Understand Technical Debt And Unlock Sustainable Growth

What is Technical Debt?

This is a good question, considering this concept was created for code, rather than business. The basic concept of Technical Debt is attributed to Ward Cunningham, who used it as a way to explain the long-term costs of quick coding solutions.

The idea is simple. Technical Debt is a type of interest that is the sum of all the time, money and resources it will take to fix, improve or optimise a system overtime. So, if you made a system quickly (or cheaply) using all the workarounds and shortcuts you can just to get it live, you are going to have a huge amount of Technical Debt. This is because for every update or change to the system you want, you’re going to have to work around all those shortcuts that don’t update easily. You might have saved money in the initial setup, but not in the long-term maintenance of the system. Therefore, the only way to avoid this and cut costs, is to either invest heavily from the outset, or set aside intentional time to rebuild that system so it’s “up to code”.

So, how can this model help us understand a growing business?

The Three Types of Technical Debt

Okay, first, just a tiny bit more explanation of the concept, because there’s more than one “type” of technical debt. Stay with me.

1 – Accidental/Outdated Technical Debt

This is the inevitable fate of all systems. Even if you future proof as much as physically possible, eventually technology will overtake your system. That doesn’t mean you shouldn’t take steps to avoid it, but that you still need to take time to update your systems, or this will creep up on you.

2 – “Bit Rot” Technical Debt

This is the devil of Technical Debt. This is the closest thing to what I outlined in the definition and it is to be avoided at all costs. It is created by a system that “has devolved into into unnecessary complexity through lots of incremental changes, often exacerbated when worked upon by several people who might not fully understand the original design“. This makes it clunky and progressively harder to update. Quick changes, potentially made in the name of agility, become the very thing that make it impossible to adapt.

This can only be avoided by a group of people who understand the needs of the system working together to rebuild and adapt the system entirely on a regular basis – but more on that later.

3 – Intentional Technical Debt

Now this is the interesting one, and it’s somewhat controversial. The idea is that you can incur Technical Debt intentionally in order to capitalise on an opportunity. This is very, very risky, but sometimes, speed is key.

Say, something world changing happens (i.e. there is a pandemic or a brand new technology) and you are the company to capitalise on it. You just need some kind of system or structure to support that new avenue in the short-term. In that way, Technical Debt can actually be useful, but it is only worth doing if you’re A) sure that you are able to capitalise and B) willing to make a down payment of future time to rebuild that system to support long term growth.

You might be able to see where this is going now.

How We Can Use This Model

You can probably see how this would translate from coded digital systems, to the very systems (both digital and social) that make up a business. In short, Technical Debt can be an incredibly useful model for how we measure the costs associated with rapid growth.

You might rapidly expand your business to capitalise on a new opportunity, but looking at it with this model, we can formulate an actual calculation to look at the long time growth and earnings of that change. If you make quick, workaround changes (i.e. by redistributing workload or hiring new staff), are you prepared to sit down in 2-3 months time, with your full team and restructure again to clear the baggage and issues that change created?

This is true from employee growth, to digital systems and beyond. The key to reducing Tech Debt long term is simply understanding what the new system needs and working with people to rebuild it more sustainably.

Many of us have probably made a rapid change in the last few months, potentially into digital or remote markets, but how have you calculated those long-term costs? This is the time to look at how your business works and ask yourself genuinely if it is functioning effectively. Maybe it’s time to map your business processes and take some time to reduce that Debt, otherwise, it’s just going to keep getting bigger.