My Real Options Story

A few weeks ago I bumped into Chris Matts and thanked him for the ‘Real Options’ session he’d lead at SPA last year. I promised write up this little story about what I took out of it.

When I got back from the conference, my team were at a point where we had to chose between two competing technologies to build something. Looking at the two options, we really didn’t know which one to go for: they both had advantages, and at that time they were both unknowns to us. Wearing my new ‘options thinking’ hat, I realised that we didn’t need to choose at this point: in fact, making a punt right now would be downright irresponsible: we didn’t have enough information to make the decision properly.

So instead of using my ‘gut feel’ to pick one of the competing options like a real hero would, I did a much more pragmatic, but less intuitive thing: I decided we would do both, until it became clear which one was the right one to pick.

We were lucky that our constraints at this point were time, rather than cost, so we could afford the luxury of having two streams of work going on in parallel, knowing that one would eventually be thrown away. Obviously the hidden deliverable even from that throwaway stream would still be a developer or two who understood the problem domain really well, and with a new technology in their toolbox to use in the future.

A week later it was much clearer which of the options we should pick, and the other workstream was stopped. And everyone lived happily ever after :)

Update: If you want to know more about real options, read Chris’ article on InfoQ here.