Limit process to preserve innovation

Alpha refers to outperformance/innovation in finance; beta refers to volatility/unpredictability.

Processes in a business exist for the sole purpose of lowering beta. Processes are for decreasing volatility in the output of the system. The downside of a process is that it suppresses alpha.

Process, by definition, is variance reducing. You're introducing it, because you worry that the variance in your org is too high. You want people to sort of meet a certain standard. And the cost of that is obviously, while you are reducing the standard and bringing folks up to the average, you're also bringing other folks down to the average. And oftentimes, the folks you're bringing down are your highest performers, your most creative thinkers.

Within a closed system, entropy increases over time. In the early stages of a company, you're essentially fighting to survive. In the second phase of a company, you're trying not to stagnate. But then the third stage is you're fighting complexity.

I've started referring to this as the MVP, the minimum viable process. So if I give folks a template, I'm like, 'Look, use the template. But if you want to break out of it, please absolutely do.' And I've started writing this at the top of templates now. 'If this doesn't work for what you're trying to explain, don't use it. But just know that this is the minimum viable thing. We're setting the bar here, but go higher if you can, please.'

Feature teams are given pre-defined requirements to build, while empowered product teams have autonomy to discover and decide what problems to solve for customers.

An empowered product team can do everything a feature team can do and more. And once in a while I do hear somebody say, why isn't it good enough to be a feature team? How do you answer that really? To me, it is like, why are you in this business? Do you really not care what your customers think about your product?