Thursday, October 31, 2013


I wonder if the paradigm for change management should be changed? I'll bet a lot of people have an opinion on this. If so, and having received their input, I wonder if we would all come together to make a change to the means and manner for managing change?

Parse the paragraph just read:
Step A: Pose a hypothesis or ask about a possible outcome
Step B: Test the hypothesis or evaluate the responses to the question
Step C: Plan the change, or roll out what can be changed (successfully)

This is a simple example of the "ask-receive-change" paradigm. Too often, that's not the paradigm of change management. Too often we get:
Step 1: Plot the change
Step 2: Impose the change
Step 3: Enforce the change

A friend recently asked: plot or plan -- what's the difference?
Two responses to that question:
  1. Dictionary: Plot: a secret plan or scheme to accomplish some purpose; Plan: a not-secret plan or scheme to accomplish some purpose.
  2. Management view: Transparency. Plots come from the back room; plans come from the front room.
So, in change management, should the plotters be planners? Or, is it better to plot before planning?Should managers ask or tell? And, should the need for change be self-evident or enforced?

Of course the words are dripping with bias. Often, you can't plan in a fishbowl; does that make planning in private a plot? And, no matter its noble purpose and majority advantages, there are will likely be a minority -- sometimes vocal -- for which enforcement is the only highway.

My advice: be biased toward A,B,C even if 1,2,3 are necessary.

Bookmark this on Delicious

Check out these books I've written in the library at Square Peg Consulting

Tuesday, October 29, 2013

Befuddled by expected value

In a prior post, we mused about "risk amateurs". However, even experts are often befuddled by expected value.

Questions arise:
  • What value should I plan for -- the expected value or the full face value?
  • What about the most likely value -- shouldn't it figure into the planning?
  • If I plan for the expected value, and the risk event occurs, where do I get the money to cover it? Isn't this an unmanaged exposure? And,
  • What should I pay to get someone else to take on the risk -- the expected value, or more?
There are objective answers, of course, but the objectivity often has to be tuned for domain, context, and risk attitude, and whether or not there is calibrated data to work with.

Calibrated data: data based on facts and not guesses. Of course, there is a place for estimates: facts adjusted for circumstances where adjustments are based on reasonable and customary experience.

So, the first thing is that if we have calibrated data, then we may have data good enough to estimate event probability and event impact. Multiplying these two calibrated single point estimates is valid for that one point.

We come to the second thing: my objective answers, tuning as suggested notwithstanding:
  • Make an operating plan based on expected value; to reduce exposure to an event actually happening, establish reserves (likely on possible coverage of the exposure) and alternative approaches (options) in the event of the risk event.
  • The expected value is generally more pessimistic than the most likely value, so expected value is usually a better planning metric. (reduces exposure)
  • See my first answer about where to get the money
  • Any transfer payment in excess off the expected value is a profit or bonus to the agent accepting the risk. So, if you are not bonus averse, you can pay more than expected value. See: insurance... bonus in excess of the expected value is the basic model for insurance.

Check out these books I've written in the library at Square Peg Consulting

Data Item Description

In  the old days (in the last century) -- in the defense and the aerospace domains -- we used to routinely write "data item descriptions" (DiD) to define or explain what we meant by a particular data item.

Example: Define "customer" as a data item that might appear in a database. This is no small matter if you've ever tried to do it. You have the buyer, the decision maker, the user, the payer, and the warehouse receiver, to name some but not all. There are also physical descriptions, as in the headquarters, the sales office, the warehouse, etc.

So, it came to pass recently that I was on a volunteer project whereon there was a security task: we were asked to be on the lookout for "bags" and not let them pass a certain gate.

Indeed: what is a 'bag'? Like "customer" this is no small matter to define, and no one on the project wrote a DiD, and likely could not have if asked.  A lost skill? Perhaps!

And so, there were plastic bags, hand bags, back-packs, fanny packs, hyropaks, arm totes -- really, what is a bag?

A classic case of "where you stand depends on where you sit". If you are on a security task, everything looks like a bag! Otherwise, why is a fanny pack a bag?

Suffice to say: there is nothing like a DiD when trying to communicate clearly
Part 1: tell them what you are going to tell them
Part 2: tell them
Part 3: tell them what you told them.

Check out these books I've written in the library at Square Peg Consulting

Saturday, October 26, 2013

Risk amateurs

You can always tell if you are in the presence of a risk amateur. The one thing that amateurs almost always miss is that risk has two components, not one:
  1. A risk event -- aka 'impact'; and
  2. An event probability -- not always statistically predictable
An amateur will become focused on -- even obsessed by -- one or the other. Usually, it's the risk event, the impact, the impending calamity. In doing so, they unwittingly exaggerate the event probability. In effect, they make it feel like the event is right around the corner.

Their behaviour is form of bias, an acting out of utility, making small probabilities seem larger than they could possibly be.

Now a word of caution on the arrogance of my proposition: 100 year floods happen! The improbable does occur; and sometimes the highly improbable happen multiple times back to back. Oops, the black swan must have run into some white paint.

Actually, when the risk event would catastrophic, we sometimes revert to the "1% Doctrine":
"An infinitely small probability times an infinitely large impact =[implies] 'certainty'"
Consequently, we act as though the event is certain, even if it's likelihood is remote, statistically insignificant and thus statistically unpredictable.

Check out these books I've written in the library at Square Peg Consulting

Thursday, October 24, 2013

Risk Boomerang

"The organization is expert at transferring risk to contractors, and then assuming the risk has been managed. The risk, however, often comes back transformed."

Ooops! That wasn't supposed to happen!

So, now what? Transfer out the 'transformed risk'? And, who would have put that on the risk register? Not only does it come back, but it comes back as a surprise!  Good grief..

Though not rhetorical questions -- there are solutions -- nonetheless it's all context and situationally sensitive. There's probably no way to predict the transform. If there were, we might skip Step 1 and go directly to the transformed risk.

However, we can think in terms of not being fragile in the Taleb sort of way: being anti-fragile requires redundancy, buffers, elements of cohesion, and possibly diversification so that unpredicted risks don't bring down the project.

Check out these books I've written in the library at Square Peg Consulting

Monday, October 21, 2013

Why people make bad decisions

Dan Gilbert has a great talk on TED about making bad decisions.  Though he doesn't call it a discussion of "utility" and cognitive biases in decision making, that's what it is. If you've read Daniel Kahneman's stuff, or the excellent book "Against the Gods", you will recognize Gilbert's points immediately.

However, even if you are familiar with all of this stuff, Gilbert is very entertaining and his examples are quite illustrative and easy to identify with. His main talk is given in 24 minutes, and then he answers questions for 10 more.

Give it a listen and look:

Check out these books I've written in the library at Square Peg Consulting

Saturday, October 19, 2013

RMS anyone?

I wonder if there is anyone around who remembers RMS -- or more importantly: how it's used in PM? If this sounds a bit technical, but don't bail yet. It's a lot simpler and more actionable than the much more complex Six Sigma idea.

In the Sixer world, defined process control was the major outcome, and we were told that it was practical to obtain the data to drive the statistics.

Nonsense, for the most part, in PM. Projects don't usually have the historical data in reliable form to drive process control limits to anywhere like six sigma; most projects live in the "one sigma" world.

And that reality, one sigma, brings us to RMS! "Root of the Mean of the Squared-error"

It's really not that bad, and: It's actionable by PMs! Here's a question you could answer with RMS analysis:
If it costs the project $100 to discover/fix a page error in a deliverable document, what's your risk exposure if you plan your project anticipating finding 1000 errors at an average discovery/fix of 3 per page? Your budget is: $100 * 1000 errors = $100K; or 333 pages * $300/page = $100K
To answer that question, here's an example of  how RMS analysis works:
Let's say you have a team working on documents, and you've based the budget on a reasonable number of errors/fixes in the documents: say 3 errors per page. In effect, 3 errors/page is the mean error rate that drives your project estimates for time and labor to discover and fix the errors.
Now, suppose you get a monthly report from your work package manager that gives the following four observed errors per page in various documents in process: 1,2,5,4
The errors, relative to planning mean, are the difference between the actual observed error and the planning mean. For the first one we compute (1-3) = -2; for the others, applying the same protocol: -1,2,1.  (It actually doesn't matter if you adopt the opposite protocol: 3-1 = 2, if you are consistent)
The squared errors are: -2 * -2 = 4; and 1,4,1. The mean-squared error is average of the squared-errors, computed as: (1/4)(4+1+4+1) = 2.5 errors-squared.
Now, as a practical matter we can't work with something dimensioned as errors-squared, so we just take the square root to get the dimension back where we can use it. 
And (drum roll goes here), the RMS is the sqrt (2.5) = 1.59 error/page (Call it 1.6 or even 1.5, since we're only talking planning stuff here, not trying to navigate to the moon)
So can we answer the question about risk exposure?
Yes: By virtue of a couple of statistical theories, we can say:
Expect any similar document page errors to be more likely within +/-1.6 error/page of the planning mean than elsewhere.
Thus, anywhere from about (3 - 1.6) = 1.4 to about (3 + 1.6) = 4.6 is where most of the results are expected to be.
In short-hand, our expectation is: Planning mean +/- RMS.

Now, calculate the exposure: The best approach is to use the figure of 333 pages. Most of the cost (not budget) to discover/fix errors will likely be between:
  • 333 * 1.4 * $100 = $47K, and
  • 333 * 4.6 * $100 = $153K 
Since you have a budget of $100K, you are exposed to a risk of $53K -- of course, there's an opportunity to come in at $47K, thus saving $43K!

Check out these books I've written in the library at Square Peg Consulting

Wednesday, October 16, 2013


Students ask me about change, change management, managing change, organization and institutional change.

I have one answer: it is all about:
  • Mystique-Message-Messenger-Management
Mystique is about managing the mystery around change, it's motivations, it's agenda, and it's likely outcome. No matter the thoroughness of communication, you can not reduce mystique to zero. Some mystery -- at the beginning quite blanketing -- will always remain.

But, some mystique is a good thing... there's actually something to the idea of "too much information". (Clothes [and uniforms] make the person, etc, ; don't carry your own bags; and for the elite: always sit in the right-side rear! )

Message is about the content of what really is the motivation, process, outcomes, controls, etc. "Who, what, when, how" of the change. And, the message has form and format... presumably in this day and age of the social media, cable media, open spaces, and et al, there will be many and numerous. Read, hear, view...

Messenger we've actually touched on: actors both animate and inanimate, and more than one, and more than one time!
  • Tell 'em what you're going to tell them
  • Tell them
  • Tell them what you told them!
Management: it can't looked half-baked. Credibility is earned by not looking like bozo's in the change arena:
  • Plan, design, rollout, metrics, reflection, fix, and re-roll!

Check out these books I've written in the library at Square Peg Consulting

Sunday, October 13, 2013

Priceless, but not costless!

There are a lot of advertisements that run on public media here that tout things to buy that are "priceless" -- a value so meaningful that you can't really monetize it.

Perhaps so -- what value would you put on a meaningful and fulfilling relationship?!

  • Priceless, I'll bet.

So, what would you spend to keep it going? Any amount?

  • Maybe... However, however, priceless, it's not costless I'll wager.

And so after this set-up we arrive at business value vs project cost... you probably knew we'd get here if you read this blog often.

What would you pay to keep a good business from going into decline:?
The real test of decline is whether or not there is new investment going into the business. In the decline stage, the emphasis is on cost control, efficiency, and getting the most out of existing product with existing customers; there's little or no investment beyond required maintenance. Over time, product will obsolesce and customers will move on. If there's investment going into finding new customers with existing product, that's probably an organization surviving and perhaps growing and redefining.

Show me the money!
Of course, one way to start is on the balance sheet: what's the book value of the business? Another place to start is with the cash flow: what's the present value of the DCF?

Certainly, but project to keep the business from decline should not cost more than the business is worth! Or should it? Enter:
  • Utility, bias, fear, emotion, irrational exuberance, etc.
These move you from cost to priceless! (See: Bezos buys the Washington Post)

Project balance sheet
I suggest the real start is with the project balance sheet: the accounting between the business and project to find the risk in the gap between their individual conceptions of value. If you (the PM) can handle the risk... then press on!

Check out these books I've written in the library at Square Peg Consulting

Thursday, October 10, 2013

Who knew? Complexity is free!

I learned just this month that 'complexity is free'. Who knew? Some years ago, it was quality that was free. Now, we've got the whole package: complexity and quality! And, all free.

Not so fast!

What we are talking about is the invasion of the agile refactor paradigm 'RGR' -- red, green, refactor -- into the pure hardware business, and the application of 'continuous integration' (CI) or perhaps even the hardware equivalent of X-unit testing.

And, what is the instrument of this invasion: the 3-D printer!  In this essay, we learn about how General Electric is applying 3-D printing to a hardware version of RGR-CI.  According to Luana Iorio, who oversees G.E.’s research on three-dimensional printing, here is what is going on:

Today ...  engineers using three-dimensional, computer-aided design software now design the part on a computer screen. Then they transmit it to a 3-D printer, ...... Then, you immediately test it — four, five, six times in a day — and when it is just right you have your new part. .... That’s what [is what is meant] by complexity is free.
“The feedback loop is so short now,” .... that “in a couple days you can have a concept, the design of the part, you get it made, you get it back and test whether it is valid” and “within a week you have it produced. ... It is getting us both better performance and speed.”
Sound like agile? Certainly does to me! We've now moved to 'agile in the hardware' being a practical idea...

Check out these books I've written in the library at Square Peg Consulting

Monday, October 7, 2013

CMMI Level 5 with Agile!

I recently received this information from a colleague doing business at Level 5 with Agile. I didn't even know they made those kind!
Our organization is CMMI level 5 certified as a requirement working with the federal government on certain contracts. This influences all projects and we are currently working on the best way to meet the needs of both these requirements and running an Agile project. ... We run daily stand-ups, with sprint retrospectives to refine our sprint processes. In addition we conduct sprint reviews with the customer and all stakeholders and conduct release reviews and retrospectives after delivery. In addition to these more traditional Agile monitoring and control processes we also have CMMI driven monitoring and control tools. We leverage several efforts throughout the release cycle. One highly leveraged is project metrics worksheet that tracks iteration or sprint metrics which includes, timing, story point, defects, technology, sprint focus, etc. these chart planned versus actual for trending. Our organization also incorporates functional points to help track metrics and performance across diverse projects for company wide trending and monitoring. 

Check out these books I've written in the library at Square Peg Consulting

Friday, October 4, 2013

React and respond -- we all do it!

It's human nature to 'react'; that's our survival instincts at work. So, our baseline is reactive, not proactive, a mechanism we have that Daniel Kahneman has called "System 1"... nearly automatic, and often quite fast: the so-called 'knee jerk' reaction.

The thing we can control better than reaction is response: and the hardest thing to respond to is losing or getting lost. Again, Kahneman is a guide: this phenomenon is best explained by 'prospect theory' -- in a few words, we hate (hate, hate!) backsliding from a position we achieved, earned, or bought into, and when we are lost who ever stops for directions? (Certainly, not men!)

But, accepting guidance/direction/input/advice -- even if given as 'tough love' -- is often what it takes to get back on track, even though we hate (hate, hate!) hearing from someone what we may already know but are unwilling to admit.

Then, the biggie is recovery of self-esteem if that has been challenged; reaffirming dominance; and recovering a leadership position.  These are no small matters in the business of human relations, and they take up a lot of project energy -- anti-lean, to be sure!

From a planning perspective, in order not to be fragile (See: Nassim Taleb), we need redundancy and margin to absorb these shocks, for shocks there will be.... Amen!

Check out these books I've written in the library at Square Peg Consulting

Tuesday, October 1, 2013

About risk perception

“Unfortunately, my King … here I am, unwilling and unwanted … because I know that no one ever welcomes a bearer of bad news.” —Antigone by Sophocles, circa 442 BC 
“It is pardonable to be defeated, but never to be surprised.” —Frederick, the Great
Pedro C. Ribeiro, writing in ASK magazine for NASA, has a nice posting on risk perception. He reports on a study that tells us that nearly 3/4ths of all those that report a risk condition to the PMO feel as they are not heard or listened to.

The messenger of bad tidings is not welcome! Hello! No news there, to be sure!

And, of course, this is all too common:
Postmortem analyses, inquiries, and audits of failed projects often uncover streams of unheeded warnings in the form of letters, memos, e-mails, and even complete reports about risks that were ignored, past lessons not learned, and actions not taken—a failure of leadership that creates the conditions for a “perfect storm” of problems that could and should have been prevented, but nevertheless catch leaders by surprise.
Remember: even Nassim Taleb defines a black swan from the eye of the beholder. What's a calamitous surprise to some may be foreseeable to others.  So, even though the PMO may not be able to see around the next corner, they may be some with extraordinary powers of sight that need to be listened to. Ignore them at your peril!

Check out these books I've written in the library at Square Peg Consulting