Strategic CIO // Enterprise Agility
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7/8/2014
09:06 AM
Chris Murphy
Chris Murphy
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Tech Leaders On Speed Vs. Risk: InformationWeek Video

GE, Netflix leaders explore how to develop new products and features faster while controlling the risk.

As a maker of aircraft engines and power plant turbines, it's a good thing that General Electric engineers get risk reduction engrained into their DNA from the first day on the job. The downside: How does a company like GE learn to develop products faster in such an environment? How does IT experiment with cutting-edge tech without cutting corners?

GE CIO Jim Fowler addressed this tension between speed and risk management at the InformationWeek Conference in April. A major reason GE opened a large software development center in San Ramon, Calif., in 2013 was to create a culture more aligned with developing products faster, he said.

[Technology is great if you know how to use it. Read Internet of Things Done Wrong Stifles Innovation.]

"If you're an engineer at GE you learn about quality from day one, and you learn about process rigor and control, and unfortunately sometimes the process rigor and control get in the way of speed," Fowler said. (See video excerpt below.) Fowler was CIO of GE Power & Water at the time; he has since been named CIO of GE Capital.

GE is trying to take some of the tactics used in the San Ramon center (which now employs more than 700 people) and apply them to the rest of GE, without sacrificing the quality and controls essential to the company's products. Those tactics can include relying on 10-person dev teams instead of 100- to 150-person teams, and focusing on 30-day outcomes instead of three-year timeframes. CEO Jeffrey Immelt refers to this idea of embracing new tactics and innovation as "Fast Works."

Netflix's developers think they can turn the speed vs. risk management dilemma on its head: Add new features more often to the company's web-based video streaming service while lowering the risk of downtime at the same time. Adrian Cockcroft, former Netflix cloud architect and current Battery Ventures technology fellow, described the process at the InformationWeek Conference. (See video excerpts below.)

Netflix removed the multiple stages and departments required to deploy a software change to the production environment. "There's no 'meeting with Ops' to put a feature in production," Cockcroft said. New software relies on APIs that deliver about 600 different micro-services, so a new feature relies on very little new code, he said.

The reasoning: By making small changes to the live production environment very often, the rate of change increases but the risk decreases, because only a small part of the system is impaired if the code is flawed, so the required fix is quick and easy. "It's much easier to switch one thing back if it breaks," said Cockcroft. He compared that approach to a conventional big-bang software release process, with 100 software changes bundled together so that if one element breaks, "you end up backing out 99 things that didn't break."

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Chris Murphy is editor of InformationWeek and leader of its Strategic CIO community. He has been covering technology leadership and strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in Hungary; ... View Full Bio
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yalanand
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yalanand,
User Rank: Ninja
7/30/2014 | 4:20:32 PM
Re: For every GE there are many Kodaks
@D. Henschen: Finance management is tough when there are so many resources at your disposal and you?ve got so many subsidiaries to take into account. Financial innovation requires marketing models and risk management that can get the better of any marketing analyst. Therefore what GE does (according to this article) is create low number teams of marketing analysts and gives them a lesser time frame, while the risk management is given to another department.
yalanand
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yalanand,
User Rank: Ninja
7/30/2014 | 4:19:55 PM
SPEED vs. RISK
This particular thing seems to be a headache for every manager out there, and in a market where speed is of utmost importance, the risk management is also important because in the end, customer safety (both physical and digital) guarantees market forces. Some companies create the most secure software but in low volumes, and they also take the pinch when it comes to market leading attributes. GE is finding new tactics to set the graph between risk and speed a constant slope for a long time to come.
zerox203
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zerox203,
User Rank: Ninja
7/10/2014 | 1:34:24 PM
Re: Tech Leaders On Speed VS. Risk
Thanks for this, Chris. All these recaps from the InformationWeek Conference (a great event which is news to me) are really well-done and the videos are well cut together. After all, IT people aren't always known for being the most talkative bunch, and sometimes they're more excited to get off stage than to share their innovations (I know I'm in this camp!). You guys do a great a job of asking the right questions and making sure you capture the important bits. Indeed, we've had a handful or articles just on these processes at GE and Netflix alone, but I feel like I'm learning something new or getting a different take every time.

It is true that smaller organisations iell have trouble replicating the muscle or finances of a GE or a Netflix, but that doesn't mean they can't replicate the agility. Indeed, it seems like GE is going out of it's way to take a page out of smaller organisations' playbooks with some of these changes. Sometimes, breakind down walls (in terms of processes and so forth) that we've had for such a long time sometimes makes us wonder what we needed them for in the first place. The chart from Mr. Cockcroft makes it seem pretty straightforward - why go through fives teams when you could go through three? However, for your individual organization, it's important to decide which two are the ones that are unnecessary and which processes you'd be better off without - it doesn't mean to axe everything.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
7/9/2014 | 2:36:58 PM
Re: Requires incredible discipline
David, it definitely is a change in mentality to only develop that new feature, and to make everything else a common, reuseable service. But it's not just the developer, it's having an infrastructure that makes that service re-use feasible and practical.
D. Henschen
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D. Henschen,
User Rank: Author
7/8/2014 | 2:17:11 PM
For every GE there are many Kodaks
For every company like GE -- going out of its way to embrace disruption -- there are all too many Kodaks. Kodak actually invented a lot of the patents around digital photography, but it couldn't get out of its own way and ended up in bankruptcy. The film business was too seductive a cash cow. The printer business was (and still seems to be) the hoped-for way to recreate the old razor-blade model (even though HP, Canon, Lexmark and others already had the market well covered).

We'll see if Fowler can bring this IOT model over to GE Finance. Seems like they have good headway on industrial innovation, but financial innovation is likely to be a different animal.
Laurianne
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Laurianne,
User Rank: Author
7/8/2014 | 11:27:05 AM
Fast Works
I expect more CEOs will follow Immelt's lead and demand a "Fast Works" approach as well. As for Cockcroft, he really seems to have given the developers rock star status inside Netflix, while effectively merging IT and business ops. He argues others can make this cultural leap too -- if they have the will. 
David F. Carr
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David F. Carr,
User Rank: Author
7/8/2014 | 9:49:18 AM
Requires incredible discipline
The Netflix approach is impressive because it requires a lot of discipline to break functionality down into such atomic units. I think the more natural instinct for a developer is to create in bigger chunks.
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