I Said It Wasn’t Complicated, I Didn’t Say It Was Easy, Part I

 

In last week’s blog, I made the point that project management concepts aren’t that complex, and offered up some examples. I was halfway expecting some push-back from readers/commenters, but that didn’t happen. The comments (as you can see) were very positive, despite that fact that I just got done asserting that we PM-types’ jobs aren’t that advanced. Doesn’t that imply that almost anyone could do our jobs?

Life Is Tough. It’s Tougher If You’re…

Well, no, actually. The project management field is often referred to as “the accidental profession,” and lots of bad things (including death) can come from being on the receiving end of an accident. Done right, it’s tough – hence the obscene percentages of projects (particularly IT ones) that fail to come in on-time, on-budget. So, if it’s not complex, but still tough while not being (necessarily) dangerous, what makes it that way?

Well, a couple of things pop to mind right away. The first one is that we PM-types are attempting to overcome centuries (literally) of management science theoretical barriers. In this blog I have often mocked the closely-held concept of the accountants, and other business-college grads, that the point of all management is to “maximize shareholder wealth.” This single phrase is preached so often and prevalently in business schools that it’s considered axiomatic.

For those who have only recently started reading Game Theory in Management, the problem with that idea is, it’s false. And I can prove it.

Consider the hostile takeover. This occurs when one company attempts to buy up a controlling share of a competitor’s organization, with the end-goal in mind of selling off its assets and driving the target out of business. Several things to keep in mind include:

• Whenever this happens, the targeted company’s stock usually spikes in price. By definition, this represents the maximizing of shareholder wealth.
• Conversely, the acquiring company will usually take a hit on their books, either via a drop in equity or through a reduction in the assets needed to perform the takeover. By definition, this is contrary to maximizing shareholder wealth.
• Also, once the hostile takeover is successful, the sell-off of the assets of the targeted company virtually never compensates for the expenditures needed to perform the acquisition in the first place. Again, the acquiring organization is doing the precise opposite of maximizing shareholder wealth.
• Companies that become aware that they are the target of a hostile takeover will often use the tactic of taking out high-percentage loans in order to increase their liabilities (taking a “poison pill”). They do this in order to deliberately damage the assets-to-liabilities/equity ratio, which makes them a less attractive target.

The inevitable conclusion here is that, if the “maximize shareholder wealth” thing is legit, then no organization would ever attempt a hostile takeover, and no targeted organization would ever resist it. Instead, what we see over and over again is managerial behavior that is utterly inconsistent with this oh-so-sacrosanct theory.

And, in the world of management science, if your theory is being disproved by corporate behavior on a consistent basis, you might want to at least re-examine said theory, if not abandon it altogether.

Also, you business school professors absolutely need to stop teaching that drivel.

The Business School Professors Will Not Take Kindly To Being Accused Of Being So Wrong

There are many other examples (return on investment [ROI] being the ultimate arbiter of project worthiness; comparing budgets to actuals to ascertain “cost performance”; using spend rates to project estimates at completion [EAC], to name but a few), but you see my point. The asset managers have ruled the management science roost for so long, and many of their clearly backward concepts have become so entrenched, that when those upstart PM-types come along, claiming some level of business insight in the pursuit of customer-stipulated parameters of cost and schedule performance, the asset managers’ reflex reaction is to ridicule or downplay the project management aficionados’ positions.  We PM-types can’t advance our agenda because we are, in a true management science sense, rebels, positing theories contrary to the status quo, and receiving the punishments for daring to question the asset managers’ so-called intellectual authority. I simply cringe when I see some study proposing to establish the value of the project management office (PMO) based on a calculation of its return on investment! We may as well offer a scholarly research project on the value of surrendering prior to the start of the battle, to see what kind of terms we can extract from the quacks who believe they occupy the high ground.

As for the second issue that makes PM so difficult, it’s …

Look at that! Out of space again. Tune in next week, for I Said It Wasn’t Complicated, I Didn’t Say It Was Easy, Part II.