Thursday, January 18, 2018

Risk: four points of view



1
Frequency-impact: When you say "risk management" to most PMs, what jumps to mind is the quite orthodox conception of risk as the duality of an uncertain future event and the probability of that event happening.

Around these two ideas -- impact and frequency -- we've discussed in this blog and elsewhere the conventional management approaches. This conception is commonly called the "frequentist" view/definition of risk, depending as it does on the frequency of occurrence of a risk event. This is the conception presented in Chapter 11 of the PMBOK.

The big criticism of the frequentist approach -- particularly in project management -- is that too often there is no quantitative back-up or calibration for the probabilities -- an sometimes not for the impact either. This means the PM is just guessing. Sponsors push back and the risk register credibility is put asunder. If you're going to guess at probabilities, skip down to Bayes!

However.. (there's always a however it seems), there are three other conceptions of risk that are not frequentist in their foundation. Here are a few thoughts on each:

2
Failure Mode Event Analysis (FMEA): Common in many large scale and complex system projects and used widely in NASA and the US DoD.  FMEA focuses on how things fail, and seeks to thwart such failures, thus designing risk out of the environment. Failures are selected for their impact with essentially no regard for frequency. This is because most of the important failures occur so infrequently that statistics are meaningless. Example: run-flat tires. Another example: WMD countermeasures.

3
Bayes/Bayes theorem/Bayesians: Bayesians define risk as the gap between a present (or more properly 'a priori') estimate of an event and an observed outcome/value of the actual event (called more properly the posterior value).

There is no hint of frequentist in Bayes; it's simply about gaps -- what we think we know and what it turns out that we should have known. The big criticism -- by frequentists -- is about the 'a priori' estimate: it's often a guess, a 50/50 estimate get things rolling.

Bayes analysis can be quite powerful... it was first conceived in the 17th century by an English mathematician/preacher named Thomas Bayes. However, in WWII it came into its own; it became the basis for much of the theory behind antisubmarine warfare.

But, it can be a flop also: our 'a priori' may be so far off base that there is never a reasonable convergence of the gap no matter how long we observe, or how many observations we take.

4
Insufficiently controllable, aka anonymous operations: the degree to which we have command of events. Software, particularly, and all anonymous systems generally are considered a "risk" because we lack absolute control. See also: control freak managers. See also the move: 2001: A Space Odyssey. Again, no conception of frequency.



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Monday, January 15, 2018

Be consequential



Interviewer: "Yes, I hear all of that. But what did YOU do?"
This is your moment to explain how consequential you were on the last job, or throughout your career.

The test, of course, is what footprints in the sand did you leave behind? But for your efforts, imagination, leadership, first responses, etc, something of consequence would not have happened, or might not have happened.  What was that?

Not all invention
Managers are particularly susceptible to the "But what did YOU do?" question. Just keeping things moving may be of consequence, but often, when looking back, it's hard to find the value-add in routine managerial tasks.

Sometimes being consequential yourself is motivating, inspiring, encouraging, and enabling others; sometimes being consequential is providing for the "welfare" of others by providing jobs, careers, environments, and relationships.

Add value
At the end of the day, you yourself have a lot to says about your own job content. Unsurprisingly, you can grab for the ring more often than you think. I think the test is always about adding value:
  • If you didn't make the customer more successful, why should they pay?
  • If you didn't make the customer more successful, they may not be able to pay.
  • If you didn't make the customer more successful, what did you do instead?


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Thursday, January 11, 2018

J.Q. Adams on leadership


J.Q. Adams was the 6th president of the United States -- a one-term guy who lost to populist A. Jackson in the election of 1828.

Apart from that distinction he had a pithy thought on leadership, which I pass along hither:
If your actions inspire others to dream more, learn more, do more and become more, you are a leader."



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Monday, January 8, 2018

The price of value?



It's commonly said "value is in the eye of the beholder", meaning: the price of value is what someone is willing to pay.

Fair enough. No willing buyer: no practical value. Many potential buyers: let demand drive the value (Some would call this phenomenon bubble economics .... perhaps)

If the market is "efficient" --  meaning everyone has access to all the relevant information -- then value, like water, should find it's own level.

Then, along comes this idea, usually tagged to an intangible:
"There is no right or wrong value. Value is only a matter of adoption and enthusiasm"
In other words: there's no comparable benchmark. The intangible is what it is to those who want it for whatever the reasons.

Now comes project management: How do you build a business case around outcomes with no benchmark; no idea of a right value -- whether too high or too low?

Answer: it's a crap shoot, and such risk separates the bold from the timid. No need to write a book for a business case; you can probably fill it out on a post card.

Perhaps the business can generate its own wind, stirring up demand (I didn't know I needed that!) where there is none, driving both adoption and enthusiasm. But, sometimes both just take off: the smart phone didn't need much of a kick!

Others:
  • Sony Walkman comes to mind, but it's a tangible. Similarly the personal computer. Who knew you needed a computer in your house ... didn't they belong in the rooms with the punch cards -- don't fold or staple?
  • Digital currencies come to mind. How do they work and what are they worth? And, who says the worth is this or that?
Since there are no objective answers to any of this, I can leave it here!



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Thursday, January 4, 2018

The real problem?


"I cannot define the real problem, therefore I suspect no real problem, but I'm not sure there's no real problem"
Richard Feynman, Theoretical physicist


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Monday, January 1, 2018

Happy New Year!



Happy New Year!




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Saturday, December 30, 2017

Trust vis Acceptance


As I've written elsewhere, there is not really -- and can not be -- trust between strangers because trust requires a transfer (or exchange) of power based on a mutually shared belief that interests are entangled.

To wit: you can trust me on this because I accept some responsibility for our mutual success

And, I'll only do that if I know you well enough to believe in your competence, your integrity, and your sense of values that align well enough with what I value. This, of course, lets out strangers

On the other hand, even if I don't have trust, I can have acceptance. I can believe, based on observation or context, that you are likely to follow the norms I follow. If that weren't the case, we probably couldn't hurdle down the highway at 80mph with on-coming traffic of strangers. We don't know the other drivers, of course, but we have acceptance of their belief in the value of the traffic norms.

With that in mind, I was struck by this statement in a novel I'm reading:
"Trust is something an intelligence officer does not give on first meeting. But, I [can] accept you"
"The Quantum Spy" David Ignatius

Given that tens of thousands of PMs work in classified environments, and given the breaches of confidence and norms in the past few years, is it any wonder that trust in our industry is devolving to merely acceptance -- with a "show me" to follow?


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