In a new book called ‘Dance with chance, making luck work for you’ authors Spyros Makridakis, Robin Hogarth and Anil Gaba suggest that people tend to assume they can control much more than they actually do and as a consequence, they underestimate the role of chance.
One of the key ways of dealing with risk is accepting that there are things that you simply can’t control, and one of those things is the future. Underestimating uncertainty has very serious implications for risk management, and project managers should pay special attention to what can be predicted and what we can’t predict. The authors pinpoint two kinds of risks: subways and coconuts. You can plan for the subways, but it is difficult to plan for the coconuts.
- You can do research and be relatively sure that the subway will be predictable most of the time (but never all of the time!).
- On the other hand, you know that coconuts fall from trees, but you can’t predict when they will fall or where they will land.
They argue that we have to accept that there are some things that we simply can’t predict and as a consequence, the idea that project managers can control risk is an illusion. “Just accepting that is a huge step. It doesn’t come easily for most people, but it is absolutely the first critical step” Gaba says.
Acceptance is the first part of what the authors call the ‘Triple A’ strategy of accept, assess and augment:
- First you accept that there are things you can’t control.
- Then you try to assess the uncertainty and finally
- Augment your project plans to make sure you manage risk more effectively.
This means using models, independent opinions, internal and external advice and any other means to assess the unknown risks and to make your team nimble and open to change when the unexpected does happen.
In this context, the project schedule and cost plan are two models that can help in the assessment but they neither control the future nor eliminate risk. What these plans should do though is provide a good foundation for implementing a nimble response when the unexpected does happen.
For more on the book see: http://dancewithchance.com/index.html (and any men of a ‘certain age’ should read the blog ‘Testing, testing, testing… is it necessary?’)
To understand the role of schedules and other plans in a 21st century project see: Project Controls in the C21 – What works / What’s fiction
- Risky Business discussing the work of Nassim Nicholas Taleb, author of the Black Swan.
- The powerful illusion of control the illusory effect of power on the perception of control