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Risky Business: Real Options for Business Agility
1
Todd Little, Chairman Kanban University @toddelittle
Managing Enterprise Agility
When will we get the requirements?
All in good time, my little pretty, all in good time
But I ...
We’re not in Kansas Anymore
My! People come and go so quickly here!
I may not come out alive, but I'm goin' in there!
The ...
How do businesses deal with
risk and uncertainty?
Weather
Forecasting:
Hurricane Rita
The Cone of Uncertainty
We expect uncertainty and manage for it through iterations,
anticipation, and adaptation.
Getting Better
Movies
Oil & Gas Exploration
Oil & Gas Exploration
Poker
Poker
Metric:
Percent of
Hands Won
Risk management tools
Types of Risk
Categories of risk
Delivery Failure
Business Case
Failure
Collateral Damage
Quality and Market
Acceptance
Business Case Failure
Is your Strategy a Bucket or a Filter?
Bad Strategies (Rumelt)
Fluff
Failure to face the problem
Mistaking goals for strategy
Fuzzy or overly complex strategic o...
Purpose Alignment Model
CAN WE
CREATE A
DIFFERENTIATED
PARTNERSHIP?
INNOVATE,
CREATE
MINIMIZE /
ELIMINATE
ACHIEVE AND
MAIN...
Applicable at all Levels
• Corporate Strategy
• Product Strategy
• Feature
22
A View of Strategy - Apple
ATT
NEW PRODUCT DESIGN
USER EXPERIENCE
CONTENT DISTRIBUTION
MS OFFICE
INTEL HARDWARE
OTHER S...
Fit for Purpose
• Who are your
Customers?
• What is their
purpose(s)?
• What Problem(s) do
they want solved
Delivery Failure
Late
Over Budget
Understand Bias
"What gets us into trouble is not what we don't
know. It's what we know for sure that just ain't
so.“
»Mar...
Negotiation Bias
"It is difficult to get a man to understand something
when his salary depends upon his not understanding
...
Software Projects: Actual vs. Original Estimate
10-20% 50% 80-90%
1X
2X
4X
P90/P10 = 4
In God we trust, all others must bring data
Fat tail vs. Thin tail
Data over Estimation
Kanban Impact at Accenture Brazil
Market Acceptance
Features and Quality
Market Acceptance
“I skate to
where the
puck is going
to be, not
where it has
been.”
Wrong Priorities?
Lean Startup Feedback Loops
Fit for Purpose
• Feedback from the
front line
• Fit for Purpose Box
Score
Collateral Damage
Delivery Failure results in Collateral Damage
I’m beginning to
think it wasn’t such a
good idea to turn off
those unit tests
I’m beginning to think it wasn’t such a good idea to turn off
those unit tests
Risk management tools
Risk Management Tools
Value of InformationValue of Uncertainty
Tornado ChartReal Options
Value of Flexibility
Summary
1. Know what business you are in
2. Discover the risks and uncertainties
that dominate your business
3. Get very g...
Gordon the Guided Missile
Understand Bias
“When the odd are against you it is gambling.
When the odds are in your favor you are
investing.”
»Patrick...
Contact
Todd Little
 todd@mauvius.com
 @toddelittle
LKCE19 - Todd Little - Risky Business: Real Options for Business Agility
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Enterprise projects are known to have challenges with uncertainty, risk, forecasting and commitment – and the most valuable projects often carry the most risk. Other industries also encounter risk and generate value by understanding and managing that risk effectively. Todd Little explores techniques used in a number of risky businesses – product development, oil and gas exploration, investment banking, medicine, weather forecasting, and gambling – and shares what those industries have done to manage uncertainty.

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LKCE19 - Todd Little - Risky Business: Real Options for Business Agility

  1. 1. Risky Business: Real Options for Business Agility 1 Todd Little, Chairman Kanban University @toddelittle
  2. 2. Managing Enterprise Agility When will we get the requirements? All in good time, my little pretty, all in good time But I guess it doesn't matter anyway Doesn't anybody believe me? You're a very bad man! Just give me your estimates by this afternoon No, we need something today! I already promised the customer it will be out in 6 months No, we need it sooner. Not so fast! Not so fast! ... I'll have to give the matter a little thought. Go away and come back tomorrow Ok then, it will take 2 years. Team Unity Project Kickoff
  3. 3. We’re not in Kansas Anymore My! People come and go so quickly here! I may not come out alive, but I'm goin' in there! The Great and Powerful Oz has got matters well in hand. "Hee hee hee ha ha! Going so soon? I wouldn't hear of it! Why, my little party's just beginning! Developer Hero Reorg Testing
  4. 4. How do businesses deal with risk and uncertainty?
  5. 5. Weather Forecasting: Hurricane Rita
  6. 6. The Cone of Uncertainty We expect uncertainty and manage for it through iterations, anticipation, and adaptation.
  7. 7. Getting Better
  8. 8. Movies
  9. 9. Oil & Gas Exploration
  10. 10. Oil & Gas Exploration
  11. 11. Poker
  12. 12. Poker Metric: Percent of Hands Won
  13. 13. Risk management tools Types of Risk
  14. 14. Categories of risk Delivery Failure Business Case Failure Collateral Damage Quality and Market Acceptance
  15. 15. Business Case Failure
  16. 16. Is your Strategy a Bucket or a Filter?
  17. 17. Bad Strategies (Rumelt) Fluff Failure to face the problem Mistaking goals for strategy Fuzzy or overly complex strategic objectives  “increase market share”  "our fundamental strategy is one of customer-centric intermediation."  “reaching for the impossible to do the impossible"  47 strategies and 178 action items.  Action item number 122 was 'create a strategic plan.’
  18. 18. Purpose Alignment Model CAN WE CREATE A DIFFERENTIATED PARTNERSHIP? INNOVATE, CREATE MINIMIZE / ELIMINATE ACHIEVE AND MAINTAIN PARITY, MIMIC, SIMPLIFY
  19. 19. Applicable at all Levels • Corporate Strategy • Product Strategy • Feature
  20. 20. 22 A View of Strategy - Apple ATT NEW PRODUCT DESIGN USER EXPERIENCE CONTENT DISTRIBUTION MS OFFICE INTEL HARDWARE OTHER SOFTWARE PERIPHERALS
  21. 21. Fit for Purpose • Who are your Customers? • What is their purpose(s)? • What Problem(s) do they want solved
  22. 22. Delivery Failure Late Over Budget
  23. 23. Understand Bias "What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.“ »Mark Twain
  24. 24. Negotiation Bias "It is difficult to get a man to understand something when his salary depends upon his not understanding it.“ »Upton Sinclair:
  25. 25. Software Projects: Actual vs. Original Estimate 10-20% 50% 80-90% 1X 2X 4X P90/P10 = 4
  26. 26. In God we trust, all others must bring data Fat tail vs. Thin tail Data over Estimation
  27. 27. Kanban Impact at Accenture Brazil
  28. 28. Market Acceptance Features and Quality
  29. 29. Market Acceptance
  30. 30. “I skate to where the puck is going to be, not where it has been.”
  31. 31. Wrong Priorities?
  32. 32. Lean Startup Feedback Loops
  33. 33. Fit for Purpose • Feedback from the front line • Fit for Purpose Box Score
  34. 34. Collateral Damage
  35. 35. Delivery Failure results in Collateral Damage
  36. 36. I’m beginning to think it wasn’t such a good idea to turn off those unit tests
  37. 37. I’m beginning to think it wasn’t such a good idea to turn off those unit tests
  38. 38. Risk management tools Risk Management Tools
  39. 39. Value of InformationValue of Uncertainty Tornado ChartReal Options Value of Flexibility
  40. 40. Summary 1. Know what business you are in 2. Discover the risks and uncertainties that dominate your business 3. Get very good at managing for those uncertainties 4. Feedback loops are critical to learning
  41. 41. Gordon the Guided Missile
  42. 42. Understand Bias “When the odd are against you it is gambling. When the odds are in your favor you are investing.” »Patrick Leach
  43. 43. Contact Todd Little  todd@mauvius.com  @toddelittle
  • AparnaRenganathan

    Apr. 1, 2021
  • whilpert

    Mar. 8, 2020

Enterprise projects are known to have challenges with uncertainty, risk, forecasting and commitment – and the most valuable projects often carry the most risk. Other industries also encounter risk and generate value by understanding and managing that risk effectively. Todd Little explores techniques used in a number of risky businesses – product development, oil and gas exploration, investment banking, medicine, weather forecasting, and gambling – and shares what those industries have done to manage uncertainty.

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