On Business Optimization

Remember how mapping the human genome was going to lead to cures for different genetic diseases? The idea was pretty simple: compare the genes of healthy people to the genes of people with diseases ranging from cancers to allergies and – voila – fix the genes that were making them sick. Instant cures, right?

 

Well, maybe not.

 

It seems like things turned out to be a lot more complicated than that. 

 

In The Gene Bubble published in November's Fast Company, David Freedman explains that in spite of the billions of dollars poured into mapping the human gnome "with precious few exceptions virtually no promising new treatments or even highly useful diagnostics have emerged."

 

Why?

 

Because of "junk DNA." Apparently, junk DNA "accounts for 80% of a genes influence over disease and is incredibly difficult to sort out." 

 

According to Nadav Ahituv, a geneticist at the University of California, San Francisco:

 

"It's very discouraging, but we don't have any kind of code for understanding junk DNA. I can find the switches, but I don't know what they do. There are switches for the switches, and switches for those switches. It's endless."

 

Meanwhile, Wired reports on a paper published in the Proceedings of the National Academy of Sciences that showed that it isn't just the sequences of genes but how a gene is folded up. “It’s become clear that the spatial organization of chromosomes is critical for regulating the genome,” said study co-author Job Dekker, a molecular biologist at the University of Massachusetts Medical School.

 

So remember: even in nature, how you fold your junk matters.

 

 

What are the best uses of your company's dollars and resources? Optsee^® can tell you. Optsee^® is a project portfolio management and budgeting optimization tool unlike any that you've ever seen. Click here to find out more.

 

Sunk costs are the costs that have already been incurred and cannot be recovered. We aren't supposed to consider sunk costs when making rational investment decisions, only the future costs.

But people do anyway. 

How many times have you heard someone say, "Well, since we've already spent this much on it, we might as well finish it." They're making their decision based on sunk costs.

Ideas have sunk costs, too, only they're different from economic costs. When we spend a lot of time thinking about and working on a new idea, it is hard to let go of it in our minds, even when it proves unworkable or unfeasible. So we keep mulling it over and eventually we can become over-invested in it. 

 

And then we can't evaluate the actual outcomes rationally. 

Take the current Health Care Reform debate. Some people have so much sunk into the idea that Health Care Reform must be passed that they want to see anything signed, regardless of what is in the final bill. Others have so much sunk into the idea that Health Care Reform can never be good that they don't want to see anything signed, again, regardless of what is in the final bill. 

Both of these groups are basing their positions on their sunk investments into their ideas of Health Care Reform, and not necessarily on the future costs and benefits of what is actually currently being discussed.

About 12 years ago I worked on a potential new treatment for AIDS. It was a unique molecule that ultimately failed in clinical trials. Since then it has wandered as a potential treatment from one disease du jour to another and failed each time. Recently, I heard that it had been proposed as H1N1 flu vaccine booster, again, with no plausible scientific rationale.

So now it is just an interesting molecule with no proven clinical application or clear rational for using or trying it as a future treatment for anything else.

It is an idea whose time came and went more than a decade ago, yet the inventors just kept trying. They can't let it go, regardless of the fact that the odds for success are much longer now than they ever were. But the accumulated sunk cost of their initial promising idea keeps driving them to continue investing in it. 

"If we only keep trying…"

Sometimes it is useful to deliberately stop and consider if you're continuing to work on an idea because of what you have already mentally and emotionally invested in it or because of its actual future potential.

 

And sometimes the only way to avoid investing more time in thinking about a once-good idea is to just start working on a new and different one.

 

 

What are the best uses of your company's dollars and resources? Optsee^® can tell you. Optsee^® is a project portfolio management and budgeting optimization tool unlike any that you've ever seen. Click here to find out more.

 

Good project execution is essential to achieving the strategic goals of a company, but most companies either don't measure it or don't measure it well.

 

In companies where the quality of project management execution is assessed at all, it is usually measured against meeting budget, timing, and resource objectives that were often ill-conceived to start with. So when projects go over budget or are under resourced or when timelines are missed, it is too often blamed on "execution," and rarely on the poor quality of the initial budget, timing, resource, and risk assessments (or lack thereof).

 

How often have you seen managers record a quantitative basis for their planning estimates at the beginning of a project and then assess them at the end of a project? 

Too often managers look at Gantt charts as if they are THE PROJECT PLAN carved in stone. They aren't. Most of the time, Gantt charts represent the best guesses of well-intentioned people who tend to underestimate risks, resources, and timing (because that is what human beings tend to do). Most of the time, the "data" used to support the project planning either doesn't exist, hasn't been checked, or hasn't been derived empirically. Task start and end dates are fixed with virtually no meaningful or quantitative discussion about the probabilities of meeting those dates or modeling the dramatic cumulative effects of small amounts of slippage on project value.

So it is no wonder that the 2009 project management benchmark survey CHAOS report from The Standish Group showed that  "44% of projects were "late, over budget, and/or with less than the required features and functions" and only 32% of all projects were delivered on time, on budget, and with the required features and functions.

 

A big contributor to those results may not be just poor project execution, but how and where the project finish lines were drawn at the start of the project. So it is past the time for managers to be measuring the quality of project execution based on chiseled-in-stone Gantt charts.

 

Instead, today's managers need to start using quantitative risk analyses, databases of empirical data from previous experiences, and statistical tools for probabilistic project planning so they can truly assess and improve the quality of project execution.

 

 

What are the best uses of your company's dollars and resources? Optsee^® can tell you. Optsee^® is a project portfolio management and budgeting optimization tool unlike any that you've ever seen. Click here to find out more.

 

In spite of the fact that counting, numbers, and games of chance have been around for millenniums, it wasn't until the middle of the 17th century when three Frenchmen, Blaise Pascal, Pierre de Fermat, and Chevalier de Méré, developed the foundations for modern probability theory.  

 

So even though probability theory seems obvious to us today, it was relatively late in human history that it was developed. With that in mind, I have been enjoying teaching some of the concepts of probability to my 9-year old son using a fun little book called Do You Wanna Bet?: Your Chance to Find Out About Probability By Jean Cushman and Martha Weston. It is an entertaining story of two boys, Danny and Brian, discovering the impact of probability in their everyday experiences and developing a practical understanding of how to apply these concepts to others. 

Oliver Wendell Holmes once said, "One's mind, once stretched by a new idea, never regains its original dimensions." Probability is one of those great ideas that can stretch a person's mind, particularly a child's. Once a child has learned the basic concepts of arithmetic, it is probably never too early begin teaching these great ideas, and this book is a wonderful way to start.

 

 

What are the best uses of your company's dollars and resources? Optsee^® can tell you. Optsee^® is a project portfolio management and budgeting optimization tool unlike any that you've ever seen. Click here to find out more.