Economics for Software Developers. 1. Quality. Sustainability. Scaling. (Growth)

Having:

  • Software Development as my first high education;
  • an experience to be a software developer;
  • an experience to teach future software developers;
  • an experience to discuss economical topics with software developers;
  • an experience to be a director of software development company;
  • read a lot of “economical” posts and discussions on the different sites (like DOU in Ukraine)

i realized a “distance between regular software developer and economy” as a sphere of our life and an unavoidable part of our surrounding.
So I would like to describe some economical issues/situations/reality in a way which I hope “resonate” with a mindset of software developers.

1. Quality. Sustainability. Scaling. (Growth)

Kind of an issue I’ve described a lot of times: “Some person (or small group of people) is producing a Perfect Product (or Service). Why do they usually either grow and start to produce less good product or just disappear?”

  • How it works: Everything starts when some person (or small group of people) implement their “hobby or product they are passionate about”. Product is perfect because:
  • author is passionate about the product;
  • product has been planned/prepared/implemented passionately in the best possible way;
  • person is just right executor to produce The Product. (No Wrong People are involved.

E.g.: My favorite example of the Perfect Product which keeps its quality for many years already is the “Pan Marzipan” Cafe/Restaurant in Zhitomir.
It is perfect to have a Perfect Product. But a situation is relatively sustainable only in several cases:

  • Executor is ready to serve a small (limited) amount of customers himself with relative small and limited income from the Product. (Even in case of loyal customers this option might appear to be not sustainable in case of either crisis or appearance of a “replacing product” with much lower price and reasonable quality. Competitor may save a lot of money on the scale of his business having less fixed expenses per one item of Product.)
  • The Product is being produced by the “cloned parts” of the big company. I like the term “to grow out” given by Jurgen Appelo in his book Management 3.0 for the situation when some entity replicates itself by creating more small copies around.

Otherwise the Perfect Product which is being produced by the person will be destroyed by:

  • a crisis when a payable demand for the Product will not allow the person to survive.
  • a big competitor who has an “industrial knowledge” in the manufacturing, marketing, logistics, has a big budget for an advertisement and reasonable savings on the scale.
  • inability of the small producer to provide constant supply/support/additional service.

As you may see from the article above, growth is the usual way to sustainability, but it also brings a lot of risks to have a situation when the quality of a product is not too high and product appeared to be not “the perfect fit for the small group of customers”, but “the reasonable (in the best case – better than others) fit for the wide group of customers”.
Growth is usually good, but every time risky. An explanation why growth is risky you may read in some of the next articles of EfSD (Economics for Software Developers).

Dmitry Antonyuk,
ISM Ukraine
,
director
Zhitomir 2011

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This entry was posted in Doing business in Ukraine, Economics for Software Developers, Education, IT (software development), Life, Work and tagged , . Bookmark the permalink.

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