Thursday, July 9, 2009

Early Kills are an Improvement...

It's been a few days since I read it (so I apologize for the missing reference), but it came up in my mind again today. There was a recent discussion about the definition of 'success' in relation to Forrester's or Gartner's research published about projects. It seems that software projects became more successful as agile adoption hit the mainstream market; but project success metrics have decreased in the last few years with widespread enterprise agile adoption. One side of the debate says it is because Agile doesn't work in complex environments (that's ignorance since I learned about agile in one of the largest most complex global 500 companies). The other side of the debate is focusing on the definition of 'success'.

For example, if you were going to work on your project for 3 years in your old model and then it failed... wouldn't it be an improvement if you realized this way in advance? That's a lot of cost savings. It gets those people on something that they can be excited about sooner. It's less "stuff" to throw in the trash. It's less wasted time.

My point is that I agree with the side of the debate that says Agile can help you be successful by shortening feedback loops and creating transparency ESPECIALLY WHEN it leads to the project failing sooner!

Now, I want to take this a step further. Mike Cottmeyer wrote a great post yesterday about Real Option Theory and how to think about risk management. He reviewed an example where he chose to put a deposit on something to extend the window of time where he could gather more information to make the right decision between 3 options. His points surrounded risk management and how every choice (or non-choice) we make affects the economics of the project.

I took this a step further in my comment:
I think there is another piece to this. Some people make the mistake of looking at the deposit as part of your future decision. For example, option 2 and 3 are even choices, but because we paid the deposit... we should not waste it and choose #2 over #3.

The deposit was a payment to extend time (as you described). Some people forget this and see it as a partial payment of the total cost and can't let go of it.

This is how companies keep projects going that should be killed because "they already spent 12 million dollars on it". My response is, "and you want to waste another million?". Instead they see it as "so close to completed, they can't throw it away."

I was once told that the main rule of an MBA education is you decide what to do moving forward based on costs/profit moving forward, not money already spent.
I encourage you to read Mike's post (he's a much better writer than I) and if anyone knows the reference I mentioned above, place it in a comment and I'll add it to this post for future readers!

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