Your SlideShare is downloading. ×
Agile IS Risk Management - Agile 2014 - Antifragile
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Agile IS Risk Management - Agile 2014 - Antifragile

9,278
views

Published on

How applying core agile principles make the development process robust and at times antifragile to the disorder of uncertain events, allowing us to avoid harm and reap the benefits of uncertainty, …

How applying core agile principles make the development process robust and at times antifragile to the disorder of uncertain events, allowing us to avoid harm and reap the benefits of uncertainty, without the need for heavyweight risk management processes.

Many believe that agile is lacking because there is no formally defined risk-management process. To compensate for this “failing” some people introduce a heavyweight risk-management process. Others might not believe that any form of risk-management process is necessary; if a risk matures into a real issue, then just deal with the issue through the normal agile process. In my experience, organizations that successfully “manage” their risks don’t fall into either of these camps. In this presentation, I discuss how a large part of successful risk management in agile is applying core agile principles to prevent risks from occurring rather than using a complex process for dealing with the risks that easily could be avoided in the first place.

Published in: Software

1 Comment
2 Likes
Statistics
Notes
No Downloads
Views
Total Views
9,278
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
15
Comments
1
Likes
2
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. 1Copyright © 2014, Innolution, LLC. All Rights Reserved. Agile IS Risk Management Agile 2014 Orlando, FL July 29, 2014 by Ken Rubin
  • 2. 2Copyright © 2007-2014, Innolution, LLC. All Rights Reserved. Background of Ken RubinAuthorTrainer Coach Exp Trained more than 20,000 people Coach developers and executives 1st Managing Director 1st Scrum project was in 2000 for bioinformatics
  • 3. 3Copyright © 2014, Innolution, LLC. All Rights Reserved. Agenda Uncertain Events Managing Risk via the Product Backlog Maximize Expected Monetary Value Using Agile to Avoid Some Uncertain Situations Traditional Risk Management Agile Principle-based Risk Management
  • 4. 4 Some questions… and discussion… Copyright © 2014, Innolution, LLC. All Rights Reserved. We outsource stress-testing of our application to a third- party and there is a risk it won’t be done when promised. How do we handle this? How do we manage the risks of a fixed-price contract? Should we try to avoid the risk of building the wrong product by working longer and harder up front to get its specification right? We lack knowledge to make an informed technical choice. So there is a risk of a bad decision. How should we proceed?
  • 5. 5 How to handle these risks — a roadmap for our discussion Copyright © 2014, Innolution, LLC. All Rights Reserved. When appropriate, apply simple traditional risk management techniques in a good-enough (barely sufficient) manner Apply agile principles to avoid the self-creation of inherently risky or uncertain situations Apply agile principles to avoid the harm (be robust) and reap the benefits (be antifragile) from uncertainty in the environment Manage risk via the product backlog
  • 6. 6Copyright © 2014, Innolution, LLC. All Rights Reserved. Uncertain Events
  • 7. 7 Many words for the same concept Copyright © 2014, Innolution, LLC. All Rights Reserved. Risk Randomness Volatility Variability Uncertainty
  • 8. 8 For our purposes we will treat them the same Copyright © 2014, Innolution, LLC. All Rights Reserved. Lack of knowledge regarding uncertain events
  • 9. 9 Some more uncertain events Copyright © 2014, Innolution, LLC. All Rights Reserved. Earthquake disables California data center housing the development servers Vendor fails to deliver a component when promised Application fails to scale to 10 million current usersUsers
  • 10. 10Copyright © 2014, Innolution, LLC. All Rights Reserved. Typical mental model of uncertain events “Uncertain” event Probability of occurrence Consequence (payoff / exposure function) Impact of occurrence sum of all has a has Cost Candidate action Effectiveness has has changes changes 1..* Can influence 1..* 1..* Expected monetary value used to compute used to compute Source: Based on paper by Jerry Gilland, Engineering Management Services, 1996.
  • 11. 11Copyright © 2014, Innolution, LLC. All Rights Reserved. Maximize Expected Monetary Value
  • 12. 12 We strive to maximize economic benefit Copyright © 2014, Innolution, LLC. All Rights Reserved. “Uncertain” event Probability of occurrence Consequence (payoff / exposure function) Impact of occurrence sum of all has a has Cost Candidate action Effectiveness has has changes changes 1..* Can influence 1..* 1..* Expected monetary value used to compute used to compute Our goal is to maximize the “economic benefit” in the presence of uncertainty Given that uncertain events will occur…
  • 13. 13 Fragile, Robust, Antifragile Copyright © 2014, Innolution, LLC. All Rights Reserved. Fragile Harmed by disorder Robust Resilient to disorder Antifragile Benefits from disorder Agile Goal is not to eliminate uncertainty, risk, or variability, but to protect ourselves against the variability that harms us and to promote and exploit the variability that benefits us Waterfall
  • 14. 14 Asymmetric payoffs create economic value or harm Copyright © 2014, Innolution, LLC. All Rights Reserved. Positive asymmetric payoff (antifragile) anything that has more upside than downside from random events (variability) Negative asymmetric payoff (fragile) anything that has more downside than upside from random events (variability) Source: Taleb, Nassim, Antifragile: Things That Gain from Disorder, Random House, 2012.
  • 15. 15Copyright © 2014, Innolution, LLC. All Rights Reserved. Traditional Risk Management
  • 16. 16 Traditional risk management process Identification Qualitative Analysis Quantitative Analysis Plan Control Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 17. 17 Example traditional risk- management artifacts Copyright © 2014, Innolution, LLC. All Rights Reserved. Risk Prob Exposure Mitigation 0 20 40 60 80 100 0% 10% 20% 30% 40% 50% Cost($K) Probability % 1 2 3 4 5 6 7 8 9 10 Risk Management Plan
  • 18. 18 Assumption – early on we can identify the uncertain events Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 19. 19 Assumption – we can identify all uncertain events Copyright © 2014, Innolution, LLC. All Rights Reserved. Large-scale unpredictable (or very hard to predict) events of massive consequences Source: Taleb, Nassim, The Black Swan: The Impact of the Highly Improbable Fragility , Random House, 2010.
  • 20. 20Copyright © 2007-2014, Innolution, LLC. All Rights Reserved. Assumption — we can accurately calculate probabilities 0 20 40 60 80 100 0% 10% 20% 30% 40% 50% Cost($K) Probability % 1 2 3 4 5 6 7 8 9 10 Assumes we can predict the probabilities
  • 21. 21 Example – we can predict the event, but we can’t predict or change probabilities Copyright © 2014, Innolution, LLC. All Rights Reserved. We can predict earthquakes will happen in California We can’t predict the occurrence of a specific earthquake of a given magnitude, or change the probability of it happening We can describe the consequences to our business via a disruption in our California-based data center if we are affected by an earthquake
  • 22. 22 More sophisticated process does NOT solve these problems Copyright © 2014, Innolution, LLC. All Rights Reserved. Mistaken belief that we need better computation in order to more accurately predict the event and figure out the probabilities Better approach is to modify our exposure and learn to get out of trouble fast
  • 23. 23 So, do we employ traditional risk management in Agile? Copyright © 2014, Innolution, LLC. All Rights Reserved. Like anything else in Agile, we would embrace the minimum (barely sufficient) amount of process that would be sufficient for dealing with the risks in our particular environment Domains where human lives are at risk might choose to employ a more intense risk management process
  • 24. 24 Example of a simple risk Copyright © 2014, Innolution, LLC. All Rights Reserved. Vendor might fail to deliver a component on a promised date “Uncertain” event Probability of occurrence Consequence (payoff / exposure function) Impact of occurrence sum of all has a has Cost Candidate action Effectiveness has has changes changes 1..* Can influence 1..* 1..* Expected monetary value used to compute used to compute We can easily identify the uncertain event We can derive a probability that isn’t too wrong There are easily identifiable candidate actions The consequences are well understood
  • 25. 25 Candidate action 1 – traditional risk management Copyright © 2014, Innolution, LLC. All Rights Reserved. Send one or more of our employees to vendor to help expedite Risk Prob Exposure Mitigation Vendor fails to deliver Component X 50% $1m/month Send Barbara to vendor to help expedite Manage risk via lightweight traditional techniques
  • 26. 26 Candidate action 2 – also traditional risk management Copyright © 2014, Innolution, LLC. All Rights Reserved. Pay expedited charge to move to head of queue Risk Prob Exposure Mitigation Vendor fails to deliver Component X 50% $1m/month Pay more money to get head of queue privileges Manage risk via lightweight traditional techniques
  • 27. 27Copyright © 2014, Innolution, LLC. All Rights Reserved. Managing Risk via the Product Backlog
  • 28. 28Copyright © 2007-2014, Innolution, LLC. All Rights Reserved. Value Cost Dependencies Knowledge Risk Resources Risk as a factor in prioritization
  • 29. 29 Example: Develop email system for 10 million concurrent users Copyright © 2014, Innolution, LLC. All Rights Reserved. Option 1 Option 2 Spend a lot of money early on to develop core and advanced email features Then, perform scale-up testing late and hope it works Run tests earlier to determine if scaling to 10m users is possible Then, start building email features with confidence system will scale up to 10m users
  • 30. 30 Manage dependency risk via product backlog grooming Copyright © 2014, Innolution, LLC. All Rights Reserved. Affects prioritization of other items in the product backlog This feature is dependent on delivery of the component Vendor might fail to deliver a component on a promised date
  • 31. 31 Manage risk by creating risk- mitigation items in product backlog Copyright © 2014, Innolution, LLC. All Rights Reserved. Employ the parallel hedge strategy Us Insert one or more product backlog items to develop the component ourselves First to finish wins! Partner
  • 32. 32Copyright © 2014, Innolution, LLC. All Rights Reserved. Using Agile to Avoid Some Uncertain Situations
  • 33. 33 Some uncertain events can be avoided altogether Copyright © 2014, Innolution, LLC. All Rights Reserved. Avoid the self-creation of inherently risky or uncertain situations If we don’t go into space, we don’t have to worry about the risk that our spaceship could run out of fuel Fixed FixedFixed Contract If we don’t write fixed price subcontracts, we can avoid the risks of fixed price contracts!
  • 34. 34Copyright © 2014, Innolution, LLC. All Rights Reserved. Effort saved not having to “manage” uncertain events “Uncertain” event Probability of occurrence Consequence (payoff / exposure function) Impact of occurrence sum of all has a has Cost Candidate action Effectiveness has has changes changes 1..* Can influence 1..* 1..* Expected monetary value used to compute used to compute Think of the effort saved if we end up injecting less uncertain events into our environment!!! The art of maximizing the amount of work not done!
  • 35. 35Copyright © 2014, Innolution, LLC. All Rights Reserved. Exercise – identifying uncertain events avoidable by Agile What are some known risks or uncertainties that we can avoid just by applying Agile development?
  • 36. 36Copyright © 2014, Innolution, LLC. All Rights Reserved. Agile Principle- based Risk Management
  • 37. 37 Applying agile principles to be robust and antifragile Copyright © 2014, Innolution, LLC. All Rights Reserved. Applying agile principles make the development process robust and at times antifragile to the disorder of uncertain events, allowing us to avoid harm and reap the benefits of uncertainty, without the need for heavyweight risk management processes
  • 38. 38Copyright © 2014, Innolution, LLC. All Rights Reserved. Failure to Apply Scrum Principles Throughout the Value Chain Variability and Uncertainty
  • 39. 39Copyright © 2014, Innolution, LLC. All Rights Reserved. All before any is “risk generating” All-Before-Any: assumes all” of one activity can be completed before any of the next activity begins
  • 40. 40 Iterative & incremental is antifragile Copyright © 2014, Innolution, LLC. All Rights Reserved. Get things wrong before we get them right Build some of it before we build all of it Reduces forecasting errors Offers opportunity for continuous deployment
  • 41. 41 Inspect and adapt is antifragile Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 42. 42Copyright © 2014, Innolution, LLC. All Rights Reserved. Failure to Apply Scrum Principles Throughout the Value Chain Prediction and Adaptation
  • 43. 43 Risk of trying to get it right upfront Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 44. 44 Keep options open (last responsible moment) Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 45. 45 Exercise – Architecture A vs. B Copyright © 2014, Innolution, LLC. All Rights Reserved. First day of a new product development effort. There are two architectural choices: A or B. Each appears to have viable characteristics. Which one should we select?
  • 46. 46 Rapidly intermingle exploration and exploitation to address uncertainty Copyright © 2014, Innolution, LLC. All Rights Reserved. Knowledge acquisition Predicting Exploration Exploitation always a tension between requiresinvolves in the presence of UncertaintyUncertainty in the presence of increases Level of certainty does not increase Adaptive processes Predictive processes heavily focus on early interleave small-scale
  • 47. 47 Real options Copyright © 2014, Innolution, LLC. All Rights Reserved. The right but not the obligation to do something Options have value Options expire Never commit early to an option unless we know why
  • 48. 48 Managing change risk during a traditional development project Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 49. 49 Managing change risk using Scrum Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 50. 50Copyright © 2014, Innolution, LLC. All Rights Reserved. Failure to Apply Scrum Principles Throughout the Value Chain Validated Learning
  • 51. 51 Assumptions = accrued risk Copyright © 2014, Innolution, LLC. All Rights Reserved. Assumption is a guess or belief that is assumed true, real, or certain Not-yet-validated assumptions represent significant accrued risk during development Don’t let important assumptions live long without validation
  • 52. 52 Reduce risk by going fast through the loop Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 53. 53 Organize flow of work for fast feedback Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 54. 54 Fast feedback is antifragile Copyright © 2014, Innolution, LLC. All Rights Reserved. Agile benefits from the uncertainty (unpredictable things we learn) in fast, frequent feedback Learn fast we are going down the wrong path and then truncate the path Exploit newly acquired knowledge to realize an emergent opportunity Asymmetric payoff by limiting downside harm and providing much greater upside potential
  • 55. 55Copyright © 2014, Innolution, LLC. All Rights Reserved. Failure to Apply Scrum Principles Throughout the Value Chain Work in Process (WIP)
  • 56. 56 Use economically sensible (typically smaller) batch sizes Copyright © 2014, Innolution, LLC. All Rights Reserved. Reduced cycle time Reduced flow variability Accelerated feedback Lower risk of failure Reduced overhead Increased motivation & urgency Reduced cost and schedule growth Source: Reinertsen, Donald, The Principles of Product Development Flow: Second Generation Lean Product Development, Celeritas Publishing, 2009.
  • 57. 57 Inventory (WIP) represents a significant economic risk Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 58. 58Copyright © 2014, Innolution, LLC. All Rights Reserved. Failure to Apply Scrum Principles Throughout the Value Chain Planning Risks
  • 59. 59 Belief that loading planning on the front-end reduces risk Copyright © 2014, Innolution, LLC. All Rights Reserved. Better the planning the better the understanding and therefore the better the execution Give appearance of orderly, accountable, and predictable approach Developing a product rarely goes as planned Beliefs don’t match uncertainty in product development
  • 60. 60 Scope is the risk-reducing degree of freedom Copyright © 2014, Innolution, LLC. All Rights Reserved. Scope can be binary Scope can be shades of grey Allows us to bound the downside on the asymmetric payoff function
  • 61. 61 Communicate uncertainty with range answers to questions Copyright © 2014, Innolution, LLC. All Rights Reserved.
  • 62. 62 Teams with T-Shaped skills Copyright © 2014, Innolution, LLC. All Rights Reserved. Can offset random increases in demand by quickly compensating with changes in capacity Example of negative covariance or counter balancing. Changing capacity available to do work a given vertical area (a change in one random variable) counterbalances the variability in demand (a change in a second random variable)
  • 63. 63Copyright © 2014, Innolution, LLC. All Rights Reserved. Contact Info for Ken Rubin Email: krubin@innolution.com Website: www.innolution.com Phone: (303) 827-3333 LinkedIn: www.linkedin.com/in/kennethrubin Twitter: www.twitter.com/krubinagile Facebook: www.facebook.com/InnolutionLLC Google+ plus.google.com/+KennyRubin1/ Essential Scrum: A Practical Guide to the Most Popular Agile Process www.essentialscrum.com Comparative Agility Website www.comparativeagility.com