Can Game Theory deliver any insights on the subject of Disruptive Influences (ProjectManagement.com’s theme for October)? Last week I blogged about the difficulties involved when a formulaic, or canned strategy, is employed in a project situation where a novel approach is appropriate. If we flesh out the payoff grid (and Game Theory In Management Nation knows how I love payoff grids), it would look something like this:
In those instances where a canned strategy is both called for and is employed (scenario #1), which, if we employ the Pareto Principal, is probably 80% of the time, then things will probably work out, save for the garden variety project bizarre happenstance(s). Similarly, if a new or novel strategy is called for and employed (scenario #4), usually because of new technology or unusual circumstances signaling a novel approach is needed, then there’s a workable match between the work and the management approach. I discussed scenario #2 last week, which leaves the Game Theory in Management Nation with scenario #3. What happens when the traditional PM organization tackles a project that really isn’t analogous to any of the rest of its portfolio? Is it not human nature to invoke the familiar, and use the same strategies that brought success historically?
Indeed it is, and therein lies our problem. To be blunt, in those instances where a novel technical approach is called for and attempted, but not expected nor accepted by the sponsoring macro organization, several business model pathologies can be expected to manifest, including:
So, how does the novel approach-embracing PM counter these tactics? While there’s no sure-fire counter to the above list, it’s been my experience and research that the following may be effective counter-measures:
From a management science purist’s point of view, the advancement of novel business models on just their merits shouldn’t have to involve all of this strategizing and counter-measures. But, human nature being what it is, the tactics and counter-measures discussed above can be expected to be employed by the opposition and the winning PM.
And, to any real Game Theorist, winning is what it’s all about.
If I were to ask you which craft you would prefer in a dogfight, a Grumman F-14D Tomcat, or a hot air balloon, which would you take?
Of course, the obvious selection would be the Tomcat, the U.S. Navy’s go-to all-weather air superiority fighter from 1974 to 2006. It had a top speed of Mach 2.34, and could carry a deadly array of bombs, missiles, and aerial cannon rounds. Hot air balloons, conversely, are not known for carrying any ordnance whatsoever, and have a top speed of 245 miles per hour (and that was for a balloon named the Pacific Flyer, specifically configured to travel in oceanic jet streams). The balloons at the Albuquerque International Balloon Fiesta (held each October) will not even launch if the winds are above 15 mph. The choice is a no-brainer, right?
Well, just a moment. There are a couple of disruptive influences that might be taken into consideration.
The Tomcat weighs 61,000 pounds fully loaded.[i] In order for it to get airborne off of a carrier, it has to be catapulted to 140 knots, which requires an enormous amount of energy. Even if it’s on a runway, it’s going to need at least a mile to take off, and that’s with afterburners. A hot air balloon only requires the space needed to unfold the balloon’s envelope, fan ambient air into it, and begin to heat it with its propane burners. All of this can be done in the space used for a small business’ parking lot. So, if the start conditions include that each vehicle is in an uneven field (where hot air balloons typically take off and land), then the odds have been altered, no? The Tomcat could not even get airborne, much less dogfight, though, I suppose, it could use its aerial cannon, should the hot air balloon be positioned directly in front of it. Its missiles would be useless, since they are actually dropped off of the Tomcat’s hard points, rather than shoot directly ahead, as from a gun.
And how would our airborne hot air balloon disable a Tomcat, exactly? Well, I suppose they could carry an anvil aloft, and simply drop it on the grounded interceptor, Coyote and Roadrunner – style. In most instances it would probably not inflict enough damage to make the Grumman no longer airworthy, but our balloonists could get lucky. After all, hot air balloons delivered the coup de gras against the belligerent alien invaders in the television series V.
Meanwhile, Back In The Project Management World…
When we’re talking about disruptive influences (ProjectManagement.com’s theme for October), we have to take into account the question (as I posited last week), disruptive to whom? Most organizations carry with them, through the communication mechanisms of corporate culture, the canned strategies that they expect their in-the-combat-zone PMs to execute, given the presented circumstances. These canned strategies are perceived to be rather robust in most, if not all, analogous Project Management scenarios, having been tried and found successful in previous projects. But what if the project at hand isn’t really all that analogous to the one where the canned strategy worked? What happens when the new project is sufficiently different that the canned strategy is almost guaranteed to fail?
In these instances it’s the experience of the executives that, ironically, becomes the disruptive influence. By insisting that the organizations’ PMs make their decisions in a highly formulaic manner, and punishing dramatic departures from this norm, they not only set the proverbial table for eventual project failure, they hamstring the very PMs who are in a position to not only save the project at-hand, but to introduce a new, novel approach to resolving this project’s destabilizing issues. These are the very innovations that allow the macro organization to adapt and grow, and the reflexive crushing of them for being non-compliant with the organization’s norms is an automatic, if not immediate, death knell.
But let’s assume that you just know the “right” technical approach to your organization’s projects’ difficulties, and have mandated it to your team. I have one quick question: do you have enough runway space to take off in your F-14? ‘Cuz, if you don’t, you might want to be wary of dogfighting hot air balloons.
[i] Wikipedia contributors. (2018, September 19). Grumman F-14 Tomcat. In Wikipedia, The Free Encyclopedia. Retrieved 02:28, October 7, 2018, from https://en.wikipedia.org/w/index.php?title=Grumman_F-14_Tomcat&oldid=860238298
You can always tell when management writers are attempting to address a topic in a new or largely speculative arena, or for which there isn’t very much hard evidence. Their language swerves towards the inchoate, incorporating terms that sound sophisticated but are better described as “fuzzy.” Such terms include:
Okay, okay, I threw in that last one just to jab our friends, the risk managers, but the others are almost always dead giveaways that the person writing the piece is conducting a largely exploratory effort. Management writers conducting exploratory efforts is okay, don’t misunderstand. It’s just, well, frustrating. Consider this example I swerved across from the world wide web[i]:
Whether it’s how we spend, take care of ourselves, learn or interact with each other, digital disruption has changed the script. While this causes dislocation, it also creates opportunity.[ii]
I must have read that paragraph over a dozen times, and I’m still not sure I know exactly what it means. Strictly speaking, digits “disrupt” nothing. Who’s writing this “script”? What (or whom) has been “dislocated”? Perhaps I’m being uncharitable, and simply need to leverage my dynamic understanding of the innovative confluence here.
“Okay, wise guy” I can hear Game Theory In Management Nation saying, “If it’s really not all that complicated, and simply awaits a writer who knows how to convey more precise meaning, why don’t you do it?” Okay, I will.
Recall my oft-cited overarching management structure, the one that asserts that there are three different types of management:
Any discussion about Disruptive Influences, or technologies, is more effective if it centers on Strategic Management. Why? Well, the Asset Managers have been sucking all of the accepted management practices oxygen out of the board rooms for some time, so, at this point, any easy way of reducing costs without (or sometimes, even though it means) disrupting project quality or delivery has been explored ad nauseum. Similarly, the number of papers, presentations, and paper presentations along the lines of how everybody really needs to be doing Earned Value and Critical Path would, if printed out in twelve-point font and delivered, sink a Nimitz-class aircraft carrier.
But Strategic Management? That’s a different animal. As I discuss at length in my second book, advances in technology are game-changers in any industry. Recall another one of my axioms: quality, affordability, availability – pick any two. This rule governs many a strategic approach business model. Should an advance in technology provide a way of, say, making a given product or service more affordable at existing market conditions of quality and availability, the impact is always significant – one might even say disruptive.
The organizations that are adept at monetizing advances in technology will always be more successful than those seeking to wring the last efficient penny out of older ways of doing business. This, of course, is highly “disruptive” to those organizations clinging to the more conventional ways of doing things, but to the rest of us it’s anything but. Indeed, it’s less troublesome or unsettling (two of the thesaurus’ synonyms) than it is soothing (antonym) when a non-competing vendor monetizes a technology in such a way as to deliver a superior product for a better price.
Which returns us to our word-salad imbued management science analysis. Whenever you see or hear something about “disruptive influences,” ask yourself this: who, exactly, would find this influence disruptive? For me, it’s all those digital disruptions changing the script.
[i] QUT Dynamic Capabilities of Innovation and Change website (which has two of our “reveal” words in the very title of the web page, no less):
[ii] Retrieved from https://research.qut.edu.au/dynamic-capabilities-of-innovation-and-change/2017/08/29/disruptive-influences-what-to-do-with-them-2017/ on September 29, 2018, 20:18 MDT.
The Girl In My Life was an American television show that ran in the 1973-1974 season. It featured a person whose life had been bettered by a specific woman, who was in attendance in the audience and would join this person on the stage and receive a gift package. I was pretty young when this show aired on ABC, but the one episode I saw made quite an impression on me. It featured a fellow who came out on the stage to announce – I swear I’m not making this up – his status as a superhero, and he was dressed for the part. He appeared to be wearing tights and a cape, with some odd symbol on the middle of the costume’s chest area. The thing was, though, that he had essentially the same body build as (American actor) Jack Black – pudgy, and not very muscular at all. But he was all-in to the part: he announced his superhero name, enthusiastically asserting that his mission was to fight crime and protect the innocent, complete with little hops and uppercuts thrown at imaginary foes. In my estimation, had he actually encountered a hardened street criminal his life expectancy could probably be measured in nanoseconds.
Then came the really funny part: he announced the name of The Girl In His Life, confidently claiming that he could have never attained his superhero status if not for the support he received from her. The announcer calls this poor woman up on stage to ask her a few questions prior to actually presenting her with the modest gift package. I have to admit she held up quite well, considering the only genuine superpower being exhibited was her ability to not die of embarrassment.
Meanwhile, Back In The Project Management World…
In the ongoing discussion of hybrid management systems, how to evaluate them to know which are useful and which are probably bogus, I’m struck by how many assumptions are blithely accepted as true without any real evaluation against basic standards of management science. This is particularly ominous because of the prevalence of management systems (or information streams) that grossly over-sell their efficacy. Just as one does not become a superhero by putting on spandex, a management information system does not become valid by making a claim to “hybrid” status, or pushing out a piece of information with a certain name or title.
Specifically, our friends the accountants are really good at extracting from the general ledger the information asset managers need to perform their duties. I’m not arguing to the contrary. However, they fail utterly when they make forays into Project Management space, which they tend to do on a regular basis. Here’s a couple of incontrovertible facts: comparing budgets to actual costs does not generate a cost variance, and extrapolating spend rates and projecting them forward does not create an accurate or reliable Estimate At Completion (EAC). Adding insult to injury is the notion that the previous two assertions become false if only the “analysis” is performed at greater and greater levels of detail, or granularity. I’m sorry, but that’s just dopey. And yet, the practice of ascertaining cost performance based on this very comparison is so widespread that I’m fairly confident that it has attained near-universal acceptance.
Then we have another one of my favorite targets, the risk managers. Here are the two incontrovertible facts I would love for them to recognize: Gaussian curves can’t be used to predict the future (being willing to place a bet on the outcome of future events, which is what insurance providers do, is not the same as reliably predicting what’s going to happen to a given project), and stochastic ranges based on ordinal scales represent utterly useless pieces of (dis) information. Some management writers (with whom I am entirely in agreement) have gone further, arguing that such analysis is worse than useless, in that it is often genuinely misleading.[i] In the risk managers’ and accountants’ cases, they attempt to generate what are admittedly extremely valuable information streams from systems that simply can’t support them. What they end up sending up the reporting chain is the equivalent of corpulent delusional non-combatants inserting themselves into environments where they not only do not belong, but their presence is comically inappropriate.
Ah, but they have those wonderful
Even if they do receive a modest prize package from the risk managers and accountants at the end.
[i]Hubbard, Douglas W., The Failure of Risk Management, Wiley and Sons,2009.
There have been several iterations of programs in the Star Trek universe, as well as multiple movies based on two of them. They span centuries and vastly different galaxy locales, but the one thing they all have in common is: someone is the commander of the starship at the center of the epic, and, in three of those instances, the starship’s name was Enterprise.
Seein’ as how I’m a baby boomer, my personal preference is William Shatner as James Tiberius Kirk, from the original series (sorry, The Original Series, or TOS). He was insightful, courageous, and a full reading of his commendations received is so long that it would make a court martial prohibitively protracted. Kirk also had the advantage of having been created by writers who understood basic plot structure. As all us baby boomers know, having been taught basic plot structure by eighth grade, the most compelling stories and scripts have an introduction, rising action, a climax (where the protagonists overcome the central problem or antagonists through a combination of endurance, talent, and some luck), and then on to falling action and the denouement.
Jean-Luc Picard, played by the brilliant actor Patrick Stewart, was captain of the Enterprise in the series Star Trek: The Next Generation (TNG). Unfortunately for Jean-Luc, his writers would consistently (and infuriatingly) engage in the extraordinarily cheesy device of dues-ex-machina. Dues ex machina dates from ancient Greek theater, where a script would develop along classical lines but, at the climax, some Greek god would be literally craned onto the stage, and use his or her supernatural powers to resolve the plot’s central conflict. Even the ancient Greeks knew this was a singularly unsatisfying way to resolve a play, but Star Trek TNG’s writers were seemingly bereft of this millennia-old insight. Almost every week, TNG fans were presented with a central problem, rising action, and, at the climax, the “god” of superior understanding would be craned onto the sound stage. Oh, it was just all a big misunderstanding! We Federation officers failed to appreciate where you seemingly hostile aliens were coming from! We’re sorry!
Finally, the prequel series, Enterprise, featured captain Jonathon Archer, played by Scott Bakula. Sadly for Captain Archer, Enterprise also suffered from dismal writing. I would sum it up as an ongoing request for permission from all non-humans to be allowed to play in the galactic sandbox, and being okay with it when all the other players were mean to us, because, well, reasons.
Meanwhile, Back In The Project Management World…
Some years ago there was a big push from a few of the major Project Management-related software producers to introduce “enterprise” programs, or systems that could handle all of the information needs for a given organization’s executive management. It was, perhaps, one of the earliest attempts at developing a hybrid management system. Of course, if an organization could actually produce such a comprehensive and insightful information stream, it could expect profit margins in the same ball park as the current crop of tech giants. These initiatives usually crashed and burned, and I’m pretty sure I know the reason why – it’s because their writers didn’t follow the right plot structure.
As an example, I’m familiar with one producer of a Project Management-related software that launched an initiative to provide such an across-the-organization system by combining their already-established PM system with utilities that would normally belong to the general ledger. I actually had an opportunity to interact with this company’s senior management around this time, and attempted to tell them why I though this initiative was vulnerable, based on my opinion that all organizations had to have a working general ledger in order to pay taxes – in other words, to get into and stay in business in the first place. Since poaching various aspects of the general ledger in a bid to claim enterprise-wide utility would endanger the workings of the general ledger itself, I predicted that few would use the upgrade. Although I was ultimately proved right, at the time the execs didn’t want to hear it, and breezily dismissed me and my ideas.
The part of the structure they got wrong is familiar to my regular readers: management science deals with three very different arenas. Asset Management is about maximizing shareholder wealth, and its primary information base is the general ledger. Project Management is centered on delivering projects on-time, on-budget, and its primary information streams come from Critical Path Methodology (CPM) and Earned Value Methodology (EVM) systems. The often mis-understood Strategic Management is NOT simply a high-level conflation of the other two. Instead, its target is to maximize market share, either through advertising, improving the product or service, or by undermining the competition. Therefore, any software platform that can legitimately lay claim to “enterprise” management must be able to distill the timely, accurate, and relevant information streams from each area, and produce that information in a way that allows the organization’s top decision makers to understand the trade-offs among the three areas inherent in the high-level decisions they make. I discuss more precisely how to do exactly that in my second book, but for the sake of brevity in this blog post I’ll leave it with the notion that simply peeling off aspects of the systems from one area and attempting to tractor-beam it into another is doomed to fail. In other words, craning in a piece of data from another management arena and expecting that to resolve your organization’s central conflict is a truly cheesy approach to management.
I’ll leave my readers with one last observation on the value of valid management information system structures as analogous to science fiction naval architecture: the original series’ (sorry, The Original Series’) Enterprise has been expertly restored and is conspicuously placed in the Smithsonian Air & Space Museum. The other Enterprises, well, aren’t.