Olav Maassen: RISK AND DECISION: THE ‘WHEN’ RATHER THAN THE ‘HOW’ - LKCE13

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While HOW to make decisions is important, the WHEN to make decisions is critical to your chances of success. Olav and Chris present Real Options, an approach they have been working on since 2006 that focuses on the “When” rather than the “How” of decision making. Timing is everything, however deferring commitments causes stress to many people. Real options helps you manage that stress by creating bounded uncertainty in an context of total uncertainty. This is not a simple process that you copy and learn to adopt through practice. This is a new way at looking at the world around you that starts by learning to differentiate between options and commitments. Olav and Chris help do this through an interactive exercise. It turns out that the way you manage your options is to focus on commitments and attempt to avoid or defer them. After identifying commitments, Olav and Chris discuss creating options to turn the commitments into reversible commitments. Olav and Chris have recently creating “Commitment”, the first graphic business novel about managing project risk. Because they eat their own dog food Real Options plays a big part in the creation part of the book as well. They present the creation process as a case study about applying Real Options and how that leads to different behavior. Finally they present a number of mini case studies where other people have applied Real Option thinking in “out of the box” situations. Once you get it, it will change your life.

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Olav Maassen: RISK AND DECISION: THE ‘WHEN’ RATHER THAN THE ‘HOW’ - LKCE13

  1. 1. #LKCE13 #realoptions November 5, 2013 Risks and Decisions The ‘When’ rather than the ‘How’ Olav Maassen Xebia info@commitment-thebook.com @OlavMaassen Chris Matts Emergent Behavior chris.matts@gmail.com @PapaChrisMatts
  2. 2. “LUPUS”' “LUPUS”' IV'CYTOXIN' PLASMA'PHERYSIS' “HEP'E”' NO'TREATMENT' SOLUMENDROL' “HEP'E”' !' Toast' Get'Worse' Get'beBer' Or'' Get'Worse' No'Impact' Hurt'him' Just'right'
  3. 3. Options have value ©'luismi1985' Options expire ©'givepeasachance' Never commit early unless you know why ©'Tub'Gurnard'
  4. 4. Agenda Real Options: understand the difference between an option and a commitment •  •  •  •  Options and commitments Reversibility of decisions Applying Real Options in writing a book Real world examples 5'
  5. 5. 40 Minutes 6'
  6. 6. When is something a commitment?
  7. 7. When is something optional? ©'MacUK'
  8. 8. Do you have a choice? OpSon' Commitment' 9'
  9. 9. •  This talk •  Could we walk of the stage? •  Hotel this morning (what’s the consequence of not showing up: Nils panic, never invited again, reputation shot) •  Is the hotel a commitment •  Is the flight a commitment •  What about five minutes after it has taken of? •  Nils asked us: commitment or option? •  What about the actual event •  If the event got cancelled would we still go? •  Lady gaga concert? 11'
  10. 10. 12'
  11. 11. 13'
  12. 12. 14'
  13. 13. 15'
  14. 14. 16'
  15. 15. 17'
  16. 16. 18'
  17. 17. 19'
  18. 18. 20'
  19. 19. Options have value ©'luismi1985' Options expire ©'givepeasachance' Never commit early unless you know why ©'Tub'Gurnard'
  20. 20. 1.  Right' 2.  Wrong' 3.  Uncertainty' ©'Bethany'L'King' ©'Violator3'
  21. 21. •  When do supermarkets open a new till / register -> conditional •  Published and the customers start to manage it 23'
  22. 22. 30 Minutes 24'
  23. 23. A'Month
  24. 24. A'Day'
  25. 25. hBp://www.flickr.com/photos/embreyart/ 4229109725/sizes/m/in/photostream/'
  26. 26. An'Hour'
  27. 27. A'Minute'
  28. 28. 35'
  29. 29. If the time it takes to recover, is greater than the time you can survive, you die. Which means you need more options. 36'
  30. 30. A'Month
  31. 31. A'Day'
  32. 32. hBp://www.flickr.com/photos/embreyart/ 4229109725/sizes/m/in/photostream/'
  33. 33. An'Hour'
  34. 34. A'Minute'
  35. 35. A'Second
  36. 36. ROLL$BACK!$
  37. 37. If the time it takes to recover, is greater than the time you can survive, you die. Which means you need more options. Monitor the conditions 48'
  38. 38. Its' not'' about' probability'
  39. 39. It’s' about' survival'
  40. 40. 20 Minutes 51'
  41. 41. Options have value ©'luismi1985' Options expire ©'givepeasachance' Never commit early unless you know why ©'Tub'Gurnard'
  42. 42. Eat own dog food 53'
  43. 43. 54'
  44. 44. Finding the artist
  45. 45. 57'
  46. 46. Rough Outline
  47. 47. First manuscript
  48. 48. Artwork
  49. 49. 65'
  50. 50. 66'
  51. 51. Different covers 67'
  52. 52. 68'
  53. 53. 10 Minutes 69'
  54. 54. 70'
  55. 55. 71'
  56. 56. 72'
  57. 57. 73'
  58. 58. 74'
  59. 59. 75'
  60. 60. 76'
  61. 61. 77'
  62. 62. 78'
  63. 63. Staff Liquidity 79'
  64. 64. 80'
  65. 65. Analysis' Design' Code' Test' Prod'
  66. 66. Analysis' Design' Code' Test' Prod'
  67. 67. Analysis' Design' Code' Test' Prod'
  68. 68. 85'
  69. 69. 86'
  70. 70. 87'
  71. 71. 88'
  72. 72. School choice 92'
  73. 73. Options have value ©'luismi1985' Options expire ©'givepeasachance' Never commit early unless you know why ©'Tub'Gurnard'
  74. 74. When do we have to decide? We'are'here!' Yellow'+'Blue'opSon'???' Produce' DVD+box' Stock'shops' Servers' Blue'opSon'???' March' ©'Pascal'Van'Cauwenberghe' ????' Oct' Nov' Dec'
  75. 75. When do we have to decide? We'are'here!' Yellow'+'Blue'opSon'???' Produce' DVD+box' Design'and' test' (2M)' Blue'opSon'???' March' ©'Pascal'Van'Cauwenberghe' August' Stock'shops' Servers' Oct' Nov' Dec'
  76. 76. How will we decide? •  IF the new blue design is completely stable •  AND if the estimate of the blue design < 2 months •  THEN we use the blue design •  ELSE we use the yellow design AND we’ll plan the blue redesign once the blue design is stable •  Meeting: August 1st
  77. 77. Meanwhile... •  We develop the site in “black & white” •  One team member participates in the followup meetings of the new design (2 hours every 2 weeks) and keeps the team informed of the situation
  78. 78. The day is not done yet •  A few more questions: •  Developers, what changes when the design changes? •  Developers show architecture and code •  What if there was less to change? •  Quick architectural “spike”: remove duplication, separate concerns... •  How much to refactor the site? •  “We can do it in a few days” •  “Afterwards, any redesign costs less than 1 month”
  79. 79. When do we have to decide? We'are'here!' Yellow'+'Blue'opSon'???' Produce' DVD+box' Design'and' test' (2M)' Blue'opSon'???' March' ©'Pascal'Van'Cauwenberghe' August' Stock'shops' Servers' Oct' Nov' Dec'
  80. 80. When do we have to decide? We'are'here!' Yellow'+'Blue'opSon'???' Produce' DVD+box' Design' and'test' (1M)' Blue'opSon'???' March' ©'Pascal'Van'Cauwenberghe' Sept' Stock'shops' Servers' Oct' Nov' Dec'
  81. 81. Focus on when to make a commitment!
  82. 82. Understand'the'difference' between'commitment'and' decision' ' ' Do'you'need'a' rope'to'climb' back'up?' '
  83. 83. Key take aways •  Be aware of options and commitments •  For the conference: –  How does this create options for me? –  How does this allow me to push conditions to a later date in order to gather more info? 103'
  84. 84. Questions are an option 104'
  85. 85. http://commitment-thebook.com Contact'info:' Chris$Ma4s$(Emergent$Behaviour)$ Chris.maBs@gmail.com' twiBer.com/papachrismaBs' Contact'info:' Olav$Maassen$ info@commitmentlthebook.com' twiBer.com/olavmaassen' 105'
  86. 86. Conflict... we'hide' ' intent' and' informaSon' ©'Theqspeaks'
  87. 87. Collaboration... we'signal' ' intent' and' informaSon' ©'Krypto'
  88. 88. Options have value 108' ©'Tracy'O'
  89. 89. Options expire 109'
  90. 90. Never commit early unless you know why ©'*L*u*z*A' 110'

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