Apurva Jain, apurva.jain@usc.edu
USC Center for Systems & Software Engineering http://csse.usc.edu

OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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

– from Latin “valere” – to be worth

– relative worth, utility or importance


– 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
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 nonfinancial (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)
GOALS, MISSION
BOUNDARY
STRATEGY ENVIRONMENT SIZE TECHNOLOGY
MANAGEMENT
STYLE
CLIMATE
ORGANIZATION’L
STRUCTURE
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
 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 loselose…(v)
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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)
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Contingency
Theory
How do contingencies affect value realization?
What values are important?
How is success assured?
Theory W:
SCS Win-Win
How to adapt to change and control value realization?
Control Theory
Utility Theory
How important are the values?
How do values determine decision choices?
Decision Theory
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OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Supporting Theories –
 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.
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Environment – Framework (Porter, Burton and Obel)
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
Uncertainty Equivocality Complexity Hostility
Buyers’ Bargaining
Power
Suppliers’
Bargaining Power
Threat of
Substitutes
Threat of New
Entrants
Inter-firm
Rivalry
 Systems & Software Project Implications
– Process
– System Architecture
– System Capabilities
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Environment – Propositions
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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)
Leader Producer
Preference for
Delegation
Level of Detail in
Decision-Making
Reactive/Proactive
Decision-Making
Decision-Making
Time Horizon
Risk
Preference
Motivation and
Control
HIGH
LOW
PROACTIVE
LONG
HIGH
HIGH
HIGH
REACTIVE
SHORT
LOW
INSPIRATION CONTROL
Entrepreneur Manager
LOW LOW
HIGH
PROACTIVE
LONG
HIGH
INSPIRATION
HIGH
REACTIVE
SHORT
LOW
CONTROL
 Systems & Software Project Implications
– Staffing
– Process
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Management and Leadership Style – Propositions
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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)
ILL-DEFINED
CRAFT NONROUTINE
ROUTINE ENGINEERING
WELL-DEFINED
FEW
EXCEPTIONS
MANY
EXCEPTIONS
TASK VARIABILITY
 Systems & Software Project Implications
– Staffing
– Process
– System Architecture
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Technology – Propositions
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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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Technology – Propositions
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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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Supporting Theories –
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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 –
 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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Supporting Theories –
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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 –
4b, 6b. Option, solution development & analysis
Contingency
Utility Theory
Theory
3. SCS Value
Propositions
2a. Results Chains
2. Identify SCSs
3b, 4b, 6b. Cost/schedule/ performance tradeoffs
3b, 6a. Solution
Analysis
(Win conditions)
Theory W:
4a. SCS expectations
4b, 6b. Prototyping
SCS Win-Win management
5, 6c. Refine, Execute,
4. SCS Win-Win
Monitor & Control Plans
Negotiation
1. Protagonist goals
Control Theory
3a. Solution exploration
6. Risk, opportunity,
change management
Decision Theory
5a, 6c. State measurement, prediction, correction;
Milestone synchronization
4b. Investment analysis,
Risk analysis
SCS: Success-Critical Stakeholder
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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 –
EXPLORATION
UTILITY
θ
CONTINGENCY
θ
Protagonist
Goals
θ W
DECISION
θ
SCS (Market, Sociopolitical,
Technical, Economic, People)
Dependencies
Stakeholder
Value Propositions
Expectations
Management
Market, Sociopolitical,
Technical, Economic
Dependencies
Stakeholder
Value Propositions
Solution
Analysis
Cost, Schedule,
Performance Tradeoffs
A
Cost, Schedule,
Performance Tradeoffs
A
Investment, Risk
Analyses
Solution
Analysis
Prototypes
Cost, Schedule,
Performance Tradeoffs
Stakeholder
Value Satisfaction
Cost, Schedule,
Performance Tradeoffs
Stakeholder
Value Satisfaction
Risks, Capabilities
Plans, Control Variables
B
CONTROL
θ
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Conclusion
OUTLINE
- Overview
- Key Drivers
- 4+1 Model
- 4+1 Theories
- Evaluation
 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-bystep guidance
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