Reducing Uncertainty == Value

In knowledge work, there is value in reducing uncertainty.

Certainty is comfort. Certainty is ease. Certainty is the product.

I’m pretty sure it was Steve McConnell in Rapid Development (which Amazon remembers me purchasing 17 years ago) who introduced me to the concept of the Cone of uncertainty.  In the book, he explains how as requirements are gathered, code is built, and testing is performed that we progressively improve our ability to estimate since unknowns are being removed.  I think this concept has a broader application to any type of knowledge work, be it software development, consulting, financial valuation, or other types of “figuring things out”.  Here’s a sketch to illustrate my mental model:

It is useful to keep in mind that you can never remove all of the uncertainty – you can only get as close to Truth as is practical with an acceptable amount of uncertainty remaining.

Look at the Cone of Uncertainty as a model, not as actual measurement, and consider the path from initiation (Complete Unknown) to delivery – such as working software which has been tested, documented, formatted, commented, etc.  Let’s slice the cone into 9 steps and pull out the total uncertainty (i.e. add the left and right distances from Truth centerline) to represent what someone needs to overcome to move to the next step:

At step 1 (Creation/Initiation) there is a huge reduction in the amount of uncertainty. Accordingly, there is huge value.  People who create companies, people who create products, and salespeople are all good examples of working in that area.  The ability to go from a nearly complete unknown to something that has structure is incredibly valuable – and can offer corresponding financial rewards.

The next few steps chip away at uncertainty until we get to the first working version.  It’s not just that it takes skills to gather requirements, determine an appropriate architecture, and design a system – it’s that at every step along that path there is a non-trivial amount of uncertainty which must be dealt with.  The people working in those domains need to understand that uncertainty and press forward to reduce it.  It’s uncomfortable to be unsure.  The feeling of sticking your neck out and running the risk of being wrong can be crippling to some – think of everyone who says that they could never be a salesperson or start a company.  Those who overcome that feeling and work through it, however, are some of the highest paid people in any industry.

Note also that between step 5 (First working version) and step 9 (which is, essentially, a very specific form of documentation) there is very little reduction in uncertainty. This makes sense if you think about it – you could hand software from step 8 to anyone with basic development skills to have step 9 completed. While this is still an important step, there is substantially less value in it compared to building the first version since it is commodity work.  This is also one of the reasons why developers are so hesitant to comment their code, write documentation, etc. – it doesn’t have the same level of satisfaction that comes from building something and going from concept to functioning code.

This idea has been on my mind for a few weeks now since I work with team members in a wide spectrum of capabilities and price points.  I started wondering, “Why do we pay Igor the designer more than Ivan the tester?” and “Why is this guy paid like a team lead while that guy is paid like an intern?” In each case it wasn’t the individual’s skill level, but the amount of uncertainty they managed to both deal with and reduce for us.  A designer who can take fuzzy direction like, “Make it look modern and attractive” and create a great user interface is worth more to us than a tester who takes a piece of software and reports back “Here are the things I tried and here are the results”.  This is particularly interesting to me since testing is hard and requires more skill to do well than most people realize.

I’ve focused a lot on how this applies to software, but I’m pretty sure you can apply it to any knowledge-work based position.  This leads to a couple of important conclusions.  The first is that you need to accept, acknowledge, and overcome uncertainty.  Part of your job is to explain, contain, and remove that uncertainty.  This is usually accomplished by writing something which explains what you found, what you decided, and why.  Someone with more (or different) experience may disagree with you, but if you’ve provided what you know and what you think it will be easy for others to improve or correct what you’ve done.  Lastly, if you’re looking for a way to become more valuable then work your way up the cone to deal with increasing levels of uncertainty.  The ultimate is to create a completely new product or company and go from the terrifying unknown to millions of people understanding you.

You Are a Product

Think of yourself as a product for a few moments. Your employer (or client) continuously refills on what you have to offer.

Now think of how you treat products.  The ones you like and seek out vs. the ones you just kind of use because they’re there or because switching costs are high.  There are also products you use that you really don’t like, but feel there is no good alternative (I’m looking at you, AT&T which has essentially a monopoly where I live).

Which are you?  Are you a product with a devoted following or are you just there because you’re there?

One of the difficult aspects of the modern economy is that there are new, competing products being released all the time.  Just like music moved from tape to digital, there are now alternatives to what you’ve been doing for years.  Not many people (if any) said, “Think of the tape manufacturers – it’s not fair, we need to keep using cassettes!”  Instead, we saw that CDs (and then MP3s and then streaming) were better alternatives and so we switched.

Jobs are “disappearing” because there are so many better alternatives to hiring for those jobs.  From outsourcing to machine learning to robotics and drones and autonomous vehicles – you aren’t competing against just other people anymore.

A new model year for you is just around the corner.  Is the 2017 edition of you going to sell out or sit on the shelf?  You need to become your own product manager, which means understanding your true competition, your actual costs (if you are unfamiliar with “fully burdened labor costs” then Google it – or just add 20% to your pay to estimate it), your actual value, etc.

So, as the year winds down give some serious thought to your entire offering – from packaging to warranty.

Here’s to wishing you a year of Apple-level devotion and margins!

Your #1 Job

Your #1 j ob is to make people want to work with you.  If you’re ever faced with a work decision, use that measuring stick first by asking if your response makes someone want to work with you more, less, or the same. Since a large part of my brand is clarity, I’ll break this down into specifics, but please keep in mind that this list isn’t comprehensive and that environments vary widely.

  • Deliver.  Getting your work done is critical. This is the biggest influencer on whether people want to work with you.
  • Smile. Not just in your facial expressions, but in your words and voice. Being pleasant is a close second to getting your work done and close enough that I’ve seen ineffective people retain their position far longer than they should simply because everyone liked them.
  • Innovate.  While this is a pretty overused term, I’m using it here to specifically mean “do something or create something new which is a pleasant surprise”. It only takes 1 or 2 small innovations a year for people to want to work with you and see what’s next.
  • Bleed. You are going to make a mistake – own that mistake and do everything you can to make things right. You should not, of course, intentionally create problems but it’s pretty safe to say that problems will come.  If you are the type of person who never blames others nor covers things up then people will notice (consciously or not) and want to work with you.
  • Support. Keep an eye out for others having difficulty and jump in to get their head above water.  Someone who can keep the team moving in the toughest of times will be sought out and held onto.
  • Teach. If you can make others more valuable then you are a force multiplier and people will want to work with you.
  • Delight. The occasional left-field surprise goes a long way.

The challenging aspect to all this is that it needs to be genuine – for example pleasant can’t be an act, it needs to be a commitment.

How NOT to Ask for a Raise

To close out my year-end thoughts on salary and raises, let’s cover some anti-patterns in asking for a raise.  These are frequently occurring ill-advised behaviors that tend to drive managers crazy even if they don’t tell you they do.

  1. Benchmarking yourself against someone else.  This is usually some form of “Bob gets paid x and I’m at least as good as Bob, so I deserve x (or x+)”.  I’ll admit, the logic is solid – the problem is that the information is flawed.  It all comes down to “you’re not Bob” or, more specifically, “You have so little actual information about how you and Bob both fit into the organization that your comparison betrays your naïveté”.  This is one to never, ever do.  At best, you look naive.  At worst, you look like you can’t stand on your own merits.  Focus attention on your value – that’s what you’re selling.
  2. Benchmarking yourself against “the market”.  This one is an all-time favorite of mine.  It’s less awkward than targeting an individual within the organization, like Bob, and so it’s very tempting. What you’re saying (intentionally or not) is that you view the organization as a commodity which can be easily replaced based purely on the dollar figure.  My knee-jerk reaction to this line of reasoning is usually, “Right back at ya, brother” (since I’ve only ever had guys be this ham-handed about it).  So, you’d like to play the game of maximizing economic efficiency without regard to any other factor?  Keep in mind that that was my life/job as a crappy manager at the beginning of my career since most managers make that mistake early, lose someone valuable, and reflect upon it every time they argue for “overpaying” a force-multiplier employee.  I get it, you see ads on Dice, or Monster, or Stack Overflow, and think “Wow, that could be me”.  Perhaps it could be and, if that’s what you want, I’ll help you get there.  I would rather have someone work somewhere else and be happy than feel like they’re trapped on my team.  Keep in mind that someone else’s willingness and ability to pay more money isn’t an obligation for your organization to pay you more.  In other words, the two are independent variables as far as your request for a raise is concerned.  Yes, your manager should be aware of what “the market” is offering and should factor that into your pay or risk losing you – but suggesting that you deserve a raise because you feel you could make more somewhere else once again reveals a lack of understanding of what you have to offer.
  3. Suggesting you deserve a raise because of what you’ve done this year. This is where we start to get into a tricky area and one that trips up a lot of employees.  Let’s say you busted your ass all year long and, at the end, you feel unappreciated with a smaller than expected raise.  What happened?  Well, it could be any number of things.  Maybe you busted your ass in Q4 and that erased your memory of coasting through Qs 1, 2, and 3.  Maybe you busted your ass on the wrong things.  Maybe you felt like you busted your ass, but really you were just keeping up.  There are so many possibilities, most of which boil down to “you didn’t work with your manager to ensure that your actions were aligned with the organization”.  Lastly, a raise should be for future work – a bonus should be for past work.  Just like a Franklin Mint plate, past performance is no guarantee of future returns (although some plates have gone up in value).  This is especially true if you were at all vocal about your extra work.  Now, the pseudo-exception to this is if you took on extra work which shows that you can provide additional value on an on-going basis.  For example, if you took over part of someone else’s work because their workload has increased and you’re able to continue to do so rather than triggering another hire, then that’s legitimate value. Even in this case, however, the previous work should only be used as evidence of success going forward – always focus on the future.

These certainly aren’t the only mistakes made during “the ask”, but they are the ones I’ve seen enough to rattle off from the top of my head.  If you’ve seen another mistake or, even better, if you’ve seen something you think might be a mistake then please leave it in the comments as a service to those who face this in the future.