Monday, July 30, 2012

The hidden cost of planning, precision, and predictability

There appears to be a perception that it would be irresponsible for us to do any work without a very clear idea of what and how we are going to deliver and how much this will cost. Whilst I’m not at odds with this idea, it denigrates all other notions of responsibility. Consider;
  • Is it responsible to make no decisions until all the facts are known even if, by delaying, it is too late to act?
  • Is it responsible to avoid proposing potentially risky courses of action which may yield high returns, because we're unsure of the effort /cost involved?
  • Is it responsible to invest time and energy defining solutions to problems rather than delivering solutions to problems?
Most sane people would agree that all of the above show some levels of irresponsible behaviour, but all too often this exact behaviour is hidden behind the notion that having a clear and precise plan is the only responsible course of action. Now, a clear and precise plan is a great thing to have, especially if you can come up with it at almost no cost, but as the military says ‘No plan survives first contact with the enemy’, and the corollary ‘if your attack is going to plan, it’s an ambush’…

So what is the responsible approach? I’d suggest it’s a compromise, i.e. that the responsible thing is to
  • Balance risks with rewards. If I know something will cost between $100 and $200 I don’t need to go into any more detail if the return is $300. I should switch to delivery mode immediately and get that benefit asap rather than spend time and effort working out that it should cost $173.24. On the other hand, if the return is $150 I might want to do more investigation.
  • Balance planning with action. Have a rough plan for the long term and a detailed plan only for the immediate short term, possibly with other levels between. Spend most of our time delivering value against the short term plan, and revise the long term plan less frequently.
  • Balance precision with effort. Being precise is admirable, but if the effort required to be precise is too high then the benefits of precision are undermined. E.g. if it costs me $20 to determine an investment will be between $100 or $200 (for a total cost of between $120 and $220) and $50 to know the cost is $173.24 (for a total cost of $223.24) I’ve realised no benefit from the extra effort involved in gaining that precision.
  • Balance predictability with adaptability. Having a predictable outcome is admirable, but if it means missing out on opportunities to change course and deliver a better value outcome the advantage is undermined. Knowing that I can spend $150 to achieve a return of $300 is great, but if it means missing out on an opportunity to increase that return to $400 for the same cost I have failed to maximise my effort.
  • Balance budgets with benefits. Rather than try to define a deliverable with a cost, define the benefit associated with an outcome and set a budget accordingly. If the budget appears unachievable reconsider the approach, but if it does appear achievable start delivering and continue to monitor the budget and benefits until the crossover point is reached – i.e. when the incremental benefit of more work is not worth the cost that will be incurred.
That is to say that whilst there's benefit to planning, precision, and predictability they're useless unless coupled with taking action, delivering benefits, and being adaptable. Of course, whilst you're stuck in an environment where an investment has to be proposed and approved through a lengthy bureaucratic process this balanced approach is difficult to achieve, but unless the status quo is challenged effort will continue to be wasted and opportunities missed.

1 comment:

Member Plus said...

Well explained article