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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
8/7/2019 Decison Making During Uncertainty
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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
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
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
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
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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Not One Or The Other
But One And The Other
Make
And
Sell
Sense
And
Respond
Anticipate
And
Lead
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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Not One Or The Other
But One And The Other
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
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
GM Examples
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Not One Or The Other
But One And The Other
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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Not One Or The Other
But One And The Other
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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An Example of Sense-and-Respond
ENVOY VIDEOENVOY VIDEO
GM Examples
A E l fS d R d
8/7/2019 Decison Making During Uncertainty
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An Example of Sense-and-Respond
GM Examples
NotOneOr The Other
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Not One Or The Other
But One And The Other
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
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
Putting It All Together
A nottoo distantexample
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A not too distant example
Putting It All Together
A somewhatdistantexample
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A somewhat distant example
Putting It All Together
Itsnotaboutoneortheother
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Its not about one orthe other
Make
And
Sell
Sense
And
Respond
Anticipate
And
Lead
Putting It All Together
Itsaboutoneandthe other
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Its about one andthe other
Make
And
Sell
Sense
And
Respond
Anticipate
And
Lead
Putting It All Together
TheJourney
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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
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?
Relevance to Project Risk Management
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
Relevance to Project Risk Management
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
Relevance to Project Risk Management
An example of the Business Design Effect
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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
Anticipate-and-LeadSense-and-RespondMake-and-SellTrait
Relevance to Project Risk Management
An example of the Business Design Effect
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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
Anticipate-and-LeadSense-and-RespondMake-and-SellTrait
Relevance to Project Risk Management
An example of the Business Design Effect
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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?