October 12, 2020

How Big Investments in Tech Can Lead to Small Returns

“Moneyball: The Art of Winning an Unfair Game” should be required reading for all technology leaders. The book is about Billy Beane, GM for the Oakland A’s, and his outsized success given his budget. Billy’s ability to find success where others fail to see it is uncanny. His use of data to analyze baseball players was unheard of at the time. Of course, now Sabermetrics is used by all teams. There’s a lesson in here for many companies.

A perfect example

A recent article in the WSJ, “Kroger Spent Hundreds of Millions on Tech Before Covid-19, but It Wasn’t Enough”, caught my eye. It highlights the disparity between Kroger’s investments in technology and the results they’ve received. Despite investing in drone delivery and remote fulfillment centers, companies like Albertsons and Target had better results in same-store sales and digital sales.

I think our friends at Kroger could have benefited from “Moneyball” coupled with Dr. Nicole Forsgren’s “Accelerate”. Dr. Forsgren applies her Ph.D. in Computer Science to slice and dice a huge data set on how companies perform their software development and delivery tasks.

Kroger didn’t miss the mark by betting on technology; They missed the mark on betting on technology that didn’t immediately show results. Remember, it took a while before Spring delivered on cloud-native computing. Kroger’s strategy lacked the flexibility, and agility to respond quickly to events like COVID-19. Of course, a Kroger spokesperson described the investments as “timely and allowed the grocer to quickly expand e-commerce services.” But that is simply not the case. Kroger has been slow to roll out services for customers that competitors have already delivered on. Customers have described their app as clunky and frustrating.

Keys to positive software delivery

Four simple metrics provide the keys to positive software delivery:

  • Lead time for changes
  • Deployment frequency
  • Time to restore service
  • Change failure rate

You will not find “swing for the fences” technology bets here. It’s all about playing small ball: generating runs through singles, walks, and hits-by-pitch. It’s about doing the small things really well so you can do the big things great.

To a lot of people, big partnerships and moonshots are sexy and get a lot of attention. But changes like delivering daily instead of monthly or weekly, are far more impactful.

Dr. Forsgren drills into the results in delivering better software faster in the 2015 State of DevOps report:

“In a follow-up survey last year, we gathered stock ticker data and performed additional analysis on responses from just over 1,000 people who volunteered the names of the companies where they worked, and whose companies are publicly traded. We found that these people were from 355 companies, and they all outperformed the S&P 500 over a three-year period. The publicly traded companies that had high-performing IT teams had 50 percent higher market capitalization growth over three years than those with low-performing IT organizations.”

By focusing on the four metrics listed above first, you’ll be able to take advantage of moonshots and other technology gambles. If they result in a positive outcome, you win. If they fail to deliver on results, your company is still going to outperform the market and competitors.

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Robert Reeves
Robert Reeves
CTO & Co-Founder
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