1. Uncertainty is valuable
Why it matters
Fallacy #1: You can eliminate all uncertainty.
There is a positive correlation between uncertainty (aka risk) and reward. What we are often oblivious to is that eliminating uncertainty can sometimes limit potential reward.
A classic example from gambling: long odds = big payout.
Fallacy #2: The problem can be solved with more analysis.
It’s generally better to do something, in order to learn more. For example, not starting a project until all risks are accounted for and evaluated. This gives a false sense of security because you can only analyse factors you think are relevant and you are bound to ignore factors you are not aware of. “You don’t know what you don’t know.”
The value that forecasting gives at this stage is an insight as to how much uncertainty still remains.
If the worst comes to the worst, as forecast, we want to make sure that the feature options (choices) we see before us are still viable.
What we really want to know is whether the uncertainty is so overwhelming that it doesn’t make sense to do it anymore, and whether the risk is acceptable.
How it works
To describe uncertainty, we would always expect a range of values instead of a single number.
Whenever uncertainty is presented to you as an exact number with two decimal points, be very suspicious and always ask “how”. What condition could cause this value that we ascribe to the uncertainty to double? What factors could cause this value to shift in a big way?
Think of the factors that would cause that number to vary! Is the cause of uncertainty within our control? If it’s outside our control, then it needs to be observed! Uncertainty often comes as a chain of events, rarely a single event. Think also about the likelihood of those factors.
Here’s an example: You have to be at work at a certain time. You would leave home earlier if it’s snowing. The snowing is outside your control but the choice of transport is within your control. Instead of driving to work because of the uncertainty of road conditions and how much longer it would take, you might want to go by public transport because it’s more reliable.
As a general principle, the more the uncertainty, the earlier you should get started in order to get it done in time.
Use forecasting as a technique to reduce uncertainty, and to understand the impact of your decision options.