An Overview of Agile

Definition

No unified definition of Agile.

The term ‘Agile’ was created in a meeting sited by a group of software developers in 2001. They only produced the Manifesto for Agile Software Development, whereas did not explain what ‘Agile’ means. “The only concern with the term agile came from Martin Fowler (a Brit for those who don’t know him) who allowed that most Americans didn’t know how to pronounce the word ‘agile’“, Jim Highsmith noted this interesting story in History: The Agile Manifesto.

As mentioned above, 17 ‘independent thinkers around software development‘ came together to talk, ski, relax and eat on February 11-13, 2001. But after this small conference, they had done a landmark work that found an alternative to the traditional heavyweight, document-driven processes and produced the Agile Manifesto at the end. Today, ‘Agile’ is very broad and is interpreted in the agile community in several different ways. For instances, AgileAlliance defines Agile as ‘the ability to create and respond to change‘; ScrumAlliance suggests that ‘the term agile describes a specific set of foundational principles and values for organizing and managing complex work‘. And as far as I’m concerned, Agile is a set of ideological values that can not only improve productivity but also contribute to a better working environment compared to the traditional development methodology.

On the other hand, I do not agree with some basic views of Agile. For example, the author of The Agile Samurai, Jonathan Rasmusson, presents a definition of agile in website Agile in a Nutshell as ‘Agile is a time-boxed, iterative approach to software delivery that builds software incrementally from the start of the project, instead of trying to deliver it all at once near the end‘. In my view, Agile should not be seen as the Scrum framework (a time-boxed, iterative approach to delivering software), which is just one of the well-known Agile frameworks! Moreover, we can see that there are also many well-known behaviours, concepts and techniques associated with Agile frameworks, while they only can be represented as being part of the Agile way of working, instead of the Agile.

Manifesto

The symbolic output emerged from the meeting and signed by all participants was the Manifesto for Agile Software Development, or the ‘Agile manifesto’ as it is more commonly known. It should be emphasised that the meaning of the final two lines of it is crucial to understand: it is a case of the relative importance of the values, and not a case of ‘good’ or ‘bad’.

We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

Individuals and interactions over Processes and tools

Working software over Comprehensive documentation

Customer collaboration over Contract negotiation

Responding to change over Following a plan

That is, while there is value in the items on the right, we value the items on the left more.

Principles

Another output from the meeting was Principles behind the Agile Manifesto. The keywords of each principle have been highlighted in my own mind.

1. Our highest priority is to satisfy the customer through the early and continuous delivery of valuable software.

2. Welcoming changing requirements, even late in development. Agile processes harness change for the customer’s competitive advantage.

3. Working software is the primary measure of progress.

4. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

5. Business people and developers must work together daily throughout the project.

6. Build projects around motivated individuals, give them an environment and support they need, and trust them to get the job done.

7. The most efficient and effective method of conveying information to and within a development team is face-to-face communication.

8. Agile processes promote sustainable development. The sponsors, developers and users should be able to maintain a constant pace indefinitely.

9. Continuous attention to technical excellence and good design enhances agility.

10. Simplicity, the art of maximising the amount of work not done, is essential.

11. The architectures, requirements and designs emerge from self-organising teams.

12. At regular intervals, the team reflects on how to become more effective, then tunes and adapts its behaviour accordingly.

Features

As presented above, Agile has not been defined in a specific and unified way, while there are many mindset (behaviours or values), concepts (fundamentals) and techniques (practices or tools) that are treated as being part of the Agile way of working. There are some examples of them (obviously, not all of them) shown subsequently as follows.

Mindset (Behaviours)

  • Customer-focused
  • Embracing change
  • Being collaborative
  • Self-organising
  • Empowered
  • Trusting not blaming
  • Respect each other
  • Being confident
  • Empiricism
  • etc.

Concepts

  • Prioritising what is delivered
  • Not delivering everything
  • Communicating continuously and clearly
  • Working iteratively and incrementally
  • Continuous integration
  • Limiting WIP (Work in Progress)
  • Time-focused
  • Inspection and adaptation
  • Kaizen
  • etc.

Techniques

  • Timeboxing
  • Backlogs (Product and Sprint)
  • User stories
  • Planning poker
  • Burn charts
  • CFD (Cumulative Flow Diagram)
  • Retrospectives
  • etc.

Frameworks

It is an interesting fact that some processes, approaches and frameworks focusing on improving iterative and productive capabilities had been created and applied in practice before the term ‘Agile’ created (in 2001), such as XP (eXtreme Programming), Scrum, DSDM (Dynamic Software Development Method), ASD (Adaptive Software Development), Crystal, FDD (Feature-Driven Development), Pragmatic Programming. And actually, Agile was initially introduced by the representatives of these frameworks above, so that they are all included in the family of frameworks being agile basically. Although Agile and most frameworks of it were originally applied in the software development domain, some of them have been recognised as successful frameworks beyond software development nowadays. In addition, there are also some commonly known hybrid approaches having been used in more challenging situations.

There are some typical frameworks in the Agile frameworks family introduced as follows.

widely-used

  • Scrum. The Scrum Guide defines Scrum as ‘a framework within which people can address complex adaptive problems, while productively and creatively delivering products of the highest possible value‘.
  • Kanban. A method to improve flow and provoke system improvement by visualising the workflow and limiting work in progress.
  • Lean Startup. It is a methodology for the development of businesses and products aimed at shortening lifecycles of product development and discovering the viability of the proposed business model quickly. Lean Startup approach was originally employed for starting up companies, while now is applied to any business.

IT only

  • DevOps. A collaborative approach combining the work and even the teams of software development (Dev) and information-technology operations (Ops), which aims at creating a product or service through shortening the systems development life cycle and providing continuous delivery with high software quality.
  • XP. It stands for eXtreme Programming that is an iterative software development methodology focusing on improving the quality of software products and the capability of responding to the requirement change. XP can be employed solely while commonly used in conjunction with Scrum or Kanban, where XP involves software development and Scrum or Kanban is utilised for the management of work as an overall structure.
  • SAFe. It’s the abbreviation of Scaled Agile Framework. SAFe is an application used to guide the organisation proceed to work with sufficient size or level of difficulty in scaling lean and agile practices.

Hybrid

  • Scrumban. It is an application Kanban where the underlying process is based on Scrum. This combination, a mixture of the structure of Scrum and visualisation of Kanban, enhances the ability to adapt and respond to change without being overburdened.
  • PRINCE2 Agile. PRINCE2 Agile is the world’s most complete agile project management solution, combining the flexibility and responsiveness of agile with the governance of PRINCE2. This approach provides a solution for managing the holistic project process by blending the strengths of PRINCE2 and Agile, that concentrate on the areas of project direction & management and product delivery respectively. It should be noticed that unlike other agile frameworks, PRINCE2 Agile are only suitable for use on projects.

Agile Today

Agile is Trending

Agile has become more popular in software development contexts. “Looking back over the years, it is incredible to see the changes and additions to the report, as Agile adoption has grown and evolved“, CollabNet VersionOne suggests in its blog based on the released 13th Annual State Of Agile Report. The report collected and analysed the information of states of agile from 1,319 responses around the world. It points out that 97% of responses that now use agile are listed in the report. Nonetheless, only 22% of respondents say that their teams are agile, 26% more than half and 48% less than half. One remarkable benefit coming from adopting and implementing Agile is ‘Accelerating software delivery’ (74%). And there are many advantages that can be seen, such as ‘Improving team morale’ (34%), ‘Reducing project risk’ (28%) and ‘Better managing distributed teams’ (19%). The result also indicates that a 71% rise in ‘Reduce project cost’ compared with the previous year is the key explanation for agile adoption.

In regard to the domains beyond software development, Agile has made a significant impact as well. KPMG has released Agile Transformation – 2019 Survey On Agility with responses from more than 120 participants from 17 countries. The survey shows that more organisations are aware of the term Agile according to ‘Agile being scaled with 70% of respondents indicating an ambition to integrate both Business and IT-enabled Agile transformation in the next 3 years‘. Agile is trending!

Agile is Dead

Just like Agile born, when the influence and popularity of a new method continue to rise, it may always bring opposed opinions. These theories against agile are not just derived through theoretical derivation or guessing, but come from the feedback and experience gained by using agile in practice. The tendency of anti-Agile has increased with the influence of Agile. This situation emerged from the birthplace of Agile and has now occurred in many countries and industries. The earliest and the most famous event of anti-Agile is the presentation Agile is DEAD by Dave Thomas, one of the creators of Agile Manifesto. He illustrates that nowadays “Agile” has been defined as the practice of recklessly performing a set of rigid rules and bureaucratic procedures. However, the original Agile means “break all the rules”, while delivering high-quality products, do the most valuable work in a specific environment to achieve the highest production efficiency.

Agile is not what you do.

Agility is how you do it.

And what do you think?

Risk Management Technique – 3-Point Estimate

The 3-point Estimate is a mathematical technique for constructing an estimated distribution of probabilities reflecting the outcome of future events, based on limited information. In the project management area, it is one of the most effective techniques used to develop estimates. Dick Billows indicates its three advantages:

  1. Increased accuracy over one-point estimates
  2. Better commitment from the project team members because the estimate considers the risk in the assignment
  3. Useful information on the risks of each task.

In 3-Point Estimate, three figures are produced initially for every distribution that is required, based on prior experience or best-guesses:

  • O = the best-case (most optimistic) estimate
  • M/BG = the most likely (best guess) estimate
  • P = the worst-case (most pessimistic) estimate

More precisely, in project risk management, O stands for the amount of work the task might take if the positive risks team members identified do occur. M presents the average amount of work the task might take if the team member performed it 100 times. And P is the amount of work the task might take if the negative factors they identified do occur.

There are two commonly used equations of 3-Point Estimate: triangular distribution and double-triangular (or Beta) distribution. Compared with triangular distribution, the Beta distribution considers more weight on the most likely estimate. In most real-world cases, the Beta distribution has been proven to be more accurate than the triangular distribution. Moreover, the Beta distribution also is called PRET which stands for Program Evaluation and Review Technique. There are the equations of the distributions as follows.

1. Triangular distribution:

E = (o + m + p ) / 3

2. Double-triangular (or Beta, PRET) distribution:

E = (o + 4m + p) / 6
SD = (p − o) / 6

where E for both equations represents Estimate; SD is the standard deviation which measures the level of certainty of the Beta distribution.


References

  1. 3-Points Estimating
  2. Three-point estimation
  3. How To Do 3 Point Estimating

“Doing the right things, doing things right” in Management

How to make a choice between “doing the right things” and “doing things right” is an interesting topic people would like to discuss. In a nutshell, “doing the right things” focuses on defining visions, whereas “doing things right” focuses on the process of implementing the visions. Obviously, there are strong relationship and coherence between these two conditions. However, most articles around this topic assess and evaluate them respectively, instead of critical discussing. In other words, these articles emphasise the importance of one of them, while the view of taking less consideration on another also be implied. Such biases often exist in companies or project teams.

snapshot by Agile Software Development: It’s Not About Code. It’s About Business.

The Youtuber Development That Pays has presented a straightforward and specific situation when discussing the quality of code and the business value of a software product. He analogies the business objectives as a barrier on the way to success, and treats the software product as a ladder for crossing the barrier. In this manner, two potential results can be foreseen. A product with elegant code quality (or good design) may lead to “certain death”. Conversely, a product with not so good or even well-crafted quality may bring “untold riches” in a correct direction.

On the positive side, firstly, he has proved the importance of visions in business. As Peter Drucker wrote in The Practice of Management, visions could be analogised as compasses for navigation at sea. Only if setting the target, then the ship can move towards the correct destination without being affected by unexpected factors from environments. Secondly, the creator of the episode has clarified the priorities of different roles in a company or project from the perspective of software developers and market managers. A developer is responsible for the quality of products. And a marketing manager needs to find ways to improve the value of products in markets.

But I do not agree with the way of presenting this situation showed in the episode in order to the reason that “better ladder” and “more value” should not be compared as two independent sides. It would lead to ambiguity in understanding, as long as there is an explicit vision, the goal can be achieved by comparatively appropriate approaches or processes. This means that this idea may suggest people reduce or even neglect the requirements for one of them when choosing another side. Basically, this point is about how to make a choice between “doing the right things” and “doing things right” as well. In other words, the answer showed in the episode is “I am doing the right thing, while I’m doing it not so well, but it’s ok!”

The main cause is there is no unique vision. Drucker believes that human groups must be based on common beliefs, and must use common principles to symbolise everyone’s cohesion. Otherwise, the organisation will be paralysed and unable to function, and employees cannot work hard to get the performance they deserve. For a company or a project team, the “right things”, as well as the overall visions, must be identified clearly. Then, it is necessary to successfully express these visions to each employee, such as writing the visions on a large board and pasting them on the wall (like Kanban board). It could help the employees or team members grasp what value they can contribute by their work. So that employees in different positions not only simply pursue the “right things” determined by their responsibilities, but also contribute to the overall visions. The cases of software products are much more complicated than described above in practice. If the market manager focuses on profiting from the market simply and ignores product quality, or developers only care about code quality or product quality as “right things” in their minds, neither the overall nor the independent visions can be achieved then. This is also an inevitable result of not having a unique overall vision. From this perspective, if the “right things” are not set correctly, companies or project teams cannot do the “things right” then.

As mentioned above, “doing things right” has equal importance as “doing the right things”. First of all, it should be clear that companies or projects should create visions accordingly, that is, to determine which ‘things’ are ‘right’. Due to various factors from the marketplace, economic environment and so forth, that would bring uncertainties, there is no effective approach to verify that the visions are appropriate when creating them. The results would emerge from the market in the future only.

Drucker also supports this perspective and he suggests that economic and technological development lengthens the intervals required to verify the effectiveness of decision-making and its success continuously. Therefore, selecting appropriate methods or processes would help the organization to inspect visions and reduce risks constantly. I suppose it coincides with agile’s mindset.

In conclusion, I believe that “doing the right things” and “doing things right” play the identically important roles in management. The manager should demonstrate the visions of the organisation to each member explicitly and comprehensively. And everyone inside the organisation should keep them in mind and take responsibility for contributing to the visions, just “doing them right”. In addition, “doing things right” is an efficient and effective way to assess if the “things” are “right”. However, it would be meaningless without visions, even though there is the most effective working process.


关于如何在”doing the right things”和”doing things right”做出选择,一直是大家乐于讨论的一个话题。用另一个更简单的方式来说,”doing the right things”指的是对确立目标的思考,即为”what”,”doing things right”则为实现目标的方式的判断,即”how”。显而易见的是,这两个问题具有顺序性且关联紧密。但是,多数围绕这个话题的文章都把这两种情况分开讨论,而不是对其辩证思考。或者说,它们的确侧重强调了其中一方的重要性,可在读者眼里看来,同样带来了弱化对另一方的重视。更糟糕的是,这种偏见经常存在于公司或者项目团队中。

Development That Pays 在讨论代码质量和商业目的时描述了一个直接且特殊的情况。他将商业需求类比成通往成功过程中的一个壁垒,用于跨越这个壁垒的梯子则是软件产品。其特殊性表现在,它描述了一种即使具有优雅的代码质量(或者说优秀的产品设计),却导致”certain death”情况。相反的,一个代码质量不高的产品只要方向正确,最终达成了”untold riches”。

值得肯定的是,首先他明确了在商业活动中目标的重要性。就像德鲁克在《管理的实践》中将目标类比成海上导航的指南针,只有在设定目标后,才能朝着正确的目的地前进,而不会受到来自外界的意外因素的影响。其次,他分别从软件开发者和市场管理者的角度明确了不同角色在公司或者项目中应当具有的工作重点,作为开发者需要为软件的质量负责,作为市场管理者则需要设法提高产品在市场中产生的价值。

但我不认同的是他对于这种情况的表达方式,主要原因在于并不应该将”better ladder”和”more value”作为对立项进行比较。这将会导致出现理解上的歧义,认为只要方向正确,即使使用的方法或者途径并不理想,也可以实现目标。这就意味着他的答案正引导读者在做出选择时必定要舍弃或者降低对另外一方的要求。从本质上来看,这个表达方式就是在” doing the right things”和”doing things right”之间的硬性选择。换句话说,他的答案就是” I am doing the right thing, while I’ll do not so well, but it’s ok!”。这显然不是正确的。

导致这种情况的主要原因是在于没有统一的目标。德鲁克认为“人的团体必须以共同的信念为基础,必须用共同的原则来象征大家的凝聚力。否则组织就会瘫痪而无法运作,无法要求成员努力投入,获得应有的绩效”。对于一个公司和项目的”right things”,也就是目标必须明确。并且,需要将这一整体的目标成功传递给每个员工,比如把企业或者项目目标写在一张大纸上并且贴在最显眼的墙上,让公司员工或者项目成员熟知他们的工作将会帮助整个公司或者项目实现什么样的价值。从而让处于不同岗位的员工不只是单纯追求其职责所决定的”right things”,而是将这些标准服务于整体的目标。关于软件产品的案例在实际中远远没有上面描述的那么简单,若市场经理一味追求从市场中获利这个目标而忽视产品质量,或者开发者只把代码质量或者产品质量作为他们心中的”right things”的话,那么无论整体的还是独立的目标都无法实现。这也是没有统一整体目标的必然结果。从这个角度来看,如果没有正确设定统一的”right things”的话,那么一个公司或者项目团队也不可能做到”doing the things right”.

当然,我们不可否认”doing things right”的意义。首先必须要明确的是,公司和项目需要有根据地设定目标,也就是预估哪些things是right。由于来自市场环境、经济发展等多方面因素导致未来的不确定性,导致没有办法保证预设的目标是否正确,只有通过市场的检验才能知道答案。德鲁克同样证实了这一观点,他认为经济和技术进步使证实决策的成效和收获成功所需的时间不断延长。因此,选择合适的恰当的方法或者手段将会使通过预设目标的航线线路更加顺畅,从而有利于组织不断检查目标,减少风险。我想这跟agile的思想不谋而合。

因此,我的观点是:在团队管理中,” doing the right things”和”doing things right”不管对于任何角色而言都具有相同的重要性。管理者需要将组织整体的目标传递给每一位成员,并且每位成员的工作需要为整体的目标服务,” doing them right”。除此之外,” doing things right”是验证things是否right的最有效的手段。但是,即使是最高效的工作方式,一旦离开了目标就毫无意义可言。


I have realised I did mistake his thought when I watched the next episode Agile Software Development: Without Code There Is No Business. So the opinions we express are actually the same.

Risk Management Technique – EMV Decision Tree

EMV Analysis

EMV stands for Expected Monetary Value which is a statistical technique used to measure the average outcome for situations under uncertainties including positives (opportunities) and negatives (threats). Specifically, in project risk management, it can help managers or risk specialists to calculate identified risk and analyse the effect of them quantitatively on overall project objectives. This process is named Quantitative Risk Analysis. Moreover, EMV calculation is an essential skill for the PMP exam.

EMV of each possible outcome is calculated by multiplying its probability and its impact (as well as the value). According to the fact that scenarios may be comprised of multiple options, EMV equals to the sum of EMVs of options. As mentioned above, there may be opportunities and threats, so that the EMV of them are expressed as positive and negative values respectively. There is the equation of EMV as follows.

EMV = possibility (%) * value (£)

In regard to risk analysis, EMV can be utilised to calculate the cost used to remove a risk in theory. It should be noticed that there is no risk which can be completely eliminated by spending money in real practice. Then, the value with the highest EMV is selected after the analysis which reflects the lowest risk.

Decision Tree Analysis

A decision tree is a decision support tool that uses a tree-like decision model and its potential consequences. Using decision tree analysis is helpful to grasp how alternative capital solutions can be determined when the world includes unpredictable elements. In other words, it can help you making decisions accordingly when there are multiple options appeared.

Satya Narayan Dash has concluded the major points of decision tree analysis. There are:

  • Decision Tree takes future uncertain events into account. The event names are put inside rectangles, from which option lines are drawn.
  • There will be decision points (or “decision nodes”) and multiple chance points (or “chance nodes”) when you draw the decision tree. Each point has different symbols: a filled up small square node is a “decision node”; a small, filled-up circle is a “chance node”; and a reverse triangle is the end of a branch in the decision tree. These are noted in this table:
  • Because this format results in a diagram that resembles a tree branching from left to right, the decision tree is an apt name! To analyze a decision tree, move from left to right, starting from the decision node. This is where the branching starts. Each branch can lead to a chance node. From the chance node, there can be further branching. Finally, a branch will end with an end-of-branch symbol.
  • The probability value will typically be mentioned on the node or a branch, whereas the cost value (impact) is at the end.
  • Next, come the calculations on the branches of the tree. To calculate, move from right to left on the tree. The cost value can be at the end of the branch or on the node. Just follow the branch to do the calculation.
  • The best decision is the option that gives the highest positive value or lowest negative value, depending on the scenario.

Example

Scenario

Suppose you are the product manager of a video sharing website PiliPili. Stakeholders have shown interest in expanding business opportunities in the new area of online games. There are two solutions that you can take into account:

  • Develop an independent website of online games investing £8M
  • Implement a new category of online games in PiliPili investing £3M.
  1. If you build a new online games website, there is a 75% chance of a high demand and the company will realise £15M and 25% of a weak demand and the company will realise £5M in revenues.
  2. If you produce a category for online games, there is a 60% chance of high demand and the company will realise £10M in revenues and a 40% chance of weak demand and the company will realise £2M in revenues.

How do you make suggestions to the board?

What is the EMV of either option?

Application

1. Draw a decision tree starting from the left and move from the left to the right. A decision node following by a topic event will lead to two options. And each option will lead to two events or chances branching out from the chance nodes. Do not forget adding a reverse triangle at the end of each branch. Then, assign a probability of occurrence for each option pertaining to that decision. All information showed on the figure is already known from the scenario.

2. Compute the Expected Monetary Value for each decision path. The calculation sequence should be from right to the left. First, compute the profit of each branch by its outcome minus the investment on it. The EMV of each branch can be determined by multiplying its profit by its probability then. Adding them together, that is the EMV of an option of a decision. In regard to the EMV of the overall scenario decision, it should be considered as the maximum value among its options’ EMV.

Also, there is another way to represent this figure by replacing EMV of options with chance nodes, while the calculating process and result are the same.


References

  1. How to Calculate Expected Monetary Value (EMV) with Examples
  2. PMP Prep: Decision Tree Analysis in Risk Management
  3. Decision Tree Analysis Example – Calculate Expected Monetary Value (EMV)

Risk Management Technique – SWOT

SWOT is a strategic analysing framework used to summarise pivotal events associated with the competition of an organisation or a project as well as its business or execution circumstances in (also can be applied for personnel analysis). The company/project board or management team can employ SWOT analysis to recognise the capabilities and identify valuable information to draw an overall view of its strategic position. Then, potential risks and strategies during accomplishing objectives could be explored accordingly, with a focus on leveraging strengths and opportunities to overcome weaknesses and threats.

The acronym represents four perspectives that are divided into two major categories: internal and external. The internal group consists of strengths (S) and weaknesses ( W ), which indicates the situations of applying readily available resources and experience of the company or project for achieving the objectives. The factors may include all of the 4Ps (Product, Price, Place, Promotion) as well as personnel, finance, manufacturing capabilities, and so forth. There is one reasonable classification of these factors introduced by Business News Daily as follows:

  • Financial resources (funding, sources of income and investment opportunities)
  • Physical resources (location, facilities and equipment)
  • Human resources (employees, volunteers and target audiences)
  • Access to natural resources, trademarks, patents and copyrights
  • Current processes (employee programs, department hierarchies and software systems)

The external group also covers both positive and negative perspectives that are opportunities and threats. By contrast, the issues in the external group are comparatively uncontrollable for a company or project. Due to the factors external to organisations or projects, such as macroeconomic matters, technological development, legislation sociocultural changes and changes in the marketplace, the opportunities (O) and threats (T) that impact the process of achieving objectives directly or indirectly would emerge. Business News Daily also provides a classified result of them.

  • Market trends (new products, technology advancements and shifts in audience needs)
  • Economic trends (local, national and international financial trends)
  • Funding (donations, legislature and other sources)
  • Demographics
  • Relationships with suppliers and partners
  • Political, environmental and economic regulations

Furthermore, a variant of SWOT, TOWS Matrix can be employed to explore relevant strategic options of identified risks that an organisation or a project could pursue. Jim Woodruff (2019) has explained the differences between SWOT and TOWS. And there is an example of TWOS application presented by Oxford College of Marketing.

Apart from using for risk analysis, a kind of Business Planning Checklist containing key activities that need to be performed when preparing a formal business plan can be generated. The task in the template is a specific activity for dealing with different types of issues that have been identified by SWOT analysis.

ActivityownerCompletion Date
Strength/Weakness/Opportunity/Threat: task
Business Planning Checklist template

Risk Management Technique – PESTEL

PESTEL, as a variant of PEST framework, is an external analysis framework used for identifying macro-environmental factors and presenting as a set of structured sub-headings to be taken into consideration. This is a strategic method to recognize the rise or decrease of the industry, business positions, business opportunity and direction. Organisations that successfully monitor and respond to changes in the macro-environment are able to differentiate from the competition and create a competitive advantage.

The identified factors can be broken down using the following elements:

  • Political. This factor indicates the policies that may impact specific industries or industries directly or indirectly formulated by government departments. The reason for these policies would be mainly as a means of regulating the market. Hence, it would include taxation policies, trade restrictions, tariffs, political stability, etc.
  • Economic. The factor regards mainly depend on the economic environment and performance of regions, including interest rates, exchange rates, inflation rates, employment or unemployment rates, raw material costs, etc. Obviously, it would greatly affect the operation and profitability of the organisation.
  • Societal. There are many changing trends in social environments, such as population growth, age distribution, education levels, cultural needs, changes in lifestyle, etc. It would be helpful for the organisation to understand the real needs and wants from these perspectives.
  • Technological. The development of science and technology has affected many industries. The technological factors can determine entry obstacles, optimise output performance and influence outsourcing decisions. In addition, advanced technologies will improve the performances on cost, efficiency and innovation. The factors could be considered as technology development especially in digital or mobile areas, automation, R&D, etc.
  • Environmental. Environmental and ecological impacts mainly come from climate, weather, resource consumption and waste emission. With the increasing awareness of environmental protection, organizations need to consider this aspect to meet consumers and natural ecology.
  • Legal. while there are some overlaps between political and legal aspects, the previous factors are led by government policies and the legal factors mainly focus on the order of societies within the territories. These include discrimination law, consumer law, antitrust law, employment law, health and safety law, etc.

Risk Management for Bilibili(2019) – Exploring a Risk Management Plan

All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond.


As I mentioned in the previous post, we can see that the company has always placed content in a critical position. On the other hand, there were many incidents in the online entertainment industry that suffered from penalties because of content quality issues in China. Hence, the quality of the content is one of the clearest and urgent risks that could be encountered for Bilibili. In the following content, I attempt to use BowTie XP to explore current and improved risk management plans to reduce this risk respectively. And only some typical threats and consequences in each figure are introduced detailly.

Existing Risk Management Plan

the BowTie map of the existing risk management plan

The above BowTie figure indicates the causes and results of the content quality problem, according to the data, news, laws, government policies, company terms and so forth I have collected. Consequently, the hazard could be defined as ‘Operating the content in the platform’. And the top event is ‘illegal or inappropriate content posted’.

Threats

one of the threats

One of the most obvious threats I set introduces that ‘content providers ignore or comply with the requirement intentionally’. In one of the cases that would lead to this situation, some content creators would like to have more traffic by posting illegal content. In order to handle the problems, Bilibili set up the membership exam from 2013, which means only the users pass this exam, then they can upload content. And another barrier indicates that only certified content providers can upload the specific type of content, such as political information.

Consequences

one of consequences

One consequence is if users saw inappropriate content, they may reduce their engagement and loyalty. For example, a well-known former poster of Bilibili was exposed in the video content and comments he posted in 2018 that there were several sexual harassments and homophobic inappropriate information. This incident caused many users to doubt the website’s review and management mechanism at the same time as they resisted this poster. As a result, the platform was punished by relevant departments and its reputation was damaged. There are three barriers I found for this situation. Firstly, deleting this content as soon as possible. Secondly, Bilibili provides the report system. And the last measure is content providers who have posted illegal or inappropriate content would be sent to Xiaoheiwu temporarily or permanently to limit them to use the website.

Improved Risk Management Plan

the BowTie map of the improved risk management plan

The new risk management plan above has been improved based on the existing plan and multiple potential factors. So the hazard and event kept unchanged. Some new threats, consequences and the barriers could be found in the map, highlighted by red rectangles, that are introduced as follows respectively.

Threats

Threats of the improved plan – 1

Laws and regulations changing could be a threat. But for most normal companies, they don’t have enough money to form their own legal departments. Considering the growing number of users of Bilibili.com and the huge potential of its marketplace as mentioned in the previous post, the company should consider the formation of an internal legal department in the future to handle the risks by business growth.

Threats of the improved plan – 2

And some techniques could help to improve the efficiency of content review, such as artificial intelligence. 

Consequences

Consequences of the improved plan – Part 1

For the consequences, in order to avoid losing money, the company could buy some business assurances, while the commercial assurance system is not perfect enough in China.

Consequences of the improved plan – Part 2

The worst consequence I can think of is Bilibili has to shut down the platform permanently. But I have no idea about how to make a barrier for it.

Risk Management for Bilibili(2019) – Identifying Risks

All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond.


IRM

Based on the collected information, the four major risks of Bilibili are classified and shown as the mind map above. The arrows among them represent the relationship of influencing among each risk. The major risks have been identified and discussed as follows.

  1. Distribution of income. The company prospectus(2018) shows the percentage of profit from mobile games increased by year, which are 65.7%, 65.4% and 83.4%  of the total net revenue from 2015 to 2017 respectively. During this period, Bilibili did not invest much budget in the mobile games market, thereby the number and size of mobile games Bilibili owns were not large. In addition, all of those mobile games Bilibili owns were offered from third-party game developers and publishers. However, there were significant returns brought by mobile game products and services. Especially in 2017, two of the games have a particularly strong income, which accounted for 71.8% and 12.7% of the total revenue from mobile games. While revenue from mobile games fell back to 61.7% (103.7 million US dollar) of the total net revenue (168.1 million US dollar), it increased by 15% compared to the same period of 2017 (90.2 million US dollar) (according to the data from Bilibili Investor Home). 
  2. Technology competence. A recent study(Kang et al., 2015) shows that it is widely believed that the Internet is a simple service system due to the degree of cash technology education. This allows users to carry more privacy protection options in the absence of understanding. Hence, any mistakes in platform network security can have a significant adverse impact on our business, operations and reputation, given the extreme trust of such users. Technologies could support operations and review content, reducing risk due to operational errors or content non-compliance.
  3. Monitoring by the regulators. There were two events of penalties by the Chinese government in the history of Bilibili, which happened in 2012 and 2018 respectively (Hangzhou Municipal Bureau of Culture, Radio, TV, Film, Press and Publication Bureau, 2012 and The China Media Project, 2018). The reasons for them were both because of the violation of the regulations. Therefore, if the videos, games and other content formats in the Platform are deemed to be in violation of any laws or regulations of the People’s Republic of China, the business, financial condition and results of operations of Bilibili may be materially and adversely affected.
  4. Quality of content provided in the platform. the prospectus of Bilibili (2018) points out that the PUG content attracts more users to the platform. In 2017, PUG video views accounted for 85.5% of its total video views, compared with 74.5% in 2016. However, the quality and quantity of the PUG content cannot be controlled effectively because the content is produced by users. The quality of the content will affect the number of users. Once the number of users declines, the company’s revenue will be affected. Moreover, the quality of the content also affects the regulatory results of government regulators, community culture and brand reputation. These aspects will directly affect the company’s revenue and development.

SWOT

Internal

External

PESTEL

Risk Matrix

There are reasons for the positioning of each risk as follows. 

  1. Distribution of income. As mentioned above, the revenue from mobile games accounted for a significant proportion of the total net revenue from 2015 to 2018. However, Bilibili has built a partnership with a number of famous game developers since 2018, such as GREE and Tencent.
  2. Technology competence. The population of active users of Bilibili has been over 77.5 million per month since 2018 (according to Simple investor). If the service is unavailable or security issues due to technical reasons, the company’s revenue and reputation will suffer huge losses. However, Bilibili mentions that there is almost no such problems have occurred since the operation of the platform.
  3. Monitoring by the regulators. Two serious penalties occurred in the company’s history, resulting in property damage and platform rectification.
  4. Quality of content provided in the platform. Bilibili announced that the size of the content acceptance team would be increased. However, even with a large number of manual acceptance, there is no guarantee that the quality of a large amount of content will be fully guaranteed.

Risk Management for Bilibili(2019) – Overview

This is actually a study topic in my master’s period. The relevant course is about business risk management, mainly by learning methods, frameworks of risk management and practise on real business projects or companies. Secondly, Bilibili, as an Internet platform that I have been using all the year-round and one of the ideal employment companies for me in the future, has become my research object in this practice. So I would like to introduce and review the contents of this meaningful practice (All reference resources used are before 2019, the ‘current’ mentioned below refers to the beginning of 2019, and the ‘future ‘refers to the second half of 2019 and beyond).


Bilibili is the first iconic online entertainment brand for young people in the People’s Republic of China. The company has been providing a content community based on animation and professional user-generated (PUG) video since 2009 and went public in the US in 2018. Bilibili points out that their strategies are to improve the content offerings and user experience on the platform and to enhance technologies and other relevant capabilities. According to Bilibili’s only one clear mission which is to enrich the daily life of Chinese young people, their target market is the online entertainment industry and the user positioning aims for Generation Z, which refers to individuals born from 1990 to 2009 in China. iResearch shows that China’s online entertainment industry market arrived at RMB205.8 billion as of the end of 2016 and kept a growing trend. CNNIC presents the result that the number of Internet users who were aged 10-39 in China accounted for 75.0% of the total number of Chinese netizens by December 2017, which reached 579 million. Moreover, the market share contribution to the online entertainment industry of the major part of them who were born between 1990 and 2009 is expected to increase from 45.8% in 2014 to 54.8% in 2017. iQIYI is a leading online entertainment platform, operating the largest TV video streaming service in China. Alexa has revealed the result that the traffic rank of the iQIYI website is 30 in China, which is the closest rank to Bilibili website (17) as the online entertainment platform. Hence, iQIYI is one of the main competitors of Bilibili in the Chinese market.

Bilibili Inc. has been operating its main product which is an online entertainment website ‘Bilibili.com’. It mainly targets young users, with ACG(Anime, Comic, Game) as the main content in the early stage. After more than a decade of development, content themes now cover many areas, including music, movies, science and technologies, lifestyle, games, and more. Bilibili also offers live streaming services in the form of streamers. Typically the topic is anime, daily life, game strategy, etc. It is a remarkable fact that most of the content is created and uploaded by users independently, which guarantees the diversity and creativity of the content. Apart from hosting content, the core feature of Bilibili is a subtitle comment system which displays user comments as streams of moving subtitles on a video playback monitor which are visually similar to a shooter game by ‘Danmu’. That is the name of these subtitles in Chinese. These subtitles are simultaneously transmitted in real-time to all viewers and create an experiential chat room in which users want to watch and play together. This highly interactive viewing experience increases user stickiness greatly. Due to the good market positioning and these novel and attractive features, the number of users has kept growing year by year.

However, because of the continuously growing number of users and market demand, and other uncontrolled factors like the policy terms, challenges and uncertainties keep increasing as well. The company has a detailed discussion of these in the prospectus(2018). The following roadmap shows the structure based on the detailed content of the prospectus, and each node is indexed by the page number for reading easily.

The structure of Bilibili Prospectus(2018)

Projects vs. BAU(Business as Usual)

I believe understanding the definition of a project and how to identify it is vitally important before learning project management. The purpose of distinguishing projects and BAU properly is to better manage and control the work in different contexts. More precisely, it could provide a basis for selecting concepts and techniques of management accordingly, and ensure applying them appropriately during executions. For instance, there are limited application contexts for different management methods and frameworks. As mentioned in chapter 1 of PRINCE2 Agile guide[1]: PRINCE2 and PRINCE2 Agile are only suitable for use on projects, whereas agile can be used for projects and routine ongoing work as well”.


PRINCE2 (PRojects IN Controlled Environments): a structured project management method and practitioner certification programme.

PRINCE2 Agile: the world’s most complete agile project management solution, combining the flexibility and responsibility of agile with the governance of PRINCE2.

Definitions

There are no unique definitions of these two practices respectively I could found. In my view, it may be due to the specific environments in the distinct industries which the professionals considered when defined them. However, the interpretations of each of them are comparable in a manner.

BAU

BAU work would typically be repeatable routine tasks that can be carried out by people with the appropriate technical skills without needing to be managed by a project manager“[1].

the normal execution of standard functional operations within an organization – forms a possible contrast to projects or programmes which might introduce change“[2].

The two definitions indicate BAU is a ‘normal’ ‘routine’ work happening almost every business day. Like the common understanding of daily business work, it is executed basically in a fixed process environment which has the major characteristics of repetition, continuity and low risk.

Projects

A project is a temporary situation where a team is assembled to address a specific problem, opportunity or change that is sufficiently difficult that it cannot be handled as BAU. It may even be a collection of BAU items handled collectively“[1].

It’s a temporary endeavor undertaken to create a unique product, service or result“[3].

Compared with BAU, both definitions of projects emphasis ‘temporary’, which means the work of a project is not kind of permanent as BAU. In other words, a project should have its own corresponding and unique lifespan. Moreover, the aim of a project is to generate a ‘thing’ which does not exist in this world before including a concrete manner like a building, or a detailed solution for solving a prescribed requirement. Therefore, the processes of creating unknowns are more comparatively risk and each of them cannot be completely repeated.

Differences

Project

BAU

PRINCE2 Agile guide[1]
  • Temporary
  • Team is created
  • Difficult
  • A degree of uncertainty
  • Ongoing
  • Stable team
  • Routine
  • A degree of certainty
Strategic Project Organising[2]
  • One-off processes / unique
  • Determinate lifecycle
  • Temporary organisation
  • Dynamic staffing
  • Dynamic supply chain
  • Owner/client engages in the process
  • Commercial management
  • Enables change
  • Repetitive processes
  • Indeterminate lifecycle
  • Stable organisation
  • Stable staffing
  • Stable supply chain
  • Process buffered from customer
  • Supply chain management
  • Keeps the business running
Knowledge Train[3]
  • One off/Unique
  • Delivering ‘things’
  • Project manager reporting
  • Start/end time
  • Bring about change
  • More risky
  • Day-to-Day/Repetitive
  • Operational
  • Line manager reporting
  • Ongoing
  • Benefits from change
  • Less risky

The content above lists the differences between projects and BAU from three different and representative sources orderly. According to these, projects and BAU are summarised and re-compared from six new themes, as shown in the following table.

ThemesProjectsBAU
Organisation temporarystable
Costcapitalisedoperational
Timelimitedongoing
Changeenabledidentified
Riskhigh/managedlow/mitigated
Outputcreativerepetitive

The themes consist of:

  1. Organisation. The term ‘organisation’ indicates the execution team, external supply chain and other stakeholders. BAU has a stable supply and demand relationship and its producing process and structure should be fixed enough to achieve routine operation. Regards to projects, as an event responding to satisfy specific needs, the entire organizational structure and interest relationship would be established after the requirements generating. Moreover, this organisation will be disbanded after the value are achieved;
  2. Cost. Projects may generally be capitalized, while typically BAU may not be, due to the fact that the ongoing BAU work is depended on operating expenditures. It means that there are various accounting procedures for projects and other activities.
  3. Time. BAU work has an ongoing lifecycle without a predetermined end date. By contrast, A project is an event that achieves a prescribed purpose within a limited period of time. Hence, determinate time is a crucial characteristic of projects.
  4. Change. Projects and BAU respond differently to change. BAU teams operate existing business processes on a day-to-day basis. And the teams could realise changes and the impact on work as soon as they are implemented. As for a project, as mentioned above, is an event aiming at innovation. Project teams are working to incorporate all of the changes required.
  5. Risk. BAU teams attempt to identify and reduce all the operational risks. They seek to remove uncertainties for more stable and repeatable operation processes. Projects own a risk factor because of their nature of uniqueness and uncertainty. The business is only taking a leap into the unknown by undertaking a project because it implements change and creates something that wasn’t there before. Therefore, in order to reach goals and achieve the best outcomes, the project team sought to reduce the impact of risks by managing them.
  6. Output. This point is not mentioned in the comparison above. However, I believe that output is another major aspect of evaluating an event. It is determined by the goal of the event and the process performed. Projects are one-off event, not repeatable implementing to produce a new ‘thing’ or solution for solving a specific problem, opportunity or change. The output of a project is much more creative than BAU work obviously.

Examples

When I took the first lecture of the course ‘Strategy project Organising’, I was very impressive about that the lecturer asked us introducing some examples of projects and BAU work respectively. I remember a classmate who said at the time that producing a car was a project. But I pointed out that this is not while developing cars is. Now let’s re-evaluate the correctness of my answer based on the six themes summarised above.

For automobile production, it is certain that this is a day-to-day ongoing event in an automobile factory. The supply chain, assembly procedures, and acceptance criteria for each car have been clarified before production commences. This means that the budgets, resources, and output are controlled and stable and its process is repetitive. But for the research and development of new energy vehicles, for example, the reason for the start of this event is to meet the two requirements including people’s living and energy conservation and environmental protection. This is to solve a problem that has just emerged in modern society. Obviously, the traditional automobile manufacturing teams do not have the capability of researching and developing new energy engines and other technologies. Therefore, it is necessary to recruit experts from related fields to form a new research and development team. On the other hand, in order to maximise the benefits of automobile manufacturers, the research and development team needs to use controllable resources to produce feasible and unique solutions within a limited time.

The reason my classmate thought it was a project to produce a car maybe because he draws an analogy between it and building a house. What makes it different is that building a house is not a job that can be done on a unified assembly line with completely identical materials. Due to geographical conditions, construction conditions and other objective factors, the building process is non-repeatable, and the final output is unique.


  1. AXELOS(2018), ‘PRINCE2 Agile Guide’;
  2. R. Paul., Guide to project management : getting it right and achieving lasting benefit (2nd ed.);
  3. PMI, ‘What is Project Management?’;
  4. UoM(2018), ‘Strategy Project Organising’;
  5. Knowledge Train(2013), ‘The difference between projects and business as usual’;