Episode 272: Opportunities - The Not So Ugly Stepchild of Risk Management (Free)

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This episode is sponsored by The PM PrepCast for The PMP Exam:

My guest today is none other than Dr David Hillson (http://www.risk-doctor.com). You may have heard of him as the Risk Doctor and having him on the program is a great opportunity for us. In fact… project opportunity management is actually at the center of todays discussion!

Here is what David says about opportunities: "Most PMs still don’t get is the idea of upside risk or opportunity - or more accurately, they understand the theory but they don’t put it into practice." So in a moment we will not only learn what opportunities are, but more importantly we’ll hear David discuss several ways of identifying as well a properly managing them on your project.

Risk management strategies for agile projects use the same techniques so this episode is relevant to listeners working with agile techniques as well.

Since this is the first (and long overdue) appearance of David on The PM Podcast, here is a little bit about him first:

Known globally as The Risk Doctor, Dr David Hillson is an award-winning thought-leader and expert practitioner who consults and writes widely on risk management. His ground-breaking work in project risk management was recognised by honorary fellowships from both the Association for Project Management (APM) and the Project Management Institute (PMI®). He was also named “Risk Personality of the Year” in 2010-11. David is an active Fellow of the Institute of Risk Management (IRM), and was elected a Fellow of the Royal Society of Arts (RSA) to contribute to its Risk Commission. He is also a Chartered Fellow with the Chartered Management Institute (CMI).

I also recommend that you read the following Risk Doctor Briefings:

• How Do I Find Opportunities (PDF)
• Working Backwards to Opportunities (PDF)
• Opportunity Management Means Scope Creep? (PDF)

Each of these briefings is related to the topic of our discussion.

Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only. 

Podcast Introduction

Cornelius Fichtner: Hello and welcome to Episode #272. This is the Project Management Podcast™ at www.project-management-podcast.com and I am Cornelius Fichtner. Thank you for joining us today.

My guest is none other than Dr. David Hillson. You may have heard of him as the risk doctor and having him on the program is a great opportunity for us. In fact, project opportunity management is actually at the center of our discussion.

Here is what David says about opportunities. He says that most project managers still don't get the idea of upside risk or opportunity or more accurately, they understand the theory but they don’t put it into practice. So in a moment, we will not only learn what opportunities are but more importantly we'll hear David discuss several ways of identifying as well as properly managing them on your project.

Since this is the first and long overdue appearance of David on The Project Management Podcast™, here is a little bit about him first. Globally known as the risk doctor, Dr. David Hillson is an award-winning thought leader and expert practitioner who consults and writes widely on risk management. His groundbreaking work in project risk management was recognized by honorary Fellowships from both the Association for Project Management and the Project Management Institute. He was also named risk personality of the year in 2010 and 2011.

David is an active Fellow of the Institute of Risk Management and was elected a Fellow of the Royal Society of Arts to contribute to its risk commission. He is also a Chartered Fellow in the Chartered Management Institute.

And now, here's your opportunity to learn about opportunity. Enjoy the interview.

Podcast Interview

Female voice: The Project Management Podcast’s feature Interview: Today with Dr. David Hillson, the risk doctor.

Cornelius Fichtner:Hello David! Welcome to The Project Management Podcast™!

Dr. David Hillson: Cornelius, thank you very much. I'm very much looking forward to talking to you today.

Cornelius Fichtner: And we are honored to have you frankly because you do call yourself the risk doctor. But the first topic that we are going to be discussing today is opportunities. Why is opportunity management so dear to your heart?

Dr. David Hillson: I think that's a great first question to ask. Thank you for asking it. A lot of people think that risk is always and only bad. And I'd like to challenge that idea. I've been challenging it for the last 15 years or so with some success so that now the definition of risk both in the international ISO standard in the PMI PMBOK® Guide Chapter 11 and pretty much every risk management standard around the world has an inclusive, broader definition of risk which includes both threats and opportunities.

I think conceptually it's important but more than that, it's important practically because if we use the risk process to manage our opportunities then we should have more successful projects delivering more value and more benefits to our organization and our customers and ultimately our jobs as project managers should be easier.

Cornelius Fichtner: So what are our listeners going to learn from our ongoing conversation here? What's in it for them? What will they have learned by the end of this discussion?

Dr. David Hillson: Well I hope by the time you and I finish talking today, Cornelius, we'll have covered the aspects of the risk management process that we can use to both good opportunities, pick out the really good ones and then make sure that we exploit those and capture them to create benefits for our projects and our customers. But I think more than that, I'd like to infuse people with the idea that they really can do better. There are ways of working faster, smarter, cheaper and that the opportunity side of the risk process will help them to achieve those goals.

Cornelius Fichtner: Let's zoom in a bit more on the opportunities. What are some of the reasons why opportunities matter to our projects?

Dr. David Hillson: Well I'd like to go back to what I call a kind of proto-definition or a predefinition of risk. There are lots of long definitions. I expect you probably know the PMBOK® Guide definition of risk. But I start with just three words. I define risk as uncertainty that matters because all risks are uncertainties but not all uncertainties are risks. There are lots of irrelevant uncertainties out there in the world. And so what we have to do is find the ones that matter. And the ones that matter are those that could affect our objectives.

And the thing that's important to recognize is that some uncertainties matter because they could hinder us, stop us from getting to our objectives and of course also the threats. They could delay us. They could cost more money. They could lead to performance shortfalls or accidents, all sorts of things bad could happen and we need to recognize those and manage them.

But there are also uncertainties that matter because they could help us to achieve our objectives. I mentioned those three keywords --- faster, smarter, cheaper. If there are ways that we can proactively look out for ways that will save us time, save us money, enhance our performance, prevent accidents, then that should make our lives a lot easier and our projects more successful. So I think it really matters because if we only manage the downside of risk, then we're just protecting ourselves from things that could go wrong. If we manage also the upside of risk, then we're proactively looking for things that can make our projects better and more successful.

Cornelius Fichtner: If the opportunities give us so many benefits, why do you think that we don’t give them enough importance on our projects?

Dr. David Hillson: Well I think part of this is down to the way that the word is currently used in popular speech. So if you asked the man on the street: "Would you like to have a risk happen to you today?" He'll say: "No, thank you!" Risk is bad.

But if you ask a financial analyst and you talked about risks in the stock market or the bond market, what is risk in the stock market mean? It means that your stock values could go up or they could go down. It's a double-sided concept. If we think about reputation, you can enhance your reputation or damage your reputation. If we think about productivity, then we can do better than we planned or worse than we planned. The problem is that we're stuck into this negative mindset where we only think about the things that could go wrong. And I think that's the biggest reason for us not giving enough importance to opportunities on our projects. We just don’t see it as a possibility.

If something goes well, we think that's good luck and we'll kind of take advantage of it, but we don’t realize that we can go specifically proactively looking for opportunities and make ourselves more lucky. So I think it's down to the way our mindset works in terms of wanting to protect ourselves and just taking that kind of man-on-the-street view that risk is always and only bad. And I think that's a mistake.

Cornelius Fichtner: So if I understand you right, you're not saying project managers are resistant to opportunity management. They are just not all too aware of it.

Above are the first few pages of the transcript. The complete PDF transcript is available to Premium subscribers only.