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Consider Payoff

How do you choose what to work on next?

What's the Payoff

Sometimes, there will be multiple actions you could take on a project and you have to choose the best one:

  • There's the risk you'll decide wrongly.
  • And, making a decision takes time, which could add risk to your schedule.
  • And what's the risk if the decision doesn't get made?

We can't know in advance how well any action we take will work out. Therefore, Taking Action is a lot like placing a bet.

Payoff then is our judgement about whether we expect an action to be worthwhile: are the risks we escape worth the attendant risks we will encounter? We should be able to weigh these separate risks in our hands and judge whether the Payoff makes a given Action worthwhile.

The fruits of this gambling are revealed when we meet reality and we can see whether our bets were worthwhile.

Considering Payoff: Examples

Example 1: YAGNI

As a flavour of what's to come, let's look at YAGNI, an acronym for "You Aren't Gonna Need It":

YAGNI originally is an acronym that stands for "You Aren't Gonna Need It". It is a mantra from Extreme Programming that's often used generally in agile software teams. It's a statement that some capability we presume our software needs in the future should not be built now because "you aren't gonna need it". - YAGNI, Martin Fowler

The idea makes sense: if you take on extra work that you don't need, of course you'll be accreting risk - you're taking time away from sorting out the real problems!

But, there is always the opposite opinion: You Are Gonna Need It. As a simple example, we often add log statements in our code as we write it (so we can trace what happened when things go wrong), though following YAGNI strictly says we shouldn't.

Which is right?

Now, we can say: do the work if there is a worthwhile Payoff.

  • Logging statements are good, because otherwise, you're increasing the risk that in production, no one will be able to understand how the software went wrong.
  • However, adding them takes time, which might introduce Schedule Risk.
  • Also, we have to manage larger log files on our production systems.

So, it's a trade-off: continue adding logging statements so long as you feel that overall, the activity pays off reducing overall risk.

Example 2: Do The Simplest Thing That Could Possibly Work

Another mantra from Kent Beck (originator of the Extreme Programming methodology), is "Do The Simplest Thing That Could Possibly Work", which is closely related to YAGNI and is an excellent razor for avoiding over-engineering.

At the same time, by adding "Could Possibly", Kent is encouraging us to go beyond straightforward iteration and use our brains to pick apart the simple solutions, avoiding them if we can logically determine when they would fail.

Our risk-centric view of this strategy would be:

  • Every action you take on a project has its own Attendant Risks.
  • The bigger or more complex the action, the more Attendant Risk it'll have.
  • The reason you're taking action at all is because you're trying to reduce risk elsewhere on the project.
  • Therefore, the biggest Payoff is likely to be the one with the least Attendant Risk.
  • So, usually this is going to be the simplest thing.

So, "Do The Simplest Thing That Could Possibly Work" is really a helpful guideline for Navigating the Risk Landscape, but this analysis shows clearly where it's left wanting:

  • Don't do the simplest thing if there are other things with a better Payoff available.

Example 3: Continue Testing or Release?

You're on a project and you're faced with the decision - release now or do more testing?

Obviously, in the ideal world, we want to get to the place on the Risk Landscape where we have a tested, bug-free system in production. But we're not there yet, and we have funding pressure to get the software into the hands of some paying customers. The table below shows an example:

Risk ManagedActionAttendant RiskPayoff
Funding RiskGo LiveReputational Risk, Operational RiskMEDIUM
Implementation RiskUser Acceptance TestWorse Funding Risk, Operational RiskLOW

This is (a simplification of) the dilemma of lots of software projects - test further, to reduce the risk of users discovering bugs (Implementation Risk) which would cause us reputational damage, or get the release done and reduce our Funding Risk by getting paying clients sooner.

In the above table, it appears to be better to do the "Go Live" action, as there is a greater Payoff. The problem is, actions are not commutative, i.e. the order you do them in counts.

UAT or Go Live: where will you end up?

The diagram above shows our decision as moves on the Risk Landscape. Whether you "Go Live" first, or "UAT" first makes a difference to where you will end up. Is there a further action you can take to get you from the "Dead End" to the "Goal"? Perhaps.

What To Do?

As a concept, payoff is made more tricky because often the actions you take might depend on each other, and the payoff might not be immediate.

So, first things first, you need to make sure you're Tracking Risk properly.