Theory of Value-BasedSystems and Software Engineering
Apurva Jain, [email protected]
USC Center for Systems & Software Engineering
http://csse.usc.edu
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Context and Definitions – Value-Based SSE
Definition– “the explicit concern with value (financial and
non-financial) in the application of science and mathematics by which the properties of computer systems and software are made useful to people”
Practicing VBSSE– “integrating stakeholder value considerations
into the full range of systems and software development principles and practices”
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Context and Definitions – Value
Origin– from Latin “valere” – to be worth
Definition (Webster)– relative worth, utility or importance
Financial or non-financial (Maslow, Kaplan and Norton)
Key non-financial corporate value drivers (Forbes.com with Wharton and E&Y)– Innovation, ability to attract talented
employees, alliances, quality of major processes, products, or services, environmental performance
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Key Observations from Literature
1. Organizations are social units – people-centric
2. Assume bounded rationality (Simon)
3. No silver-bullets, not one-size-fits-all (Brooks)
4. Stakeholder values are financial and non-financial (Maslow, Forbes-E&Y)
5. Timeless theories of physics will not apply (from 1-4)
6. Organizational systems affect the bottom line (Burton and Obel)
7. Engineering theories must take the organization in context (from 4 and 6)
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Successful Project? Multi-Contingency Organizational Context (Burton and Obel)
ORGANIZATION’L STRUCTURE
GOALS, MISSION
BOUNDARY
SIZE TECHNOLOGYENVIRONMENTMANAGEMENT
STYLESTRATEGY CLIMATE
Key Observations from Literature (contd.)
8. Management theories usually take at least a decade for conclusive evidence
9. Problem and solution space is huge, balance on breadth and depth (T-shaped)
Therefore: Avoid reinventing the wheel, capitalize on existing research
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
What is a Theory?
1960s : System of general laws– Spatially and temporally unrestricted;
nonaccidental– Does not work for systems and software
1994 : System for explaining a set of phenomena– Specifies key concepts, laws relating concepts– Not spatially and temporally unrestricted– Better for people-intensive activities
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
“Your enterprise will succeed if and only if
it makes winners of your success-critical stakeholders”
Proof of “if”:– Everyone that counts is a winner…(i)– Nobody significant is left to complain…(ii)
Proof of “only if”:– Nobody wants to lose…(iii) – Prospective losers will refuse to participate, or will
counterattack…(iv)– The usual result is lose-lose…(v)
Theory W – Enterprise Success Theorem
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Making winners of your success-critical stakeholders requires
– Identifying all of the success-critical stakeholders (and the contingencies they “bring-in”) (SCSs)…(i)
– Understanding how the SCSs want to win …(ii)
– Having the SCSs negotiate a win-win set of product and process plans…(iii)
– Controlling progress toward SCS win-win realization, including adaptation to change…(iv)
Theory W – WinWin Achievement Theorem
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
VBSSE Theory – 4+1 Model
Utility Theory
Theory W:SCS Win-Win
Decision Theory
Contingency Theory
Control Theory
How do contingencies affect value realization?
How to adapt to change and control value realization?
How do values determine decision choices?
How important are the values?
What values are important?How is success assured?
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Provides insights into various organizational and project contingencies– “What the best way to do x?” “It depends.”– Spans socio-political, environment, cultural, technical
dimensions
Component theories include– Benefits Chain, Model Clashes, Network Analysis
Primary contributions include– Helps identify contingent success-critical variables– Applies to whole (socio-technical) system– Appeals to intuition that systems fail because of
mismatches.
Supporting Theories – Contingency
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Environment – Framework (Porter, Burton and Obel)
Systems & Software Project Implications– Process– System Architecture– System Capabilities
Uncertainty Equivocality Complexity Hostility
Buyers’ Bargaining Power
Suppliers’ Bargaining Power
Threat of Substitutes
Threat of New Entrants
Inter-firm Rivalry
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Environment – Propositions
Propositions for organization structure– “If the environment has low equivocality, low complexity
and low uncertainty then formalization should be high, organization complexity should be medium and centralization should be low” (i)
– “If the environment has low equivocality, high complexity and low uncertainty then formalization should be high, organization complexity should be medium and centralization should be medium” (ii)
– “If hostility is extreme, then formalization should be low, and centralization should be very high” (iii)
– …
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Management and Leadership Style – Frameworks (Burton and Obel)
Systems & Software Project Implications– Staffing– Process
Leader Producer Entrepreneur Manager
Preference for Delegation
HIGH HIGH LOW LOW
Level of Detail in Decision-Making
LOW HIGH HIGH HIGH
Reactive/Proactive Decision-Making
PROACTIVE REACTIVE PROACTIVE REACTIVE
Decision-Making Time Horizon
LONG SHORT LONG SHORT
RiskPreference
HIGH LOW HIGH LOW
Motivation and Control
INSPIRATION CONTROL INSPIRATION CONTROL
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Management and Leadership Style – Propositions
Propositions for project structure– “If an individual is a leader, then
“Centralization should be low (i) “Formalization should be low (ii) “Complexity should be medium (iii) “Incentives should be results based (iv) “Coordination and control should be loose” (v)
– “If an individual is a manager, then “Centralization should be high (vi) “Formalization should be high (vii) “Complexity should be high (viii) “Incentives should be procedure based (ix) “Coordination and control should be tight” (x)
– “If an individual is a producer, entrepreneur…
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Technology – Frameworks (Perrow)
Systems & Software Project Implications– Staffing– Process– System Architecture
CRAFT NONROUTINE
ROUTINE ENGINEERING
ILL-DEFINED
WELL-DEFINED
PR
OB
LE
M
AN
AL
YZ
AB
ILIT
Y
FEW EXCEPTIONS
MANY EXCEPTIONS
TASK VARIABILITY
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Technology – Propositions
vs. Strategy– “Nonroutine technology is a misfit with a defender
strategy” (i). vs. Management Style
– “Nonroutine technology is a misfit with a manager leadership style, except in small organizations” (ii)
vs. Organizational Climate– “Nonroutine technology is a misfit with an internal
process climate” (iii) vs. Organizational Environment
– “Nonroutine technology is a misfit with a high equivocality environment” (iv)
– …
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Technology – Frameworks (Al-Said, Boehm)
Systems & Software Project Implications– Staffing– Process– System Architecture
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Technology – Propositions
Maintainer vs. Developer– Ease of transition is a misfit with freedom of COTS (i)
User vs. Acquirer– High levels of service is a misfit with freedom of
COTS (ii) User vs. Acquirer
– Application compatibility is a misfit with freedom of COTS (iii)
– …
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Supporting Theories – Utility
Provides a rich theoretical method to infer subjective stakeholder value over a set of choices
Component theories include– Maslow, Simon, Multiple attribute utility theory
Primary contributions include– Helps determine Pareto optimality– Works well with subjective preferences– Provides rich fodder (stakeholder utility functions) for
other theories
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Supporting Theories – Decision
Provides a plethora of techniques and models to enable decision making
Component theories include– Game theory, options theory, statistical decision theory
Primary contributions include– Helps determine risks and opportunities– Works well with uncertainty– Not wedded to a particular decision theory, such as
bounded rationality, economic man, etc.– Provides rich fodder (competing investment options) for
other theories
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Supporting Theories – Control
Provides theory augmented models for state measurement
Component theories include– BSCs, BTOPP, Risk management
Primary contributions include– Helps determine necessary conditions for enabling
control– Works well in situations requiring stability AND
adaptability– Provides rich fodder (risks and opportunities) for other
supporting theories
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
VBSSE Theory – 6-Step Process
Utility Theory
Theory W:SCS Win-Win
Decision Theory
Contingency Theory
Control Theory
5a, 6c. State measurement, prediction, correction; Milestone synchronization
4b. Investment analysis, Risk analysis
1. Protagonist goals3a. Solution exploration6. Risk, opportunity, change management
4b, 6b. Prototyping
2a. Results Chains3b, 4b, 6b. Cost/schedule/performance tradeoffs
2. Identify SCSs
3b, 6a. Solution Analysis
4b, 6b. Option, solution development & analysis
4a. SCS expectations management
3. SCS Value Propositions(Win conditions)
SCS: Success-Critical Stakeholder
5, 6c. Refine, Execute, Monitor & Control Plans
4. SCS Win-Win Negotiation
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
The Incremental Commitment Model (ICM)
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
VBSSE – Phase Configuration
UTILITY θ CONTINGENCY θ θ W DECISION θ CONTROL θ
ProtagonistGoals
SCS (Market, Sociopolitical,Technical, Economic, People)
Dependencies
Solution Analysis
Cost, Schedule,Performance Tradeoffs
Stakeholder Value Propositions
ExpectationsManagement
Market, Sociopolitical,Technical, Economic
Dependencies
Stakeholder Value Propositions
Cost, Schedule,Performance Tradeoffs
Investment, RiskAnalyses
SolutionAnalysis
Cost, Schedule,Performance Tradeoffs
Cost, Schedule,Performance Tradeoffs
Stakeholder Value Satisfaction
Stakeholder Value Satisfaction
Prototypes
A
EXPLORATION
Risks, Capabilities
Plans, Control Variables
A
B
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Conclusion
It provides a unifying theory for practicing VBSSE that is:– Entirely theory-based
“There is nothing as practical as a good theory” – Karl Lewin
– Built on existing research– Empirically validated (TBD)– Simple
Derived from simple rules, provides step-by-step guidance