Decison Making During Uncertainty

8/7/2019 Decison Making During Uncertainty

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Decision Making During Uncertainty

Vince Barabba

Project Risk Symposium 2004

May 16, 2004

Anaheim, California


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The Journey

1. Context

2. Containing System Distinctions

3. G M Examples

Make-and-Sell.

Sense-and-Respond Anticipate-and-Lead)

4. Putting It All Together

5. Relevance to Project Risk Management


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The Journey

1. Context


3. G M Examples

Make-and-Sell.




Context


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Risk

1.Risk Identification

2.Risk Quantification

3.Risk Response Planning

4.Risk Response Control

Context


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Error Types (old)

Type I and Type II Errors

Type I is a false positiveaccepting ahypothesis as true when in fact it is

false.

Type II is a false negativerejecting a

hypothesis when it is actually true.

Context


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Error Types (new)

Type III Error

The probability of solving or working

on the wrong problem when one

should have worked on (attempted tosolve) the correct problem.

Ian Mitroff

Context


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Error Types (new)

Type IV Error

Attempting to solve an ill-defined

problem set in an highly uncertain

environment, while acting as if theproblem was clear and the environment

surrounding the problem wasunderstood.

Context


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Systems Thinking

Context


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The system is of value when, to the customer,

the whole is greater than the sum of its parts!

The system is of value when, to the customer,The system is of value when, to the customer,

the whole is greater than the sum of its parts!the whole is greater than the sum of its parts!

Context


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The Journey

1. Context


3. G M Examples

Make-and-Sell.




Distinctions


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Not One Or The Other

But One And The Other

Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Distinctions


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Distinctions


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Distinctions


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Distinctions


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An example of the Business Design effect

Its not about

management its

about quick

acquisition. We need a

system that will adapt

based on our success

in changing the waythings happen.

We are not sure

what we will need

to know. Expertise

needs to be

codified in

processes and

identified byindividual.

We can predict

what is likely to

happen. Store

precise metrics of

what we need to

know in an

accessibleinformation

warehouse.

Knowledge

Management

Anticipate

and

Lead

Sense

and

Respond

Make

and

Sell

Trait

Distinctions


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The Journey

1. Context


3. G M Examples

Make-and-Sell.




GM Examples


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

GM Examples


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An Example of M ake-and-Sell

GM Examples


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Past is Prologue

CORVETTE VIDEOCORVETTE VIDEO

GM Examples


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Past is Prologue

GM Examples

N tO O Th Oth


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

GM Examples

A E l fS d R d


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An Example of Sense-and-Respond

GM Examples

A E l fS d R d


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ENVOY VIDEOENVOY VIDEO

GM Examples

A E l fS d R d


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GM Examples

NotOneOr The Other


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

GM Examples


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Reinventingthe

Autom obile

GM Examples


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GM Examples


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GM Examples


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GM Examples


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GM Examples


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GM Examples


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GM Examples

TheJourney


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The Journey

1. Context


3. G M Examples

Make-and-Sell.




Putting It All Together

A nottoo distantexample


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A not too distant example


A somewhatdistantexample


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A somewhat distant example


Itsnotaboutoneortheother


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Its not about one orthe other

Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead


Itsaboutoneandthe other


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Its about one andthe other

Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead


TheJourney


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The Journey

1. Context


3. G M Examples

Make-and-Sell.




Relevance to Project Risk Management

Implications for Project Management


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Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Are the current approaches to Project

Management sufficiently robust to cover thefull range of business designs?


An example of the Business Design effect


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p g

Its not about

management its

about quick

acquisition. We need a

system that will adapt

based on our success

in changing the waythings happen.

We are not sure

what we will need

to know. Expertise

needs to be

codified in

processes and

identified byindividual.

We can predict

what is likely to

happen. Store

precise metrics of

what we need to

know in an

accessibleinformation

warehouse.

Knowledge

Management

Anticipateand

Lead

Senseand

Respond

Makeand

Sell

Trait

Distinctions

Three traits of project management


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related to alternative business designs

Make

And

Sell

Sense

And

Respond

Anticipate

And

Lead

Traits:Traits:Complexity

Uncertainty

Risk


An example of the Business Design Effect


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You define the

world

Objective and

requirements areclear

Limited learning

curve

High, limited

learning curve

Objective may

change

Minimal

Complexity

Learning Curve

Limited change

Elements &

Relationships

are known.

ComplexityFunction of

number of

elementsand

relationships

Anticipate-and-LeadSense-and-RespondMake-and-SellTrait




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High

Uncertainty.

Goal is known

but path to goal

is not

High

Uncertainty.

Objective may

even change

over time

Low or

Standard

project

uncertainty.

Goal is to

optimize

project

Uncertainty

Function of

complexityand time





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Project Risk

could be high

since new

destination

provides

limited learning

curve

advantage.

Requirement

may change.

Increased time

pressure

increases risk.

Traditional

Standard

project risk.

Possibility of

solving the

wrong

problem

raises risk

level

significantly

RiskFunction of

Uncertainty of

consequences





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You define the world

Objective and

requirements are clear

Limited learning curve

High Uncertainty. Goal is

known but path to goal isnot

Project Risk could be highsince new destination

provides limited learning

curve advantage.

High, limited learningcurve

Objective may change

High Uncertainty.

Objective may evenchange over time

Requirement maychange. Increased time

pressure increases risk.

Minimal Complexity

Learning Curve

Limited change

Elements &

Relationships areknown.

Low or Standard

project uncertainty.Goal is to optimize

project

Traditional Standardproject risk.

Possibility of solving

the wrong problem

raises risk level

significantly

ComplexityFunction of

number of

elements and

relationships)

Uncertainty

Function ofcomplexity and

time

RiskFunction of

Uncertainty of

consequences

Trait Make-and-Sell Sense-and-Respond Anticipate-and-Lead

Error Types (new)


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Type IV Error

Attempting to solve an ill-definedproblem set in an highly uncertain

environment, while acting as if theproblem was clear and the environment

surrounding the problem was

understood.

Context


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Questions?

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Decison Making During Uncertainty

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