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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.

Published in: Leadership & Management
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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

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