PDF Summary:The Unicorn Project, by Gene Kim

Even a successful, long-lasting business can be undone by a harmful workplace culture. If a company fails to trust its employees, focuses on blame instead of solving problems, and drowns every decision in a sea of red tape, its rivals will outpace it in the market. In The Unicorn Project, Gene Kim presents a fictional case study of a business that falls behind its competitors because of its soul-crushing work conditions, leading a band of rebellious employees to figure out a new, more productive way of working.

In this guide, we’ll look at Kim’s diagnosis of the problems that exist in a toxic workplace, as well as the changes he recommends to foster creativity and productivity. We’ll discuss how Kim’s themes align with those of other business experts, and because Kim demonstrates his ideas through fiction, we’ll direct you to other nonfiction works in which his core concepts are fully explained.

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(Shortform note: Why does the Unicorn team feel so motivated when their previous work on the Phoenix project had felt like endless drudgery? The answer may be the autonomy they’re given to design and set the Unicorn project into motion. In Drive, Daniel H. Pink argues that autonomy motivates team members by empowering them to choose the direction of their work. This creates a direct link between a person’s output and their internal values. Autonomy gives employees free rein to be creative and come up with solutions that top-down management often overlooks. Rather than hampering efficiency, autonomy lets employees come up with better ways to achieve business goals than a manager would think of.)

The Unicorn team sends a trial run of promotional emails to 1% of Parts Unlimited’s customers. This already differs from Kim’s depiction of the Phoenix rollout, which was attempted with no pretesting whatsoever. When customers start to place promotional orders, glitches occur, but each problem is fixed by a group of programmers whose changes are uploaded to the system immediately. Despite the hiccups, the test is successful, though Maxine warns that the volume of promotions—and their associated glitches—will be much higher when the full rollout happens.

(Shortform note: Maxine’s advice has roots far back in the early days of computer programming. In 1975’s The Mythical Man-Month, Frederick P. Brooks points out that not only does every piece of software have errors, but fixing those problems creates even more errors that will show up further down the road. Brooks says that you should expect errors to crop up—as Maxine does in the story—and recognize that endless debugging leads to diminishing returns. Eventually, you have to deploy your software, whether or not it’s 100% perfect.)

Unicorn’s Success

Unicorn promotional offers are sent to all customers as the Christmas shopping season opens. Though a few more errors crop up, the result is the single biggest sales day in Parts Unlimited’s history. It couldn’t have happened without the risks, experiments, and employee engagement encouraged by Kurt’s rebels, nor without Maxine’s focus on business goals and customer needs. Kim writes that though the Unicorn team has won their first victory, their next battle is to prove to upper management that the company’s culture needs to change.

The CEO agrees that the Unicorn model should become the standard for software development and implementation, but the process of shifting gears isn’t painless. By eliminating internal dependencies and bottlenecks, Unicorn revealed that many workers’ jobs would soon be made redundant. Maxine is dismayed to be part of the process of deciding which team members must be let go, but downsizing reshapes the IT department into how it will operate going forward. For some workers, retraining is necessary to find more useful roles in the department.

Change on a Company Level

In both The Unicorn Project and The Phoenix Project, Parts Unlimited’s IT department goes through an overhaul in their entire work culture within the space of a handful of months, but in reality, such change takes preparation, leadership, and participation from all corners. In Leading Change, Harvard professor John P. Kotter lays out the steps that business leaders must take to adapt their companies to an ever-changing market while acknowledging that change is a collective effort undertaken by everyone in the company.

Kotter’s first step is for leaders to create a sense of urgency that change is needed for the company to survive. While the Phoenix project’s failure creates urgency at Parts Unlimited, it isn’t coupled with strong leadership with a positive vision for the future. Kotter’s next steps for business leaders are to get buy-in from internal and external stakeholders and articulate a clear vision for the company’s future. After communicating that vision and setting measurable goals to mark the organization’s progress, only then can a company’s culture be changed. A culture is usually deeply entrenched, and only when other changes are self-sustaining can a new way of doing business fully replace what came before.

Once the holiday season is over, Kurt and Maxine’s rebels are triumphant. Parts Unlimited has exceeded all sales expectations, thanks in no small part to Unicorn, and Maxine is given the task of identifying innovations for the future, culled from suggestions that can be offered by any department in the company. Using the Unicorn model of initiating projects and putting them into production quickly, Parts Unlimited will be able to explore markets and opportunities on a wider horizon than their old culture could ever have accomplished.

(Shortform note: While Kim ends The Unicorn Project by implying that future innovations will continue to propel Parts Unlimited ahead of its competitors, the sad truth is that most innovation projects fail. In Shortform’s The Master Guides: Business Innovation, we’ve collected insights from many business experts who suggest that successful innovation projects must be different enough from other products to stand out to customers, they need to overcome the market’s resistance to adopting new technologies, and above all, they must be managed correctly.)

Symptoms of a Toxic Workplace

Throughout his story, Kim paints a picture of an IT department that fails to function on every level, to the detriment of the company and its workers. All of the problems Kim describes are self-inflicted—none can be blamed on forces outside the business. The specific negative features he highlights are a culture of fear and blame, a production process stunted by a lack of trust and feedback, and systems that have grown so complicated that it’s nearly impossible to change anything for the better.

Kim says that the root of workplace toxicity is a culture of fear and blame. At Parts Unlimited, mistakes are punished, and so is calling attention to errors. This creates a climate in which people are encouraged to hide their mistakes and avoid taking risks that might lead to innovation. A climate of fear isn’t just bad for business—it’s bad for workers’ mental and physical health. For example, long hours and lack of sleep during the multi-day Phoenix Project rollout results in every IT worker having to call in sick at some point.

(Shortform note: Fear is at its root an evolutionary response that’s helped our species survive through the ages, but continual exposure to fear can have a negative, compounding effect. In Radical Acceptance, psychologist Tara Brach explains that when fear is the norm, you spend your life in a defensive mindset rather than living your full potential. Fear can lead to a trance-like state in which constant worries stop you from living in the present. In addition to the body’s physical response to fear, your mind can get trapped in self-destructive habits, such as withdrawing from others and obsessing over harmful internal narratives that perpetuate a cycle of blame like the one Kim depicts within Parts Unlimited.)

On top of their fear, employees are frustrated when they can’t do anything because of bureaucratic rules. In the story, when Maxine devises a fix to an error in the Data Hub, the rules prevent her from uploading it herself. She has to submit her fix to QA, where it might wait two weeks before it’s tested and passed along to the waiting line at Ops, where it might take another month to be deployed. Every roadblock was instituted in the past with the best of intentions, but they’ve calcified into a bureaucratic maze that reinforces the message that the company doesn’t trust its employees to be competent at their jobs.

(Shortform note: Like Kim, management expert Peter F. Drucker, author of The Effective Executive, critiqued bureaucracies for their focus on rules over outcomes. He suggested that as in-house monopolies, bureaucratic support systems such as Human Resources departments have no motive to increase productivity and should therefore be outsourced when possible, reducing their administrative drag on a business. However, other authors point out that bureaucracy does have advantages: When it works, it establishes a structure by which leaders can steer an organization. It also helps enforce rules by which company resources can be allocated fairly, from sick leave to departmental budgets.)

Kim describes every step along this path where work must wait on someone’s time or approval as a dependency that bogs down production. Dependencies do more than just slow a system down—they make simple processes more complicated. Every layer of dependency in a system creates a mounting level of inertia that makes even simple corrections needlessly hard to apply. What this means is that employees waste their time and resources wading through bureaucracy instead of working toward business goals. Navigating the dependency maze is a full-time job in itself, and it comes at a very high cost for the company.

(Shortform note: L. David Marquet’s Turn the Ship Around describes a real-life example of dependencies crippling an organization. When Marquet became captain of the USS Santa Fe, the worst-performing submarine in the US Navy, the crew was hamstrung by their rigid dependence on old routines and mandatory authorizations. Department heads couldn’t get approval for changes, meetings were delayed because of one person’s absence, and even requests for leave were ignored because of the long chain of command they had to go through. To correct conditions on the Santa Fe, Marquet had to change the sub’s culture entirely.)

The Essentials of Productivity

The dysfunctional model of Parts Unlimited isn’t the only one that businesses can follow. Kim’s recipe for a productive software development department contains elements that are applicable in any organizational setting. These include a focus on simplicity and the needs of the customer, an environment in which candor is rewarded, a culture dedicated to nonstop improvement, and management that enables its employees to find a sense of flow and pleasure in their work. Because Kim demonstrates these values through fictional examples, we’ll dive into the literature of nonfiction business management to back up and expand upon Kim’s underlying message.

(Shortform note: Since The Unicorn Project is a work of fiction, Kim follows the fiction writer’s rule of “show, don’t tell” to get his message across. This rule says that instead of explaining an idea, an author should imply the idea through action, dialogue, and sensory details. For example, rather than stating that a character is frightened, an author might describe how their hands shake as they frantically try to dial for help. The “show, don’t tell” technique has power because it immerses the reader in the story. In the case of a book like The Unicorn Project that’s meant to convey a specific message, this technique allows readers to draw their own conclusions, which leads to a deeper emotional understanding of the book’s material.)

Simplicity and Focus on the Customer

The first of Kim’s essential components can be summed up by the ancient words of wisdom, “Keep it simple, stupid.” Not only does this refer to small, tightly focused projects directed toward singular goals, but it also means always keeping an eye on the needs of the customer as a guiding star. As this guide steps beyond Kim’s narrative to explore the literature on simplicity and customer orientation, we find that while other authors agree that simplicity is an important goal, they suggest that complexity can’t be done away with, innovation should only be applied in moderation, and that simplicity is most important as it's perceived by a product’s end user.

In Kim’s story, the Phoenix Project went off the rails when its original purpose—to provide an online ordering system—became lost under a growing mountain of added functionality and demands for new features from other business departments. This created a nonstop growth of scope and complexity that became so untenable the project couldn’t move forward. Kim argues that part of the job of project management should be to reduce complexity and not to let projects grow out of control. While that can be true of any business project, in the world of software, Kim recommends functional programming as a means to achieve simplicity in design.

(Shortform note: Functional programming is a technique for writing software that builds computer programs out of units of code that exist independently of the data they process. Common functional programming languages include Haskell, Erlang, and Clojure. The most popular alternative to functional programming is object-oriented programming, which primarily structures software around bundles of data, characteristics, and code. Object-oriented programming languages include C++, Python, and Java.)

Kim also reminds us that any project within a business has to serve the goals of the business, which inevitably amounts to meeting the needs of the customer. This serves as a test of any new project or added software feature—will it further the business and give customers what they want? In the name of simplicity, Kim recommends that any single project shouldn’t try to accomplish too much at once. Instead, a new, simple project should be created to meet new customer demands rather than adding to and complicating an existing project.

The Challenge of Complexity

In The Mythical Man-Month, IBM’s Frederick Brooks discusses complexity in Kim’s context of software development, but with implications for any organization. The primary obstacle Brooks found was the number of people and software components that had to coordinate with each other. (In the place of software components, you can theoretically substitute any business tool or operation.) Furthermore, each new person or component multiplies a project’s complexity instead of merely adding to it. Brooks argues that complexity can’t be done away with, but it can be managed and reduced. His solutions include limiting the size and scope of teams and setting realistic expectations for the schedule regarding a project’s completion.

In Kim’s story, Unicorn differs from Phoenix in that it’s a small project instead of a huge one. In Great by Choice, Jim Collins and Morten T. Hansen show that companies who successfully innovate do so in small doses, adopting a “bullets before cannonballs” approach. Before attempting a large-scale project, they experiment with a smaller version of the concept which can later be scaled up if it produces positive results. The characteristics of a good, simple test project are that it’s low-cost, low-risk, and doesn’t disrupt the company’s regular operations.

Kim’s litmus test for pursuing a project is customer orientation—how will it benefit the product’s end user? In User Friendly, Cliff Kuang and Robert Fabricant explain why customer focus and simplicity of design are becoming crucial in the age of information. Hard-to-use technologies create complications on the consumer side, ranging from annoyance to maddening frustration. Since technology is so embedded in every aspect of contemporary life, tech innovations should simplify some aspect of the customer’s life and provide clear feedback as to whether the product works, which dovetails into Kim’s next principle.

Candor and Safety

The next vital step toward productivity is to create an environment of intellectual and emotional safety and trust in the entire organization. Employees need this to feel safe and encouraged to give and receive honest feedback, and also to alert their teams and supervisors when problems arise. Here, we’ll turn to books by other management experts who agree with Kim about openness in the workplace, but they make it clear that creating a culture of safe, honest feedback requires leaders to demonstrate caring, trust, and vulnerability.

When errors were discovered during the Unicorn team’s first test run of promotional emails, the team held a meeting to diagnose and solve problems, not to find out who was “at fault.” In this kind of environment, the person responsible for an error is free to admit their mistakes without fear. Kim says that the purpose of these evaluative meetings shouldn’t be to punish errors but to find a way to prevent them from repeating. Ideally, admitting a mistake should be rewarded. When treated as learning experiences, mistakes can make the whole company stronger.

Feedback and Vulnerability

As Kim shows by depicting the IT department’s boost in morale, feedback does more than correct mistakes and improve productivity. In Radical Candor, Kim Scott argues that when leaders and workers commit to openness, they create a culture of mutual guidance and support. That openness has two sides: caring for others and challenging them. Caring means taking an interest in your colleagues that goes beyond their contributions at work, whereas challenging them means being ready and willing to have tough conversations about solving problems—conversations that go both ways. Before giving feedback, a leader builds trust by asking for guidance and setting an example of how to respond appropriately.

Doing so requires that a leader be vulnerable, which Parts Unlimited’s CEO finds difficult but necessary. In Dare to Lead, Brené Brown insists that allowing vulnerability in the workplace helps companies thrive. Brown defines vulnerability as exposure to the risk of failure or emotional harm. While some people think that showing vulnerability is a weakness, being open to vulnerability makes difficult conversations more productive by demonstrating honesty and reducing defensiveness. Acknowledging and dealing with vulnerability can help an organization recover more quickly when something goes wrong. After all, the emotional fallout of failure can be worked through more quickly if it’s not bottled up.

The digital studio Pixar is a dramatic example of a real-world business where candid feedback fueled remarkable growth. In Creativity, Inc., Pixar co-founder Ed Catmull describes the practices that fostered Pixar’s brand of flexible, collaborative artistry and creation, including frequent feedback meetings where everyone can be heard, setting clear boundaries to keep people focused, allowing safe spaces for experimentation, and holding diagnostic sessions like the ones Kim describes so that lessons can be learned after projects are done without assigning blame or punishing mistakes. These practices bring about a beneficial cycle in which the mistakes of one project lead to success and improvements in the next.

Nonstop Improvement

A fundamental that Kim carries over from his previous book The Phoenix Project is the need for continual improvement in a business. Rather than something that just happens on-the-fly, finding ways to improve how work is done must be part of each employee’s daily routine. In this section, we’ll look at the writings of leadership experts who highlight the importance of taking responsibility for the process, putting pressure on yourself and your organization, and making improvement part of your DNA.

Kim cites a policy instituted at Microsoft which states that if given a choice between developing a new software feature or working on a way to improve overall productivity, an employee should always choose improving productivity. This goes against the traditional management model in which procedures are dictated from on high while workers simply do as they’re told. Giving employees the freedom to explore new ways to improve the company itself requires managers and executives to change their mindset from being bosses to acting as guides and enabling their workers to make full use of their creative insights.

The Pressure to Be Better

In Extreme Ownership, Jocko Willink and Leif Babin go a step further than Kim by arguing that leaders enable continuous improvement by taking ownership of their workers’ mistakes. This doesn’t mean accepting blame, but rather that when someone on your team does something wrong, you should ask what you can do to make sure it doesn’t happen again. Accepting responsibility in this way links improving your team with improving yourself. This practice also means taking responsibility for your own mistakes, prioritizing constant improvement over salving your ego.

Another truism implied by Kim’s story is that constant improvement requires constant pressure. In Relentless, Tim Grover frames this as an attitude necessary for individual greatness, but a similar outlook could be applied to an organization. The components of this mindset include not setting limits on what you can achieve, pressuring yourself to maintain high standards, and accepting that the process of improvement will involve some pain and discomfort along the way.

In a survey of many real-world companies, Jim Collins and Jerry I. Porras confirm Kim’s assertion that successful businesses make constant improvement a part of their identity. In Built to Last, they challenge the myth that outstanding companies focus on beating their competitors. Instead, by insisting on constant self-improvement, they remove the “finish line” of defeating an opponent in favor of always striving to do better and planning for long-term growth as opposed to chasing after short-term gain. Collins and Porras suggest that internal competition and forced innovation can keep progress going like an endless marathon where the company stays on the track of improvement.

Promoting the Flow

The final characteristic of a productive workplace is that it lets its employees achieve a state of flow in their work. “Flow” is the sensation of being in the zone, when creativity comes as naturally as breathing and workers derive intense satisfaction while accomplishing the goals they’re working toward. In this final section, we’ll hear from psychologists and business professionals who agree that reaching a state of flow improves mental health and productivity, though it requires making deliberate choices to limit distractions and energize your mind.

In the example of software developers, Kim writes that a sense of flow can be reached when you’re able to write code, run it immediately, fix any problems, and know all the while that the work you’re doing is toward a tangible, positive outcome. When projects are simple and customer-focused, when you feel safe to take risks and learn from mistakes, and when nonstop improvement is the underlying drive, a state of flow can be the natural outcome of a business culture that’s optimized for success.

Deep Work and Distractions

The state of creativity Kim writes about was first identified in Flow by psychologist Mihaly Csikszentmihalyi. While tricky to define, a flow state can be characterized as an optimal experience in which your attention and your energy are focused as you become completely immersed in what you’re doing. Enabling team members to reach flow states in their work can make them more self-confident and improve their sense of well-being. People are more likely to achieve a feeling of flow on the job if their work is challenging and engages multiple skills.

In Deep Work, Cal Newport presents a closer look at creative flow states specifically in the workplace, emphasizing that your ability to concentrate on and perform “deep work” determines how much you’ll be able to thrive in the information economy. A task qualifies as deep work if it’s important, difficult, and fulfilling. Newport gives specific advice for individuals to block out time for deep work, but a business can facilitate deep work as a priority by creating an environment that supports concentration and reduces distractions.

Distractions are the bane of staying in the flow. In Make Time, Jake Knapp and John Zeratsky give practical tips for maintaining your focus and reducing interruptions, all of which could be made easier if embedded into a company’s culture. These include blocking off uninterrupted time to work on important projects, limiting your amount of email use, and being deliberate about how you use technology instead of letting your computer and phone dictate what you do from moment to moment. All of these steps can help team members maintain their focus and reach a state of flow, resulting in an overall increase in productivity.