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10/8/2010




Risk management
    in Kanban
       using
   Real Options
     Olav Maassen
         Xebia




  Clip of House M.D.




                              1
10/8/2010




Let’s play a game


                        Goal:
                          To deliver as quickly as
                            possible




                    Teams
     • Form teams
     • Decide on name




                                   Who will
                                   complete
                                   task A and
                                   task B first?




                                                            2
10/8/2010




                Task A
Dear Team,

 Construct a six sided random number
 generator. Something like a dice like
 thingy.

 Each member of the team should take it in
 turns to use it until everyone on the team
 has rolled a "Double 6".




                Task B
Dear Team,

 Construct a four sided random number
 generator. Something like a dice like
 thingy.

 Each member of the team should take it in
 turns to use it until everyone on the team
 has rolled a "Double 6".




                                                     3
10/8/2010




What are options?




                    8




                    9




                               4
10/8/2010




                An Arbitrage
               (Free Money)




                               © wilhei55




  © moonpix7




© Justin Russell




                 Options
               everywhere
                                 © tvol




                                                   5
10/8/2010




100.000 (+/- 5%) barrels of oil for $100 / barrel
Total value: $10.000.000



• Price drops to $90          • Price goes to $110
• 95.000 barrels              • 105.000 barrels



• Cost saving: $10 * 5.000    • Extra profit: $10 * 5000

    95.000 barrels plus the option to buy
               10.000 more




   When is something optional?




                                                                  6
10/8/2010




What is a commitment?




                        15




                                    7
10/8/2010




               Black Scholes…..


                A House of Cards




                        Oops!


© shaymus022




                                          8
10/8/2010




Options            Options              Never
have               expire              commit
value                                    early
                                        unless
                                          you
                                         know
                                          why

© luismi1985       © givepeasachance      © Tub Gurnard




               Options have value




                                                  19




                                                                 9
10/8/2010




Options expire




                       20




               Never
              commit
            early unless
             you know
                why




                       21




                                  10
10/8/2010




                                          Real world
                                          examples




                                                  © codyR   22




                                 1. Right
                                 2. Wrong
                                 3. Uncertainty




© Bethany L King

                   © Violator3




                                                                       11
10/8/2010




                           A or B?




               © The Nug




WWW.




        Grid
                                     © Uninen
Maths




                                                      12
10/8/2010




Options             Options              Never
have                expire              commit
value                                     early
                                         unless
                                           you
                                          know
                                           why

© luismi1985        © givepeasachance      © Tub Gurnard




          STOP
        Guessing!
                                              © topher76




                                                                 13
10/8/2010




   Create Options



                                 © haydnseek




                    Prepare to run fast.




© James Temple




                                                     14
10/8/2010




                         ……and
© lordkirbs
                        have fun.


              Clip of House M.D.




0:00 – 0:05




                                          15
10/8/2010




Questions?



Contact info:
Olav Maassen
Xebia

olav.maassen@xebia.com
twitter.com/olavmaassen




                                16

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Risk management in kanban using real options - Olav Maassen

  • 1. 10/8/2010 Risk management in Kanban using Real Options Olav Maassen Xebia Clip of House M.D. 1
  • 2. 10/8/2010 Let’s play a game Goal: To deliver as quickly as possible Teams • Form teams • Decide on name Who will complete task A and task B first? 2
  • 3. 10/8/2010 Task A Dear Team, Construct a six sided random number generator. Something like a dice like thingy. Each member of the team should take it in turns to use it until everyone on the team has rolled a "Double 6". Task B Dear Team, Construct a four sided random number generator. Something like a dice like thingy. Each member of the team should take it in turns to use it until everyone on the team has rolled a "Double 6". 3
  • 5. 10/8/2010 An Arbitrage (Free Money) © wilhei55 © moonpix7 © Justin Russell Options everywhere © tvol 5
  • 6. 10/8/2010 100.000 (+/- 5%) barrels of oil for $100 / barrel Total value: $10.000.000 • Price drops to $90 • Price goes to $110 • 95.000 barrels • 105.000 barrels • Cost saving: $10 * 5.000 • Extra profit: $10 * 5000 95.000 barrels plus the option to buy 10.000 more When is something optional? 6
  • 7. 10/8/2010 What is a commitment? 15 7
  • 8. 10/8/2010 Black Scholes….. A House of Cards Oops! © shaymus022 8
  • 9. 10/8/2010 Options Options Never have expire commit value early unless you know why © luismi1985 © givepeasachance © Tub Gurnard Options have value 19 9
  • 10. 10/8/2010 Options expire 20 Never commit early unless you know why 21 10
  • 11. 10/8/2010 Real world examples © codyR 22 1. Right 2. Wrong 3. Uncertainty © Bethany L King © Violator3 11
  • 12. 10/8/2010 A or B? © The Nug WWW. Grid © Uninen Maths 12
  • 13. 10/8/2010 Options Options Never have expire commit value early unless you know why © luismi1985 © givepeasachance © Tub Gurnard STOP Guessing! © topher76 13
  • 14. 10/8/2010 Create Options © haydnseek Prepare to run fast. © James Temple 14
  • 15. 10/8/2010 ……and © lordkirbs have fun. Clip of House M.D. 0:00 – 0:05 15