How to Measure Anything, Finding the Value of “Intangibles in Business” Third Edition

Chapter 12 of How to Measure Anything, Finding the Value of “Intangibles in Business” Third Edition is the second chapter in the final section of the book.  Hubbard titled Chapter 12 The Ultimate Measurement Instrument: Human Judges.  The majority of HTMA has focused on different statistical tools and techniques.  This chapter examines the human as a measurement tool.  Here is a summary of the chapter in a few bullet points:

  • Expert judgement is often impacted by cognitive biases.
  • Improve unaided expert judgment by using simple (sic) statistical techniques.
  • Above all else, don’t use a method that adds more error to the initial estimate.


Turkey Trot

Turkey Trot

Empathy is defined as understanding what another person is experiencing from their frame of reference. Empathy is more than mere understanding; requiring more of a cognitive connection between two people or a group. Empathy is a very valuable concept because it forms a basis for trust, enables communication and possibly facilitates the development of altruism. However, poorly practiced empathy can lead to problematic behaviors. The first is reinforcing boundaries and defining outsiders, which makes it hard to teams of teams to interact. Secondly is misapplied empathy when there is no basis of trust; the illusion of empathy can be perceived as manipulation. (more…)

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The Software Process and Measurement Cast 345 features our essay on Cognitive Biases and two new columns. The essay on cognitive bias provides important tools for anyone that works on a team or interfaces with other people! A sample for the podcast:

“The discussion of cognitive biases is not a theoretical exercise. Even a relatively simple process such as sprint planning in Scrum is influenced by the cognitive biases of the participants. Even the planning process itself is built to use cognitive biases like the anchor bias to help the team come to consensus efficiently. How all the members of the team perceive their environment and the work they commit to delivering will influence the probability of success therefore cognitive biases need to be understood and managed.”

The first of the new columns is Jeremy Berriault’s QA Corner.  Jeremy’s first QA Corner discusses root cause analysis and some errors that people make when doing root cause analysis. Jeremy, is a leader in the world of quality assurance and testing and was originally interviewed on the Software Process and Measurement Cast 274.

The second new column features Steve Tendon discussing his great new book, Hyper-Productive Knowledge Work Performance.  Our intent is to discuss the book chapter by chapter.  This is very much like the re-read we do on blog weekly but with the author.  Steve has offered the SPaMCAST listeners are great discount if you use the link shown above.

As part of the chapter by chapter discussion of Steve’s book we are embedding homework questions.  The first question we pose is “Is the concept of hyper-productivity transferable from one group or company to another?” Send your comments to

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Re-Read Saturday News

The Re-Read Saturday focus on Eliyahu M. Goldratt and Jeff Cox’s The Goal: A Process of Ongoing Improvement began on February 21nd. The Goal has been hugely influential because it introduced the Theory of Constraints, which is central to lean thinking. The book is written as a business novel. Visit the Software Process and Measurement Blog and catch up on the re-read.

Note: If you don’t have a copy of the book, buy one.  If you use the link below it will support the Software Process and Measurement blog and podcast.

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Next . . . The Mythical Man-Month Get a copy now and start reading! We will start in four weeks!

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The next Software Process and Measurement Cast will feature our will interview with Jon Quigley.  We discussed configuration management and his new book Configuration Management: Theory, Practice, and Application. Jon co-authored the book with Kim Robertson. Configuration management is one of the most critical practices anyone building a product, writing a piece of code or working on a project with other must learn or face the consequences!

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What you see is dependent on what you expect.

What you see depends on what you expect.

Cognitive biases are a pattern of behavior that reflects a deviation in judgment that occurs under particular situations. Biases develop as filters or shortcuts that help us perceive information quickly in a manner that turns out to be beneficial to a decision-making process. Biases that help us recognize patterns helped early humans stay alive by recognizing predators. The shortcut kept our ancestors alive even if there were false positives (you can survive lots of false positives, but you aren’t likely to survive a false negative). Project teams (Agile or not) use or fall prey to a wide range of biases that affect perceptions and decisions. A sample of common biases that affect project teams in this category include:

Anchor bias refers to the tendency to rely heavily on one piece of information when making decisions. This bias is often seen when early estimates for a project or a tasks are made. The instant they are placed on the table they become a reference point to which all changes will be compared.

Clustering illusion (or clustering bias) is the tendency to see patterns in clusters or streaks of in a smaller sample of data inside larger data sets. For example, a team I recently worked with had an average velocity of 30 story points per sprint (ranged between 20 – 36) had three sprints in a row that delivered 40+ story points. While nothing significant had changed with how the team was working, outsiders saw a pattern and believed something out of the ordinary was occurring. (FYI – if there is no statistical significance to the data what we are seeing is “common cause” variance.)

The curse of knowledge bias generates a filter that blocks the ability think about a topic from a different and generally less informed perspective. In many cases being an expert on a topic makes it very difficult to see an out-of-the-box solution. This is one of the reasons significant changes in IT platforms or concepts come as new players enter the organization that have less experience with current tools and techniques. In a similar manner to the curse of knowledge, the status quo bias or the tendency to want things to stay relatively the same, creates a perception filter that helps the individual or team seek out and fixate data and concepts which makes them comfortable so they do not need to change.

An availability cascade causes a concept to become more and more plausible the more it is repeated publicly.  An availability cascade generates a self-reinforcing feedback loop. Perhaps that is why Pokemon became more popular the more it was shown on the Cartoon Network. Daniel Pink, author of To Sell Is Human, in a Salesforce.Com webinar on July 9th pointed out that repetition increases process fluency, which makes the repeated item seem to be more true through repetition. Sales, marketing and 24 hour news channels understand and use the availability cascade bias to great effect.

A final example of biases that affect behavior and perception is optimism bias. Optimism bias is the tendency to be overoptimistic about favorable outcomes. This bias is often exhibited in status reports or in promises made early in a project. These are generally not lies, but rather due to optimism bias we believe that we can deliver. Dr. Ricardo Validri in Software Process and Measurement Cast 84 suggests that optimism bias is one of major reasons IT personnel are poor estimators.

This is a sample of cognitive biases that affect how we perceive information and then how we make decisions. Each of the biases reflects some basic component of human psychology and has been found to be generally beneficial. However all biases can create blind spots. A good coach or leader will first be aware of his or her biases and then help the team understand their blind spots while not abandoning the shortcuts that can help us perceive what is important and make timely decisions.

Many of us have a cognitive bias toward eating scorpions!

Many of us have a cognitive bias toward eating scorpions!

Cognitive biases are patterns of behavior that reflect a deviation in judgment that occurs under particular situations. The phrase cognitive bias was introduced by Amos Tversky and Daniel Kahneman in 1972. Biases can affect how information is perceived, how teams and individuals behave and even our perception of ourselves. Biases are a part of nearly every human interaction, so we need to understand the potential biases that are in play if we are going to help teams grow and evolve.

Project teams make decisions on continuous basis. Most decisions are made based on how the decision maker perceives the information he or she has at hand. One bias that can affect how information is perceived is the illusory correlation. The illusory correlation is the perception of a relationship between two or more variables when no relationship exists. An example would be that a team that works more hours a week has higher productivity because working longer gives the perception of creating more output. The perception of a relationship causes you to pay less attention to other factors, such as the higher level of effort they are expending. There are numerous biases that affect how information is perceived, and these biases can impact the outcome of decisions or even whether we make needed decisions at all.

Biases can affect behavior. Neglect of probability is a type of cognitive bias common in IT organizations that are planning and estimating projects or in risk management. For example, most estimates should be represented as a range based on probability. Techniques like Monte Carlo analysis can be used to generate a range of probability based estimates to address type of bias. However, almost all estimates are represented as a single number and regardless of all the caveats attached, and the continuum of probability is ignored. Lottery ticket sales are another reflection of the neglect of probability bias; buying one or 10 doesn’t materially affect the probability of winning, but that does not stop those who think buying ten tickets increases their chances of winning. In both cases neglecting probability affects how we behave and make decisions.

Biases can affect our motivation. For example, a self-serving attributional bias, occurs when success is attributed to internal factors and failures are attributed to external factors. This type of bias can occur at an individual level or at the team level. While self-serving bias can improve self-esteem (or a team self-esteem) it can also cloud judgment by causing an overestimation of capability. For example, if a team is able to deliver more than their long-term productivity or velocity would predict, the team might then perceive that they have increased their capability to deliver. If no fundamental changes have occurred such as an infusion of knowledge, training or new tools, the higher velocity may not be attributable to the team. A good coach will help teams examine these types of biases during retrospectives.

Bias are powerful psychological filters that affect how both individuals and teams perceive the world around them and then how they behave. Biases reflect shortcuts in how we interpret and react to stimuli. In many cases these reactions are valuable; however they can also cause problems (as many shortcuts can). Understanding how biases impact how individuals and teams perceive the world around them can help team make better decisions and therefore deliver value more effectively.


Consider an elastic band that has been stretched between two points. If the elastic hasn’t lost its stretch, as soon as it is released at one end it will snap back. Organizational culture is like that elastic band. We pull and stretch to make changes and then we want them to settle in. However, we need to anchor the change so that when we change focus the changes don’t disappear. The eighth step in Kotter’s eight-stage model of change discusses this need to anchor the change to avoid reversion.

Culture describes the typical behaviors of a group and the meaning ascribed to those behaviors. Kotter describes culture as the reflection of shared values and group norms. All groups have a specific culture that allows them to operate in a predictable manner. Within a group or organization, culture allows members to interpret behavior and communication, and therefore build bonds of trust. When culture is disrupted bond are scrambled and behavior becomes difficult to predict until culture is reset. If a change program declares victory before the culture is reset, the group or organization tends to revert to back to the original cultural norm.

Culture is powerful because:

  1. The individuals within any group are selected to be part of the group and then indoctrinated into the culture. Cognitive biases are a powerful force that pushes people to hire and interact with people that are like them, homogenizing and reinforcing culture. Culture is further reinforced by training, standards and processes that are used to reduce the level of behavioral variance in the organization. Standardization and indoctrination help lock in culture.
  2. Culture exerts itself through the actions of each individual. While in a small firm, the combination of the number of people in the firm and proximity to the leaders of the change make culture change easier (not easy just easier).  However when we consider mid-sized or large firms in which hundreds or thousands of people need to make a consistent and permanent change to how they act, change gets really complicated. Since culture reflects and is reinforced by how people work, real change requires change each how each affected person behaves which is significantly more difficult to change than words in the personnel manual.
  3. Much actions taken in an organization is not driven by conscious decision which makes it hard to challenge or discuss. A significant amount of our work behavior is governed by shared values and muscle memory. I often hear the statement “that’s just the way it is done here” when I ask why a team has taken a specific action. Many of these actions are unconscious and therefore tend to go unrecognized until challenged from the outside. Pushing people away from comfortable patterns of behavior generates cognitive dissonance.

Less power is needed overcome entrenched culture if the change can build on the organization’s base culture rather than having to confront it. Building on to the current culture will often generate some early momentum towards change because those being asked to change see less risk. Alternately change that is at odds with the current culture will require significantly more effort and a greater sense of urgency to generate and sustain.

Kotter argues that culture changes trail behavior. Put another way, culture change happens last. Each of the stages in the model for change are designed to build urgency, momentum and support for organizational changes. Vision provides the direction for the change. Results provide proof that the change works and is better than what it replaced. Continuous communication of vision, direction and results break through the barriers of resistance. Breaking down the layers of resistance challenges old values and pushes people to admit that the change is better. When barriers can’t or won’t change sometimes change means changing key people.  Nihilistic behavior in the face of results can’t be allowed to exist. Kotter finally points out that in order to anchor long-term change the organization will need to ensure that both succession planning and promotions reinforce the change rather than allow reversion.

Peter Drucker said, “Culture eats strategy for breakfast.” Innumerable people have suggested a corollary that says “Culture eats change for breakfast.” The Eight Stage Model for Significant Change provides a strategy for overcoming the power of an entrenched culture to generate lasting change.

Re-read Summary to-date

Change is a fact of life. John P. Kotter’s book, Leading Change, defines his famous eight-stage model for change. The first stage of the model is establishing a sense of urgency. A sense of urgency provides the energy and rational for any large, long-term change program. Once a sense of urgency has been established, the second stage in the eight-stage model for change is the establishment of a guiding coalition. If a sense of urgency provides energy to drive change, a guiding coalition provides the power for making change happen. A vision, built on the foundation of urgency and a guiding coalition, represents a picture of a state of being at some point in the future. Developing a vision and strategy is only a start, the vision and strategy must be clearly and consistently communicated to build the critical mass needed to make change actually happen. Once an organization wound up and primed, the people within the organization must be empowered and let loose to create change. Short-term wins provide the feedback and credibility needed to deliver on the change vision. The benefits and feedback from the short-term wins and other environmental feedback are critical for consolidating gains and producing more change. Once a change has been made it needs to anchored so that that the organization does not revert to older, comfortable behaviors throwing away the gains they have invest blood, sweat and tears to create.

Trying to read the context...

Trying to read the context…

Many people poke fun at consultants because they invariably use the phrase “it depends,” even when discussing lunch. “It depends” is code for the context of the situation matters to the answer. When I asked a sample of my readers and listeners to weigh in on whether being on-budget, on-scope or on-schedule was the most important attribute of project success, most answered without using the dreaded “it depends”. An excerpt for a recent Twitter conversation in response to the essay about being on-budget, emphasized that in real life the definition of success will be influenced context.

UntitledIn the sample I surveyed, being on-schedule was the most important attribute with on-scope a close second and on-budget a distant third. If I had added constraints to the mix the answer would probably have been different. One respondent, while explaining why they felt that scope was the key attribute of success, made a strong argument for context (without calling it out directly), “Budgets and schedules can be modified when justified, and functionality can be phased in over time.” The statement could easily be interpreted as as a statement that success criteria, at least in the short run, depends on the goals of the business and the context of the project.

We can all conceive of scenarios where a specific context lead one attribute to be viewed as the most important in project success ASSUMING the software does what it is supposed to do and in an adequate manner. As an example of context, one respondent noted that in his environment and for some projects, “regulatory requirements that say it MUST deploy on a specific date.” Failure to meet the date can result in fines or penalties. In a similar vein, another respondent stated, “Projects are often tied to an organization’s business milestones or regulatory requirements so missing the date is not acceptable.” In both cases the context of a project could lead a project team to focus on one attribute over another.

Why did I ask the question without context? As I have noted in earlier essays, we are all subject to cognitive biases. These bias act as filters and shortcuts that help us interpret data. The context of a project will provide information about the goals and constraints of the project. Our cognitive biases are usefully in helping us interpret project context. Which is why project teams with diverse perspectives tend to make better choices when sorting out which attribute is most important. Is one attribute truly more important than another? It depends!