Why You Need A COMPASS
If you’ve ever trained in a martial art then you’ll probably remember all the drills your instructor made you do. You repeat certain patterns of actions (e.g. block, move, punch) over and over (and over) again until you start to get sick of them. The reason it works like this is that, when you are under attack, you don’t have time to think about what to do. Your reflexes must be trained so that you respond immediately and appropriately.
You may be wondering ‘What does this have to do with being the CEO of a software company?’
Anyone who has been running a company for a while will probably recognise the feeling of getting incredibly busy, tired, and stressed. It can often get hard to make the right choices and can seem like worrying about whether you are doing the right thing vs. the expedient thing is a luxury you just can’t afford.
This is where a system (mine is called COMPASS) comes in. A good system helps you orient yourself in your situation, and will suggest questions and/or tools that will be helpful in deciding what to do. With a good system in place even the most tired or harassed CEO can make decisions that will lead to better outcomes for their business.
So, what does COMPASS stand for?
I chose these strategic pillars for my work because they represent key areas of difficulty that I have observed most, if not all, software businesses get stuck with:
We don’t start with the customer, we start with the mission (but, alas, I couldn’t find a good acronym starting with M!). However, the customer is, and should remain, a key focus of our activities. Assumptions we make about customer needs & wants can often come back to haunt us. Maybe we end up building the wrong product and get trapped in “that’s interesting” conversations that never turn into sales. Certainly, if we don’t understand the customer well, we risk missing out on generating the maximum value for them and, ultimately, for us. In his book, The Four Lenses of Innovation, Rowan Gibson articulates how powerful understanding customer needs is as a way of creating huge value. In my work with clients understanding customer needs is a key activity. If we can get our understanding of the customer broadly right, we will be better prepared to weather many other problems.
The best strategy and business models are worth nothing if they are not executed (preferably executed well). This often means discovering which of the many activities that we are doing are actually working, and which are not. Development can be a particular challenge as it resists easy measurement. But we can’t just throw up our hands in despair so we can use tools such as Impact Mapping to help get this problem under control. A key aspect of understanding operations is understanding the difference between measuring behaviours and measuring outcomes and doing both. We also need to learn to make predictions as this will tell us how well we understand the world around us (remembering that our map is not the terrain) as well as signalling when the world is changing. If we have a good measuring system in place we’ll hopefully get plenty of warning and time to respond. Without it we may discover what we need to know too late to be effective.
I use terms like ‘mission’, ‘purpose’, ‘vision’, and ‘goal’ somewhat interchangeably in my work but I like ‘mission’ because - when used right - it creates a sense of coming together to achieve something we really believe in doing. Our mission addresses why we are doing this. It helps us ensure we are on the right journey. It helps us to get alignment in our organisation. And a good mission is a beacon to attract talent who believe in the same change that you do. If you’re going to invest years of your life into a business, don’t you want to be sure it’s creating something worthwhile? Something that, at the end, you’re going to be glad you did and not be left disappointed.
Perspective could be described as 360° vision or the ability to see around corners. It is perspective that helps us see what’s coming up behind us, or to see ourselves as others might see us. Part of being a driven entrepreneur is getting so focused on what you’re doing that it’s almost inevitable that you lose perspective. Knowing when to shift your focus and what you should focus on right now can be a significant challenge. There are many things we need to keep track of, not least how the landscape is changing around us. We need tools to help us manage our perspective.
Why us and not our competition? This is the art of the advantage. We need to ensure that any product or service we spend time, effort, and cash, building, gives us an advantage that justifies (and defends) our value with customers. It prompts us to understand customers better and think about how different things we can do move the needle for our business rather than concentrating on building product features.
We’re a tribe of software builders. It’s how we aim to make the world a better place. But, very often, software isn’t the world we come from and has its own disciplines and traps for an unwary CEO. In particular, building software can get very expensive, very quickly, and if we don’t start out right it can be very hard to correct our trajectory. So we need to learn how to do this better. In particular how to ensure that spending money building software has a tangible, positive, effect on our business.
The strategy weaves together all the other elements. It points to where we should go and helps us discriminate between the things we should and should not do. A lot has been written about strategy and much of it is hard to access for a busy CEO. However borrowing from the approach outlined by Richard Rumelt in his excellent book Good Strategy/Bad Strategy: The difference and why it matters we can focus on defining a strategy kernel and identifying and addressing critical factors. This any business can, and should, do.
The COMPASS system that I will begin publishing soon contains an overall approach that addresses the pillars, as well as a set of tools (some I have created myself, some are published by generous third parties such as Alex Osterwalder, Tony Ulwick, David Bland, and Gojko Adzic). The goal is to build a toolset that helps a CEO understand where they are in the process of building software and decide “What should I be focusing on next?”
I won’t claim COMPASS represents the comprehensive list of concerns that a CEO must be on top of, but experience has taught me the importance of each of them. I believe that any software CEO who masters these elements and responds to their challenge is giving themselves, and their business, the best chance of success.