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By Tai, June 25, 2009 12:03 am

When more analysis brings more risks

It is frequently equated that more analysis reduces the risks in decision making. However, there exist cases that the more analysis is done, the more risks are produced.

1. When analysis slows down decision making

Excessive analysis can slow down decision making.

Early mover advantage is shattered and thus, more risks are introduced in the rivalry.
Excessive efforts for analyzing data and networking for relevant information increase costs and make the firm less competitive.
The longer it takes for analysis especially networking, the higher the probability of information leakage is.

2. When analysis increases sunk investment

Investment in R&D, analysis and innovation initiatives become sunk investment.

While these practices are increasingly seen in strategic perspective as opportunities drivers, they are still viewed as fixed costs in traditional accounting perspective.

Accounting risks are reflected in risk assessment of the firm nevertheless.

3. When analysis conflicts with intuition

Imagine you’re an ambitious entrepreneur and your intuition whispers so powerfully “go for it!” while analysis shouts “don’t!”.

Conflict in communication and conflict in roles (especially in startups) are inevitable.

4. The risk of structure and process

More mature enterprises have structures, processes, role definition and division of labor in place. The risk of this is people fulfiling their roles can lock themselves within their frames and aggressively defend their ideas.

Analysts might hinder certain innovative, risk-taking efforts. The risk of politicking decision making is also a concern.

Insights

In short, these examples prove that analysis and risk taking are not mutual exclusive. They are not on the two ends of a string, but intertwines at some points.

What to do

Roles

Know your roles and your workmates roles. Respect their standing and seek mutual understanding.

Some smaller firms don’t hire professional analysts, so one person can take multiple roles. In this case, techniques like the six thinking hats can be helpful.

Blended decision

In the blurry literature cases of uncertainty, an advice is often to balance different views. This does not recommend a ’straight’ balance of determinant factors. What should be aimed for is a wise mixture of practices in lights of the situations. At the end of the day, your logical mind and judgement are best.

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By Tai, February 1, 2008 4:28 pm

Risk Analysis

Category: Analysis

How to use

Risk = probability of event x cost of event

Write down answers to the following questions:

Identify Threats

Threats may include:

• Human
• Procedure: internal system, organization
• Nature: weather, disaster, disease, accident
• Technology: technical failure
• Politics: tax, public opinion, policy
• Project:budget, time
• Finance: stock, business failure, interest rates
• Others

Estimate Risk

By using formula based on key indicators

Prioritize the risks and create risk management plan.

Managing Risk

Select a cos-effective approach.

Risks can be managed by:

• Using existing assets
• Using contingency planning: choose to accept a risk, but develop a plan to minimize its effects
• Investing in new resources

Advantage

Risks analysis allows you to examine the risks that you or your organization faces in a structured approach. It focuses on probability and cost of events occurring.

Risk analysis forms the basis for risk management.

Previous volumes of the series

1. Introduction
2. Reversal
3. Appreciation
4. Drill Down
5. SWOT Analysis

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By Tai, September 15, 2007 3:06 am

Apart from motivationally writing for the web, I have been invited to universities as a motivational speaker to talk about the IT industry and IT occupations with IT students.

What question do you think is most frequently asked?

What programming languages and tools are currently used in your company?

It is not a surprising one because the same question has been asked much more frequently on technical forums and newsgroup and has caused so much debates on T-tool vs. U-tool and more heatedly, X-language vs. Y-language.

And my answer is

“It is nice that you are preparing the knowledge and skills that you think your potential employers will seek. However, skills and experience in a particular programming language is not the only technical skill employers seek in candidates. They’re also looking into the foundation technical knowledge, such as but not limited to: Object Orientation, Design skills, Software Methodologies, Data Structures and Algorithms, Database Design, Architecture, Computing Theory, that empower your programming skills. You may do programming with, let’s say, Java relatively well in some situations without the above knowledge, but if you are thrown into a more complex project to build a huge product, the risk is high.

One example. You spend two to four years in college polishing your skills in X language that you predict will (still) be hot in a few years when you graduate. When you do graduate and apply for jobs, if they say “Sorry, X is old. We’re needing Y people”, what will you do? Spend the same amount of time learning Y? No, it’s not the way it should work. Foundation knowledge is the root, languages and tools are leaves. Equip yourself with the foundation, and when technology changes (is IT a slow changing area that does not change every 6 month or so?), you can adapt more easily.

When you have mastered the foundation knowledge, and possessed significant experience in using programming languages, which IDE is not a bug big issue.

Besides, about recruitment, technical skills are not the only evaluation criterion. Think about soft skills and attitude too.”

I was thinking about my profession

The number of Business Analysts and System Analysts required in software companies is not that many compared to developers; in some smaller companies with less formal process definition, some developers take the Analyst role. If the need for Analysts were higher, this question could have been asked: “What modeling languages and tools are currently used in your company?”

The answer is simple: Unified Modeling Language. UML itself has been a well-established language for modeling. More of a reason why it has become so popular is due to the promotion of UML by RUP.

But once again, UML is a language. The case is not much different from that of programming languages. Knowing UML is not enough to perform all tasks Analysts do, Business Process Modeling for instance - and a new standardized set of notations named BPMN (Business Process Modeling Notation) is being proposed.

Underlying UML skills are Modeling skills. Modeling languages are used to present information in a more visual (and structural?) way. You need to know what model or diagram should be used to present what kind of information at what time in what situation to whom.

Model is one kind of information. In order to develop solid Modeling skills, Information Processing skills and Data Analysis skills need to be developed first or in parallel.

With all those skills at hand, you will be able to guess how shapes are categorized and may quickly locate the right notations you need in Modeling tools, no matter if it’s Rational Rose or Visio or Enterprise Architect or so on.

After you have created a good piece of model, you may want to present it to customers or other teams in your project. Presentation skills may help.

Side discussion: Model vs. Diagram

Throughout this article, I have used Models consistently, without mentioning diagrams. The may raise question since “UML diagram” is a very common terminology. The reason is because Analysts produce visualizations which are not diagrams too. Organization charts, map, prototype are just a few to name. ‘Model’ covers all of these, of course including diagrams. Also, one trivia is that the word may remind the fact that information systems actually model the real world.

Conclusion

So to conclude, foundation knowledge is required in any profession. Technology and tools change so quickly, but concepts do not as quickly. Build your internal strength should be the higher priority.

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By Tai, July 26, 2007 11:48 pm

Problems with Trait tests mis-use

Firstly, many of them cover self-assessment. As depicted in the “360 assessment” illustration, self-assessment alone is never, and far from enough. How good self-assessment results are depends on their self-awareness.

Next, using these tests for what they were not intended for may invite counter effects. Trait tests were designed to guide rather than to judge, they give more information on preferences than on abilities. They help people to identify their potentials; they are not to identify people’s capabilities. They are great in creating and maintaining healthy relationships, but they are not an excuse for relationship termination

Furthermore, when seeing test result of a person, you’re seeing a snapshot of that person together with his mental and probably physical conditions. People are not static, but dynamic and growing, fluctuating with dreams, visions and aspirations.

Applying Trait tests without credentials of ethical and appropriate use might come as another question. A lot of tests rely heavily on interpretation and the results can be trusted as the level of trust placed upon the reader.

Besides, many assessments have a little something for everyone. People are not totally black or white, but tend to have a mixture of different, degree varying, personalities. Test-takers are tempted to to seriously overestimate the degree to which general statements can fit them uniquely.

Finally, categorization, or fitting dynamic people into pre-defined frames can become an abuse, one one should be fully aware not to overuse or takes the risk of being misled.

Notes when applying Trait tests

• Adaptation is required for the tests to comply with the enterprise’s culture and sociological factors
• When invest in using Trait tests, do so seriously and stressing the importance and complexity of these tests. Overall, they are definitely not for idle times, but require full research and occupation.