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15
Jan

Using options to better manage uncertainty of events organization

(Note 6th Feb 2014: I have written in comment my conclusion after some feedbacks received, if you read this post, read my first comment!)

Last year I organized Don Reinertsen 2 days Workshop in Paris. I’ve written a behind the scene blog post, in french, to share what I learned along the journey. But I missed something about Mauko proposition: he was not sure to be able to attend due to business priorities. As he wanted to be sure to get a seat if he was able to join, he proposed me to buy an « option to attend », price = 50% of price, expiration date = when all seats are sold, exercice = paying the rest of the cost. His proposition made full sense for him and for me, as I guaranteed him a seat until the expiration date, and if he didn’t exercice the option, I secured 50% of the money. I realize that I should explore this experience to organize next year workshop.

Furthermore, I was managing uncertainty with « probabilities to attend » from every potential participant I knew. It was a really simple excel spread sheet with name « potential participant » and a probability representing « I have x% chance that potential participant will buy one ticket ». The sum of this probability gave me a rough idea of final number of participant. The best was that the participant himself gave me its probability. This simple technic worked quite well, as I ended up with 16 participants which was in line with the sum I had since mid september (so at a time where only 8-9 people bought their ticket). I was surprised by the result, as I was aware that those probabilities was probably as bad as estimations are in software development world. As I was updating my spread sheet for 2014 this morning, I asked myself « what if it was just pure luck? ».

As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality. ― Albert Einstein

After a step back, I remembered Mauko’s proposition and started to think about an option model to kill my spread sheet.

Options seem to be a much better way to manage uncertainty, as instead of just guessing probability to attend, it engages people in the process. It’s not just word anymore, but it’s action, it’s money. I’m writing this blog post to share my thoughts on the design of such a plan. An option price needs to be aligned with the engagement, so I came up with this 4 options:

  • if I want my seat to be secured until the very last moment, it has a cost, I must pay for it, and I’m probably ready to pay because I really want to get a seat.
  • if I want to attend but I’m not sure my management will validate the training (or I’m not sure to be available especially when I don’t know the date yet and just the period), I want to secure the opportunity without losing too much money if I can’t make it.
  • if I would like to attend, but need time to think about it, I am ready to pay for delaying my decision.
  • if I would love to attend, but I have very few chance to be able to join this year and want to think about it for next year, I am ready to support the initiative this year, at a very low level of cost, to encourage organization for the next year event to happen.

Obviously, price and expiration date are different between options, if I pay a low amount of money, I pay to delay the final decision. But all options need to get another trigger which is « no more seats available » signal.

Options have a price because of uncertainty and scarcity. What is scarcity when we organize a workshop? Obviously it’s the number of seats. Last year I known the lowest limit of participants, but I didn’t want to set up a high limit. This year, if I use this model, I need a high limit. The high limit has an impact on seats price and options price: if there is only 5 seats available, the cost of the seat and the option prices are higher than if I have 40 seats available. What is the best high limit I should set up, knowing that I don’t want to increase too much cost of seats and I want to guaranty a high quality of direct relations between participants?

I would be glad to have your ideas and feedback about those options, prices, expiration dates, high limit. Does it make sense? Is it a process that you would like to use to secure your seat in a workshop / training you want to attend?

Last year I had a discussion with Thomas Lissajoux about the organization of Lean Analytics Masterclass in Paris the 13th of December. He has the idea to organize it using a crowdfunding platform, which was, to me, a brilliant idea. Unfortunately the Masterclass was canceled because of too few participants, and when I talked to people around me about this Masterclass, none of them was enthusiastic with the crowdfunding way to fund a training or workshop. Does buying « option to attend » makes more sense?

Maybe Weezevent or others will develop option model to organize event? Or maybe it already exists out there? Let me know!

Commentaires ( 1 )
  • alexis8nicolas says:

    After some feedback received from different people around the world, I must admit that it’s not the great idea I was looking for. Indeed feedbacks I got was like:
    – Interesting but it does not work for my context
    – Very interesting but I won’t buy one, I take the risk
    – Very interesting, and you could price options using this model etc… Would you buy one? No I won’t join the workshop
    – Interesting, but I need to check dates before buying it
    – It’s a bit complicated
    – …

    As a conclusion, most of people in my network are very nice people who don’t want to disappoint me :o) but a business idea is not here to enjoy thinking of models or complex algorithm! A business idea that no one want to buy, is a bad idea period.
    I’ll keep my lucky way to manage uncertainty for now, I’ll probably open the first option type, and I’ll wait to find a better idea… Feel free to propose!

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