Life can only be understood backwards; but it must be lived forwards. Søren Kierkegaard

In the previous entry, the discussion of error cost correction was opened, and a couple of definitions were introduced. So now that the foundation is laid, it is time to start investigating all the “whys” around the late detection of errors. And today we will start with the most obvious issue – the absence of a crystal ball.

The unfortunate circumstance of not possessing a crystal ball results in two types of issues: either the materialization of highly improbable scenarios or unrealized opportunities. Both are united under one common property – these are developments that we do not expect happening, but which make sense in retrospect. As we have started by quoting philosophers in this entry, let us keep the bar high while introducing the first category, realization of highly improbable scenarios:

We demand rigidly defined areas of doubt and uncertainty! – Vroomfondel

The outcry of Vroomfondel, a philosopher from the universe of Douglas Adams, is the secret wish of all risk and project managers – if only the areas and especially the dimensions and the magnitudes of uncertainty were clearly defined! Alas, they are not, and the methods of risk measurement and the derivation of mitigation scenarios remain imperfect, to put it mildly. A risk scenario might not be identified as realizable – at most, as a potential and borderline to speculation. As time and project evolve, the circumstances change, and events we would categorize as “zero probability” or at the very least “next to impossible” turn out into accomplished facts assuming the “probability of one”. Nassim Taleb coined and popularized the term the “Black Swan” to describe such events: occurrences that are impossibly difficult to predict and which change our perception of reality upon realization.

Such scenarios turn out into extreme and dramatic stories: for example, the book of Michael J. Mauboussin “Expectations Investing” came out on the US-American market on Sept 10^th Sept 2001. When the contract was signed in 1999, nobody saw why the date could turn very much suboptimal.

The reality is that we still must consider the presence of such events – not for every particular scenario, but for the whole category. But before we turn to the question of what we have at our disposal to assure an adequate preparation, let’s look at another variety of risk-driven events: an unrealized opportunity. And let us just continue our quotes-bingo to introduce them:

‘- It seemed like such a simple idea!

- Stupid, Jack, the word is “stupid”!’

This enchanting dialogue from the iconic TV series “Friends” captures the sentiment of hindsight in a perfect way – after the fact, a lot of ideas stop being “ingenious” and turn out to be “disastrous”, and within a split second. What seemed to be rock-solid during the planning phase, hits the rock-bottom shortly upon launch, and not necessarily due to a mundane mistake in the calculation. Many meticulously planned products never really make it. A lot of infrastructure projects or design solutions look just perfect – on paper. Quite a few financial plans are impeccable – within the cozy environment of an Excel spread-sheet. To take the example really back home, I cannot help thinking of the good old analog days when I would be planning to move into a different apartment. I would spend quite some time fitting the pieces of furniture into a new apartment on a piece of paper (everything pedantically calculated and scaled), and it would look perfect. Until the moving day came, and I would realize the impossibility to translate the outcomes of my 2-D exercise into a 3-D environment. Technically it would work out, but it just would look plain stupid.

Though so different in their nature, all these cases have at least one thing in common: impeccable in theory, they look sheerly ghastly when implemented.

The cinema industry has supplied us with a few amusing examples. Back in the 1950s, the movies started struggling to keep their audience in the view of growing popularity of television. This gave birth to several attempts to provide the audience with a totally new experience and thus lure them back to the cinema. One of these was Smell-o-Vision: with the use of technology, the audience was able to experience the smells throughout the movie. The plan was to capitalize on the knowledge that smell has a very high potential of triggering and anchoring emotions and memory. The idea looked convincing in theory, but all the implementation attempts backfired.

The only way to radically cut out these types of risks would be to stop any activity and not even embark on a project. As this is not the way we want to pursue, let us have a look at the structures and tools at our disposal to mitigate the risks. We shall do that in two shakes of a lamb’s tail – that is, assuming our lamb shakes his tail once per week.