Game Theory in Management

Modelling Business Decisions and their Consequences

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Recent Posts

Hey, Leader! Where Are We Going?

A Simple Trick to Enhance Project Team Harmony

The Three Horsemen of the Leadership Apocalypse

The Last Word on Sponsorship

“First Learn Balance!”

Hey, Leader! Where Are We Going?

A lot of what’s written about leadership has to do with consideration for the followers, communications with stakeholders, maintaining a high level of integrity, etcetera, etcetera. I would like to cut straight to the heart of the matter: where, exactly, are we being led?

Have you ever had the experience of following someone who had no idea where they were going? For long-distance runners in a competition on a poorly-laid-out course, this can be especially frustrating. If the appointed leaders make a wrong turn, it can add a lot of distance to an already difficult run, meaning that those who would otherwise be in the forefront can suddenly find themselves significantly – if not prohibitively – behind where they thought they were. In short, when we’re talking about leadership, one (literal) misstep can lead to dramatic and frustrating failure.

It’s true in running, and it’s also true of project management. The problem with managerial leadership is that the appropriate course is almost never known (or even knowable) beforehand. The team simply has to tackle the scope in front of them, really without a clear picture of where they will end up, since we’re no longer talking about a geographic destination. We’re talking about an anticipated end-state that takes place in the future, and the future is notoriously difficult to map out.

(Just as an aside, “the undiscovered country” is NOT the future, at least not as referenced in Hamlet, Act III, scene 1. As Hamlet himself uses the term in his famous soliloquy, it actually refers to the afterlife – which, on second thought, might have been the real intent when Councilor Gorkon quotes it in the Star Trek movie of the same name. Perhaps it is better rendered in “the original Klingon.”)

Look, I’m not saying it’s fair, or easy; but the truth of the matter is that followers have an expectation that leaders can see into the future, at least to some extent, and have selected the most appropriate strategy to deliver them to this desired end-state. This is why leaders of all stripes are so often attracted to soothsayers, fortune-tellers, or others who claim to be able to peer into the future and return the results that will be realized should the asker continue on the chosen course of action. On the managerial side, these people are known as risk managers (Ahh, c’mon! It’s been weeks since I took a swipe at those guys!). All these so-called analysts have to do is to shoe-horn in some statistical jargon into their predictions, and they automatically assume the aura of insightful, must-have information generators. Consider:

Palm reader: “I sense a dark force, one that you can’t stop, damaging your path going forward.”

Risk analyst: “If the weather closes in, you will have a 15% lower chance of completing those tasks on-time.”

Crystal ball-gazer: “I see a tall, thin man coming into your life, and changing many aspects of your comfortable routine.”

Risk analyst: “Did you see that last Baseline Change Proposal?  I’ll have to completely re-do my ‘risk baseline’ if this goes through.”

It’s my contention that true leaders spend less time attempting to quantify the future than they do making their teams more robust and better prepared to deal with the unexpected events that inevitably find their way onto – and obstructing – the path to success. That’s not to say true leaders don’t plan – on the contrary, they make it a point to plan, and do so to the best of their ability. But it’s like Eisenhower said : “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”

And so it is in project management. To have a clear view of the project team’s ultimate destination , and the best way of attaining it, is one of the most – if not the most – crucial aspect of managerial leadership.

That, and knowing when Klingons are mis-interpreting Shakespeare…

Posted on: October 20, 2014 01:44 PM | Permalink | Comments (1)

A Simple Trick to Enhance Project Team Harmony

For my next installment on October’s theme, leadership, I’m going to remind my readers of the blindingly obvious: contentious project teams do not perform nearly as well as harmonious ones. On those occasions where your team does not steadily progress through the clichéd stages of Forming-Storming-Norming-Performing, what strategies are available to combat project team infighting?

For this analysis I’d like to turn to one of the “games” – actually, an analogous set of stated interactive parameters – that I referenced in the book that this blog is named after, Game Theory in Management, titled Hawk/Dove. As the name implies, this game involves two types of birds, or, more specifically, fairly generic birds that can choose a passive strategy (“Dove”), or an aggressive one (“Hawk”).

In all variants of the Hawk/Dove game, the overall population’s payout is maximized if every bird selects a Dove strategy, i.e., they each forage for food, and consume or keep all that they gather. However, if the available food supply is less than can support the population of birds, then the only way for a given bird to survive would be to adopt a more aggressive Hawk strategy, one where the survivor either takes the food other birds have collected, or else stops them from foraging in the first place.

Even in those instances where there is more than enough food to support the population, the introduction of just one Hawk – or one bird that consistently selects the Hawk strategy – will result in a change of behavior in the entire population. Collectively they will arrive at what’s known in Game Theory as the Nash Equilibrium, which is that point at which there is no advantage to be gained on the part of any one player by altering their strategy or strategies. In the 100-bird variant of Hawk/Dove, the Nash Equilibrium is 25%/75% Hawk-Dove, meaning that either 25% of the birds act like Hawks all the time, or else all of the birds act like Hawks one-quarter of the time.

I can hear y’all now – “Hey, Michael, enough with the birds! My project team members are giving each other the bird! You said you had a simple trick…”  Okay, okay, back to the project team.

Your team’s members may not be hurting for food (or a paycheck), but promotions, raises, bonuses, and other forms of recognition are generally more scarce, scarce enough to induce some aggressive behavior in certain team members. The aggressive strategies do not include stealing other team members’ lunches out of the refrigerator (on second thought, though, they might); rather, they involve attempts to change management perceptions. This strategy involves four tactics:

·         Maximize the perceived value of the contributions of the instigator,

·         Minimize the perceived impact of the errors of the instigator,

·         Maximize the impact of the mistakes of the target(s), and

·         Minimize the value of the contributions of the target(s).

What do these four tactics all have in common? They require the instigator to communicate with the PM. So, what’s the simple trick that defeats them all simultaneously?

Forbid ex parte conversations.

Any time any team member wants to talk to you about how they see the performance of another member of the team, interrupt them, and arrange for the other person to be in the room prior to continuance of the conversation. It’s pretty automatic: if the instigator has a real problem, he won’t mind airing it out in front of the person perceived to be the cause. If, however, he’s simply trying to cast himself in a better light at the expense of an innocent comrade, he will immediately realize the game is over, and refuse to proceed. It’s not a silver bullet, but by not allowing ex parte conversations, your team will quickly learn to trust you, trust each other, and should begin performing better.

Identifying the person stealing the lunches? That’s a different problem…

Posted on: October 12, 2014 11:58 PM | Permalink | Comments (1)

The Three Horsemen of the Leadership Apocalypse

I have a theory about the three indispensable attributes of successful managerial leadership; but, because they tend to be somewhat subjective, the only way I can reasonably establish their relative value is to evaluate what happens when any of the three are absent in a so-called leader who has gained the position through means other than verifiable merit. What happens? Usually, disaster.

The first of these indispensable attributes is technical competency, if not out-and-out excellence. If a leader in a management position does not know the most effective, economical way of pursuing the organization’s goals and objectives, the project team will quickly come to realize it, and lose all enthusiasm for participating in attaining said scope. It’s been said that Ulysses S. Grant – a natural leader if ever there was one – was reluctant to step up to lead the Union forces during the American Civil War until he perceived how badly McClellan was flailing about. Then and only then did Grant more aggressively pursue both his battlefield objectives and his personal ambitions, with the results known to history. Few things are more frustrating for the members of a project team than to come to know that the technical agenda they are expected to execute is the wrong one, and that all their efforts will most likely fail to ever come to fruition, and frustrated project teams equal failure.

The next key attribute has to do with the managerial leaders’ relationship with the project team. While it’s natural for managers to hope for, expect, or even demand performance from their teams, the teams must never be led to the conclusion that their manager/leader does not care for them personally. I’m not implying that managers have to get involved in their employees’ dating lives or children’s scholastic challenges. What I am saying is that each team member has to have at least an inkling that their leader has what’s best for them at heart, even if it’s only to evaluate which members of the organization are the best candidates for promotion. When managerial leaders do not care for their charges, the members of the team come to know it, and fast. Should the team learn that their leader doesn’t care for them personally, you know what happens? They tend to not care for the leader nor the agenda, and this lack of caring quickly manifests in the project team’s cost and schedule performance.

This is something that really can’t be faked. The leader either (a) cares for his people and successfully conveys it, (b) cares for the team but has a tough time communicating it, or (c) does not care about the team. The first scenario is no problem, and the second can be addressed. The third can not, to the point that persons appointed to leadership positions who cannot bring themselves to care about their people should resign, and resist ever again being placed in a leadership position.

The third crucial aspect of the managerial leader is a single-minded intent to attain the project team’s goals, even under those circumstances where the rest of the team is tempted to give up. This high-energy commitment to the technical agenda conveys both a willingness to commit herself to attaining those goals, but also a confidence that the technical approach selected is the right one. The example I like to use for this aspect is that of another General, George S. Patton. Based on the things he said and did upon being assigned to the European Theater during World War II, I have no doubt that Patton would have single-mindedly attacked the Nazis, even had he been deprived of the U.S. Third Army and needed to parachute into occupied France solo in order to do so. His men knew it, too, and largely shared in his personality-consuming drive to overcome the enemies of the United States. Of course, few of us have projects whose execution has such world-changing consequences, or requires such an overwhelming commitment. But you see my point – the project team recognizes and appreciates true passion, and is keenly aware leadership that is bereft of it.

So, there you have it, the Three Ps of managerial leadership: Proficiency, People, and Passion.  Without them, you get the Three Horsemen of the Leadership Apocalypse, Ineptitude, Independence, and Indifference (coincidentally all beginning with “I”).  Once Human Resource departments can successfully test for these attributes, we’ll all be free from lame managerial leaders forever, right?


Posted on: October 06, 2014 08:43 PM | Permalink | Comments (1)

The Last Word on Sponsorship

As September’s theme comes to a close, I want to make a few remaining points on project sponsorship that may, of course, strike many as being counterintuitive. But, hey, counterintuitive is what I do, so…

The ability to demonstrate your organization’s “superior” project management information systems means less than you think to your typical free-market potential customers. All they care about is your performance on their scope, as evidenced by what happened with projects similar to the one for which your company is being considered (and whether or not your company’s bid is lowest, or at least reasonably arguable). Obviously, if your organization’s PMs are informed on a timely basis of their cost and schedule status, they are far more likely to make the decisions that lead to successful project completion, making the overall performance against the portfolio look good. But from the outside looking in, the existence of such systems, in and of themselves, is pretty much expected.

Those organizations that have spent time and energy developing their proposal and contract backlog management information systems have a distinct advantage over those that haven’t. The information feed from these systems influences decisions in all three management areas, Strategic, Project, and Asset.

The Strategic Management angle is obvious. You can’t know what your position is relative to the competition without a handle on the likely contract backlog going forward, as calculated by the proposal backlog management system (your proposal management backlog system can’t calculate the most likely revenue stream going forward? Dude!).

Project Management is more of a contributor to the portfolio management system, since a key component to managing your projects’ sponsors is knowing which types of projects your organization performs better than others (your project management information system doesn’t inform you which projects perform better than others? DUDE!).

The General Ledger comes in dead last when it comes to providing the management information needed to help in the project sponsorship management arena.  I mean, seriously, when was the last time you predicated a purchasing decision on whether or not the vendor’s last profit-and-loss statement contained good news?  That won’t stop your Chief Financial Officer from asserting a place at the manage-the-sponsor table, though. He’s convinced that every single piece of management information that has anything to do with budgets or revenue simply must come from the General Ledger. He’s wrong about this, but can’t be convinced as such. You simply must release Amazon Basin Goliath Moths into his office prior to the project sponsorship board meeting, and see if he can extricate himself from the situation in time to “contribute” to the meeting (you don’t have ready access to Amazon Basin Goliath Moths? DUDE!!!).

There’s a reason why scope creep is so deadly to the prospects of brining projects in on-time, on-budget. Many (if not most) project sponsors realize that their vendors are eager to cultivate positive relations, and this eagerness can be leveraged into asking for the occasional “extra.” During the transition period, from contract award to baseline approval, these sponsors will attempt to gauge the extent that they can presume upon the contractors’ good will to get more than what was specifically spelled out in the contract. The managers of these new pieces of work need to be clear-eyed about how far they are willing to go to cultivate these relationships, and know how far is too far. Again, there’s a reason why scope creep is so deadly to the successful completion of projects.

And that reason is only tangentially associated with a lack of ready access to Amazon Basin Goliath Moths…

Posted on: September 29, 2014 11:07 PM | Permalink | Comments (0)

“First Learn Balance!”

Mr. Miyagi’s advice to Daniel in The Karate Kid also applies to the selection of strategies when it comes to attracting projects, programs, and portfolios. Project sponsorship is a tricky field of endeavor, and, if your organization is a novice to it, the other companies in the market will gang up and bully you right out of contention (though, hopefully, not while dressed in skeleton costumes).

In the last two weeks’ blogs, I reviewed opposite ends of the spectrum when approaching the problem of securing sufficient projects to not only keep your organization’s head above water, but to actually have it thrive. The first example involved a very large Beltway Bandit that placed extraordinary emphasis on increasing the number of jobs being credibly bid, while giving short-shrift to the existing project backlog and its performance.

This company went out of business.

Next, I examined another company I worked for, with the opposite problem: as a designated small, minority-owned business, a certain portion of the (U.S.) federal government’s procurement budget was “set aside” for companies with this designation, so that the projects would often be awarded to this organization with little or no effort on behalf of its proposal preparation team. However, the “set aside” status doesn’t last forever, and, when it expired…

This company also went out of business.

The trick, then, is to set up a management information system that can help inform the company’s decision-makers on which types of work ought to be pursued, from which customers, and how much of it should be in the proposal backlog. The first two are relatively easy – the third, well, isn’t. But I’ll give a primer on the look and feel of these MISs my best 700-800 word shot.

Which types of work should your company pursue? Which do you do best? Don’t bother asking the tenders of the general ledger for that one – if you don’t have (at least a rudimentary) Earned Value Management System covering your project work, you have a lot more problems than just the info feed for your strategic management system. If you do, this data point naturally falls out of it upon inquiring.

Ditto on which customers.

Now for the size of the targeted proposal backlog. Did anyone notice how I inserted the word “targeted” into the mix there? Yeah – clearly, simply bidding on everything that tickles the organization’s fancy that shows up on the Commerce Business Daily is a strategy for disaster. To best manage your company’s project sponsors, some handle on the following parameters is necessary:

·         Project performance, by type of work and customer

·         Size of the target market

·         Position of the competitors in that market

Then, an analysis that takes into account the organization’s position with respect to Asset, Project, and Strategic management will allow a clear vision on the strategic direction the company should take. It’s informed balance, the kind that can’t be attained by doing different-footed chicken-kicks off of Oceanside pillars.

Or, absent this insight, your organization could simply get the stuffing beat out of it by the Cobra Kai-trained competition.

Posted on: September 22, 2014 10:00 PM | Permalink | Comments (1)

"Drawing on my fine command of language, I said nothing."

- Mark Twain