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 non-statistical 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. …