Episode 7, the final installment of this season of Architecture Corner is out (I made a guest appearance in episode 1, “Good at Innovation”). In this installment, the CEO is greedily planning for a winner take all negotiation with the company’s suppliers.
Chris the CEO (Casimir Artmann) and John the CIO (Greger Wikstrand) have a game plan: “we win, they lose”. What could go wrong with a plan like that? Ann the CFO (Christina Lundström) brings in some outside help to understand the pitfalls.
In my previous post dealing with Ron Jeffries (since revised) “Summing up the discussion”, I focused strictly on the customer-focused aspects. I did, however, note some language regarding negotiating estimates that I wanted to touch on:
“Negotiating” estimates is deeply embedded into most cultures. It probably started in the marketplace in the village in ancient Greece, where the carrot guy tried to get three hemitetartemorions for his carrots, and your great-to-the-nth grandmother talked him down to one.
We assume that a contractor’s estimate has fat in it and we assume that we need tough negotiation to squeeze it out. The better the contractor is at estimating, the more this process hurts him, because he has nothing left to squeeze. And in the end, it hurts the buyer as well: the only way the contractor has to survive is to cut quality.
Jeffries is absolutely correct that negotiation is an ancient tradition. Likewise, he is correct that shaving an accurate estimate may well end up costing the customer in reduced quality (especially if giving point estimates, which is an incredibly poor practice, in my opinion). What he fails to mention, however, is that negotiating an estimate need not happen. In fact, negotiating an estimate without negotiating the deliverable is pretty much the worst possible thing you could do. You’re risking either your profit margin or any future business with the customer and quite possibly, both. It’s a bad idea for a vendor and incredibly ill-considered for in-house IT (it’s not like you can take the money and run).
In my opinion, when someone is willing to change an estimate without a change in what they’re estimating, it’s a bad sign. If you adequately understand the information at hand, have some experience, and have made a good faith effort, there’s no reason to be willing to change the estimate without learning more about what is or is not needed. It’s not really a negotiation if only one party is getting what they want, particularly if the other party is getting abused. For the abused party, striking back (by shaving quality without the customer’s knowledge) is counter-productive. The only negotiation should be what’s in scope and what’s not.
In a balanced relationship, the provider can explain what the customer is getting for their money and the customer realizes they won’t get something for nothing. Communication and collaboration can provide the basis for trust. Trust is essential for both parties to become partners in delivering the best possible product.
Since my last post on #NoEstimates, the conversation has taken an interesting turn. Steve McConnell weighed in on July 30th, with a response from Ron Jeffries on the following day. There have been several posts from each since, with the latest from Jeffries titled “Summing up the discussion”. In that post, he states the following (emphasis added):
The core of our disagreement here is that Steve says repeatedly that if the customer wants estimates, then we should give them estimates. He offers the Manifesto’s “Customer collaboration over contract negotiation”1 as showing that we should do that. (It’s interesting that he makes that point in a kitchen where surely he expects that the couple and the contractor(!) are going to negotiate a contract.)
To anyone who has been even minimally involved with business, the idea that a contract will be negotiated should not a surprise, no matter how agile the provider. In spite of his footnote warning “I confess that I am singularly unamused when people bludgeon me with quotes from the Manifesto”, I have to note that the Agile Manifesto does say “…while there is value in the items on the right, we value the items on the left more” rather than “only the items on the left have value”.
In the post, Jeffries says that in an agile transformation, the “…contractor-customer relationship gets inverted”. I have to confess that the statement is a bit baffling. A situation where “the customer is always right” can certainly degrade into a no-win scenario. Inverting that relationship, however, is equally bad. Good, sustainable business relationships should be relatively (even if not perfectly) balanced. Moving away from minutely detailed contracts that prevent any change without days of negotiation just makes sense for both parties. Eliminating all obligation on the part of the provider, however, is a much harder sell.
Jeffries asserts that “Agile, if you’ll actually do it, changes the fundamental relationship from an estimate-commitment model to a truly collaborative stream of building up the product incrementally.” If, however, you fail to meet your customer’s needs (and, as I pointed out in “#NoEstimates – Questions, Answers, and Credibility”, one of the best lists of why estimates are needed for decision-making comes from Woody Zuill himself), how collaborative is that? Providing estimates with the caveat that they are subject to change as the knowledge about the work changes is more realistic and balanced for both parties. That balance, in my opinion (and experience) is far more likely to result in a collaboration between customer and provider than any inversion of the relationship.
Trust, is essential to fostering collaboration. If we fail to understand our customers’ needs (which impression is given when we make statements like that in the tweet below), we risk fatally damaging the trust we need to create an effective collaboration.
Form Follows Function 