Monday, August 29, 2016

Draw it -- then write it



A great technique for writing proposals, papers, or books -- as I do a lot -- is to storyboard the ideas.

My favorite expression:  
"If you can't draw it, you can't write it!"

Here's Einstein on the same idea:
"I rarely think in words at all. A thought comes and I may try to express it in words afterwards"
If you're not a storyboard person, or just want some great ideas about storyboards, check out this website for insight...



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Friday, August 26, 2016

Reacting to threat: Game theory for the PMO



In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing. —Theodore Roosevelt

Actually, that's Teddy's version of cousin FDR's famous "Try something!"

But what if it's all about a threat -- something external -- for which you have no experience?
  • Call in your PMO team and brainstorm? Perhaps
  • Ask the question -- what's the other guy -- the guy doing the threatening -- going to do?
And, if the other guy does X, what's your next move? With that question, you've arrived at 'game theory'

Game Theory and Project Management

Here's the set-up for game theory and project management: As project managers, we may find ourselves challenged and entangled with sponsors, stakeholders, and customers, and facing situations like the following which some may find threatening:
  • Adversarial parties find themselves entangled in a decision-making process that has material impact on project objectives.
  • Adversarial parties have parochial interests in decision outcomes that have different payoffs and risks for each party.
  • External parties, like legislators, regulators, or financiers, make decisions that are out of our control but nonetheless affect our project.
  • The success of one party—success in the sense of payoff—may depend upon the choices of another.
  • Neither party has the ability or the license to collaborate with the other about choices.
  • Choices are between value-based strategies for payoff
Game theory is a helpful tool for addressing such challenges.

Specifically, game theory is a tool for looking at one payoff (benefit or risk) strategy versus another and then asking what the counterparty (adversarial or threat party) is likely to do in each case.

In the game metaphor, “choice” is tantamount to a “move” on a game board, and like a game, one move is followed by another; choices are influenced by:
  • A strategic conception of how to achieve specific goals
  • Beliefs in certain values and commitment to related principles
  • Rational evaluation of expected value to maximize a favorable outcome—that is, a risk-weighted outcome
Tricks and traps
If you look into some of the issues raised by game theory, there are two that are important for project managers
  1.  Because you don't know that the other guy is going to do, your tendency is to optimize your risks and benefits assuming the worst move by the other guy, but that might result in an overall worse choice on your part
  2. Or, you may arrive at a spot, called a Nash Equilibrium, where your choices are made irrelevant to the other guy's choices. Thus, the other's choices provide no incentive for you to change your mind.
Challenge yourself to a game
To see how this stuff actually works, challenge yourself to a game. Tricks and traps #1 is demonstrated with this video, "The prisoner's dilemma", and then #2 is the next video in the same series that explains the Nash Equilibrium 

Oh, did I mention this is also Chapter 12 of my book, "Managing Project Value"?


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Tuesday, August 23, 2016

Addressable opportunity



Value increases when the satisfaction of the customer’s need augments and the expenditure of resources diminishes. —Robert Tassinari

Tassinari's quote may be a little stuffy, but the idea is simple:
  • Value -- as seen by the business -- is the difference between the satisfaction of customer need, on the one hand, and the cost to meet that satisfaction, on the other hand. 
Presumably, the business has a way of monetizing the customer's satisfaction so that the "difference" is calculable.

Fair enough

In many prior posts I've asserted these propositions:
  • That there is a distinction between project value and business value, and 
  • That the interests of the customer/user, the sponsor/stakeholder, and the project manager must be balanced in some way, even though they compete for attention -- and resources -- as value is developed.
Me, me, me:
Each of these three interest groups has their own needs and wants, each has their own sense of urgency and importance, and each has an idea of the investment he wants to make and the risk he is willing to accept.

Nothing new there, but it helps to write it down. Hopefully, there's a sense of compromise and not polarization. Of course, unlike government, polarized businesses go out of business, and thus the issue is resolved in a manner of speaking.

The planning challenge

The planning challenge for project sponsors is to fashion a practical and rewarding opportunity for a practical project from the myriad of permutations and combinations of needs and wants, colored by urgency and importance, affordability, and risk.

Addressable opportunity 
In the event that there are more needs and wants than one project or one business or agency can address as an opportunity, the planning challenge becomes fashioning an addressable opportunity. And by that, I mean that part of a larger scope or landscape that is carved out for a project.

Carving it up may be a matter of skills and capabilities; it may be a matter of budget. It may be a matter of spreading stuff around so that no one PMO has the whole basket.

To state the obvious: to make the best of opportunities requires goal setting and strategic development in the context of mission and vision.

Mission provides the compelling call for action. Vision provides the epic narrative and points the way ahead. Goals set the stage; goals are the end-state to be achieved; goals motivate business strategy and in turn, project strategy.

This post was taken from Chapter 2 of my book: Maximizing Project Value. You can get it on any e-book site.


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Friday, August 19, 2016

The gig project



Familiar with the "gig economy"? It's what some call the power of one. Take one of this and one of that and one person here and there, mix well, and you've got a team ... or at least a group that might coalesce into a team, given some time and experience together.

But, there can be problems. Heads up if you are managing a gig team:
"Problem 1: The people on the projects were not interested in learning our system.
Problem 2: They were successfully able to ignore us, and were still delivering software anyway!"
Alistair Cockburn, noted Agile thought leader.

Note to reader: I've got a more from Mr Cockburn in my book, now in its second edition: "Project Management the Agile Way: Making it Work in the Enterprise".

Another note to reader: Cockburn looked for a solution to problem 1 in the details of problem 2. Well damn! don't fight them; join them! Maybe they know something we don't.

And thus the Crystal Method was conceived. Cockburn's big contribution in my mind was to recognize that teams should not be "over subscribed" to the strictures of a methodology. Some adaptation to the context and circumstances is allowable. He thinks of himself as the humanitarian of Agile Methods.

In my mind, history has proved him right. Common sense and the capture and repurposing of the stuff that has always worked has made Agile more practical, more accepted, and now pretty much mainstream.



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Tuesday, August 16, 2016

Evaluating prospects -- alternatives



Daniel Kahneman and Amos Tversky may be a project manager's best friends when it comes to understanding decision making under conditions of risk. 

Of course, they've written a lot good stuff over the years.....my favorite is "Judgement under uncertainty: Heuristics and biases".

The original prospect thinking
Tversky and Kahneman are the original thinkers behind prospect theory..  Their 1979 paper in Econometrica is perhaps the best original document, and it's entitled: "Prospect Theory: An analysis of decision under risk".  It's worth a read [about 28 pages] to see how it fits project management

What's a prospect?

 A prospect is an opportunity or possibility with both an upside advantage and a downside risk. Said another way: by opting fo a prospect, you might gain something you don't have or lose something that you do have, that something usually measured in monetary terms.

Prospect theory addresses decision making when there is a choice between multiple prospects, and you have to choose one.

And, a prospect choice can be between something deterministic or certain and something probabilistic or uncertain.

What's the Theory? The big idea
So, here's the big idea: The theory predicts that for certain common conditions or combinations of choice, there will be violations of rational decision rules

Rational decision rules are those that say "decide according to the most advantgeous expected value [or the expected utility value]".  In other words, decide in favor of the maximum advantage [usually money] that is statistically predicted.

Ah yes! Statistics .... lies, damn lies, and statistics!
Shocking news -- sometimes, we ignore the statistics. Ergo: violations of rational decision rules.

Evaluating alternatives and prospects: Violations of decision rules driven by bias:
Prospect theory postulates that violations of decision rules are driven by several biases which we all have, to some degree or another:
  • Fear matters: Decision makers fear a loss of their current position [if it is not a loss] more than they are willing to risk on an uncertain opportunity.  Decision makers fear a sure loss more than a opportunity to recover [if it can avoid a sure loss] 
  • % matters: Decision makers assign more value to the "relative change in position" rather than the "end state of their position"
  • Starting point matters: The so-called "reference point" from which gain or loss is measured is all-important. (A small gain matters more to those that have nothing, than the same amount matters to those that have a lot) The reference point can either be the actual present situation, or the situation to which the decision maker aspires. Depending on the reference point, the entire decision might be made differently.
  • Gain can be a loss: Even if a relative loss is an absolute gain (to wit: I didn't get as much as I expected), the lesser outcome affects decision making as though it is a loss
  • Small probabilities are ignored: if the probabilities of a gain or a loss are very, very small, they are often ignored in the choice.  The choice is made on the opportunity value rather than the expected value.
  • Certainty trumps opportunity: a bird in hand ... in  a choice between a certain payoff and a probabilistic payoff, even if statistically more generous, the bias is for the certain payoff.
  • Sequence matters: the near-term counts for more. Depending upon the order or sequence of a string of choices, even if the statistical outcome is invariant to the sequence, the decision may be made differently.




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Friday, August 12, 2016

Try something!



"It is common sense to take a method and try it. If it fails, admit frankly and try another. But above all, try something." FDR

"Try something!" Franklin Roosevelt said. In the scope of leadership styles, on many difficult and uncertain occasions, he was the supreme delegator. And, he was imprecise. In his broad-stroke envisioning, he was famous for his tolerance for ambiguity.

Among those that practice this style with aplomb, and Roosevelt was certainly one, you can expect:
  • A good deal of trust flows down (but, never break that trust!)
  • Ceremony is minimum -- you may hear about it from the grapevine, and for the one who is the "paper at the bottom of the birdcage", 
  • There is no help coming from above!
But FDR added two more:
  • Fuzziness and ambiguity in the scope of delegated responsibilities, and 
  • Competition among the delegees for turf. 
 His thought: empower more than one and let the best rise to the top!


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Tuesday, August 9, 2016

Fred P. Brooks on Estimates



Brooks

Dr. Fred Brooks, Jr.'s "The Mythical Man-month" is still required reading, even if written decades ago.

And, as these things go, it has a lot of humor, but also a lot of wit. There are dozens of quotes from this book floating about, but here's one worth writing down:

"It is very difficult to make a vigorous, plausible, and job-risking defense of an estimate that is derived by no quantitative method, supported by little data, and certified chiefly by the hunches of the managers"

Of course, some would say, in response: Then, make no estimates at all!

Yuk! No estimates is actually worse because that means that there's been no thought put into outcomes, value, and worthiness. No one can run a business very successfully for very long if that's the mindset.


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Saturday, August 6, 2016

Extreme risk management



Extreme risks: ever been there; done that?

Extreme risks are those for which the consequences are irreversible, and the impact is near-catastrophic. In most cases, the likelihood of the event is low.

You're probably thinking: "Black Swan". But no, a black swan is unanticipated and not-thought of -- never happened before so, not on the radar.

No, I'm thinking of the knowable, if not the estimable. Insurance from high-risk underwriters--most famously Lloyds of London--has been a traditional mitigation.

But for some projects and some circumstances, insurance is not practical. Even Lloyds was near bankruptcy in the early 19th century before the risk factors were really understood in the trans Atlantic shipping business. Each of those voyages was more project than production.

There are a couple of principles that guide action, and it's no surprise that 'utility theory' that takes into account the nonlinear, sometimes irrational, reactions of people--in this case, risk managers--is involved.

Precautionary Principle
Probably the oldest is something called the Precautionary Principle. In a few words what it means is that burden of proof about consequences is shifted to the advocate of the action and away from the pessimist who is blocking the action.

That is to say, for impacts so horrific and irreversible that such an outcome is unaffordable in every sense of the word, the advocate of an action that might lead to such an outcome must prove the consequences can be avoided; the pessimist -- standing in the school house door -- need not prove that the consequences are the most likely outcome.

Failure is not an option
One project example is the decision in Houston regarding the return of Apollo 13 after the explosion that damaged the spacecraft.

Gene Kranz, lead Flight Director, essentially turned back the advocates for a quick return and directed an orbit around the moon for the return.

The consequences of an early return, if not successful, were fatal since the moon lander lifeboat had to be abandoned if the early return option was selected.

A good description of the decision making process is found in Kranz's book: "Failure is not an option"

The One Percent Doctrine
Tom Friedman, writing in this essay, described the One Percent Doctrine, a phrase made famous by Ron Suskind in his book of the same title.

If there is even 1% chance of a horrific event happening, then even 1% is too likely. [ It's sort of a "infinity x zero = 1, i.e.: certainty" argument.]

The impact of the 1% doctrine is to make the impact x probability result so high that it subsumes all other risks.


Consequently:
  • Mitigate the risk as though it were a certainty; 
  • Promote its risk response to the head of the class. 
  • All possible measures must be undertaken to avert the risk event--failure is not an option!




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Wednesday, August 3, 2016

Mixing Agile with traditional business



There comes a point where more planning can not remove the remaining uncertainty, instead execution must be used to provide data and remove uncertainty.

This quote comes from a nicely argued case -- from the agile blog 'leading answers' -- for mixing agile methods in rather traditional businesses, like the oil and gas exploration/production business

If ever there was a business that benefits from Boehm's Spiral Model, OGM (oil, gas, minerals) is certainly one. (Disclosure: I hold some OGM leases in Texas, so I've a bit of personal experience with this)

So, what have we got here?
  • A lot of risk acknowledged up front (can't know everything -- thus the opening quote)
  • A need to run with pilot projects before committing to production
  • A need to tie into legacy systems (in the OGM case, distribution systems)
  • A lot of deliverables that can be done -- indeed, should be done -- incrementally, and then integrated
  • Small (it's all relative re small) teams, co-located, personally committed, with risk hanging on every move.
  • A degree of local autonomy required to meet the challenges of the moment
Sounds like an environment that needs agility, if not agile methods, on a lot of the stuff.

Of course, there's "one big thing" in many traditional businesses:
  • You can't go around self-organizing (agile speak) willy-nilly! Especially in OGM, there are regulatory constraints everywhere, and safety-first doctrine hanging on every move.
So, yes, there is a big bureaucracy that watches over... it's certainly more intrusive than a coach or a servant-leader (more agile speak)  (I'm sure they never heard this stuff in an oil field or an offshore rig!). In fact, I'll bet the rig boss is a force to be reckoned with!

What you can do, taking a page from Agile and Critical Chain methods, is
  • loosen dependencies; 
  • insert buffers; 
  • define interfaces carefully; and 
  • commit to incremental success.



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