Time is an asset. delay is a cost.
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The document discusses the significance of time as a critical asset in strategic decision-making across chess, warfare, and business, emphasizing the cost of delays in realizing business value. It presents methods to prioritize work based on cost of delay using both qualitative and quantitative approaches, such as the Weighted Shortest Job First (WSJF) formula. Additionally, it highlights the importance of context in addressing urgency and risk associated with project management decisions.
![©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016
29
Know the context…
• Chaotic (high risk, uncertain)
domains are not susceptible to
quantitative analysis
• Obvious domains don’t require it
• Complicated domains are most
suitable to quantitative analysis
• Complex domains may benefit
from a qualitative or hybrid
approach
By Snowded (Own work) [CC BY-SA 3.0 (http://creativecommons.org/
licenses/by-sa/3.0)], via Wikimedia Commons](https://image.slidesharecdn.com/timeisanasset-161006204722/85/Time-is-an-asset-delay-is-a-cost-27-320.jpg)
Time is an asset. delay is a cost.
- 1. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 1 Time is and Asset Delay is a Cost Applying qualitative and quantitative analysis for competitive advantage Andy Carmichael PHD FBCS @andycarmich ac@openxprocess.com Twitter: #lascot16 @andycarmich
- 2. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 2 Who is going to win? • Tempo from the Italian for time • An essential element of strategy in chess
- 3. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 3 Who is going to win the dogfight? • Max speed? (level-climb-dive) • Max altitude? • Manoeuvrability? (agility) • Pilot training • Cockpit visibility • Power-steering References: Wikipedia, www.warbirddepot.com, Chet Richards, “Certain to Win”, OODA diagram drawn by Patrick Edwin Moran John Boyd
- 4. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 4 Time is key to strategy in… • Chess • Warfare (Sun Tsu, Clauswitz, Von Moltke, John Boyd) – See Chet Richards, Stephen Bungay •Business We borrow time… We buy time… We invest time… We save time… We waste time… We spend time… Time “is” Money?
- 5. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 5 Time “is” Money? Time (t) influences Value (V) 𝐷𝑒𝑙𝑎𝑦 𝐶𝑜𝑠𝑡 = − 𝜕𝑉 𝜕𝑡 Δ𝑡 “Cost of Delay” (CoD) A Cost – e.g. measured in dollars A rate of change in value e.g. measured in dollars per week or “Urgency”
- 6. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 6 Essential Kanban Condensed: The Glossary
- 7. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 7 Cost of Delay is a decision-aid • Context: • choosing the next “feature” / “experiment” to implement (Product)? • Choosing which product to fund / postpone (Portfolio)? • Why? • to maximise realised business benefit • How? • By estimating (forecasting) future cash (or value) flows and the time delay before the benefits will occur
- 8. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 9 Context: Portfolio level is where decisions are made about investing/disinvesting in different products Product level is where decisions are made about how to maximize the value delivered by that product Portfolio Product Team Personal WEEKS/ DAYS DAYS/ HOURS MONTHS/ WEEKS YEARS/ QUARTERS Products - Goals Strategic Direction Options - Value Product Management Stories - Delivery Day to day Leadership Tasks - Focus Individual Professionalism
- 9. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 10 How to approach Cost of Delay? quantitatively? qualitatively?or
- 10. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 11 Value flow from a new development – “adoption” Cost of development Increasing then decreasing profits/savings
- 15. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 16 -100.0 0.0 100.0 200.0 300.0 400.0 500.0 600.0 0 20 40 60 80 100 CumulativeValue$(K) Time in weeks No delay 10-week delay 20-week delay Cost of 10 week delay Linear benefits profile (e.g. Staff-Saving feature)
- 16. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 17 0510 0 100 200 300 400 500 0 20 40 60 80 100 Urgency$(K)perweek DelayCost$(K) Length of Delay (weeks) Approximately linear Delay Cost Approximately constant “Urgency” Linear benefits: Delay Cost & Urgency Profiles
- 17. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 18 DelayCost($) Urgency($perweek) Delay Cost and Urgency Profiles General Delay Cost and Urgency Profiles Low delay impact before this point Low delay impact after this point Roughly constant urgency over this period
- 18. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 19 WSJF with constant urgency (apply the formula) prioritise highest urgency/duration • Value realised by implementing item 1 then item 2: 𝑉1 + 𝑉2 − 𝑈1 𝐷1 − 𝑈2(𝐷1 + 𝐷2) • Difference in value by doing item 1 first, compared to doing item 2 first 𝑈1 𝐷1 − 𝑈2 𝐷2 𝐷1 𝐷2 WSJF: Favours urgent short jobs 12 wks 4 wks $8pw $3pw D2 Urgency(CoD) Time (weeks) $96 $48 D1 U2 U1 D2 Urgency(CoD) Time (weeks) $112 $12 D1 U2 U1 Total Delay Cost=$144 Total Delay Cost=$140 Total Delay Cost “wisjif” or “CD3”
- 19. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 20 What is “Duration” in the WSJF formula • Customer Lead Time? • System Lead Time? • Touch Time? • Lead Time does not represent how long the team is “blocked” by a different item • In some circumstances* Touch Time (for which an estimate of effort is a reasonable proxy) should be used * where items are released on completion, rather than waiting for batch releases
- 20. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 21 How to approach Cost of Delay? quantitatively? qualitatively?or
- 21. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 22 Value isn’t just increased profit… • Protecting loss of profits • Increased turnover • Increased learning • Reduced risk • Cost saving • New market option • Cover competitors’ moves • Staff retention • Process improvement • etc… How would you put a monetary value on each of these?
- 22. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 23 Qualitative Approaches to ordering work by Cost of Delay 1. Gut feel / HIPPO 2. SAFe 3. Delay Cost Profiles 4. Category Radar Plots 5. Hybrid approaches and combination with probabilistic forecasting
- 23. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 24 The SAFe formula for WSJF • All quantities estimated on a 1-20 (sic) “Fibonacci” scale • This is a qualitative rather than quantitative method • The danger of this approach is the use of spurious numbers! • As a qualitative method it may help people talk to each other about value… Couldn’t they do that without playing cards? 𝑊𝑆𝐽𝐹 = 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐷𝑒𝑙𝑎𝑦 𝑆𝑡𝑜𝑟𝑦 𝑃𝑜𝑖𝑛𝑡𝑠 No. It doesn’t! 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐷𝑒𝑙𝑎𝑦 = (𝑇𝑎𝑛𝑔𝑖𝑏𝑙𝑒 𝐵𝑒𝑛𝑒𝑓𝑖𝑡 + 𝑇𝑖𝑚𝑒 𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙𝑖𝑡𝑦 + 𝐼𝑛𝑡𝑎𝑛𝑔𝑖𝑏𝑙𝑒 𝐵𝑒𝑛𝑒𝑓𝑖𝑡) No. It doesn’t!
- 24. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 25 Delay Cost Profiles • Expedite: Very high urgency – no end point in sight • Fixed Date: One off impact on fixed date • Standard: Medium urgency; tails off (or cuts off) as value is lost • Intangible: Low urgency, may be followed by high urgency DelayCost($) Delay (time) Intangible DelayCost($) Delay (time) Standard DelayCost($) Delay (time) Fixed Date DelayCost($) Delay (time) Expedite We can define different “Classes of Service” for these archetypes
- 25. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 27 Category Radar Plots • Context specific dimensions of risk and value • Dimensions… • must be Ordinal • not necessarily Interval/Ratio • and not just Nominal Source: David J Anderson http://www.slideshare.net/ScrumTrek/david-anderson-enterprise-service-planning-kanban
- 26. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 28 How urgent is it to start this item? • the ordering of work items (WSJF: Urgency / LT) • Choosing the class of service that is appropriate for the work item • Policies for more value, less risk • Ensuring some intangible items are always in play (interruptible if unexpected / irrefutable demand) • Pay attention to the “last responsible moment” for starting a work item (say, 85% probability point) Source: @lki_dja
- 27. ©2016ANDYCARMICHAELALLRIGHTSRESERVEDLEANAGILESCOTLAND2016 29 Know the context… • Chaotic (high risk, uncertain) domains are not susceptible to quantitative analysis • Obvious domains don’t require it • Complicated domains are most suitable to quantitative analysis • Complex domains may benefit from a qualitative or hybrid approach By Snowded (Own work) [CC BY-SA 3.0 (http://creativecommons.org/ licenses/by-sa/3.0)], via Wikimedia Commons