I don’t get to go to Paris as often as I’d like, so it’s a real treat to be off to Paris this weekend to present Real Options: l’ultime frontièreat XPDay France on 5 – 6 May. J’espère que vous allez nous rejoindre. À très bientôt.
Archives for the Month of April, 2008
Wednesday, 30 April 2008
Monday, 28 April 2008
Many thanks to the 28 individuals who chose to play the new Real Options Space Game at the Agile North Mini Conference last Saturday. Based on the retrospective feedback, we left folks with much food for thought. As usual, Pascal and I found that each time we play the game it makes us think more deeply about what Real Options really means.
What are Real Options?
Real Options is a decision-making process for managing uncertainty and risk. It’s a simple and powerful approach that helps us make better informed decisions,as individuals and in groups, by understanding and responding to the psychological effects uncertainty has on our behaviour.
Real Options means:
- You don’t have to decide now (aka ‘Decide at the last responsible moment’)
- But you know when to decide
- Keep as many options open for as long as possible
- Actively gather information until you have to make the decision
- Only commit when you must or when you have a good reason to.
A Real Option:
- Has a value
- Has an expiry date or condition
- Costs: cost of buying the option + cost of exercising the option.
You exercise an option only when its value is worth more than its cost. That’s where the similarities of the metaphor between Real Options and financial options end.
Isn’t that just common sense?
Yes it is! The problem is that common sense doesn’t make it common behaviour. Take a look around you. How does your team or manager make decisions under pressure? How do you make decision at times of intense stress?
Uncertainty makes people impatient and afraid. Under pressure, people tend to 1) make the right decision, then 2) prefer to make the wrong decision rather than 3) postpone the decision until the last responsible moment which leads to ill-informed decisions that create problems later on.
Real Options reminds us that waiting is an option, too. The trick is to spend the waiting time on gathering as much information as you possibly can to better understand your options and, where possible, create new ones.
Real Options is difficult because it’s an information hungry process. It requires effort and that’s one reason why many people don’t do it even though they know it’s the best way to make optimal decisions.
How much is an option worth?
The value of an option varies and depends on time as well as context. Its value is what it’s worth to you at different points in time. The key is knowing the relative value of an option in comparison to the other options you currently hold.
Give me an example
The Agile North mini conference is a good example of a Real Option.
- Option value = conference for learning new stuff
- Expiry date = deadline by which you have to sign up for the conference
- Cost of buying the option = effort required to register (conference entry was free)
- Cost of exercising the option = effort for travelling to the conference and giving up a Saturday afternoon to go on a space adventure
Real Options is not nonsense
Real Options is an optimal decision making process. Even though it’s common sense, it’s surprisingly hard to do. It sounds simple, but isn’t easy in practice.
One participant said, ‘The game reminded me about the importance of a lesson I learnt 10 years ago on an orienteering course but never really sunk in.’ To find out what that lesson is, come play the Real Options Space game (version français) at XPDay France next week.
Real Options is very simple in theory, but difficult to put into practice – especially at work or when people are placed under pressure. How can you use Real Options to make better decisions?
Thursday, 24 April 2008
Imagine: You nip to the loo in an office building you’re visiting for the first time. After washing your hands, you look into the mirror and what do you see? A see-through sticker with white writing.
Five simple words. Words that send so many alarm bells ringing. Who let the bullies in? Are they still here? Which teams do they work in? Do people take notice of the message? What difference does that one sticker make?
That’s when I notice there are more stickers running along the wall of mirrors, each aligned above a corresponding sink so you can’t ignore the problem. Or so you would think.
Cultural or Cuisine Differences?
It’s lunchtime. I ask about the stickers as I tuck into the tasty weekly Indian meal. It turns out most people around the table don’t really know what bullying means. So I change my question to one of the developers.
‘Does Candy respect you?’ I venture, bold and plain as the nose on my face.
She’s nice. She answers my questions about requirements,’ he replies with a tired but sincere smile.
I meet Candy for the first time that afternoon. Candy’s friendly enough. She smiles back, teeth clenched.
Communication without respect is worse than not communicating at all
In my experience, respect is the hardest value of all to live by, partly because you have to dig extra deep as it forms the foundation for the other four values. The main reason it’s the toughest to live by is because it’s usually the first thing that most people abandon when the going gets tough.
What does respect mean to you? How would you rate yourself in terms of respect on a scale of 0 – 5 from lowest to highest? Respect begins by recognising, appreciating then leveraging the value each individual brings to a team. How would your team rate you on the scale of respect?
Wednesday, 23 April 2008
Question: What could be more enticing than learning and gaming with a bunch of friendly Agile folks on a Saturday?
Answer: The fact that entry’s free! Sign up for your place here.
Agile North Mini Conference
The Agile North mini conference is this Saturday. Why am I looking forward to it?
Monday, 14 April 2008
It’s Monday morning and what do I find? The 10 centimetres of railing that used to be covered in black-and-yellow sticky tape has been replaced by a metal casing like the rest of the stairwell railing.
Now’s that’s what I call a happy ending. T-H-A-N-K Y-O-U to the powers that be who made it possible. Who knows? May be they even care about quality – enough to get the job ‘done’. Continuous improvement in action. Marvellous
Saturday, 12 April 2008
Once upon a time
My manager said to me, ‘The team thinks you’re doing a good job.’ After a short pause he declared, ‘And I agree with them.’ Then a longer pause. I suspected I was in trouble, but I wasn’t sure what for. He continued. ‘The thing is, I’m just not sure what it is you actually do.’
From Dawn to Dusk to Present Day
I’m reading a book described as an ‘intimate portrait’ of the current President of France called L’Aube, le Soir ou la Nuit (Dawn, Evening or the Night) by Yasmina Reza. I was surprised to learn that Sarkozy and I have something in common.
In a conversation with Yasmina about young people today, Sarkozy says, ‘Ce qui est un problème c’est quand ils deviennent indépendants et pas gentils, gentils c’est le plus important.’ (‘The problem with young people is that when they grow up they forget about kindness. Being kind is what matters most.’)
‘It’s nice to be nice’
That was the gist of the answer I gave my manager all those years ago when he quizzed me about why the team was convinced I was doing a good job. I remember glossing over how I did what I did because my manager graduated from the school of stick-and-carrot management (using the Command and Control Management method). He wouldn’t have understood about consideration for others. I knew this because he had previously expressed concerns about my apparently ‘weaker’ style of management.
Although I couldn’t openly admit to my manager that I worked on the principle of Putting People First back then, the team knew and that was plenty good enough for me.
Agile is all about values
Putting People First is also about Communication, Simplicity, Feedback, Courage and Respect. Most people I talk to about becoming agile almost always identify respect as the key value from which the others spring.
What’s less well-known is that respect wasn’t in the first version of the published Agile Values. Some say that respect was omitted because it was a given. Surely people know the importance of being respectful towards one another? But even assuming they know about respect, can we trust that they will always behave in a respectful way? Do you? Towards everyone? After all, everyone is valuable.
In a conversation with Pascal about the values at the SPA conference last month, we both agreed that there is a sixth value: Trust. I’ve seen trust, when combined with respect, empowers teams to grow beyond all previous prejudices and perceived limitations. Trust from a manager or team lead is crucial. Trust among team members is equally vital.
What did you do this week to improve the way you work? How can you show you trust your team more?
Sunday, 6 April 2008
London, 6 April 2008, 13.20. Everything is covered in snow. On my way home last night, I ask the taxi driver, ‘Do you believe it’s going to snow tomorrow?’
‘I wouldn’t be surprised if it did. It’s happened once before, so it can certainly happen again,’ he replies.
I can tell Richard is a no-nonsense kind of guy. He doesn’t seem the least bit worried about the uncertainty of the weather. He goes on to tell me he’s already evaluated all his options come rain, snow or shine. He’s a man unfazed by uncertainty.
And so I find myself faced with more questions than when I first started my journey home:
- Dealing with uncertainty is something we Brits excel at. If we’re used to the unpredictability of the British weather and have learned to cope with it, why can’t we do the same with the uncertainty of projects instead of pretending that plans can be done upfront or that things shouldn’t change? That way, we’ll be leveraging all the knowledge, experience and wisdom we have when it comes to coping with changeable weather. It’s what we Brits have had to live with all our lives. We’re lucky that we get so much practice. Learn more about Real Options here.
- It’s happened once before, so it can certainly happen again. It only takes something to happen once for things to change forever. It makes the impossible suddenly possible and, more importantly, acceptable. What’s the one thing you can try doing this week to change the way you work for the better?