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Expecting the Unexpected: Managing the Unknown In Product Development

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How do you manage product risks in a volatile, uncertain, complex and ambiguous (VUCA) environment? This seminar introduced participants to a situational approach to risk management based on the Cynefin Framework and several heuristics for managing product risk in complex environments. Initially presented at Agile Austin on Nov 21, 2017 by Daniel Walsh and Dhaval Panchal

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Expecting the Unexpected: Managing the Unknown In Product Development

  1. 1. Expect the Unexpected Product risk in a VUCA World (Volatile, Uncertain, Complex, Ambiguous) @dhavalpanchal @danielwalsh
  2. 2. What Are Some Risks for Your Product? ● Select a product or service that you are working on (or pair with someone else as needed) ● Brainstorm a list of 3 to 6 risks that worry you ● Write each on a separate Post-It Note Risk Risk Risk Risk Risk Risk @dhavalpanchal @danielwalsh
  3. 3. Sometimes Our Products Result In Ruin
  4. 4. Sometimes Product Result in Ruin ● Write down a few more risks that may result in ruin for your product Risk RiskRisk ● Develop a scenario where your product results in ruin @dhavalpanchal @danielwalsh
  5. 5. Balancing Business, Usage, & Technology ● Three fundamental perspectives needed for compelling solutions ○ Business ○ Usage ○ Technology ● Use the Three-Circle Model to identify 2 to 3 additional risks Reference: Balancing Business+Usage+Technology To Deliver Compelling Solutions Risk RiskRisk @dhavalpanchal @danielwalsh
  6. 6. Build a Continuum for Risky Decisions CHAOTIC Completely unpredictable Unknowable Obvious Predictable Well Known Most Obvious Most Chaotic RiskRisk RiskRisk RiskRisk @dhavalpanchal @danielwalsh
  7. 7. Situational-based Approach For Risk Management Continuum based on the Cynefin Framework Cynefin is a sense-making framework used to make sense of the situation in order to take effective action Risks need to be managed differently depending on their nature Reference: HBR A Leader’s Framework for Decision Making by David Snowden & Mary Boone @dhavalpanchal @danielwalsh
  8. 8. Situational Approach to Product Risk Safe-to-Fail Limit Exposure Analysis Estimation AvoidancePreparation in advance of need Continuum based on the Cynefin Framework Cynefin is a sense-making framework used to make sense of the situation in order to take effective action Risks need to be managed differently depending on their nature @dhavalpanchal @danielwalsh
  9. 9. Situational-based Approach For Risk Management CHAOTIC Completely unpredictable Unknowable Obvious Predictable Well Known Most Obvious RiskRisk Risk COMPLEX Safe-to-Fail Limit Exposure Sandbox Canary Test COMPLICATED Analysis Estimation Expert analysis Simulation OBVIOUS Avoidance Policies and Training Error Proofing CHAOTIC Preparation in advance of need Rapid Response Rainy Day Fund Chaos Engineering* Most Chaotic Risk RiskRisk Reference: Chaos Engineering @dhavalpanchal @danielwalsh
  10. 10. Mindset Principles for working with complex product risks @dhavalpanchal @danielwalsh
  11. 11. Entropy <- Less Entropy More Entropy -> @dhavalpanchal @danielwalsh
  12. 12. Unintended Consequences "When we try to pick out anything by itself, we find it hitched to everything else..." - John Muir Interventions in complex domains will always result in unintended consequences @dhavalpanchal @danielwalsh
  13. 13. Path Dependence ● “Strategy of ruin, eats away all gains” - Warren Buffet ● Survivorship bias ● If it can go wrong, sooner or later, it will. Ref: Nassim Taleb: https://medium.com/incerto/the-logic-of-risk-taking-107bf41029d3@dhavalpanchal @danielwalsh
  14. 14. Complex Risks Have Non-linear Effects ● Butterfly Effect ● Runaway cascade or snowball @dhavalpanchal @danielwalsh
  15. 15. Heuristics Techniques for working with complex product risks @dhavalpanchal @danielwalsh
  16. 16. When In Doubt… Assume Risk is Complex Best-practices are only a when things are stable, repeatable, and well known Need to prove that risks are NOT complex before relying on standard methods (e.g. RPN) If in doubt, it’s safest to assume the situation is complex @dhavalpanchal @danielwalsh
  17. 17. Spread Your Bets Harry Markowitz received the Nobel Prize in Economics in 1990 for his work on Modern Portfolio Theory (MPT). Yet as Gerd Gigerenzer notes, when it came to investing his own money, Markowitz relied on a simple heuristic, the “1/N Rule” Reference: Macroresilience- Heuristics and Robustness in Asset Allocation: The 1/N Rule @dhavalpanchal @danielwalsh
  18. 18. Start from the tail: Face of the cat is less important than size of the cat. Take risks you can measure, not measure risks you take @dhavalpanchal @danielwalsh
  19. 19. Sensitivity to risk factors Your sensitivity to risk-factors is more important than measurements of risk Sandbox or quarantine: Manage for extreme risks, rest is noise. Every increment of upside comes with possibility of maximum downside. @dhavalpanchal @danielwalsh
  20. 20. Only care about survival power Barbell strategy: Everybody is susceptible to prediction errors - Be as hyper-conservative and hyper-aggressive as you can be, instead of being mildly conservative and mildly aggressive. @dhavalpanchal @danielwalsh
  21. 21. Simulate the Unexpected Chaos Monkey* (2011 Netflix) - purpose is to simulate failures in a real environment & to check that systems continue to work. Chaos engineering - discipline of experimentation on a distributed system to build confidence in the system's ability to withstand turbulent production conditions @dhavalpanchal @danielwalsh *Reference: https://en.wikipedia.org/wiki/Chaos_Monkey Netflix Medium Post: ChAP - Chaos Automation Platform
  22. 22. Structure of Risk ● Loss of electric power ● No potable water ● No food ● No gas at gas pump ● No road How to prevent ruin, when all or some of above happens (scenario), eg. Hurricane ?
  23. 23. Exercise: Structure of Risk - 7m ● Face all risk-item post-it notes upside down. ● Pick three (3) risk factors at random ● What could be a scenario when all these risk-items may come true? ● What else could go wrong, under this scenario? ● What does this reveal about “structure of risk” for your product? ● How does your product risk differ from other products in your group? @dhavalpanchal @danielwalsh
  24. 24. Risk Journal Capture risks you want to remember & take away from session @dhavalpanchal @danielwalsh
  25. 25. Conclusion: Key Take Aways ● Holistic risk assessment for product ○ Mundane and extreme - don’t underestimate ruin ○ Evaluate Business, Usage, and Technology risks ● Take a situational-based approach to characterize and mitigate risks ● Assume risks are complex until proven otherwise ● Understanding impact of risk factors (scenarios) is more important than measuring risk factors @dhavalpanchal @danielwalsh Feel free to contact us with any questions or follow up... dhaval.r.panchal@gmail.com daniel.walsh@nuCognitive.com

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