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Four Laws of Software Economics
The document presents four laws of software economics by Rich Mironov, emphasizing the need for prioritization, understanding market demands, and recognizing that profits come from reusing software. Key points include that development teams will always be limited, and success hinges on delivering complete products rather than just software components. Additionally, effective strategy requires insight into customer needs and cannot be delegated away.
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Four Laws of Software Economics
- 1. FOUR LAWS OF SOFTWAREECONOMICS RICH MIRONOV @richmironov
- 3. @richmironov 4 Laws ofSoftware Economics #1 Your development team will never be big enough
- 4. Development can never buildas fast as we can dream
- 5. Magical Thinking “CEO saysit’s really important.” “We already promised it to a big prospect.” “How hard could it be? Probably only 10 lines of code.” “We’ve been talking about this for months.” “We’ve gone agile, which gives us infinite capacity...” “My neighbor’s kid could do this in an hour.”
- 6. #1 Law of RuthlessPrioritization • AND requests but EXCLUSIVE-OR decisions • We succeed by finishing a few critical things Executive’s Job • Make hard trade-offs • Battle magical thinking and one-offs
- 7. 4 Laws ofSoftware Economics 1. Your development team will never be big enough Law of Ruthless Prioritization 2. All of the profits are in the nth copy
- 8. For Software All ofthe profits are in the nth copy
- 9. Revenue Implications Goal isnot to minimize costs but to maximize revenue • Your development team of 6 costs… • Implied revenue commitment… • Incremental cost per user? $1M/year $6M/year
- 10.
- 11. There’s nothing more wastefulthan brilliantly engineering a product that doesn’t sell.
- 13. #2 Law of BuildOnce, Sell Many • Segmentation: strategic art of choosing customers who want the same solution Executive’s Job • Focus on segments, not deals
- 14. 4 Laws ofSoftware Economics 1. Your development team will never be big enough Law of Ruthless Prioritization 2. All of the profits are in the nth copy Law of Build Once, Sell Many 3. Software bits are not the product
- 16. Naked without • Deepcustomer understanding • Positioning, messaging, awareness • Sales & channels • Support, evangelism Software Bits < Whole Product @richmironov
- 17. Commercial Software FailureModes* Undifferentiated or poorly positioned Marketing/sales/ channel failures Late delivery Poor quality Wrong problem, wrong solution *In my personal experience
- 18. Most of thesuccess / failure of a product is determined before we pick our first developer or fill out our first story card
- 19. #3 Law of WholeProducts • Customers buy solutions (include software) • Mean-Time-To-Joy Executive’s Job • Watch for organizational silos • Make sure incentives are aligned
- 20. 4 Laws ofSoftware Economics 1. Your development team will never be big enough Law of Ruthless Prioritization 2. All of the profits are in the nth copy Law of Build Once, Sell Many 3. Software bits are not the product Law of Whole Products 4. You can’t outsource your strategy
- 21. Input < Decisions •Voice of the Customer • Surveys • Crowdsourced feature ranking • Showcase customers • Industry analysts • Competitor data sheets • Smartest customers • Smartest developers • Executive Survey-of-One • Investment banker • Your mother-in-law • Inflight magazine @richmironov
- 22.
- 23. • Business valueerror bars >> engineering error bars • Bottom-up prioritization ugly products • Biased trade-offs among unlike items Analytics < Strategy
- 24. • Hard torank-order unlike items • Instead, group similar requests • Cross-bucket trade-offs reflect our biases Prioritizing Within Buckets Prioritization within buckets
- 25. “I skate towhere the puck is going to be” Strategy Requires Strategy Strategy requires judgment
- 26. 4 Laws ofSoftware Economics 1. Your development team will never be big enough Law of Ruthless Prioritization 2. All of the profits are in the nth copy Law of Build Once, Sell Many 3. Software bits are not the product Law of Whole Products 4. You can’t outsource your strategy Law of Judgment
- 27. Rich Mironov Mironov Consulting SanFrancisco, CA rich@mironov.com 1.650.315.7394 twitter.com/richmironov linkedin.com/in/richmironov
Editor's Notes
- #2 © 2015 Rich Mironov, Mironov Consulting. Rights reserved.