Playing The Game When The Odds Are Against You

 

No self-respecting blogger on the topic of Game Theory can go long without referencing the Nash Equilibrium. Named after Thomas Nash, the central character in the movie A Beautiful Mind, it refers to

…a concept in game theory where the optimal outcome is when there is no incentive for players to deviate from their initial strategy. The players have knowledge of their opponent's strategy and still will not deviate from their initial chosen strategies because it remains the optimal strategy for each player.

Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. A game may have multiple Nash equilibria or none at all.[i]

So, what does this Game Theory theory have to do with Change Management/Change Agency in a Project Management context (ProjectManagement.com’s theme for December)? Plenty.

I, like virtually every other Game Theorist out there, believe that the business world is highly analogous to some grand game, with economic rewards, certainly, but other prizes as well. Many aspects of the business world inform Game Theory hypotheses, such as the notion of the “logical man,” or one who will consistently (if not exclusively) act in their own observable self-interest, whether or not that self-interest is confined to economic benefits. Similarly, much of Game Theory makes an appearance in business environments, such as commodities trading, which often takes on the characteristics of a zero-sum game. Heck, even the brilliant Michael Maccoby named his most successful business behavioral archetype “the Gamesman[ii].”  I think it’s obvious that a substantial amount of overlap exists between the two realms.

Now, lets take another look at the Nash Equilibrium definition. “…there is no incentive for players to deviate from their initial strategy.” (emphasis mine) For those PM-types who have been brought into a medium-to-large organization to set up a Project Management Office, and (presumably) advance that organization’s PM capability, success involves way more than getting your PMP®, memorizing EIA 748, and knowing how to administer Critical Path Methodology software’s databases. You can flawlessly execute the following steps:

• Get the accountants to agree to collect costs by Work Breakdown Structure elements,
• Send the Project Controls specialists to Earned Value and Critical Path school (or hire ones with that expertise already),
• Train the PMs and Control Account/Work Package Managers in the basics of PM,
• Establish usable Scope, Cost, and Schedule baselines,
• …with Baseline Change Control Boards, staffed by willing participants,
• Arrange for monthly Project Reviews, where Gantt Charts and Cost Performance Reports are the main discussion points,

…and still fail miserably if your implementation strategy isn’t near-perfectly matched to the host organization. Why is this so? Because of the Nash Equilibrium. The players Project Team members have been playing this game working here for some time, and they will often perceive “no incentive … to deviate from their initial (non-PM-oriented) strategies.”

Also, consider the influence of our friends, the asset managers. Like us, they exert considerable effort in shaping the structure of the business model, and the Management Information Systems that make it work. Unlike us, their charter is, to a considerable extent, mandated by law. An Earned Value Management System is key to a successful PMO, but it doesn’t help at all when it comes to paying corporate taxes, and not paying taxes sends even very powerful people to jail. And I haven’t mentioned the very strict standards that go into preparing a profit-and-loss statement, or a balance sheet, or any of the other exhibits that form the basis of the asset managers’ function. The idea that the purpose of all management is to “maximize shareholder wealth” was pretty standard fare when I was attending business school. Long-term members of GTIM Nation know of my many objections to that little maxim, so I won’t rehash them here. I’m merely pointing out that, while basic PM-oriented cost performance practices and techniques are not incompatible with Generally Accepted Accounting Principles, in practice they do represent an alternative way of processing, presenting, and making decisions based on management information streams. My experience and education inform me that the introduction of project performance information systems that are not dependent on the general ledger represent something of a rival to the asset managers’ influence on the overarching business model. In other words, most of the organization has probably already adopted a series of non-PM-related management strategies, and there is no real incentive to change.

So, essentially, the advance-PM-capability game can be arrayed against us PM-types from the start, no doubt accounting for many failed attempts at doing so. Blaming such failures on such amorphous aspects such as “resistance to change” doesn’t do any good, particularly for those tasked with becoming change agents. This leaves us with an overwhelming (?) question: are we ready to win at effecting organizational change, even in those cases where the odds in the game are against us?

Well, are we?

[i] Retrieved from https://www.investopedia.com/terms/n/nash-equilibrium.asp on December 5, 2022, 18:33 MST.

[ii] Maccoby, Michael, The Gamesman, The New Corporate Leaders, Simon and Schuster, 1977.