Five Different Decision-Making Strategies That Don't Need Estimates
This is a quote from a #Noestimates presentation. Remember, all projects operate in the presence of Uncertainty. If not, it's either a de minimus project, buying things from a catelog, and assemblying them, and even then there is uncertainty if they will work as specified in the catelog.
But first a few words about strategy.
It's overused, misused, and abused. Here's what strategy means in the software and IT business
Strategy is creating fit among a company's activities. The success of a strategy depends on doing many things well - not just a few. The things that are done well must operate within a close nit system. If there is no fit among the activities, there is no distinctive strategy and little to sustain the strategic deployment process. Management then reverts to the simpler task of overseeing independent functions. When this occurs operational effectiveness determines the relative performance of the organization. - "What is Strategy," M. E. Porter, Harvard Business Review, Volume 74, Number 6, pp. 61-78.
- Do the most important strategic work first.
- How can you know what is most important without knowing the cost to produce the value from that work?
- How can you know what is strategic without estimating the strategic value to those paying?
- A strategy is about turning intangible assets into tangible outcomes. In the presence of uncertainty, these means making estimates of both the intangible assets and the tangible outcomes.
- Read Strategy Maps, Norton and Kaplan to see how this is done in practice.
- Also, read Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers
- Or knowing the units of measure for Value?
- Or for whom it is valuable?
- Is there any uncertainty in those measures?
- No? No Estimate needed.
- Yes? Then you'll need to estimate the Value, the Cost to produce that Value, the Time when that Value is needed.
- Do the highest technical risk first.
- ALL risk comes from uncertainty. This uncertainty comes in two forms - Aleatory (Irreducible) and Epistemic (Reducible).
- Here are a short list of papers on Aleatory and Epistemic uncertainty, the risk it creates.
- And the technical risk is only one of three classes. Cost and Schedule are the other two.
- There may be a high technical risk, but it can be handled quickly for very little money.
- Or there may be a low technical risk but will require longer and be more expensive.
- In all three cases, when there is uncertainty, Estimates are needed to make that decision.
- Do the easiest work first.
- And how do we know what's easiest unless we have an understanding of the risk, cost, and duration?
- In the presence of uncertainty, those three parameters need to be estimated
- Do the legal requirements first.
- Maybe, maybe not.
- I work in the 21CFR 807 medical device domain.
- There may be foundational requirements that have to be implemented before the legal requirements are done.
- The legal requirements may be the last ones implemented.
- Do the work that generates revenue first.
- Why? Where is the value stream map the Product Roadmap the Release Plan showing what work is needed when what potential revenues it might generate?
- This is the role of a Product Manager if products are being built. And the role of a Scrum Product Owner if it's an internal customer.
- This decision is a Managerial Finance process operating in the presence of the Microeconomics of decision making with all the uncertainties of the market, development cost and of course risk created by uncertainty.
The Fallacy
No matter how many times its stated that decisions can be made in the presence of uncertainty WITHOUT estimates, it's just not true. It's a fallacy. That statement violates the principles of Microeconomics, Managerial Finance, the Probability and Statistics of decision making, and plain old common sense.
Here's one starting point for making decisions in the presence of uncertainty that has served us well in a wide range of domains.
