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What if? Simulation in portfolio management and replacing estimation as a risk management strategy
Managers and leaders worldwide struggle to decide between projects A, B, or both. Traditional estimation techniques fail because humans can't predict the future. This talk proposes a simulation-based approach inspired by investment strategies, industrial management, and poker playing. By leveraging AI, forecasting, and computing power, simulations offer a reliable and adaptable portfolio planning strategy. Rather than relying on human estimation, simulations streamline decision-making and provide reassurance.
Target Audience: Portfolio Managers, Product Leaders, CPO, CEO, CTO, Product Managers, Product Owners
Prerequisites: Beginner level probabilistic forecasting, familiarity with portfolio level decisions
Level: Basic
Extended Abstract:
Right now, around the world, managers and leaders are scratching their heads to try and answer the question “Should we take project A, B, or both?”. The techniques they are using, are woefully inadequate to answer their question because they rely on a skill humans don’t possess: predicting the future!
Estimation as a portfolio and risk management strategy relies on our ability to predict the future. But we don’t have that skill! What can we use instead then?
In this talk, we explore how we can learn from the world of investment (risk management), industrial management (process control), and poker playing (thinking in bets) to create a powerful simulation strategy that will streamline and reassure your portfolio planning team. Unlike humans, simulation can take as many ideas as you can throw at it, and can come up with the most likely winning scenarios quickly, repeatably, and is infinitely adaptable to future surprises.
Why rely on estimation when we can rely on AI, Forecasting, and the near-infinite computing power we have in even the most humble of spreadsheet programs?
Key Learnings
- Basics of simulating portfolio decisions
- Comparing simulation vs estimation for portfolio level decisions
- Examples of simulation use in complex scenario assessment, with N >> 1 options for decision
- How to effectively support decision making with simulation.
Vasco Duarte, a leading figure in the agile community, co-founded Agile Finland and hosts the popular Scrum Master Toolbox Podcast with over 10 million downloads. His book "NoEstimates" provides a unique approach to Agile, enhancing software development's sustainability and profitability. As a keynote speaker, he shares his expertise, empowering organizations to improve effectiveness, adaptability, and responsiveness. Vasco's contributions have reshaped the landscape of software development.
Daniel Vacanti is a 25-plus year software industry veteran who has spent most of his career focusing on Lean and Agile practices. In 2007, he helped to develop the Kanban as a strategy for knowledge work and managed the world’s first project implementation using Kanban that year. He has been conducting Lean-Agile training, coaching, and consulting ever since. In 2013 he founded ActionableAgileTM which provides industry-leading predictive analytics tools and services organizations that utilize Lean-Agile practices. In 2014 he published his book, “Actionable Agile Metrics for Predictability”, which is the definitive guide to flow-based metrics and analytics. In 2017, he helped to develop the “Professional Scrum with Kanban” class with Scrum.org and in 2018 he published his second book, “When Will It Be Done?”. Most recently, Daniel co-founded ProKanban.org whose aim is to create a safe, diverse, inclusive community to learn about Kanban.
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