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Itrevolution
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My Adventure Learning About Option Value, How To Measure It, GenAI, and DORA
- Learning about option value, its measurement, and how it enhances value creation in times of high uncertainty was discussed in a two-hour session.
- An interview with Dr. Carliss Baldwin, known for her research on modularity and option value, shed light on its impact on industries like IBM and Amazon.
- The conversation delved into option value in manufacturing, hardware development, software architecture, modern development, and option value theory.
- A formula, NK/T where N is the number of modules, K is the number of experiments, and T is the time, ties together the concepts of option value and experiments in parallel.
- The role of uncertainty (σ) in determining option value was highlighted, with higher uncertainty leading to greater value in having options.
- Toyota's insight on embracing uncertainty in manufacturing and creating value from it through modular systems was discussed as a case study.
- Visualizing how N*K/T and σ interact to create option value was demonstrated as a tool for understanding value creation in uncertain environments.
- The discussion also touched on the impact of GenAI on creating new forms of option value for developers and the importance of recognizing and exploiting uncertainty to drive innovation.
- The session emphasized why options are more valuable in domains with high uncertainty, such as software/technology innovation and new product development.
- Overall, the conversation highlighted the significance of option value in driving value creation and innovation, particularly in dynamic and uncertain environments.
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