Tuesday, September 13, 2016

Incremental Development is Like a Savings Account

In January of 1996 I opened a mutual fund account, investing in an S&P index fund. My initial deposit was $1,000, and I set up an automatic transfer of $200/month from my checking account. This month I looked at my statement and the account had crossed the $100,000 mark.

You can take that as an example of compound returns, and why you should establish a savings account early in life. But it reminded me of a conversation that I had with a project manager a few years ago, after our company had introduced Scrum.

His complaint was “But we could just decide to stop working on the project at any time!”

My response was a customer-value-oriented “Right, if we no longer provide incremental business value, then we should stop.”

But I now think that was the wrong answer, because in my experience most Agile projects don't stop. They continue to be enhanced for years because there's always an increment of value to be had, worth more than the cost of providing it. By comparison, “big push” projects do stop, because there's always another big project to consume the resources. So companies hop from one big push to another, pay for the team(s) learn the environment, and end up with something that's often less than useful to the client.

Returning to my mutual fund: if I had invested $1,000 and stopped, my investment would be worth approximately $5,000 today — the S&P has returned about 8% annually, even with the 37% downturn in 2008. But the reason that I'm at $100k today is because of the $200 added to the account every month for the past 20 years. Something I could “just stop” at any time.

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