Poverty Thinking and Corporate Transformation

Summary: Success arises when we transform significantly, not just do marginally better. We must give ourselves and our teams mandates, time and incentives to ponder and execute such transformations.

Last month, MIT professor and economist Esther Duflo won the prestigious John Bates Clark award, for the person under 40 who contributed most to economics.  There is an inspiring profile of her in The New Yorker.  Dr Duflo performs economic experiments in developing countries, exploring important problems statistically (for example, that quotas requiring proportional representation for women in elections do, in fact, reduce societal bias). Such experiments give us clearer direction for future action.

I was struck by the following passage that illustrates a problem we often overlook at work, both as individuals and as an organization:

On a plane to New Delhi one evening, the Bolaño unopened on her tray table, Duflo took a moment to recall her childhood idea of what it was like to be poor in a developing country. “I had this sense of people completely hapless, who have no control of anything, for no fault of their own,” she said. She imagined the poor as “people who have to walk ten kilometres to find some dirty water, and then drink it and immediately die of cholera.” She laughed.

Her adult view is that the poor are very clever about money, except when they are not clever at all; they are “incredibly smart” about day-to-day financial matters, “because the cost of errors is much bigger,” but “so busy doing this effort, and optimizing on some margin, that they might entirely miss some huge elephant in the room,” like the importance of buying fertilizer for their crops, or immunizing their children. She referred to the old joke, made at the expense of economists who assume that all consumers are rational, about the person who sees a hundred-dollar bill in the street but is restrained from picking it up by the thought that if it were real someone else would have taken it. “If you’re a development economist—at least, in my view—you realize there are many, many, many hundred-dollar bills lying on the sidewalk,” she said. “There are efficiency gains waiting everywhere.”

The New Yorker (May 17, 2010)

Good “program management thinking,” which really should be done by every manager and executive, demands that we look not only at the efficiency of individuals and teams, but also the efficiency of the systems in which we work, all the way from idea conception to customer delivery and marketing. There are plenty of people who become doctrinaire about agile methods who may have forgotten why we were doing it in the first place, and that we have many knobs to turn, not just knobs relating to software development.

When we feel overwhelmed or uncertain about work, it is particularly easy to fall into the “marginal optimization” trap Duflo sees in the poor. If we find ourselves in such situations, somehow we must find ways to reduce our workload, and then use that time to think more clearly and execute more broadly. Systemic efficiency gains can often be considered only when we are given enough slack to think.

Overloading Sprints with too many features can force us to stay “impoverished” with marginal optimization.  Jeff Sutherland advises that we accept into our Sprints no more story points than we have completed, on average, in the previous few sprints, and then focus deliberately on getting those done.  If we complete everything on our Sprint backlog, we can then take a step back and consider systemic issues and global (rather than marginal) optimization. Of course, we can take on new work from the backlog, but we can also refactor either our code or our process to make future accomplishments better and faster.

Or we can go further, to think about the systems that impact us, the customers we serve, and the hundred-dollar bills lying everywhere on the sidewalk.

New Yorker article abstract:

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