Guest Post: Chaos, Planning, and the Power of Decision Intelligence (DI) Simulation

I’ve been a project manager dozens of times for over 45 years (hard to believe!).  Core to my success in this role has been the belief that “planning is associated with project success; both project efficiency and overall project success.”

But this belief has been substantially challenged in recent years, and I’ve come to realize that we’re in a new reality where planning is no longer as central as it once was. Why? As it turns out, most plans assume that the external world remains relatively stable for the duration of the project. Today stability is no longer a valid assumption, and so in many circumstances,  the traditional approach to planning is now obsolete.  We can do better.

The modern business landscape is novel, volatile, uncertain, complex, and driven by external factors like political decisions and economic policies. The chaos created by sudden policy shifts like tariff changes is disrupting markets and supply chains, creating whiplash, and rendering traditional planning – my bread and butter over my entire career – substantially obsolete.

Yet you know that planning is a tool for managing risk and aligning the project team. Deviations from the plan can make people perceive management decisions as arbitrary.

How can you obtain the benefits of planning in a chaotic world?

The TL;DR answer: model the chaos; measure the chaos; and optimize in the moment.

Let’s unpack the TL;DR:

Step 1: Model the Chaos. You’ll usually have a goal in mind (like $10M in profits this year), some actions you can take to achieve that goal (like how you set up our supply chain, budget allocations to manufacture, pricing, and marketing), and things that happen in the external world that affect how your actions lead to your intended outcomes (like tariffs, government regulations, and weather).

In this kind of volatile situation, you need to do something new.  I suggest that you use Decision Intelligence to create a causal decision diagram (CDD) that maps the causal chains from your actions and the external factors to your desired outcomes. Simply creating the CDD together with your team, and seeing it graphically on a virtual whiteboard, aligns the team. Identifying the externals—the volatile factors in the outside world that have the greatest effect on your best actions — is step one in managing chaos.

Step 2: Measure the Chaos. Simulate the decision model with a tool like World Modeler™, as described in my DI Handbook.  Run simulations where you and your team change assumptions about (values of) external factors and see which externals have the most impact on which actions produce your desired outcomes.

Together observe which values of key externals create risk to your outcomes—if you don’t change your action to adapt to this external, you won’t achieve your desired outcomes. Simulation will show you which actions are best for different (ranges of) values for externals. And you might need to brainstorm some new actions that produce better outcomes for some external values.

Exploring different simulation scenarios (combinations of externals and actions) together aligns the team around the effects of a chaotic outside world and gives them confidence that change is expected and planned for, not arbitrary.  

Now start measuring the key externals. The more volatile the external, the more often you need to measure it. You might want to purchase “feeds” for the really volatile or really important ones.

Step 3: Optimize in the Moment. When a key external changes, optimize. Use your simulation to find your best actions right now. In other words, the advance plan is no longer relevant, because the situation has changed.  Make sure your team and your management can see and understand the simulations that find the optimization so that everyone sees new actions as powerful and agile risk mitigation, not a management flip-flop.

This is like the difference between white-water rafting, where you change direction every few minutes in response to changing circumstances, and planning the course of the Titanic across the Atlantic ocean, where you have a set course that only changes rarely. Both are effective ways to navigate, but if you’re on a river using a Titanic-style (non-reactive) navigation system, you’ll run aground for sure.

So what do you have now? You’re using data and a decision model to implement an always up-to-date method — which is superior to advance planning because it is based on the ability to react to rapidly-changing circumstances — to optimize your outcomes in a chaotic world. You can respond quickly to changes in this volatile environment. And your team can look at the optimization and understand why your agility in the face of chaos is putting you ahead of your competition.  

Learn more: www.dihandbook.com, www.quantellia.com,  and www.gettingstartedwithdi.com.