Quality and value

I've been reading some of Michel Thiry's thoughts about quality and value.  Thiry is a expert in value management, with skills and experience from his London-based consulting practice.

About quality, he says: "Quality ...is defined as the ratio of what is offered versus what is expected; if the offered exceeds [in some sense] the expected, quality responds to the need" From the project side, resources required to deliver quality must also be in balance: to wit: the resources needed must balance the resources available.

Here's a diagram to help make the point:

About value, he posits four definitions:

• Use value: the amount we are willing to pay for a deliverable that serves our functional need.  
• Esteem value: the amount we are willing to pay for the pleasure of owing or possessing the deliverable
• Cost value: the cost to achieve a functional deliverable; 
• Exchange value: the amount of current resources required to trade for an equivalent function

Here are some of my musings about this:

• Quality certainly has many dimensions.  You can catch up on my thoughts about quality with this blog.
• Use value and esteem value are really the benefit streams to the business from the customer: sum up the risk weighted present value (PV) of all the benefits--what customers are willing to pay for the need or want--and you have a good way to compare the economic benefits of this project to any other that might be competitive
• Cost value is really the project budget; in EVM terms its the earnable value because it should be only the cost that investors want to pay, not the cost value they have to pay to get done. 
• Exchange value: if we ever get to barter, this one may be a good one!  But on a serious note, if there is competition for resources--and when isn't there?--then the exchange of resources between one project and another certainly makes the case for which is the more valuable.

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Agile for Business Analysts

I'll be speaking to the Orlando chapter of IIBA later this month. The topic is Agile for Business Analysts. I've posted the charts on slideshare.net

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The near future and the far future

Here's a quote from Mr. Bill Gates that we should bear in mind as we practice situational awareness:

"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.  Don't let yourself be lulled into inaction"

I think of this as the 'cone of uncertainty'. Risk attitudes change over time; the near future is always more ominous because we can see more clearly and imagine more vividly everything that can go wrong. On the other hand, the far future is the time of optimism: we can imagine everything going right and we discount any view to the contrary!

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Creative Thinking

Michel Thiry has a compact list of things to consider when thinking creatively.  He defines creative thinking as "lateral thinking".  Lateral thinks means "...exploring new paths rather than pursuing a given path.." 

From his book on "Value Management Practice" comes this list of ten:


1. Write all ideas and comments
2. Target quantity rather than quality
3. Exclude criticsm
4. Hold judgment until evaluation
5. Eliminate "impossible" from your vocabulary
6. Let your imagination roam
7. Use piggybacking
8. Cross-fertilize ideas

9. Let everybody talk

10. Build a friendly  but competitive environment

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Quotations worth a moment

I've always enjoyed wit and humor. Here are some favorites:

Instead of trying to make the trains run on time, it might be better to do away with the trains!

Anonymous

There is no undo button for our oceans of time

Tom Pike

"Rethink*Retool*Results", 1999

I'm sitting in the shade today because someone planted a tree a long time ago

Warren Buffett

Institutions vs. collaboration

Clay Shirky has an interesting talk on TED about institutions vs. collaboration, which, more or less, is the subject of his follow-on 2008 book: "Here comes everybody: the power of organizing with organizations".  


This talk is a variation on the general theme: 'organizing without organizations'.  His proposition is that there is value going untapped because, as he calls it, the "economic framework" of collaboration--that is, the cost of coordination and contribution--exceeds the value of coordinating the contribution of the Nth contributor.

He makes a distinction between "institutions" and ad hoc groups. Institutions are any type of formal organization  with economic, legal, and process structure that has the ability and imperative to shape the contribution of its members; groups are unstructured associations and efforts of people with some common affinity but are otherwise uncoordinated

His idea is that since the cost of coordination has fallen through the floor, the talent and contribution of groups can be tapped economically. He posits that the tools of coordination--he mentions specifically meta data tools like tagging--can be provided easily to participants as a by-product of infrastructure. In doing so,  the work--and the cost--of coordination is borne by the participants themselves.  Think: linux developers and wikipedia.  Thus, Shirky says, we now mine the value of the Nth contributor that heretofore was uneconomic.

Perhaps Shirky has a point, but he steps around a lot of issues in his talk.  Shirky doesn't address assembling or satisfying requirements, assuring the quality of the Nth contributor, nor the security, validation, and integration costs of the Nth contribution.  In fact, wikipedia is not free: there is a large formal institution that governs content, and as the number of contributors has increased, so has the cost of quality.

Shirky does make one interesting point to ponder: institutions operate on the most economic portion of the 80-20 rule.  If 20% of people make 80% of the valuable contributions, then hire those 20% and forego the 20% of contributions by the other 80% of potential contributors. Thus, the 80% constitute the group for which the cost of coordination is institutionally uneconomical. But not no so for coordination afforded by coordination infrastructure and volunteer participants.

This idea, of course, is the so-called "power rule": the Nth contributor makes 1/Nth the contribution of the most prolific contributor.  This means as the number of contributors increases, the peak of the curve gets sharper and the tail gets longer, as we see in the figure below.

 However, that necessitates setting up exclusionary boundaries--now pretty much required because of security--and a "professional class" that is somewhat less agile (there's that word!) than their non-institutionalized compatriots.

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A note about cost risk analysis

Dave Hulett has a whitepaper on his web site that covers an introduction to cost risk analysis.  If this is a new subject for you, this whitepaper goes through a number of quantitative considerations, including correlation risks among cost elements, that will give you a good feel for this territory.

You might also take a look at a more thorough treatment by reading through the cost estimating guide from the General Accounting Office (GAO), an arm of Congress.  One thing about this guide is that is well illustrated with a lot of diagrams that point the way.

Of course, NASA has a readable manual on parametric cost estimating.  Take a look at it if you really want to dig deeper into the subject.

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