The Way of the Fox

Strategy, vision, mission, values. Do we have them?

About a year ago probably the most challenging period in our history has begun. We grew, and a lot has changed in our structure and in the outside world. Previously in moments like this a crisis would happen, our growth would stall, and we would quickly adapt our infrastructure and lay foundation for growing in the coming years. However last year a crisis of a different sort – a political one – came, but still DataArt continued to grow quite aggressively. To the usual challenges of our life new ones were added: new countries and continents, new requirements and fears of our clients, relocations between offshore offices and to onshore ones.

For a long time I was boldly stating that we have neither strategy nor values, but do have growth and profit. It sounds fun, but leaves most of my colleagues with a feeling of vacuum, which in turn brings up trust issues between them and the company and has negative impact on coordination and overall effectiveness. On the other hand, I gave up a long time ago any hope to find way of creating official versions of strategic documents: we are very good in creating something template-like for a concrete purpose, but, when goals are vague all the complicated topics on self identification and selfexpression of company leaders take over and as a result “a thought once spoken is a lie”.

Therefore, everything below is my attempt at describing what I really think about company strategy, and believe me, it is not simple at all. I do hope though it will help some of us to better understand the situation and act more reasonably and effectively.

Foxes, hedgehogs and books about strategy

Jim Collins, author of the business bestseller “Good to great”, tried to explain success of the great companies through comparing them with companies that are good, but not great – not outstanding. One of the instruments was to compare company leaders, which he — following Isaiah Berlin – split into “foxes” and “hedgehogs”.

A “hedgehog” is tenacious, well-organised, can set goals and and stubbornly achieves them through the same trick (same as real hedgehog who meets any challenge by rolling into a spiky sphere). A “fox” is always manoeuvring, always uses different tricks, changes goals and ways of achieving them. According to Collins, key to success is to be a hedgehog, as “the fox knows a thousand tricks, but the hedgehog knows the best one”.

Now let’s conduct an imaginary experiment. Imagine thousands of grey hedgehogs and red foxes are out to climb mount Everest. After certain time, what will we see? On top of the mountain will be several hedgehogs, the great heroes. The rest will be lying dead at the foot of the mountain, quite dead. And roughly halfway to the top there will be packs of foxes running in circles, very much alive, looking for a safe way up; some will be slightly higher, some lower, but only the totally careless will fall off the cliff.

People like heroes. Society is interested in those who are willing to accept the risks in order to push ahead the economy and progress in general. “Hedgehogs-heroes” are highly visible, their exploits are very attractive, and books about them sell well – because everyone wants to know their secret. “Dead hedgehogs” are not so visible: losers rarely write books and do not give lectures. Foxes of course have a lot to talk about, but talking about a thousand tricks is not as attractive as talking about The Best One.

And by the way what about that book – “Good to great”? After ten years groups of “great companies” and “baseline companies” got completely mixed. In business, hedgehogs that fell off the cliff do not die but turn into foxes or go and try to climb another mountain. Some foxes manage to find an easy path to the apex and meet hedgehogs there.
It so happened that DataArt was founded by “foxes” and “foxes” were joining it throughout history. We fell from a hill a couple of times and lost appetite for high peaks; we are looking for paths that lead uphill and wouldn’t miss one that can takes really high. I will try to explain our “foxy” views below, and apologies beforehand for the lack of simple answers.

What is DataArt goal?

Point one – we have no final goal. Point two — we have an infinite goal, to live and prosper. Although we don’t really know where to go and what we should be, we do know how to go and what not to be, to find something good on our road. And we do not want the road to end at all.
Keep in mind though that we have a very good set of tactical goals, defined by current circumstances internally and externally. Here are some of them:

1. Increase added value of our services by including consulting component into them
2. Increase sales scalability through productization of our services
3. Reform account management system and make it adaptive, when complexity of management reflects complexity of account
4. Diversify our delivery and sales centres geographically, to minimise political and economic crises impact

These goals lead to a number of smaller supplementary ones, and we can in fact call these four strategic goals. What we do not want though is to try and mould our development to what is considered to be typical strategic paradigms.

Mission vs. competitive strategies

One of the most well known consultants working with professional companies, David Maister, defined typical mission of a professional company as:

1. Satisfy clients
2. Aid employees development
3. Give good ROI (return on investment) to company owners (partners)

To be completely honest, this is exactly our mission, however we phrase it and whatever adjectives add to it.
Now let's say we want to choose a strategy according to one the most popular academic models created by Porter.
We cannot easily save on expenses: our main expense is people, and, according to point 2 above, we do not want it. Besides, not a lot of clients would want to buy stupid and uneducated developers, even with a big discount; I am not taking stupid and corrupt clients into account here.
Point 3 is more interesting. ROI can be of two kinds: paying out dividends or increase value of shares owned by partners. Re-investing into company is more honourable, and traditionally it was our priority. But – like always - there are nuances. Quantitative growth skews company structure towards having more administrators, capable of effectively managing large systems. But we want growth for, first and foremost, specialists, and therefore are trying to keep balance between quantitative and qualitative growth.

Professional services

But still, why don’t we have a strategy of becoming “the best, the first, the biggest and the best known”? Because it is more important to be the best for our current and future clients.

Professional services are, in the first place, business built on human interactions and relationships.

We like it because this market is de-facto unlimited. The more people live on Earth, the more people will service other people. Labour effectiveness grows, resources get more expensive, we can eat and put on ourselves not that much. But the society is interested in keeping everyone busy, and comes up with new forms of services all the time.

Software development

We work in IT, it happened so because of the people who founded and first came to work here. Software development and solution design is an interesting and creative part of IT. Effectiveness and resources – see above – and…virtual world grows faster than real one. And that means we are in the right place!

Why do I believe that DataArt can become a great company?

What is so interesting about us? De facto DataArt is a company that is built around people who want to earn their living doing what they like professionally, with minimal limitations of their personal freedom. Sounds simple, but it is not as common as one would think, and thus a lot of people stay in the company for many years. They learn, get more experience, change, and company changes with them. We are organic company, and our laws of development are the laws of evolution.

Main law of evolution

Short term, the best adapted survive. Long term, the best adapting survive. The operative word here is “survive”. It happened so that we like our company, and we kind of got used to its name. Of course when companies die hedgehogs people don’t, they start new ventures, find new jobs, and it is not that scary but… it is not our choice. We want to survive, and we are ready to adapt.

Driving forces of the evolution

Adapting means changing. We need change, people should change, and company should change. This is why we like diversity: different characters, different way of thinking, different systems of values. Unanimous agreement seems very dangerous to us, although it gives high short term effectiveness. We like different projects and different technologies, we like, when colleagues change their zones of responsibilities and speciality – be it hard as it is, since it is hard to change without outside push.

We are different, and we can change, but it is important to just change – it is important to adapt to the changing environment. Typical problem for growing companies is that, metaphorically (and geometrically) speaking, surface area grows proportionally to linear size squared, but volume – to its cube. Internal environment slowly outweighs external. Some companies decide that they need to change external environment to fit them, some are trying to fight this effect. We are the fighting ones: we are trying to increase “surface of interaction” with the outside world, this is what the communication models we use projects are targeted at, as well as our education programs and desire to have many projects from many sources. We want to be wrinkled and hairy, with fractal surface – inasmuch as possible. We also stir ourselves internally through various changes and activities.

Through diversity and ability to change we can adapt, get better, evolve even without one single person who know the ultimate goal. It might have been good of course to have someone who knows, but our “foxy” views turn us into hardcore sceptics even with most charismatic hedgehogs and mimicking foxes J

Is there a progress vector?

This is all nice and good you would say, but humans are not the only ones who have learnt to adapt. We also have blue-green algae, for example. Is there a way to make sure that we are not just adapting, but changing and developing?

Now this is good question. It urges to pick something as a benchmark, be it size, brand awareness, profit or market share. But…size does not matter. As Captain Jack Sparrow used to say, “this is not important; what you can do and what you cannot is important”.

For me, progress vector is complexity. The biggest and the mightiest are not the most interesting; those who can master most complicated tasks and circumstances are. Complexity grows in the world, and we are becoming more complex too.

Growing complexity though increases demand for simplicity, and simplicity is in fashion now. It seems to me though that this simplicity is only surface deep, and in fact is quite complex and technology heavy on the inside. And for us simplicity is not so unambiguous. There is an interesting side effect. Every time someone within the company manages to organise something really well and hide the complexity, people around start thinking that things happen by themselves. As a result, efforts are not valued as high as they could have been, unless one does a bit of advertisement – which is borderline boasting. A client will not value heroic efforts of a team if deadlines are met, if he does not see overtime work in the night and over weekends, tons of re-written code and beauty of decision made. It is not obvious for me at all that in our business we should be hiding complexity: in fact, I think we should be proud of it.

Complexity

In everyday sense of the word complexity is defined by the size of system, diversity and volatility. As a result, complexity leads to unpredictability. Fashionable now concept of “anti-fragility” tells to be ready for unpredictability.

Even a year ago we should have been rather expecting an economic or profitability crisis, but not a political one. What we faced after a long period of growth was, together with a slowly growing crisis of manageability, a political crisis. In the past after 3-4 years of growth only crisis could – and was – able to save us. Now we are under double pressure, and it is not easy at all, but somehow we manage. And I am not talking about company leaders – everyone somehow manages, in their everyday work.

Now would be a right time to remember deficiency and existential needs that Maslow replaced his pyramid with. The former are sharp, like hunger and thirst, but disappear without a trace after you sated them. The latter make us live, like desire for professional fulfilment and responsibility for family and what one does. Right now, we all crave simplicity: just wait, I have finally figured it out, and will make everything right…But the world is not cooperating, lightness and clarity disappear, and we are left with a choice: accept that the world is complicated and grow, grow further, or weep over “stupid management who does not know what it wants”

Antifragility and damned questions

Complexity is hard. And it is annoying. Annoyance demands we remove the complexity, with a vengeance. Enter the “damned questions”.

The first of them is – “who is right?”. The feeling of righteousness (feeling, as in sense – you can feel it inside) – for me the first sign that I need to step back and not make any decisions just yet. In a complex world, nothing is right or wrong. There are many versions of pretty much everything and you need to pick an optimal one for this particular situation. But emotions and this feeling of righteousness put us in reactive mode – if facts contradict my feelings, too bad for the facts.
Correct tactics should be probably to have many versions of truth and choose. Only material world can be “genuine” and “objective”, and only “here and now”; and how often are we arguing about something material which is right here with us?

Second question – “who is the boss”. Our business is a team-based business. There is no boss, there is only someone best suited to act in this particular situation. A good team always seeks to assign people to roles where they perform best under current circumstances. Rigid structure of roles and zones is a simplification, good for short term only. The worst case is when “boss” is rigidly assigned to someone, and “boss is always right”.

There are actually more of the damned questions, but these two are leading by a mile. What should you do then – what could you do – to control situation within your zone of responsibility, without being righteous and being bossy? Use different techniques of influencing people and leading them. I will not be describing them here, I just wanted to stress that the key is to learn and use different approaches. Not all, not the best, not the right ones – but appropriate and different.

Values

Finally we have reached the most complex part of this set. First of all, values can be conscious and unconscious.

Unconscious values are those that are correct by default, obvious judgements about various things. They are horrible, in fact, because they lead to the feeling of righteousness, and here we go… Who said that we should love animals and we should not eat people? And that we can like eating slaughtered animals? Or eat plant embryos alive? Paradoxically constructed statements provoke strange emotional reactions, and lead far away from analysis – and analysis is what is needed here. What seems obvious only needs a bit of thinking to lead to realisation that it, indeed, only seems so.

For a very long time I was joking that DataArt has only one value – tolerance, and because of this, all the other values kind of got pushed aside. This is not true in fact, tolerance is our last value, but it is not the only one and not the main one. It is required for diversity that I have described above.

At the same time I think that conscious values are useful, because they ensure that company behaves adequately. If we reach perfection in flexibility, adaptation and complexity, we will become non-adequate for those around us, and will stop giving predictable answers to standard requests. This will inevitably make us far less valuable for clients, employees and partners. At the end of the day we are commercial organisation and need paid work, not Oscar for the performance of Joker.

Therefore DataArt has quite clear values and they are very much conscious ones. They make us better for our faithful clients and colleagues, and for a certain part of job candidates and potential clients.

The first and foremost value of DataArt – focus on people. We see people as free and responsible, we see our goal to learn to use each other with maximum efficiency.

The second is sincerity. Yes, we try to say what believe in and believe in what we are saying. We have to filter what we say, because not everything we think is worthy to be heard. And that is why we have so much troubles with maxims like “flawless service” and “exceed expectations”. Can you exceed expectation of exceeding expectation?

The third is trust. We use each other, we enter into agreements and pacts, implicit, social ones, and we should value them. We do not want to waste energy on suspicion and control; we want to be able to count on each other.

The only one to add is professionalism, in other words desire to do what we promise good indeed, and patience, or willingness not to sacrifice future for immediate gain and not to give up after first occasional failures.

And once we surround ourselves with patient, professional, sincere and humane people – we trust them, and from that point onward are extremely tolerant to them :).

Business planning

About 13 years ago I tried to create a business plan for DataArt. As Misha Zaitsev politely put, it was «the most weird business plan in his life». It basically contained one idea: we will be good and we will try to do everything good, and all will be good. And there was nothing about money, capital, market, competitors and growth. And yes indeed we were trying and are still trying… And a more conventional business plan with numbers, analysis and forecasts we had only once, in 2008 for investors. Investment didn't work for us and we returned the money with an interest, untouched.

Vision – do we have it?

We have as many visions as you like. Mine is described above.