are our
    biggest asset.

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  61. 2 kinds of Companies:
    Talent Producers
    Talent Consumers

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

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

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  64. 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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  65. 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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  66. 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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  67. People have different
    values in different contexts.
    TAN
    GEN
    T!

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  68. 20%
    5%
    6%
    11%
    58%
    Your Budget
    58% Compensation
    11% General + Admin
    6% Rent
    5% Advertising
    20% Net Margin

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  69. 20%
    5%
    6%
    11%
    58%
    Your Budget
    58% Compensation

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  70. Growth costs $$$$

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  71. Apprenticeships.

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  72. For most of us it comes
    down to staff utilization.

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  73. Hours per week?

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  74. What gets measured
    gets done.
    TAN
    GEN
    T!

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  75. Different target utilization by role.

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  76. Devs 95%
    Designers 95%
    PMs 60%

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  77. Slack Projects
    and
    Maintenance Agreements
    TAN
    GEN
    T!

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  78. Investment projects.
    TAN
    GEN
    T!

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  79. There are seasons for things.

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  80. Surviving Growing Thriving

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  81. Surviving Growing Thriving

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

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  83. Ending well.

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

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

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  86. Designing efficient companies.

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  87. Maximizing overhead value.

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  88. Freedom is not free.

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  89. I am a simple man.
    I love simple solutions.

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  90. Design your week.

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  91. Process is for people.

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  92. 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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  93. Weekly Breakfast
    M
    onday

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  94. Hit list
    M
    onday

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  95. Timesheets
    M
    onday

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  96. Projects Stand-up
    M
    onday

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  97. Invoicing
    M
    onday

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

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  99. Late Invoices
    Tuesday

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  100. Sales Report
    Tuesday

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  101. Profitable Projects
    vs
    Profitable Portfolio
    TAN
    GEN
    T!

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  102. 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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  103. MicroCash
    W
    ednesday

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  104. Micro-Cash flow

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  105. Micro-Cash flow

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  106. Future P&L
    W
    ednesday

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  107. Micro-Cash flow

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  108. Micro-Cash flow

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  109. $$$ Meeting
    W
    ednesday

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  110. Humans Meeting
    W
    ednesday

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  111. 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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  112. Director 1:1’s
    Thursday

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  113. 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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  114. All-Team Demo
    Friday

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  115. Forecasting Updates
    Friday

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  116. 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
    All-Team Demo
    Forecasting updated

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  117. 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
    All-Team Demo
    Forecasting updated

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  118. Selfcare
    TAN
    GEN
    T!

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  119. 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
    TAN
    GEN
    T!
    All-Team Demo
    Forecasting updated

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  120. 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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  121. Smart Hours
    TAN
    GEN
    T!

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  122. Lifestyle Hires
    TAN
    GEN
    T!

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  123. Executive Assistant
    TAN
    GEN
    T!

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  124. Director of Humans
    TAN
    GEN
    T!

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

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

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  127. 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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  128. The other 20%

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  129. Last year.
    Story

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  130. ✈ LA -> SF -> Seattle ✈
    Story

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  131. Spirit Week.
    Story

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  132. Wearing in the rut.

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  133. “Luck has the smell of Perspiration”
    -Mark Schlereth

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

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  135. Month Close
    Client Strategy Meetings
    OPS Team Meeting
    M
    onth

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  136. Estimated Taxes
    Semi-Annual Tax planning
    Q
    uarter

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  137. Year End Close
    Staff Retreat
    Owner Retreat
    Year

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  138. Optimized for Sustainability and
    Sleeping at Night

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  139. What are you optimizing for?

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  140. OPS Cadence Exercise

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  141. Studio Operations & Forecasting
    LUNCH TIME!

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  142. Studio Operations & Forecasting
    FORECASTING

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

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

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  145. Forecasting is more of a
    discipline then it is magic.

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  146. Discipline > Motivation

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  147. Three simple steps.

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

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  149. Step 1: Measure Yesterday

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

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  151. You have to get this right.

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  152. Step 2: Predict Tomorrow

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

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  154. This is a team effort.

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

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  156. Develop a forecasting cadence.

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  157. I think weekly works best.

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

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  159. Step 3: Grade and Adjust

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  160. Using letter grades.

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  161. Ask good questions.

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  162. Accuracy
    vs
    Precision
    TAN
    GEN
    T!

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  163. Context Matters
    TAN
    GEN
    T!

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  164. It is really that simple…

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

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

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  167. Bring on the pain.

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  168. Start with a small group.

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  169. Stick with it.

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  170. Wear in the rut.

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  171. Celebrate the small wins.

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  172. Rolling it out to the team.

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  173. Remember the humans.

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  174. Transparency

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  175. Clearly setting expectations.

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  176. What gets measured gets done.

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  177. Forecasted Work
    vs
    Actual Work

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

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  180. Where we are now.

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  181. The truth about time.

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

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  183. Operations Team

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  184. 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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  185. It takes a team to not be needed.

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  186. PEOPLE WHO WORK 

    ON THE BUSINESS.
    PEOPLE WHO WORK 

    IN THE BUSINESS.

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  187. LEADERSHIP TEAM
    OPERATIONS TEAM OUTREACH TEAM

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

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  189. COMMUNICATIONS
    DIRECTOR

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  190. Biggest win for 2019:
    Communications Team
    TAN
    GEN
    T!

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  191. Story
    DIRECTOR OF BUSINESS
    DEVELOPMENT

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  192. COMMUNICATIONS
    DIRECTOR
    DIRECTOR OF BUSINESS
    DEVELOPMENT

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  193. Focusing on a single client.

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  194. Shit rolls uphill.

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  195. It is ok to punt
    to future you.

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  196. OPS Team Goals
    O
    PS

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  197. Give backs
    O
    PS

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  198. Team Utilization
    O
    PS

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  199. Long term partnerships
    O
    PS

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  200. Outreach Team Goals
    O
    utreach

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  201. No whammies
    O
    utreach

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  202. Sales Targets
    O
    utreach

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  203. Combined Goal
    Com
    bined

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  204. To not be needed
    at Sparkbox.
    Goal

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  205. The biggest risk to Sparkbox.
    TAN
    GEN
    T!

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  206. OPS RACI Exercise

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  207. Studio Operations & Forecasting
    OUTCOMES

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  208. Forecasting Cashflow

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  209. Micro-Cash flow

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  210. 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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  211. Most of our costs
    are fairly consistent and
    predictable.

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  212. This may be the single
    biggest win.

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  213. Accurate Forecasted P&L

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  214. Micro-Cash flow

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  215. Micro-Cash flow

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  216. When to Hire

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

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

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  219. Accurate Sales Report

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  220. Future Available Capacity

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  221. Good forecasting helps with
    current negotiations.

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  222. 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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  223. People buy people,
    not process or brands.

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

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

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

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  227. Client
    TAN
    GEN
    T!

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  228. Managing Client Expectations
    TAN
    GEN
    T!

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  229. Setting Client Expectations
    TAN
    GEN
    T!

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

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

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

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  233. Setting Goals

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  234. Achievable Goals
    vs
    Aspirational Goals

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

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  236. 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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  237. Being ready for slower times.

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  238. Shovel-Ready Tasks

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  239. Q4 2016
    Story

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  240. Estimating New Projects

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  241. Estimating software projects
    at the beginning is
    irresponsible and impossible.

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

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

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  244. 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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  245. 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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  246. We can compare future estimates
    to projects in the past that feel the
    same.

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  247. People Over Process

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  248. Embrace your staff’s
    super powers.

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  249. Clearly set team
    expectations.

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  250. There are no shortcuts.

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  251. Embrace the
    “Office of the Presidency”

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

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  254. Make better mistakes.

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  255. Rob’s two basic rules for
    happiness in business:

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  256. 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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  257. 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:

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  258. Studio Operations & Forecasting
    ANYTHING
    GOES

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