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

“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 Harr, Vice President of Sparkbox, 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 Sparkbox runs, and 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).

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.

WHAT WE'LL COVER
-What is Studio Operations?
-The difference between operations and project management
-Where to start with forecasting
-Improving forecasting through feedback loops
-Predicting and managing cash flow
-Getting your entire team involved

Transcript

1. Rob Harr STUDIO OPERATIONS & FORECASTING: THE GOOD, THE BAD & THE UGLY @robertharr
2. GOOD MORNING!!
9. SSID: harvest_guest Password: getharvest W ifi
10. Workshop Guarantee.
11. Studio Operations & Forecasting: The Good, the Bad & the Ugly
12. Studio Operations & Forecasting: The Good, the Bad & the Ugly Or… What I wish someone had told me about running a studio 10 years ago.
13. YMMV!
14. 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”.
15. Speak Up
16. https://sli.do #7591
17. Collaborative Notes https://bit.ly/bureau-forecasting
18. Why are you here?
19. Agenda Part 1: Backstory Part 2: Designing Operations Part 3: Forecasting Part 4: Outcomes Part 5: Lunch! Part 6: Anything goes
20. What is this?
21. THIS IS NOT A TOOLING TALK!
22. +
23. THIS IS NOT A PRICING TALK!
24. Hourly web work for hire.
26. So what is this then?
27. THIS IS A STUDIO OPERATIONS WORKSHOP!
30. What is operations?
31. Figure out what you make, then spend less than that!
34. Operations is the HOW between SALES and PROFIT.
35. Operations is more of a discipline then it is magic.
36. Discipline > Motivation TAN GEN T!
37. I believe the single biggest win for operations is forecasting.
38. For us, all of our operations centers around accurate forecasting.
39. GIANT SPOLIER!
42. Studio Operations & Forecasting BACKSTORY
43. Writing the codes.
44. FORGE
45. Employee #1
46. Failure?
49. Story
50. Web software studio specializing in development and design.
51. Hourly work for hire.
52. “You won’t be in control of your business until you can accurately predict it.” ~Geoff Mandeville
53. I am a HOW Person.
54. Rob Harr Ben Callahan
55. Rob Harr Ben Callahan
56. PM Buddy.
57. PM Buddy.
58. Optimized for sustainability and sleeping at night Goal
59. Running a business is hard.
60. Running a profitable business is even harder.
61. Running a profitable business while treating people like humans is a constant struggle.
62. Our Craft What we believe. Business
63. Our Craft The Truth. Business
64. Our Craft It’s all about the people. Business People
65. Project don’t fail for technical or design reasons, they fail because of the people involved.
66. There is no “One Way.”
67. Studio Operations & Forecasting DESIGNING OPERATIONS
68. To not be needed at Sparkbox. Goal
69. Autonomy. Goal
70. This is a cash intensive business.
71. Resources
72. Resources Talent
74. I am in the talent business.
75. People are our biggest asset.
77. 2 kinds of Companies:
78. 2 kinds of Companies: Talent Producers
79. 2 kinds of Companies: Talent Producers Talent Consumers
80. The employee arrangement
81. The employee arrangement Sarah
82. The employee arrangement Sarah Developer
83. The employee arrangement Sarah 2080 hours a year Developer
84. The employee arrangement Sarah 2080 hours a year Developer Salary
85. The employee arrangement Sarah 2080 hours a year Developer Salary Vacation
86. The employee arrangement Sarah 2080 hours a year Developer Salary Vacation Benefits
87. Our Fake Team
88. Our Fake Team $45k $80k $100k $60k Salary
89. Our Fake Team $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly cost
90. Our Fake Team - Individual rates - 4x $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost
91. Our Fake Team - Individual rates - 4x $84 $152 $192 $112 Bill Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost
92. Blended Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost Our Fake Team
93. Blended Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average 
 Hourly Cost Our Fake Team
94. Blended Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average 
 Hourly Cost 4x Multiplier Our Fake Team
95. 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
96. Value Hourly Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost Our Fake Team
97. Value Hourly Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average 
 Hourly Cost Our Fake Team
98. Value Hourly Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Cost $33.75Average 
 Hourly Cost ? Fuzzy Math Our Fake Team
99. 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
100. People have different values in different contexts. TAN GEN T!
101. 20% 5% 6% 11% 58% Your Budget
102. 20% 5% 6% 11% 58% Your Budget 58% Compensation
103. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin
104. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent
105. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising
106. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising 20% Net Margin
107. 20% 5% 6% 11% 58% Your Budget 58% Compensation
108. Growth costs $$$$
109. Apprenticeships.
110. 6 months
111. For most of us it comes down to staff utilization.
112. Hours per week?
114. What gets measured gets done. TAN GEN T!
115. Different target utilization by role.
116. 80%
117. Devs 95% Designers 95% PMs 60%
118. Slack Projects and Maintenance Agreements TAN GEN T!
119. There are seasons for things.
121. Surviving
122. Surviving Growing
123. Surviving Growing Thriving
124. Surviving Growing Thriving
125. Designing efficient companies.
126. Maximizing overhead value.
127. Freedom is not free.
128. I am a simple man. I love simple solutions.
129. Design your week.
130. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s All-Team Demo Forecasting updated
131. Monday
132. Weekly Breakfast M onday
133. Hit list M onday
134. Timesheets M onday
135. Projects Stand-up M onday
136. Invoicing M onday
137. Monday Tuesday Wednesday Thursday Friday Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
138. Tuesday
139. Late Invoices Tuesday
140. Sales Report Tuesday
141. Tuesday
142. Profitable Projects vs Profitable Portfolio TAN GEN T!
143. Monday Tuesday Wednesday Thursday Friday Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
144. Wednesday
145. MicroCash W ednesday
146. Micro-Cash flow
147. Micro-Cash flow
148. Future P&L W ednesday
149. Micro-Cash flow
150. Micro-Cash flow
151. $$$ Meeting W ednesday
152. Humans Meeting W ednesday
153. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
154. Thursday
155. Director 1:1’s Thursday
156. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices
157. Friday
158. All-Team Demo Friday
159. Forecasting Updates Friday
160. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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
161. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ Meeting Humans Meeting Late Invoices Sales Report Director 1:1’s Weekly Breakfast TimeSheets due at 9:30 am Projects Stand-up Prepare and Send Invoices All-Team Demo Forecasting updated
162. Selfcare TAN GEN T!
163. Monday Tuesday Wednesday Thursday Friday MicroCash updated Future P&L updated $$ 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
164. Monday Tuesday Wednesday Thursday Friday Morning yoga Coffee Afternoon Golf league Morning Lifting Coffee Morning Lifting Coffee Weekly Breakfast Blocked Lunch TAN GEN T!
165. Smart Hours TAN GEN T!
166. You will always have something to do. TAN GEN T!
167. TAN GEN T!
168. TAN GEN T!
169. It is ok to punt to future you. TAN GEN T!
170. 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
171. The other 20%
172. Last week. Story
173. ✈ LA -> SF -> Seattle ✈ Story
174. Story
175. Spirit Week. Story
176. Story
177. Story
178. Story
179. Story
180. Story
181. Story
182. Wearing in the rut.
183. Month Close Client Strategy Meetings OPS Team Meeting M onth
184. Estimated Taxes Semi-Annual Tax planning Q uarter
185. Year End Close Staff Retreat Owner Retreat Year
186. Optimized for Sustainability and Sleeping at Night
187. What are you optimizing for?
188. OPS Cadence Exercise
189. OPS Cadence Exercise
190. Short Break
191. Short Break
192. Studio Operations & Forecasting LUNCH TIME!
193. Studio Operations & Forecasting FORECASTING
194. image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at
195. image credit: http://thedealnewsroom.tumblr.com/post/123030031822/quantum-energy-co-founder-you-can-make-money-at
196. What we think of as magic is what we have yet to completely understand.
197. Forecasting is more of a discipline then it is magic.
198. Discipline > Motivation
199. Three simple steps.
200. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
201. Step 1: Measure Yesterday
202. The first step in developing this superpower is to be able to measure what happened yesterday.
203. You have to get this right.
204. Metrics
205. Capacity
206. Utilization
207. Step 2: Predict Tomorrow
208. How many hours, on which projects during the week, and time out of the office.
209. This is a team effort.
210. Forecasting is an operations exercise, not a project management exercise.
211. Develop a forecasting cadence.
212. I think weekly works best.
213. Monday Tuesday Wednesday Thursday Friday Timesheets due at 9:30 am Forecasting updated before close of business
214. Step 3: Grade and Adjust
215. Using letter grades.
216. Ask good questions.
217. Accuracy vs Precision TAN GEN T!
218. It is really that simple…
219. It is really that simple… Except it’s not.
220. Bring on the pain.
222. Start with a small group.
223. Stick with it.
224. Wear in the rut.
225. Celebrate the small wins.
226. Rolling it out to the team.
227. Remember the humans.
228. Transparency
229. Clearly setting expectations.
230. What gets measured gets done.
231. Forecasted Work vs Actual Work
235. 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
236. No one will watch things more closely than the humans being measured.
237. Where we are now.
238. The truth about time.
239. Step 1: Measure Yesterday Step 2: Predict Tomorrow Step 3: Grade and Adjust
240. PM Buddy.
241. Operations Team
242. Monday Tuesday Wednesday Thursday Friday 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
243. It takes a team to not be needed.
244. PEOPLE WHO WORK 
 ON THE BUSINESS. PEOPLE WHO WORK 
 IN THE BUSINESS.
245. LEADERSHIP TEAM OPERATIONS TEAM OUTREACH TEAM
246. DIRECTOR OF PROJECTS DIRECTOR OF HUMANS TECHNICAL DIRECTOR CREATIVE DIRECTOR
247. Accountant
248. To not be needed at Sparkbox. Goal
249. OPS RACI Exercise
250. OPS RACI Exercise
251. Studio Operations & Forecasting OUTCOMES
252. Forecasting Cashflow
253. Micro-Cash flow
254. 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
255. Most of our costs are fairly consistent and predictable.
256. This may be the single biggest win.
257. Accurate Sales Report
258. Future Available Capacity
259. Good forecasting helps with current negotiations.
260. 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
261. Accurate Forecasted P&L
262. Micro-Cash flow
263. Micro-Cash flow
264. When to Hire
265. When you can accurately forecast cash and future needs, these decisions become much easier.
266. Winning in business is when our capacity for sales is bigger than our capacity to do the work.
267. Being ready for slower times.
268. Shovel-Ready Tasks
269. Q4 2016 Story
270. Estimating New Projects
271. Estimating software projects at the beginning is irresponsible and impossible.
272. Reason 1: Estimating software projects is impossible because: Clients are really bad at describing their actual needs.
273. 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:
274. 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:
275. But…
276. We can compare future estimates to projects in the past that feel the same.
277. People Over Process
278. Embrace your staff’s super powers.
279. Clearly set team expectations.
280. There are no shortcuts.
281. Embrace the “Office of the Presidency”
282. Embrace the “Office of the Presidency”
283. The best part of our companies is that they are made up of humans.
284. The best part of our companies is that they are made up of humans. The worst part of our companies is that they are made up of humans.
285. 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.
286. Accept the fact that you will be completely wrong about things that you are sure you learned.
287. Rob’s two basic rules for happiness in business:
288. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:
289. 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:
292. Studio Operations & Forecasting ANYTHING GOES
293. THANKS! @robertharr rob@heysparkbox.com