EmperorWearingNoClothes.ComAlternatively Emperor Without Clothes (I own

both domain names)

Overview

John Aaron 5/3/08

EmperorWearingNoClothes.ComA web enabled project risk management application and

methodologyName may be “emperorwithoutclothes .com. I own both

domain names.A parimutuel wagering process for Project Risk Identification and Mitigation on Large Scale IT and Business Transformation Projects.

Features ----Capturing the Wisdom of the Crowd ----Obtaining the Accuracy of Prediction Markets ----Identifies Project Risks as they Emerge ----Graphical Risk Time Series Metrics Show Impact of Mitigation

----Bets are nonmonetary points, winner take-all prize for the single correct choice of the actual project outcome.

Benefit—Accurate recurring feedback from project stakeholders regarding project risks. Enables project managers and project governance committees to receive unfiltered and unbiased feedback from all project stakeholders on mission critical projects

The Story of the Emperor’s New Clothes

Is a Powerful Meme Depicting the Plight of Project Sponsors of Large Scale

Technology ProjectsJust about everyone has heard of the Hans Christian Anderson story of the Emperors New Clothes. Here is the plot courtesy of Wikipedia:

“An emperor who cares too much about clothes hires two swindlers who promise him the finest suit of clothes from the most beautiful cloth. This cloth, they tell him, is invisible to anyone who was either stupid or not fit for his position. The Emperor is nervous about being able to see the cloth himself so he sends his ministers to view it. They see nothing yet praise the cloth. When the swindlers report a suit of clothes has been fashioned, the Emperor allows himself to be dressed in their creation for a procession through town. During the course of the procession, a small child cries out, "But he has nothing on!" The crowd realizes the child is telling the truth and begins laughing. The Emperor, however, holds his head high and continues the procession.”

All to often this same situation occurs with project managers and sponsoring executives. Their projects are in trouble, everyone beneath them knows it, but no one will say anything for fear of displeasing the ‘emperor’. And then even after the truth (bad news) starts to leak out into the open, everyone continues to pretend that things are fine until the day of reckoning occurs, and then it is too late to recover. Ironically the earlier that management embraces the truth, the greater the chances they can fix the problem successfully.

EmperorWearingNoClothes.Com is a tool and methodology to solve this problem.

EmperorWearingNoClothes.ComThree Underlying Principles

The Filtering of Information Flowing to Senior Management about Actual Project Performance Afflicts Most Projects and It Jeopardizes Financial Performance

•Projects are often mission critical investments to company financial success. Poor project governance jeopardizes these investments.•Project performance information on Cost, Schedule and Scope tends to get sugar coated by the time it reaches senior management and governance committees.•Senior Management tends to find out to the “truth” too late when recovery is no longer possible.

The Power of Survey Feedback•Survey feedback is an established organizational development technique. It is based upon the principle that sunlight is the best antiseptic. The trick is to obtain regular, recurring feedback from all project stakeholders (customers, developers, project managers, etc.) who identify risks and likely project outcomes. EmperorWearingNoClothes.Com makes these risks visible.

The Accuracy of Prediction Markets•By including the principles of prediction markets into the process, we obtain greater accuracy and unbiased assessments of risk impacts on project outcomes.

EmperorWearingNoClothes.ComHow the Process Works –Part 1

At the kick-off of a critical project or project phase, the project sponsors ask all stakeholders to participate in a weekly survey that includes a horse-race style wagering process (in points, not real dollars) for the likely project outcome. The survey is anonymous. So, each week all stakeholders would log into EmperorWearingNoClothes.Com and place their bets (in points) on something like this:

“In regard to the XYZ project cutting over to SAP on June 1, 2008 for ABC company, place your bets on any or all of the following six project outcomes”.

You have a total of 800 points to wager this week.

100 pts

100 pts

200 pts

300 pts

50 pts

50 pts

Sample wagers placed by a stakeholder for week

Faces are being modified by artist to reflect levels of business “pain”

EmperorWearingNoClothes.ComHow the Process Works Part 2

The processing engine within EmperorWearingNoClothes.Com gives the participating stakeholder a view of the “Tote” board both before and after placing their bets to show the cumulative wagers placed on each of six possible project performance outcomes. See next slide.

To encourage participation and truthfulness senior management would offer a winner-take-all prize to be split proportionately by all of those who bet on the winning outcome. The distribution of the prize follows the pari-mutual methodology utilized in horse racing.

In addition to processing the wagering , EmperorWearingNoClothes.Com would administer a survey of stakeholders asking them to articulate the risks they see on the project through questioning as follows:

Q1. What risks do you see that are currently jeopardizing this project?

Q2. What does senior management need to know about this project that it may not currently know?

EmperorWearingNoClothes.ComHow the Process Works Part 3

EmperorWearingNoClothes.Com gives Sr. Management (as well as all project stakeholders) a graphical weekly summary of overall project risk mitigation based upon the wagering performed each week by all stakeholders. See Next Two Slides. This reflects the power of predictive markets.

In addition EmperorWearingNoClothes.Com provides a survey feedback listing of all identified risks that have been identified. In implementation on the web it will also statistically identify turning points in risk (using time series methods) and automatically send an email of the change in risk profile.

EmperorWearingNoClothes.ComAlternatively Emperor Without Clothes (I own

both domain names)

More Details

John Aaron 5/3/08

Project Governance

Project Management

Performing Organization #1

Performing Organization #2

Performing Organization #3

Communication of Project Objectives and Expectations Regarding Scope, Schedule and Cost

For technology projects objectives are communicated downward at the beginning of a project phase or milestone

The Basic Business Problem Solved By this invention

Project Governance

Project Management

Performing Organization #1

Performing Organization #2

Performing Organization #3

But During the Execution of the phase or milestone period Brick Walls Emerge Blocking Vital Communications regarding risks from the Bottom Up. These are the people who know the facts.

Mgmt is looking for ways to break the barriers

This system helps break down the barriers

Parimutel Wagering Cycle Example

Time

Due Date For Milestone Kick-off of project phase

or milestone period

Week 1 Week 2 Week 3 Week 4

All Project Stakeholders

invited to participate and prize is

communicated

Performing Organizations Begin to Execute Work

Process Starts kick-off communication

All Project Stakeholders

invited to participate and prize is

communicated

Parimutel Wagering Cycle Example

Time

Due Date For Milestone Kick-off of project phase

or milestone period

Project performing organization

Project Management and Governance

Self Observation

of co-workers performance

Risks

Week 1 Week 2 Week 3 Week 4

Critical Risk information from tote board and graph

Performing Organizations Execute Work

All Project Stakeholders

invited to participate and prize is

communicated

Parimutel Wagering Cycle Example

Time

Due Date For Milestone Kick-off of project phase

or milestone period

Project performing organization

Project Management and Governance

Self Observation

of co-workers performance

Risks

Week 1 Week 2 Week 3 Week 4

Critical Risk information from tote board and graph

Performing Organizations Execute Work

Self Observation

of co-workers performance

and effectiveness of mitigations

Performing Organization

Responds to Risk Mitigations

All Project Stakeholders

invited to participate and prize is

communicated

Parimutel Wagering Cycle Example

Time

Due Date For Milestone Kick-off of project phase

or milestone period

Project performing organization

Project Management and Governance

Self Observation

of co-workers performance

Risks

Week 1 Week 2 Week 3 Week 4

Critical Risk information from tote board and graph

Performing Organizations Execute Work

Self Observation

of co-workers performance

and effectiveness of mitigations

Performing Organization

Responds to Risk Mitigations

Process cycles continue until completion of milestone and prize is divided by winners

Project Outcome

Icon

Product Performance

at Go Live

Business Impact

Wagers to date

% Wagers this

week(week #

4)Operates

as intended

No Hurt 75 2% 50

Minor inconvenience due to manual workarounds

Hurts a Little Bit

920 31% 600

Significant additional time & effort for

manual workarounds

Hurst a Little More

180 6% 0

Substantial overtime of staff and

decrease of morale, & risk of higher

turnover

Hurts Even More

800 27% 300

Material increase of head count and

costs; or noticeable decrease in

customer satisfaction

Hurts a Whole Lot

600 20% 200

Material adverse impact in P&L,

payroll, customer base or

net worth

Hurts Worst 425 14% 100

Critical Risk info The “Tote” BoardDisplays odds and payouts just like a racetrack. But stake-holders bet on project outcomes rather than horses

$

$

$

$

$

$

Critical Risk Info

EmperorWearingNoClothes.ComAdvanced Features

Automatic email notification to management of risk turning points calculated statistically.

Tallying of portfolio risk for companies like SAP, Deloitte etc who are implementing multiple projects for their clients.