One of my favourite authors at the moment is Nassim Nicholas Taleb.
So he mostly speaks about finance, because that’s what he knows, but
underneath he is mostly talking about statistics and risk. And that is what
we all deal with.
His previous book "The Black Swan" in some senses wasn’t
very useful… it can be abbreviated as "We are really Bad at
prediction, much worse than you believe."
His latest essay is actually quite handy. It provides a map of where we are
going to be startlingly Bad at predicting.
www.edge.org/3rd_culture/taleb08/taleb08_index.html
Many Agilisto’s will say, "Yip, he is right, thats why our
practices work".
Others may look at Taleb’s essay and get an "Aha!" moment
and finally realize why some of the Agile practices work.
He suggests you divide problems on the basis of moments of a random
variable.
If your decision is a "yes/no" choice, it is simple. Will the
project be finished by the 5th of December 2008?
If your question is based on the value of a random variable, it is more
complex. What will be the completion date of the project?
If your question is based on a higher moment of a random variable, it is
very complex. What will be the ROI of a project?
Then look at the nature of the randomness… Is it fat tailed, or well
behaved?
For nonstatistical types a probability distribution can be fat or thin
tailed. The one you learned about in the stats course you have mostly
forgotten was a thin tailed one. (Gauss / Normal distribution).
Odds on if you did any stats course they went on for hours about thin
tailed distributions, because they can do the mathematics for them.
Unfortunately most real world distributions are fat tailed.
If you have a 1000 guys in the company, the average weight of employees is
simply not going to shift by much if you employ the fattest guy in the
world. (Fat guys come from a thin tail probability distribution.)
If you look at a 1000 random project case studies, the average project
overrun is going to massively shift if you add the worlds largest project
overrun.
ie. Things like food requirements for project workers are random variables
from what Taleb calls "mediocristan".
Things like time to completion are from "extremistan".
So if divide your problems in to quadrants like this.…
Simple Payoffs  Complex (Higher Moment) payoffs
Thin tail distribution Predictable  Less predictable
Fat tail distribution Less predictable  You're utterly stuffed.
Exercise for the Reader…
1) Catalogue the random variables in your work situation and categorise
them as from mediocristan or extremistan.
eg. Time to complete an item of work  Extremistan
Programmer Productivity  Very high variance, but probably Mediocristan.
Security Risks  Extremistan. (No valid distribution on attack models,
motivations etc.)
Exchange Rate fluctuations  Extremistan
Programmer Defect rates  Not sure. Maybe mediocristan for simple
monothreaded programs. …
