Decision Making, Value Propositions, and Project Failures Reality and Responsibility

1. Decision Making, Value Propositions, andProject FailuresReality and Responsibility INCOSELas VegasSeptember 15-18 Rick Dove dove@parshift.com Paradigm Shift International

2. Anonymous Case Study: Projects and Value Propositions That will probably stick • Staffed integration-management responsibility • Agile enterprise IT infrastructure (XML bus, ETL templates) • On-Demand application integration (anything anytime) That will probably be lost • Access to comprehensive information On-Demand • Differentiated eBusiness strategy • Dept-manager responsibility for IT business tools • Business-engineering office • Comprehensive employee involvement in customer service That were planned but will probably not be implemented • Strategy Portfolio Management system • Agile-culture development and maintenance • Agile security strategy Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, www.parshift.com

3. Case Stdy: Hindsight Observations Value propositioning insufficiently addressed for execs • CEO vision was articulated, but not bought into by others • Benefits of agile vision neither appreciated, nor taught Major attention focus conflict • Production focused on plant/process construction (Herculean) • Sales/Marketing focused on getting orders (Herculean) • Other areas struggling with OJT and cultural conflicts Unresolved responsibility gaps • Copy-Exact MES untouchable, isolationist (Mfg Execution Sys) • Unresolved data-integrity conflict between ERP and MES • Unresolved ownership of eBusiness strategy & proj mgmnt Unresolved cultural conflicts • Serious intercultural cold war and gang politics • Competency and performance not appreciated concepts Unsustainable implementation and strategy • Mandate to hire local IT, but insufficient capabilities available Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, www.parshift.com

4. Project Failure Defined Project fails to deliver acceptable ROI = Implementation Failure • project terminated before completion • needs cease to exist - the world changed unpredictably • necessary resources become insufficient or unavailable • decision makers have a change of heart or are replaced • project ill defined = resources inefficiently applied • project incorrectly defined = user rejection or insufficient value Project fails to deliver as proposed = Proposal Failure • project exceeds budget • project exceeds time • project doesn't meet spec Caused by Inadequate Value Propositioning

5. Value Loss Gain Decision Makers hear promised benefits with a bit of healthy skepticism. In the information technology arena, with a good deal of skepticism. They associate a probability, that a benefit will deliver as promised. They know from experience that honest claims assume ideal conditions of implementation, transfer, and acceptance. [interpretation of Prospect Theory] Kaheman & Tvarsky: Prospect Theory Individual Decision Logic Individual Decision Behavior reflects valuation as: Non-Linear Relative Formulation Dependent Simplified Knowledge Dependent by with unless shaped as Elimination if DM has to which biases Ruiness Outcome Psycho- logical Bias "S" Curve High Knowledge Chunking Probabilities if Status Quo Hopes and Expectations looks like shaped by Not Significant Low Knowledge sets neutral point of Initial Gains/Losses Dominate Losses Loom Larger Perception as Loss or Gain perceptions of effect is effect is Diminishing Incremental Values Steeper Negative Values Low Probability Gain High Probability Loss High Probability Gain Low Probability Loss results in results in results in results in results in results in results in results in results in results in Over WeightedLow Prob Under WeightedHigh Prob Over Weighted Certainty Under Valued Increases Loss Averse Behavior Risk Seeking Behavior Risk Averse Behavior Simpli- fication Under Weighted Prob Over Weighted Prob Probability (Prob) is the subjective likelihood, assumed by a Decision Maker, thata proposed benefit will deliver as promised. © 2004, Rick Dove, Value Propositioning – Book One – Perception and Misperception in Decision Making, Iceni Books, 2004 Attributed Copies Permitted

6. Cyert & March: Behavioral Theory of the Firm Simon: Administrative Behavior Group Decision Behavior The Decision Maker "...looks for a course of action that is satisfactory, or 'good enough'....Because administrators satisfice ... they can make their decisions with relatively simple rules of thumb that do not make impossible demands upon their capacity for thought. Simplification may lead to error, but there is no realistic alternative in the face of the limits on human knowledge and reasoning." [Herb Simon] Group Decision Logic involves Objective Setting Perception Creation Choice includes interpreting based on Value Propositions from Influenced by Attention Focus Standard Rules Candidate Solutions Training and Experience based on avoids uncertainty by Simple Patterns selected by Decision Psychology Search Process Past Experience Past Org Slack Unresolved Conflict determined by Amount of Org Slack Mitigating Conflict Performance Targets Objective List Who's Searching by based on based on Similarity to Current Solution Acceptable Level Rules Sequential Attention Short Term View Negotiated Predictability Past Objectives results in results in results in results in Past Perform-ance Perform- ance of Others Group Members DM's Objectives Lowest Commonality Postponing Some Objectives Contract Terms "Satisficing" Valuation Problem Perception © 2004, Rick Dove, Value Propositioning – Book One – Perception and Misperception in Decision Making, Iceni Books, 2004 Attributed Copies Permitted

7. Recreating from memory what was witnessed at an auto accident is not unlike trying to remember what was shown in a project presentation, or what was read in a written proposal. Information is selectively filtered and interpreted by the observer in the process of becoming memory and perception. The end result is a set of perceptions that are both incomplete and different than the original information. [paraphrasing Plous] Plous: Behavioral Psychology of Decision Making Misperception Logic Mis-perception is caused by Perception Creation Memory Bias determined by determined by Re- construction of Event Context Dependence Selective Perception Cognitive Dissonance Hindsight Bias from may use forces believing conforms to Contrast Effect Primacy Effect Recency Effect Halo Effect Consistency Past Event Partial Memory Hopes making meaning meaning making was Comparison First Perception Last Perception Associated Perceptions Predictable filled in with Expectations with by changing with will be conform to Specific Reference Dominate Perception Self Image Old Perceptions Other Information Inferred Details drawn from Associated Memories results in Biased Knowledge © 2004, Rick Dove, Value Propositioning – Book One – Perception and Misperception in Decision Making, Iceni Books, 2004 Attributed Copies Permitted

8. Perception Formation David Ausebel, Meaningful Learning Joseph Novak, Concept Maps "The most important single factor influencing learning is what the learner already knows. Ascertain this and teach him accordingly."[David Ausebel] Perception Formation Logic is Learning which creates Knowledge with dimensions of Relevancy Source which appears to be Structured Concepts has scale spanning has scale spanning Rote Meaningful Internal Self Discovery External Presentation that can be modeled as Concept Maps with principles of requireslearner with reflecting Close Prior Knowledge consisting of Hierarchy Progressive Differen_tiation Integrative Recon-ciliation Concepts Interest in Material connected by as as as Relationships Commitment To Learn New Info Subsumed Under Old Increasing Linkage & Refinement Cross Links & Fixed Links © 2004, Rick Dove, Value Propositioning – Book One – Perception and Misperception in Decision Making, Iceni Books, 2004 Attributed Copies Permitted

9. Case Study: Hindsight Lessons Value propositioning for main decision should never stop • People will not listen until they are ready • Focus individually on individual's values Success constraints should be addressed with separate and continuous value propositioning • Do not assume problems are understood, make the case Responsibility voids and conflicts must be resolved early • IT cannot get cooperation w/o business mgr's commitment Cultural engineering should start early • Soft stuff is hard part, and cannot be postponed There is no substitute for competency and talent • Plan sustainability up front and act early Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, www.parshift.com

10. Value Propositioning Book One Perception and Misperception in Decision Making by Rick Dove – Book One –Perception and Misperception in Decision Making Nov 2004, Iceni Books, 14 Chapters, ~60 pages, $15.00Pre-publish PDF available now – Book Two –Competency and Talentof Decision ChampionsQ2 2005– Book Three –Responsibility and Skill of Decision MakersQ4 2005