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  • Thriving in a Stochastic World ** Don Reinertsen

  • Deterministic and stochastic mindsets differ significantly.

  • Waterfall is poorly suited for a stochastic environment

  • Growth of Uncertainty

  • Shortened development time improves the quality of requirements

  • ...because they haven't had time to change

  • Cruise missile arrives where you want it to

  • ...because the target doesn't change

  • "Waterfall"

  • Air-air missle

  • Moves at mach 4, target moves at mach 2

  • Target is uncertain.

  • Go really fast and stay pointed at the target

  • "Agile"

  • Bad strategies

  1. Plan more
  • Obviously wrong. Lack of planning is not the problem.
  1. Avoid variability
  • Select low-variability and avoid high-variability * Less effort to implement but less positive outcomes * Example: improving grades by stopping maths/science classes and doing more phys ed classes
  • Implementing a buffer
  • Essentially Redefining a bad outcome as a good outcome
  • Example: making a "B" grade the
  • But this doesn't change
  • Schedule buffers convert possible delay into certain delay
  1. Select high-variability but mask variability
  • Adding robustness always comes at cost * Chaos + turbulence is unavoiadble * Example: sailing, wind is unavoidable
    • You can pull in more sail to avoid
    • But you will go slower and lose races * Playing it safe will mean competitors can get an edge
  • Nassim Taleb - Anti-fragile
  • Most of us think fragility means:
  • Uncertainty = Worse Performance
  • Certainty = Better Performance
  • Opposite of fragile is actually a system that performs better in the presence of uncertainty
  • Rooted in financial markets: options
  • In options: higher variability (chaos)
  • In manufacturing: lower variability
  • So uncertainity combined with an asymmetric payoff function is profitable
  • How to generate asymmetric payoffs in prod development
  • Reduce economic damage from bad outcomes
  • Increase economic gains from good incomes
  • Fast feedback is required for both
  • Incremental product development: small step forward with MVP
  • Get a new piece of information * Proceed or Pivot * Shutdown unproductive options sooner * Add resource to productive options sooner * This is a payoff asymmetry decision!
  • Idea of "buying information in small batches" is through all new tech (DevOps etc as well)
  • This is the Value of Feedback
  • Like betting on a horse race in which the horses are already running * Take money off horses that our out of the race * Add money to those who look promising
  • Payload Management
  • What is the indication of success?
  • Waterfall: Meeting cost, performance, schedule targets set at the beginning of the project
  • Agike: Making good economic choices "Is everything we did more valuable then everything we chose not to do?"
  • Did we fully exploit the gifts of economically valuable information we were given as we went?
  • Old style: try to ignore the new information because it breaks your success criteria (sticking to the plan)
  • How to achieve this
  • People need to understand system level economic consequences of their acitons
  • Push understanding of economic consequences to a low level in the org
  • Feed information down so that people can make good economic decisions
  • Warfighting:
  • Commanders who try to obtain certainity will fail. War is inherently uncertain.
  • Uncertainity is a place where we must not only survive but thrive
  • Required:
  • Situational awareness
  • Encourage quick aassessment
  • Decide with partial information (if you have 80% of the required information and haven't acted you are squandering advantage)
  • Communicate intent, at least two levels deep:
  • Not 'be on the hill at 10am'
  • 'Be on the hill in 10 am because X is going to happen and you need to do Y so we cna achieve Z'
  • Be able to shift focus quickly
  • Books
  • Developing Products in Half the Time
  • Managing the Design Factiry
  • The Principles of Product Development FLOW