I’m a services software developer, which means that my company makes money by building custom systems for organizations that need systems’ solutions. These projects are typically priced based on man-hours required to build the system, so the billable hour is king in a company like ours. The philosophical problem is determining what value a non-billable activity brings to the company and/or the employee performing that activity, and how (and whether) the company should incentivize or dissuade employees from performing those activities. (I was an economics major among other things in college, so this philosophical question holds particular interest for me.)

Three somewhat concrete examples: taking training, writing proposals, and participating in technical leadership communities. No client is interested in paying for these activities, as they don’t benefit them directly, so any hours spent here are non-billable. In each of those cases, the company receives some benefit from its employees spending time in these non-billable activities. In each of those cases, the employee receives some benefit from spending time in these non-billable activities. In the case of training, I’d say the benefit lays most heavily on the employee’s side; for proposal writing, more heavily on the company’s side; and for technical leadership, it’s more of a mix.

Our company’s policy, given its reliance on billable hours for cash flow and profitability, is that non-billable activities occur above and beyond billable hour activities. For an employee that’s fully tasked (e.g., 40 hours a week are billable), that means any of these other non-billable activities occur “on their own time”. The company retains the maximum revenue benefits of the employee’s time. Since employees are salaried, there’s little additional cost incurred by having an employee work beyond their regulated work week.

The problem I see here is that any individual employee believes that their “own time” is valuable. Whilst I’ve heard of companies where the pursuit of geek nirvana rules (Microsoft), ours isn’t one of them. We are all, for the most part, very interested in being great developers/architects/project leaders/managers. We are also interested in being great parents, great friends, great volunteers, great people who spend time pursuing their various interests. The presumed rewards for doing these non-billable tasks, and thus taking away from our own time, are opportunities for professional advancement and challenges. But those opportunities and challenges aren’t guaranteed: they’re our visions of a probable future. As any little kid can tell you, though, a pleasure enjoyed today usually beats out some promise of a potential unknown reward in the future.

So, weighing the balance, the employee chooses to avoid the non-billable work, knowing that its load takes away from his or her current enjoyment of things outside work. But that non-billable work benefits the company, and so if the non-billable work doesn’t occur, the company doesn’t get those benefits. The employee hasn’t really lost anything – they’ve enjoyed today, and there was no guarantee of tomorrow’s reward – but the company has lost. In the short term, the company benefited from the single-minded focus on billable hours, but at the expense of the benefits brought by an investment in non-billable hours. (Those were also future benefits, so not as tangible as current benefits, but presumably a company managing their investments in non-billable can presume to be getting a good return on that investment.)

I need to learn more about financial models. It seems to me that there should be some way of figuring out the best mix of billable/non-billable activities, and the necessary incentives to accomplish that mix. Presumably, activities that benefit the employee more would need to be incentivized less than activities that benefitted the company more. But I haven’t figured out how to express all of that in a business case – all I’ve been able to do so far is comment that I don’t think we’ve got the mix quite right. Not nearly so constructive as “and here’s what I think a better mix would be, and here’s why”. Boy, wouldn’t I be the cheese if I could solve that problem!

Hmmm…. muenster or cheddar or swiss – which should be on my business card??

Seen in a recent cnnfn article: “chatter that we may soon nab Bin Laden helped stocks recoup their losses”.

I know hope springs eternal for an end to the mostly down movements of our stock market over the past three years, but bin Laden’s various terrorist movements have done little to impact our economic policy (Bush still won’t admit that the war’s going to cost anything, hence no policy change) and have impacted very few companies. Airlines could complain, as of 2001 and into 2002, but if they’re still complaining about bin Laden and the 9/11 attack, then they’re looking now into fairly ancient history, as far as business impacts go. So, how capturing bin Laden should cause the future business potential of any company to go up (and thus its stock price), I don’t know. You could say that markets react to the threat of war, because war increases uncertainty, which makes predictions for future economic prospects less dependable. Using that logic, capturing bin Laden reduces the threat of war, and so reduces uncertainty, and thus there’s more confidence in economic predictions. But our major threats of war right now have nothing to do with bin Laden (OK, little to do, since one of the claims against Iraq is that they support terrorist organizations like that of bin Laden). Iraq’s weapons of mass destruction have no connection to bin Laden, unless they sell them to him and North Korea’s brinksmanship has not been linked in any way to our fanatical foe.

Maybe what the stock market is really reacting to is the idea that, as American investors, we’re not really scared of Iraq impacting us personally, or North Korea making an impact to our daily lives. Yes, our military will end up in harms’ way, but not us personally. Whereas bin Laden was very effective at least once. Maybe the stock market’s not breathing a sigh of relief that companies are going to do better or that the country won’t go to war, but maybe that we won’t personally be killed before we can spend our money. Or, looking at it even more perversely, since we don’t think we’ll be killed by the Taliban madman, we need to stop living for today by buying the bigger hotuse or that SUV with the great deal, and instead invest our money, since Social Security sure isn’t going to support us in our newly rediscovered future old age.

One of the various books that’s gotten some attention from me lately is by a guy named Seth Godin. He’s written a book called Purple Cow: Transform Your Business by Becoming Remarkable. Its basic premise is that consumers no longer pay attention to marketing, so marketing no longer is an effective mechanism for selling products and services. Consumers sell themselves and other consumers on “remarkable” products. If a product doesn’t have that remarkable edge about it that causes consumers to 1) recognize that product as “the” solution to their problem or itch, and 2) then tell other consumers about this great product, then the product will not do well in today’s marketplace. (To give appropriate background info, I ran across this book via Fast Company, and accepted Mr. Godin’s offer of a free book (free + $5.00 S&H)).

Questions: 1) Do I agree with his basic premises and theory? (Note that I haven’t finished reading the book yet.) 2) Is Mr. Godin’s book itself a remarkable product?

Answers: 1) So far, my gut agrees on the ignoring the mass media part, anyway. Looking around me, seeing the number of times my husband channel-surfs through a commercial, the buzz that used to surround the Tivo, the fact that web browser companies give away their product for free but sell the version of their product that doesn’t include commercials. . . I’d have to say that the American consumer doesn’t give too much attention to commercials. The one exception is the Super Bowl, where we pay way too much attention to the commercials, and little attention the product being hawked. I can remember plenty of Bud Bowl game commercials, but can’t say as I have any more respect for their product because of them. Do I, however, base my purchasing decisions on whether a product is remarkable? In general, I’d say, no, I don’t. Mine is a calculation of value, usually – my Handspring being the obvious exception. (OK, so I thought that was remarkable and bought it.) As we start thinking about mini-vans, I don’t consider whether it has a neato cool feature that makes it stand out from the rest – I’m interested in its service history, its MPG, its safety record, etc. In fact, I’m very likely to turn down a remarkable new offering just because it’s new and I don’t trust it to yet have the kinks worked out.

But reconsider: what if I found a vehicle that met my MPG dreams, my safety wishes, and was from a dealer that I thought I could trust? Would I be willing to pay a price premium for that “remarkable” product? And thus free the selling company from competing solely on my usual value critieria? The light dawns. . . (BTW, I have high hopes for the Saturn VUE – word is that it’ll be offered as a gas-electric hybrid in 2004.)

The challenge, then, for me in applying this to what I do (or determining that I need to do something else). . . determine either the wow feature of J2EE software systems or determine a way to break outside some set of constraints that were previously perceived to be bounding J2EE software systems development (ala my service, MPG, and safety wishes for my mini-van). That’s the puzzle that’s been niggling for a few days in my spare moments. Moo.

[Note that this post, had it been extended to fully encompass the thoughts that drove it, would have been too long, and deprived me of too much sleep, for either of our comfort. Forgive me my disjoints in thought processes and communications. Trust me that it all works out somehow in the wash, at least in the brain pinging around inside my skull.]