Optionality: Synthesizing and Exercising

Attractive Options for Non-linear Gains during your Next Project

Mark A Hart#BoydAndBeyond

4 October 20141

Objective

Analyze insights on winning from John Boyd and insights on optionality from Nicholas Taleb to synthesize an optionality approach to development

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John Boyd Nicholas Taleb

Outline• Common approaches to development projects

• Optionality

• Antifragility

• Using the OODA Loop sketch to represent situations

• Analyses, synthesis, and winning

• Synthesizing and exercising options

• How to improve development experience during your current project and ensure that you win at the end of your next project

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The Gnomes of Product Development

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Section 1

Development Experience

• Autonomy

• Mastery

• Purpose

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Optionality:A quality of state where choice or discretion is allowed.

6generic*

*Section 2

Financial Options• Provide the buyer the

potential to take action

• No obligation to buy or sell

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Preferred Payoff Function• Asymmetric

• Convexity

8Based on Taleb, Understanding is a Poor Substitute for Convexity, 2014

An option is a substitute for knowledge

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Options Example

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It is advantageous to possess a variety of

responses that can be applied rapidly to gain

sustenance, avoid danger, and diminish

adversary’s capacity for independent action(Boyd, Patterns of Conflict, #12)

Antifragile•An adjective created by Taleb

•The exact opposite of fragile

•Beyond resilience or robustness

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Section 3

Characterizations of development environments• Fragile

• Robust

• Resilient

• Antifragile

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From project-to-project• Robust development

environments tend to survive unchanged

• Resilient development environments survive changes from external factors

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Antifragile SystemsAn antifragile system thrives and grows when exposed to volatility, randomness, disorder, and stressors and it welcomes adventure, risk, and uncertainty

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The option is an agent of antifragility

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Antifragile Example 1

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Netflix strives to be antifragile. They

attack their solutions to make themselves

a stronger company and improve their

development environment. They stress

their system to build up their ability to

withstand attacks.

“Chaos Monkey is a service which

identifies groups of systems and

randomly terminates one of the systems

in a group.”https://github.com/Netflix/SimianArmy/wiki/Chaos-Monkey

Antifragile Example 2

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In the late 1950s and the first half of

1960, Boyd and his students at Nellis Air

Force Base incorporated activities to

improve their antifragility. In the time

between the classroom and the debrief:

“They played grabass. They went rat-

racing. They got into furballs. Boyd gave

them their chance and one by one he

hosed them, and then he nursed them

along, teaching, demonstrating how to

control the Hun”

Ronald E. Cattonat Nellis Air Force Base

(Coram #96-97)

Image from http://www.nellis.af.mil/news/story.asp?id=123310303

OODA Loop sketch

18Based on the OODA Loop sketch from “The Essence of Winning and Losing” by John Boyd 1995

Section 4

Representing loops of various durations

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Representing a series of maneuvers of various durations

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Detecting the duration of a loop

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Representing a series of maneuvers

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Representing operating inside an adversary’s OODA loops

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Representing a competitive encounter

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Representation of the impact on OODA Loop duration when there is a dependency

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Representation of a single effort that is transformed to parallel efforts

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Representing harmonious efforts

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Boyd’s definition of harmony was the “Interaction of apparently disconnected events or entities in a connected way” (Boyd, 1986. Patterns # 125).

Items not included explicitly in Boyd’s OODA Loop Sketch

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• Faster tempo or rhythm

• Agility

• Fast transients

• Negative factors and noble counterweights

Fear : Courage

Anxiety : Confidence

Alienation : Esprit

Mistrust : Harmony

Uncertainty : Adaptability

Menace : Initiative

Stacked Representation of an OODA Loop Sketch

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How will you recognize a win?• Experience

• Problem to be solved• Job to be done

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Section 5

http://commons.wikimedia.org/wiki/File:Snowmobile_race.jpg. Trevor MacInnis.

Preparation to recognize a win

In freshly fallen snow, my friends and I want to experience the exhilaration associated with being a fighter pilot

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Analyses and Synthesis

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Boyd’s thought experiment

Boyd, The Strategic Game, 1987

Preparing for an informed analyses

People engaged in activities that are enabled by technologies

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https://www.flickr.com/photos/mt_hood_territory/8407904161/.

https://www.flickr.com/photos/91591049@N00/14714584344/

https://www.flickr.com/photos/hutchike/4549229178/

Analyses

Select one potentially valuable item from each activity then discard and forget the rest of each image 34

Skis

Handlebars

Treads

Motor

SynthesisTransformation and combination

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In most cases, one analyses and synthesis effort is not enough for a win.

In most cases, one OODA cycle is not enough for a win.

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A synthesis approach enables one to imagine how several capabilities may work together to produce the desired result

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“A loser is someone — individual or group — who cannot build snowmobiles when facing uncertainty and unpredictable change; Whereas,A winner is someone — individual or group — who can build snowmobiles, and employ them in an appropriate fashion, when facing uncertainty and unpredictable change.”

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Boyd, Revelation, 1987

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To win, the emphasis is on the capability to build and employ products in an appropriate fashion when there are unknowns

A winner is not required to be the inventor of a product or the first to market it

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In 1917, Virgil D. White received a patent for "an attachment designed to convert a Model T into a 'Snowmobile,' a name coined and copyrighted by White" in 1913. Snowmobile on display at the National Postal Museum. Images from http://www.postalmuseum.si.edu/museum/1d_Snowbird.html

Validation

In freshly fallen snow, my friends and I want to experience the exhilaration associated with being a fighter pilot

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Preparing for more analyses

People engaged in activities that are enabled by technologies and enhanced through play

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https://www.flickr.com/photos/mustafakhayat/10213753235/

More analyses

Select one potentially valuable item from each activity then discard and forget the rest of each image

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SynthesisTransformation and combination

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Validate exhilaration45

How to improve development experience during this project and ensure that you win at the end of the next project

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Section 6

Development Options• More than a negotiated agreement

based on speculation• Multiple options can be explored

simultaneously• Associated with current capabilities• Within project constraints

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Requisite Variety

48Formulated by W Ross Ashby

= variety of potential responses

= variety of disturbances (problems) = variety of outcomes tolerable bythe essential variables

Achieving Requisite Variety• Mobilize network of contributors

with diverse specialties and multiple perspectives

• Additional training

• Access to expertise

• Cooperation

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Without requisite variety, familiar patterns may not be recognized as insufficient responses

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Without a variety of potential responses at the appropriate times, a development environment may be

fragile51

Excessivevariety may reduce agility

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To ensure the adaptability of the development network

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• Amplify appropriately• Attenuate appropriately

Disintermediation• Remove layers between individual

contributors and data• Remove barriers between decision

makers

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Facilitate Disintermediation

• Experience interactions of customers with prototypes

• Direct observations that promote full-fidelity interactions

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Pair Development• Interaction of disciplines

• Synthesis of options

• Develop self-correcting focus and direction informed by the analyses of multiple perspective

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Detecting Mismatches

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RecursionRecursion: any solution or technique in which large problems are solved by reducing them to smaller problems of the same form.

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Ilya Prigogine is known for his definition of dissipative structures and their role in thermodynamic systems far-from-equilibrium. He won the Nobel Prize in Chemistry in 1977.

Fragility in a development environment tends to promote procrustean rules, mediocrity, and apathy

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In a fragile environment, one problem or one

failure or one inadequacy can impede success

An antifragile development environment benefits from a moderate amount of stress

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Antifragility in a development environment tends to promote autonomy, mastery, and purpose

How Pixar Wins • Successfully searching rather

than avoiding failure• A successful project is

comprised of millions of ideas and decisions. Show incomplete work (Dailies and notes from Brain Trust)

• Relatively few projects• Training that promotes

interaction

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“Showing work in an incomplete state reduces the potential for one group to perfect the wrong thing”

Optionality

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• Development options• Requisite Variety• Amplify and attenuate• Disintermediation• Pair development• Detect mismatches• Recursion• Far-from-equilibrium• Antifragile

Summary

Synthesizing and Exercising Attractive Options for Non-linear Gains during your Next Project

Optionality: Synthesizing and Exercising Attractive Options for Non-linear Gains during your Next Project

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www.Developing-Winners.com

Twitter: @OpLaunch

mark.hart@OpLaunch.com

LinkedIn: https://www.linkedin.com/in/mahart