Game Theory in Management

Modelling Business Decisions and their Consequences

About this Blog


Recent Posts

What’s A Real PMO?

Picard, Skywalker, or Potter – Who Are You Going To Listen To?

Maintaining PMO Morale

Your PMO – Servant, or Master?

Why We Dislike Consultants

What’s A Real PMO?

I own a Casio® wristwatch that is suspiciously similar in appearance to an Omega® Seamaster, the watch worn by James Bond (we see a close-up of his wristwatch’s face in the movie Goldeneye). A new Seamaster (“James Bond” version) retails for $3,900 (USD), but can be purchased “on sale” for a mere $3,100. My Casio – which is also a chronometer, by the way – arrived at my door for less than $100.

Now, I readily admit that the Seamaster has many more features than my Casio; but, really, how many current Seamaster owners really need a helium release valve? If the object of the game here is to deliver the time of day, accurately and reliably, to humans walking around on the surface of the planet, then those owners of the Omega watch who do not perform dives of excessive depth or extended periods wear them, at least in part, as a signal to others that they can afford to spend amounts that most middle-class folks would view as excessive on their personal effects. Which is absolutely fine by me, don’t misunderstand – I just think we need to be clear about the form-versus-function balance being attempted here.

The first Project Management Office I headed was part of what United States Government contractors know as an “8a” firm, or a company that was owned by a minority, a woman, or was somehow otherwise “disadvantaged” according to the laws followed by the American Small Business Administration. 8a firms didn’t compete for government contracts quite the same way the established mega-firms did; in fact, each contract-granting agency was expected to set aside a certain part of their procurement budget for these 8a firms. In this environment and during this time, having a PMO at all was something of an anomaly. Since new contracts would come this company’s way more easily than they would have in an environment of proven-excellence-just-to-submit-a-proposal, the pursuit of outstanding cost and schedule performance wasn’t on everybody’s mind, at least not all the time. The establishment of management information systems that would tip off the executives about which projects were doing okay, and which were train wrecks in the making, was deemed sufficient for their purposes.

Again, don’t misunderstand: I and my staff worked diligently, trying to get all of the decision-makers in the company to recognize the value of doing project management properly. But as we droned on about the need to set up the chart of accounts consistent with the reporting level of the Work Breakdown Structures, or how a cost variance IS NOT the difference between budgets and actuals,  weeks turned to months, and months to fiscal quarters. My little PMO’s exaggerated capabilities would be featured prominently on some of the company’s proposals, as if we were one of the most central aspects to managerial decision-making. Away from the marketing spotlight, however, we were largely ignored, or tolerated with a sort-of bemused patience. Some of the PMs would readily accept any help we could give them, and these ones made the whole PMO enterprise worth pursuing. These were, unfortunately, a definite minority within the minority-owned firm. From that era of figuratively beating my head against the Vice Presidents’ suite office walls, I remember now as alternately an interminable amount of time, and no time at all. The day came when the company was set to graduate from 8a status, and had absolutely no record of project execution excellence to point to as they entered the realm of non-preferential contract competition. I discreetly left prior to this graduation, and none too soon: the company, failing to make the transition, was bought out by a competitor soon afterwards.

The point here is that we can’t all be the Omega Seamasters of the PMO world, and that’s okay. Sometimes it’s alright to simply look like one, while doing the best we can to deliver accurate and reliable cost and performance information, even when our chronometer-like accuracy is taken for granted or ignored. Looking back, not only do I have no regrets, I’m actually very grateful for the opportunity and the lessons I learned during this time. My little PMO did its best to deliver the critical project cost and schedule performance information that the company’s executives should have used to keep the firm viable. I’ve often pointed out that the 20% worst managers with access to 80% of the information needed to obviate a given decision will consistently out-perform the 80th percentile top managers who have access to only 20% of the information so needed. Those execs willingly chose not to avail themselves of the PMO’s information stream, so they performed like … well, you know.

So, was this a “real” PMO? You can bet the difference in wristwatch prices it was.

Posted on: July 27, 2014 11:29 PM | Permalink | Comments (0)

Picard, Skywalker, or Potter – Who Are You Going To Listen To?

As my regular readers are well aware, there are three types of management: Asset, Project, and Strategic, each with their own goals, tools, and techniques. Similarly, there are three heavy-hitters in the realm of science fiction/fantasy cinema: Star Trek, Star Wars, and the Harry Potter series. In previous blogs I’ve described the business model pathologies that afflict the organization when the tools that are germane to one management area are used in others, blah blah blah, with some success; but now I’m thinking that there’s a more direct way of beaming this information (get it?) into my readers’ heads. I’ll equate them with these three fictional memes! It’ll be fun!

Let’s let Jean-Luc Picard, captain of the Galaxy-class starship U.S.S. Enterprise from Star Trek: The Next Generation serve as the representative of the Asset Managers.  Picard is outstanding in this role because:

·         He’s stodgy

·         and supremely confident in his powers, even though he’s relatively slight-of-build.

·         The people around him assume he has all the answers

·         but he doesn’t

·         and doesn’t let it show that he doesn’t.

In short, he’s perfect for the Asset Manager role.

I’ll select Luke Skywalker, Jedi Knight, as the PMO representative. After all, Luke is young, talented, honest, and has a clarity of vision about who the good guys are, and who aren’t, that Jean-Luc never seems to attain. His area of expertise is not widely-held in the galaxy, and he readily acknowledges that he has a lot to learn before he sits on any ship’s bridge and starts ordering people around in-between pursuing prissy hobbies like archaeology.

If you are looking for someone to add to your Strategic Management Team, you could do a whole lot worse than a person with a résumé like Harry Potter’s. Like all good Strategic Managers, Potter has no doubts about who the bad guys are: if your organization’s competitors win the battle of market share, all that organization is will cease to exist, just as, if Voldemort isn’t stopped from seizing control of the Ministry of Magic, all of the non-dreadful aspects of the dimension occupied by the magic folk will die off. And – let’s face it – everything the Strategic Managers do strikes us mugbloods as magical. They use opaque methods of influencing customers to part with their money in order to give work to our companies! How wizard is that?

So, now you’re a portfolio manager, and you see in the reports that Luke and Harry have provided that your project backlog will cover your organization’s expenses for another six months. You convene a meeting with Jean-Luc, Luke, and Harry, present them with this little factoid that’s causing you to lose sleep at night, and ask them to advise you on how to approach the problem.

“The first thing we need to do is to replace that contract backlog” begins Harry. “The way to do that is to analyze the existing proposal backlog, and capture upcoming Requests for Proposal, evaluate which ones we should pursue, and get to writing. The exact incantation is ‘Capturo ProposalWinRate-ica’!”

“I can add to that” Luke interjects. “By deriving cost and schedule performance information from our project controls staff, I can determine which customers, as well as which types of work, we perform best. I can also tell you, based on our current rates of performance, which projects will come in on-time, on-budget, and which ones we need to worry about. For those PMs who have been telling you that everything with their project is perfectly fine, when it isn’t, well, I can hold up my hand with my thumb and forefinger about an inch apart, and suddenly they have trouble speaking, or lying on their Variance Analysis Reports.”

Jean-Luc is looking at his shoes.

“Captain Picard – do you have anything to add?”

“My analysis shows that your current rate of return on your assets is comfortably above industry standard. I don’t know why we’re even having this meeting, so --- dismiss this meeting! Make it so!”

As you return to your House’s Commons/Degobah Bigelow/Admiral’s Quarters, turning the issue over in your mind, tell me: whose advice will you use?

Posted on: July 20, 2014 07:32 PM | Permalink | Comments (0)

Maintaining PMO Morale

An unhappy Project Management Office is an underperforming Project Management Office, so it’s up to you, the PMO Director, to take positive steps to maintain a high level of morale among the staff, even in light of low salaries, lack of respect from the rest of the organization, and the sharp elbows of the management information system advocates who are racing you to the role of most-important-executive-advisor team. A way of letting your PMO staff blow off some steam simply must be found. Sooo…how is this to be accomplished, exactly?

Well, there are several options, but if you are bereft of company money in any kind of a morale fund, you may well have to host a soiree at your home. If you do this, though, there’s a possibility that it will come off as somewhat lame, unless you partake of some of the following party activities – for amusement only, you understand.

·         Supply your PMO team with Nerf® guns. Invite over the members of the Chief Financial Officer’s team (read: CPAs) who believe that estimates at completion can be derived by performing regression analysis on the project’s cumulative actual costs, but tell them the start time of the party is 15 minutes after it actually starts. To be on the safe side, have the accountant sign an agreement that insulates you from liability for any light-hearted attacks they may or may not be subject to at your home. Every Nerf hit is good for 15 points towards one of the door prizes.

·         Host a little “casino night,” with the winnings being points or coupons towards door prizes. Invite the risk management team. If they play, ask them how they justify participating at all, given that, in light of the fact that, of all casino games, blackjack gives the player the best odds, and even then they favor the house by 0.5%. If they state that they “feel lucky,” they are either not genuine risk management types, or else they have found a way to cheat.

·         Equip your team members with slightly more effective (but still, of course, [relatively] safe) equipment, such as AirSoft® BB-guns, and invite the members of the CFO team (again: accountants) who believe that a cost variance is the difference between budget and actual costs, but have them show up 15 minutes after the previous batch of accountants.  Any hits count for 100 points towards the door prizes.

·         Set up a game of “PMO Jeapordy!” The topics are:

o   IT Projects and Automatic Scope Creep

o   Reasons why performing statistical analysis on Critical Path schedule-data is a waste of time

o   Canned Variance Analysis Reports that work

o   Agile, Scrum, and Cheating the BCP Process

o   The Most Boring Seminar Topics

o   Certification Initials – What They Stand For

·         Equip your team members with paint ball guns, and invite still more members of the CFO team (do I really need to remind you whom I’m referring to here?) who insist that all management information that deals with budgets or costs must be derived from the General Ledger. Arrange for them to arrive 15 minutes after the previous bunch. Any hits are good for – ahhh, just hand over the door prizes.

·         Print out some versions of this blog, get a life-sized stand-up cutout of your organization’s Chief Information Officer, and initiate a game of “Pin the Clue on the CIO.”

·         Invite over still other members of the CFO team (y’all still know who I’m talking about, right?), and have them arrive 15 minutes after the previous batch. Find ones who flat out refuse to align the projects’ chart of accounts with your Work Breakdown Structure at the reporting level, instead insisting on tracking actuals by the Organizational Breakdown Structure. Procure a delay timer and a electronically-opened cage full of tarantulas…

Ha, ha! Just kidding all along. It would, after all, be a pain to clean up after any aberrant paint-ball shots…

Posted on: July 13, 2014 11:25 PM | Permalink | Comments (2)

Your PMO – Servant, or Master?

A few years ago I gave a keynote at an Earned Value Management-themed conference, where I used the example of the Battle of Agincourt to point out how the landscape for launching or maintaining a successful PMO had changed, and the PM community had better recognize the nature of those changes before our brand loses virtually all of its value.

For those of you who may not be that into English history, the Battle of Agincourt occurred on Friday, October 25th 1415, and was fought between French forces led by Constable Charles D’Albret, and vastly outnumbered English forces led by Henry V. Henry was attempting to escape with around 6,000 men to the stronghold at Calais when he was intercepted by as many as 36,000 French near the town of Agincourt. With the martial technology available to each side roughly equal, being outnumbered six-to-one would normally be an automatic death sentence. The numerically superior French could simply out-flank and surround the English and cut them to pieces, similar to the tactics employed by Hannibal at Cannae. But two things had changed in the run-up to battle, and D’Albret failed to recognize their implications.

First, the battlefield was a freshly-ploughed meadow in between two thickly-wooded areas. There was simply no way to encircle the English forces, especially with the French cavalry. If the English were to be brought to battle, they would have to be confronted head-on, down the corridor flanked by the woods.

Secondly, it rained heavily the night before, leaving the field a muddy morass. The typical French knight carried upwards of 80 lbs. of armor into battle, and their horses would be even more heavily armored. By the time the French forces had traversed the approximately 100-yard distance to the English lines, they were exhausted, and still struggling through the muck. They would prove to be easy pickings for the lightly-armed English infantry, who could simply hatchet them to death as they struggled in the mud. By the time the battle was a few hours old, there was a wall of struggling, bleeding, and dying Frenchmen in front of the English lines. Before the day was out, Henry had won an astonishing victory.

What does all of this have to do with Project Management Offices, you ask? Well, two things have changed since the halcyon days of mandated project management capabilities, and I’m convinced that most executives have failed to recognize the implications.

First of all, the ability to demonstrate an advanced project management capability, for the most part, is no longer required of organizations performing project work for the Federal (U.S.) government, nor of virtually anyone else. I believe the main reason that PM requirements arose in the first place has to do with the dual nature of Earned Value and Critical Path method-based information systems. Their first function is to provide valuable cost and schedule performance information to decision-makers. Their second (and far more stringent) function is to generate a narrative of what happened on the project, how it happened, and who made the key decisions. PM information systems create a sort of audit trail, so that errors can be traced back to their origins. It is this second aspect of PM information systems that makes them fairly unpopular with project teams.

Secondly, since the PM capability is no longer required, the implementation approach can’t be top-down, or retain elements of attempting to leverage organizational power to compel the PM capability’s advancement. In short, the directors of Project Management Offices are no longer in the position of enforcers of requirements, but must instead become marketers of information streams to decision-making customers.

So, what’s the acid test to determine if your PMO presents as an enforcer of policy, or a source of valuable information? It’s essentially this: does your PMO behave as a master of the organization’s project teams, or their servant? It’s an important distinction, because the latter can access many more opportunities for success, whereas the former is in danger of becoming a figurative mass of struggling belligerents, just asking to be eliminated from the management arena.

Posted on: July 06, 2014 09:52 PM | Permalink | Comments (0)

Why We Dislike Consultants

Right up front I want to say that one of the reasons I dislike consultants is because I envy them. I’d really like to be able to make a living doing what they do, while being readily recognized as an expert in the field. I think I have the problem-solving piece of it down. It’s the ability to smoothly communicate the nature of the problems and a recommended solution that evades me. Consider the following table:

What A Real Consultant Would Say

What Michael Would Say

“I discovered some apparent anomalies in the read-ahead data you sent me.”

“Are you freaking kidding me?”

“This one manager appears to have a pattern of not addressing this issue effectively.”

“Contact Occupational Medicine – we have a candidate for a user of a recreational drug that not even the DEA has categorized yet.”

“That person is in a very poor position to realize his goals.”

“He’s got a wish in one hand, and a &*^% in the other.”

“How did the company come to see itself this way?”

“You’ve embraced a series of organizational pathologies that would drive Freud to cocaine. Oh, wait…”

“I would recommend we avoid that particular course of action.”

“I’d rather trim my fingernails in a Quisenart.”

“This pattern of issues is becoming fairly apparent to me…”

“It’s painfully obvious to the most casual observer…”

“This may be an instance where the consensus of the board could stand some further review…”

“Did all of you tumble out of the same clown car together?”


…but that’s just me. Generally speaking, though, many (if not most) of the organization’s sub-executive personnel who interact with consultants harbor at least a little bit of resentment, in my experience. It’s usually not the consultant’s fault, either – it’s the fault of those who hired her.

In several of my previous articles, columns, and blog postings I have asserted that, in organizations comprised of degreed, certified, experienced professionals, whatever the results of the consultant’s analysis may be, there are many members of the existing staff who not only already know the true nature of the problem that prompted the consultant’s hiring, they probably have a better handle on how to fix it, both in the short- and long—term.  If I’m right here (and, naturally, I am) then a useful mental exercise would be to put yourself, Ms. Executive, into the shoes of your management team. What are they to think when they see an outsider to the organization given access to the most profound information streams the company has at its disposal, while enjoying higher per-hour pay AND a perceived superior position with respect to their standing in the company’s executive structure (even if it’s temporary)? How could this not engender at least some level of resentment?

Now consider what prompted the need for the consultant in the first place. We’ve already established that, within professional organizations, there are almost certainly some people who already know the nature of the problem that summoned the consultant, and have a pretty good handle on how to fix it – all before the consultant gets badged in. Why haven’t they been “consulted?” It’s because the host organization has wandered so far away from being structured on a meritocracy that its native talent has no avenue for contributing as they are capable.

I’m not (that) naïve.  Very few organizations can even come close to basing their hiring and promotions purely on merit – the brilliant analyst who never has the opportunity to socially interact with the company’s executives doesn’t have the same advancement opportunities as the poorer performer who does have such access. But, when the macro organization has departed so far from the meritocracy model that the internal communication avenues that would normally identify and eradicate problems prior to their becoming major issues has ceased to function, the only real alternative is to bring in outsiders who can circumvent these failed communication avenues, and relay what many of the personnel already know.

Which may lead some already within the macro organization to wonder if all of the executives tumbled out of the same clown car together…

Posted on: June 29, 2014 08:29 PM | Permalink | Comments (0)

"A fanatic is one who can't change his mind and won't change the subject."

- Winston Churchill