Quit Kicking Cans
Let’s Talk About Debt, Baby (insert bad 90s cover music)
If you’ve never done it before, run a search for definitions for the word ‘debt’. Depending on where you look, you’ll get a wide range of answers. From the practical: ‘an I.O.U. for money, goods, and/or services’ to the more idealistic (and slightly ominous sounding): ‘trespass or sin requiring reparation or expiation’. Debt is one of those terms that can cover a lot depending on the context.
For the sake of this discussion, let’s keep it simple and say that debt is an obligation or liability that is owed to someone else. In general, debt involves an agreement to get something now with understanding that repayment will occur at some point in the future (usually with interest). For a lot of people, the most common way to relate is from a financial perspective: one party borrows money or assets from another party with the agreement to pay later. This could be in the form of loans, bonds (well played Mr./Ms. Monopoly), or credit. Because very few things are ever free, let’s keep that part about interest in mind!
Debt can be both a good and bad thing depending on the context and how it is used. In some cases, debt can be beneficial. We can all think of financial examples of ‘good debt’, like taking on debt to invest in a new business or some form of education. This kind of debt is generally considered ‘good’ because it can greatly improve your future financial growth and potential prosperity. The same for debt you take on to buy assets that appreciate in value, like a home.
On the other hand, debt can also be harmful if it’s not used responsibly. Taking on high levels of credit card debt can lead to financial strain and difficulty making payments. Similarly, taking on too much debt in a business (which we just heard could be considered good) can lead to financial difficulty and even bankruptcy if it’s not managed properly. Good or bad, the concept of debt is an important part of life and is used by individuals, businesses, and governments everywhere.
You might be saying to yourself: “Self, I’m not a finance person. In fact, I am a technical person! Why did I just spend time reading the last 300+ words about debt?”
My response is simple: It’s because the concept of debt is not limited to money and finance!
In fact, debt is all over in the technical/business worlds and the same underlying principles apply: its virtually unavoidable and needs to be managed (just like financial debt).
To prove my point, let’s look at two common types of debt: Technical and Organizational.
Technically Speaking… Debt can be Technical!
(WARNING: All puns intended) The term ‘technical debt’ is widely attributed to a software developer and computer programmer named Ward Cunningham. He used the metaphor of financial debt as a way to explain the trade-offs between short-term gains and long-term costs of owning complex systems. To paraphrase his explanation, technical debt is the cost of additional rework caused by choosing an easy, corner-cutting solution now instead of using a better, well-thought-out approach that takes longer.
Basically, it is the cost of doing things the ‘easy’ way instead of the ‘optimal’ way. It is the sum of all the trade-offs, shortcuts, and sloppy practices that went into the product as it was being built. It’s the reason every product has technical debt even if we don’t necessarily see it. No matter what product we make, we all build this type of debt in as we make it.
Examples of technical debt include:
Inefficient software/code that requires a higher upgrade or patch frequency.
Lack of standards/practices that lead to poor performance and/or drive rework.
Poor planning on integration that causes increased complexity and longer timelines.
Cost cutting on hardware component that cause product to be slower/less compatible and physically limits your products functionality.
Just like with financial debt, there is interest on technical debt. At some point, you’ll have to pay for those corners that were cut! Anyone who has ever had to go back and add unplanned/unsupported features or integrate two completely independent products can tell you how fun that process can be! The costs can sometimes be more than the original cost of the product, depending on the level of complexity and how much technical debt had accrued.
Because we rarely make perfect ‘optimal’ products technical debt can’t be eliminated. We have to make trade-offs as we go. We just hope the ones we make are the right ones. Due to the cost, resource, and other potential impacts, it is essential that we be aware of and monitor technical debt so that it doesn’t accumulate to the point where it derails your product (or worse!).
Organizational Debt (a.k.a. Proof You Were Right About How Dysfunctional Things Are!)
The organizational equivalent of technical debt is known as (<queue drum roll> wait for it…) organizational debt. Organizational debt is the cost of running, maintaining, and updating an organization that has been built in a way that is less than ideal. We call it ‘organizational’ because it can be an entire company, a project team, a business unit, or any combination. Basically, any group tasked with making a thing can be affected. Similar to technical debt, organizational debt can hide lurking in processes, structures, and systems and causing havoc in ways that are hard to understand, hard to change, or difficult to improve.
Because running any organization is filled with trade-offs (just like technical development), it’s nearly impossible to eliminate organizational debt. That means we are left with monitoring and management as the way we control the effects it has on development and maintenance. Because its a type of debt, it accumulates over time and if not addressed, can become a significant obstacle to achieving organizational goals. Identifying causes and developing ways to reduce them can help organizations to improve their performance, adapt to changing market conditions, and create a more agile and resilient organization.
Examples of organizational debt include:
Bureaucratic processes that slow down decision-making and hinder innovation.
Silos and lack of communication that hinder collaboration and information sharing.
Inefficient and outdated systems that cause delays and errors.
Lack of clear roles and responsibilities that leads to confusion and inefficiencies.
Organizational debt also has interest. Not dealing with a poor performing employee can cause the entire team to function at a reduced level or even break down entirely. Repeatedly choosing suppliers or vendors based largely on non-technical factors (read this as ‘cheaping out’!) can cause your organization to develop products using inferior parts, leading to unhappy customers, increased support/repair footprints, etc. Hiring unqualified or inexperienced personnel to save money can lead to poorly written code with more bugs that will take time and money to fix. This will in turn cause your customers to throw things, say bad words, and potentially find a new solution to their problems.
Organizational debt also needs to be monitored, but it can be much harder to do for this type of debt. This is because it accumulates in, across, and between every functional area. It assumes different forms in each case. Basically, this type of debt is the chameleon-like monstrosity lurking within organizations of every size. People at every level need to be looking for this type of debt, developing strategies to monitor it, and be empowered to mitigate it. The goal of every organization should be to keep debt in check before it grows and destroys your business (before stomping off to eat the capital city of an Asian island nation).
Conclusion (a.k.a. The Payoff)
Both technical and organizational debt can have significant impacts on a business. Any time someone says to deal with a problem later (and kicks some poor, unsuspecting can down the road) they just added to your debt! Technical debt can create issues with product quality and customer satisfaction, while organizational debt can create issues with employee retention and business growth.
If you are part of the technical team responsible for making a product, technical debt can have you pulling your hair out. If you’re constantly fighting fires instead of building products, it may be time to call a time out and rally your troops to look at why. There’s a good chance the root cause is technical debt coming due. (With interest!)
If you are a manager, business owner, or other stakeholder who is sick of fighting folks who are supposed to be on the same team, you should probably start taking a hard look at why. Sit down and start asking hard questions. Bring in fresh perspectives and consider making changes to how business is done. Pay down the organizational debt before it’s too late. Change isn’t easy, but it is a necessary part of life. (No matter what business you’re in!)
So, how can businesses avoid technical and organizational debt?
To avoid technical debt, businesses should:
Build your technical culture around accountability, quality, and maintainability.
Prioritize minimizing technical debt in project planning and budgeting.
For software: best practices! Also, regularly review and refactor code.
For hardware: best practices! Also, don’t cheap out and test, test, test.
Take process improvement seriously and look at everything as a process.
Use automated tools to detect and manage technical debt.
To avoid organizational debt, businesses should:
Prioritize communication and tear down silos! Put away the Blame-throwers!
Empower group leadership to handle issues and actually resolve problems. Stop kicking those cans!
Implement continuous improvement and effective learning.
Regularly review and update processes and systems.
Establish clear roles and responsibilities.
Use data and analytics to identify and address inefficiencies.
At the end of the day, debt can be good or bad. It depends on you and how you handle it (or don’t handle it). But for Pete’s sake, leave those poor cans alone… They’ve suffered enough!
Thanks for reading! Please let me know what you think. I respond to all comments personally.
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