Positive Incline Mike Burrows (@asplake) moving on up, positively

May 23, 2015

Kanban from the Inside: 15. Economic approaches to flow

Filed under: Kanban,lean,Uncategorized — Tags: , , , , , — Mike @ 4:54 pm

We’re at chapter 15 of Kanban from the Inside, on economic approaches to flow. This excerpt expands on the third of three principles of Real Options as identified by Chris Matts and Olav Maassen [1, 2]:

  • Options have value
  • Options expire
  • Never commit early unless you know why

Never Commit Early Unless You Know Why

This looks like another truism, but it is well worth repeating. How different would most projects look if for every planned feature someone asked this question [3]:

What would have to be true for this option to look fantastic?

Where the answers to this question are unknown, a new layer of exploratory options can be generated.

Typically, the project provides the perfect mechanism for avoiding this question. Scope, duration, and cost are all decided before the questions are even asked, let alone answered. By design, changes to any of these cause drama and stress!

Contrast that to an options-based approach. Instead of a predetermined project backlog, we have a portfolio of options, a growing pool of uncommitted ideas that may or may not come to fruition. Options get exercised—that is, work gets pulled—when they will generate the most valuable information relative to all their alternatives.

Options thinking also does something interesting to risk management. Outside the development process, uncommitted options remain in the hands of those best placed to manage them, for example, those with the market knowledge to maximize opportunity. Once inside the system though, the risks change in both nature and ownership—there are expectations to meet. There is more than meets the eye in the act of pulling of work across these boundaries—it creates obligation and transfers risk. It is not to be done lightly.

[1]Chris Matts and Olav Massen. 2007. “Real Options” Underlie Agile Practices (InfoQ)
[2] Chris Matts, Olav Massen and Chris Geary. 2013. Commitment Hathaway te Brake Publications.
[3] Roger L. Martin, in Lafley, A. G. and Roger L. Martin. 2013. Playing to Win, How Strategy Really Works Boston: Harvard Business Press.

Next up: 16. The Kanban Method. Previously: 14. TPS and Lean. Start from the beginning: 1. Transparency.

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