Designing risk out of the system

Photo by Todd Klassy I’ve written previously about looking at so-called risks more constructively, but how might we deal those things? It’s one thing to look at a problem from a different angle; it’s another to know what to do about it.

In my workshop on this subject at Agile Cambridge last week I suggested that the most effective approach is to move the playing field. In other words, don’t accept things as they are, but instead change the rules of engagement so that the uncertainty is no longer out of our control. Easier said than done? Well, you’ll probably be aware of at least one very successful example of this…

Once upon a time all software projects carried a risk along the lines of “client might change their mind” or “business context changes such that our plan is no longer relevant”. The cost of change in software projects generally used to be very high, and artificial barriers in the form of change requests were created to help make the problem go away. But then some very imaginative people developed what we call agile software development. Suddenly “things change” was no longer a problem—it was just something that people took in their stride. In fact, it’s even more radical than that. Agile development has turned “things change” into an asset, because the methodology gives the customer more control. That’s a very dramatic example of changing the rules of the game, and indeed the impact has been profound.

In discussing this between sessions with my friend Giovanni Asproni he summarised this by saying “Yes, Agile designed the risk out of the system.”

It’s a wonderful phrase, and a great perspective. The ideal is to design the risk out of the system. Not all solutions need be as dramatic as the invention of a new methodology for an entire industry, though. Venture capitalists reduce the risk of an investment by investing in more companies; they spread their bets and expect some to pay back much more than others will lose. Organisations worried about client payments devise incentive schemes for early or advance payment. Other problems will have entirely different solutions.

These approaches and others turn the tables. No longer are we the victims of bad things that happen to us. We can bring control back into our own hands and look for ways of designing risk out of the system.

Photo by Todd Klassy