Game Theory in Management

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Modelling Business Decisions and their Consequences

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If A Butterfly Flaps Its Wings In Brazil, Does It Crash Your Project?

What Bad Television Can Tell Us About PM

Grounds For Dismissal?

Project Management Is Like A Box Of Chocolates…

Agility And Alignment

If A Butterfly Flaps Its Wings In Brazil, Does It Crash Your Project?

The title, of course, is a derivative of Metcalf’s Law, which pertains to network theory. My interpretation is that relatively small perturbations in far-flung parts of a large network can (and do) initiate cascading events that end up having massive impacts on other parts of the network, sometimes even its central, major structures. In popular culture, Metcalf’s Law is often reduced to the rhetorical question “if a butterfly flaps its wings in Brazil, does that cause a hurricane in Texas?” As less fanciful (and observable) reduction can be seen in those instances where a sharp noise causes an avalanche, which brings me to ProjectManagement.com’s theme for October, social media and PM. If social media represents a threat to Project Management, my guess is that it’s due to the implications and manifestations of Metcalf’s Law.

Consider the elements that go into a typical risk management plan. Weather might affect construction projects, rate changes will affect subcontractor-heavy projects, and technology advances are notorious for disrupting Information Technology projects. And yet, none of these are relatively small perturbations. They’re pretty large, and seasoned PMs are expected to be on the lookout for them, and have Plans B, C, …N at the ready for when they occur. And yet, according to Sandboxmodel.com, one in six IT projects surveyed experience a 200% cost overrun.[i] If this is the case for IT projects in general, and the causal elements are recognizable prior to the establishment of the cost baseline in such a way that they could be expected to make an appearance in the risk management plan, then an awful lot of unforeseen (unforeseeable?) causal elements are afflicting IT projects, and on a consistent basis. Could it be that the issues that cause overruns and delays are sufficiently invisible until such a time that they have already initiated a cascade effect, and it’s too late for managerial intervention to stop them from damaging project performance? Nassim Taleb refers to such manifestations as “black swan” events, defined as (again, my interpretation) occurrences that (1) have a significant (or even catastrophic) impact, (2) that nobody saw coming, (3) but which invariably invite some sort of analysis that determines that such an occurrence could have been predicted, if only the right people were employing the correct methods. In the PM world, the analysts pushing Black Swan Element #3 are the risk managers. I get it. It’s human nature. But it’s also flawed due to Metcalf’s Law, and such ex post facto kibitzing has no place in modern management science.

Circling back to social media and PM, does the existence of large, highly interconnected enhanced communication sites, such as the giants of social media, provide a natural environment for the kinds of cascading events predicted by Metcalf’s Law? To ask the question is to answer it: of course they do. Such sites have literally millions of participants. If the entire population of Earth is connected to each other within six degrees of separation[ii], then surely social media has reduced that number by at least a couple, intensifying the conditions for a cascading effect.

So, we have the first condition for applicability of Metcalf’s Law in place, in that we are dealing with a large and potentially powerful network when we’re discussing social media and its broad participation. Can small perturbations have a cascading effect? Absolutely, as is amply documented here and here, among many other sites. I would like to point out that many of these “small perturbations” represented blatantly absurd rumors which, nonetheless, spread like wildfire across large populations who took them as truthful, and made manifestly unwise decisions based on that assumption.

In the case of social media’s impact on PM, what we have here, in my humble opinion, are conditions that are extremely powerful, utterly unpredictable, and fall entirely within the realm of communications management. What can be done?

My first recommendation flies in the face of conventional communications management (yeah, I know GTIM Nation is shocked), the notion that all stakeholders should be “engaged” throughout a given project’s life-cycle. I think this strategy makes projects more vulnerable to the negative consequences that can easily and unpredictably come about from cascading events in communications, consequences that have become even more powerful, likely, and unpredictable with the advent of social media platforms.  I believe that a far better approach would be to keep one’s project scope, cost, and schedule as quiet as possible. Customers on Cost Plus work, of course, need to be kept informed on an ongoing basis. For most other PMs, the marketing aspect of landing your project work has already taken place – now it’s up to the PM to deliver on something that’s already been marketed and sold. If the project represents some slick new technology being brought to market, with implications of new opportunities for analogous advances, let the organization’s Strategic Managers[iii] handle it. The highly volatile nature of intra-project communications, augmented to Cecil B. DeMille proportions by social media via Metcalf’s Law, renders the whole “engage all stakeholders” axiom dangerously misguided.

Am I being overly fussy about this? Perhaps. But there’s a reason loud noises are discouraged in known avalanche zones, and following conventional wisdom on stakeholder engagement in the presence of social media, in my view, is like handing a twelve-year-old a shiny new starter pistol as you’re driving through one.

 


[i] Retrieved from http://www.sandboxmodel.com/content/project-failure-rates-facts-and-causes on October 20, 2019, 15:18 MDT.

[ii] Wikipedia contributors. (2019, October 19). Six degrees of separation. In Wikipedia, The Free Encyclopedia. Retrieved 21:41, October 20, 2019, from https://en.wikipedia.org/w/index.php?title=Six_degrees_of_separation&oldid=922076946.

[iii] Reference my previous blogs, where I define the role of Strategic Management as dealing with issues of the organization’s market share.

Posted on: October 21, 2019 09:22 PM | Permalink | Comments (3)

What Bad Television Can Tell Us About PM

As if to definitively prove Newton Minow’s assertion from six years previous that the content of American television had become “a vast wasteland,” in 1967 ABC aired a situation comedy entitled The Flying Nun (and, no, I am not making this up). The premise of the series – which ran for 82 episodes, believe it or not – was that its protagonist, Sister Betrille (played by Sally Field), could actually fly with no other apparatus needed than her large, heavily starched cornett, which was roughly the shape of an airfoil. A passing breeze was all that was needed to send the petite nun airborne. Yes, it’s extremely silly. Nevertheless, I want to spend a few ounces of pixel ink on some of the problems involved in this premise, and then proceed to make an improbable link to some PM insights.

Checking out the opening and closing credits on YouTube for this show is both highly instructive and laugh-out-loud cringe-worthy, on a par with Leonard Nimoy singing “The Ballad of Bilbo Baggins.” Sister Betrille is depicted soaring over hills and valleys at what I would estimate over 40 miles per hour, at an altitude of several thousand feet, easy. Recall that this is supposedly done with no other apparatus than the cornett, which absolutely does not have a source of thrust. The good sister also appears to have a limited ability to change direction and altitude independent of the “passing breeze” that sent her airborne in the first place. Indeed, in the show’s opening she appears to be performing aerobatic tricks, which is obviously impossible without a source of thrust.

Then there’s the problem of how her cornett stays attached to her head. It isn’t strapped on – one can see her neck all the way around the gap between the headdress and the rest of her habit. Have you ever worn a hat so snug that your entire person could be lifted off of the ground if a force were to lift such a hat? Since it’s stated that Sister Betrille weighs less than 90 lbs., the only way the cornett doesn’t simply fly off of her head when these well-timed passing breezes happen by is if it’s squeezed around the perimeter of her cranium vault with 90 lbs. of pressure, which some internet sources calculate to be sufficient to crack her skull. And, even if her skull remained intact, in order to remove the cornett the petite nun would have to be able to essentially military press 90 lbs.

The last time I wrote about the absurdity of some movie stunts happening in real-life (Ripped Apart, Not Stirred, PMNetwork, March 2006), I received some, ummm, instructive e-mails roundly criticizing my challenges to some of the stunts depicted in James Bond films, and that’s okay. I’m fairly confident that this piece won’t receive similar comments. Indeed, if I squint hard enough, I can kind of see how this premise got its original footing (so to speak). There are a lot of videos of people flying large kites on the beach, and becoming airborne when force equal to or more than the weight of the flyer catches said kite, with comical results. So something along these lines is demonstrably possible – just not on the scale that our subject sitcom depicts. The concept is, simply, not scalable, which leads us to…

Meanwhile, Back In The Project Management World…

ProjectManagement.com’s theme for October is Social Media and PM. Last week I commented on the regulators/controllers of some sites, and their ability to deny access to people spouting themes that they find “outside the terms of service.” But that’s just one aspect of the flawed assumption that, if enhanced communications among project “stakeholders” is a good thing, then a greatly enhanced capacity for inter-network communications must be exponentially more beneficial. I disagree with that idea.

In his brilliantly insightful book Skin In The Game, Nassim Taleb points out the many instances where a relatively small change in a population assumed to operate within a given structure renders such structures utterly invalid. In short, the rules can change so dramatically and suddenly as to render any assumption of business model scalability suspect, if not absurd. In this particular realm, the techniques considered standard to most PM-types, while maintaining a high process value for teams engaged in small-to-medium projects, become useless (or even detrimental) when used for a larger scope. The opposite is also true: much of what the PM guidance-generating world believes is essential to “proper” Project Management approaches and strategies can be counted on to utterly fail when scaled down to small or medium projects.

For once I’ll (try to) avoid picking on our friends, the risk management experts. Their techniques are perfectly scalable in the sense that they are universally flawed (whoops, I guess I failed). But consider: for Firm Fixed-Price contracts, is Change Control ever even necessary? The winning bidder is on the hook for delivering the scope on-budget. If they overrun, what concern is that to the customer? Customers only need pay the value of the original cost baseline, and any negative variance at completion is on the contractor (or their bond holders). Is the customer a stakeholder? Obviously. Is the cost performance status of any given FFP contract communicable? Of course. Should it actually be communicated? I vote no, on the grounds that it’s irrelevant.  Change control, for internal changes, in some instances isn’t scalable.

Communication management suffers from a similar problem. There’s an entire industry that helps companies get past just a few negative comments on their customer review pages. Never mind that the vast majority of customer comments can be highly positive – a mere fraction can have out-of-proportion negative impacts to those organizations’ market share. The outsized impact of negative customer reviews in proportion to their positive counterparts, I believe, represents ipso facto evidence that enhanced communication techniques are not scalable. Are these customers stakeholders? Obviously. Should any or all of their negative experiences be published? Perhaps. Unfortunately, as I pointed out before, the existence of social media represents a gigantic expansion in the realm of interpersonal communications. In short, this lack of scalability in the face of a force multiplier like social media will almost certainly lead to some erroneous, or even really goofy, ideas being forwarded and adopted in the realm of Project Management.

All I’m looking for is a sense of proportion, GTIM Nation. The same sort of common-sense proportion that would have slammed the brakes on My Mother The Car, or talking to Mr. Ed, or Cop Rock, or … well, you get the (TV) picture.

Posted on: October 14, 2019 10:04 PM | Permalink | Comments (2)

Grounds For Dismissal?

There’s no doubt that the advent of social media has advanced interpersonal communications dramatically. The chief executive officers of Facebook and Twitter (for two examples) are multi-billionaires, pointing to their ability to satisfy a tsunami of demand. I’m thinking the communications experts within the PM community are probably happier, now that their oft-stated goal of “engaging all stakeholders” has been dramatically expedited. I took a quick peek at my ProjectManagement.com comrades’ articles and blogs on the social media and PM topic, and they’re largely positive about it, with a few cautionary tales mixed in. So, with all of the thought current apparently headed in one direction, leave it to me to push against it.

There’s been a lot of discussion on the web about social media moderators showing a bias in the way they allow or disallow certain content on their services. It got me to thinking: if there were biased moderators in the PM world, how would that manifest, exactly? Which ideas would they find odious, and torture their “terms of service” conditions to justify exclusion? In the examples I’ve read about on-line, certain content would be found to be unallowable for specific conditions spelled out in the terms of service, while other content from the opposite side of the political/religious/social scale would be allowed while appearing to transgress those same terms, and far more egregiously. The unavoidable truth here is that, no matter how anodyne the language of the terms of service, some level of subjectivity is in play whenever the moderators make a decision about what’s allowable, and what’s not, which leads us to…

Meanwhile, In The (Alternate Universe) Project Management World…

Sooooo, I’m imagining what the notifications that my GTIM social media postings were being disallowed for violating terms of service would look like if my various intellectual targets were the ones acting as moderators. I’m confident that GTIM Nation is familiar with my favorite subjects of good-natured witticisms, so, in this alternate universe, what would those longsuffering marks have to say, if they ran the allowable/unallowable divide? First up…

The Asset Managers

Dear Mr. Hatfield,

We’ve noticed that your recent postings on our social media platform have needlessly and disingenuously attacked the business models and, really, the very profession of accountants for what has to be the billionth time. While this point of view does not fall outside permissible limits of our terms of service per se, we have performed an analysis (our all-time favorite, based on frequency) of your text using the Return on Investment formula. Since your writings indicate a remarkably backward intellect, we will reproduce the formula for you:

ROI = (Current Value of Investment – Cost of Investment) / Cost of Investment

Our experts have provided estimates for these parameters, and we have assessed that your postings have a negative ROI. And, should you object that there is no “Cost of Investment” from our end, our experts have estimated that your unwarranted attacks are so insufferable as to represent a negative value. So there.

If you believe that this exclusion is being rendered in error, please feel free to call us at 1-800-POUND SAND.

The Risk Managers

Dear Mouth-Breather,

We genuinely thought that if we just ignored you long enough, you would go away. It would seem we gave you too much credit on this count. We are thrilled regret to inform you that your recent posting, “Why Risk Managers Tend To Be Tiresome,” has been excluded from our site for violating our terms of service. We arrived at this decision after evaluating your text using a single-tiered decision tree analysis. The Asset Managers informed us you are probably ignorant of this technique, so here is the formula:

Cntngy = Σ (Sc1$Imp * Odds1) + (ScN$Imp * OddsN) – Original Baseline $

Where Cntngy is the contingency budget, Sc1$Imp is the dollar value of alternate scenario one, Odds1 are the odds (expressed as a percentage) of scenario one actually occurring, ScIN$Imp is the dollar value of scenario N, and OddsN representing the odds of scenario N taking place. Are you baffled by all this? It’s okay, just take our word for it – your content flunked the analysis.

We would normally provide a point of contact for you to list any objections you may have for being censored from our platform, but the same experts who serve as moderators have also calculated that you won’t use it even if provided. So there.

Communications Specialists

Hey, Hemingway –

We hope it’s okay to communicate with you in English, since there’s little evidence based on a review of your recent postings that the written word is your long suit. Your latest posting is being rejected from our platform due to the fact that, when we ran the Flesch-Kincaid grade level evaluator, it returned its results in what appeared to be a crayon font. We didn’t actually think this was possible, but there it was. So there.

Of course, all of this is purely speculation. I’m sure that, should a member of my favorite targeted PM specialty groups actually become social media site moderators, they wouldn’t bother with a detailed analysis of why they were kicking me off. They would probably just stop me in mid-sen

 

Posted on: October 07, 2019 10:09 PM | Permalink | Comments (4)

Project Management Is Like A Box Of Chocolates…

It probably won’t surprise GTIM Nation that I was torn between the above-written title and “Forrest Gump: The Ultimate Agilist” for this blog. Forrest Gump, of course, is the eponymous protagonist of the Academy Award-winning movie. Forrest is an idiot, defined as someone who has an intelligence quotient below 70. Despite being this intellectually backwards, Forrest experiences a long series of adventures, joys and sorrows, many of them having a profound impact on popular culture, or even on the history of the United States (Forrest is depicted at being the person who calls in the burglary of the offices at the Watergate Complex, thereby initiating the series of events that would lead to the resignation of President Richard Nixon, for example).

Forrest lives his life by responding to the events and people around him consistent with a set of axioms, mostly given to him by his mother as he was growing up. These are passed along to the people sitting at a bus stop with him, and almost always predicated with the phrase “Mama always said…”. Forrest’s limited set of axiomatic rules for responding to almost any situation leads him to play college-level football, graduate college (!?), volunteer (!) for service in the Vietnam War, receive the Medal of Honor, come home, begin a successful shrimping business, and finally marry his life-long true love. At the end of the movie, Forrest has a happy life, raising his young son and financially independent. So, if you’re beginning to ask “what does this have to do with…”

Meanwhile, Back In The Project Management World…

“Plans are worthless, but planning is everything” is a quote largely attributed to Dwight Eisenhower[i], and I believe it carries significant weight in the PM world. Of course, the Forrest Gump character doesn’t seem to have a plan for anything, save going into the shrimping business at the behest of his best friend Bubba, and even that wasn’t Forrest’s plan. So, what we have here is a dichotomy, with zero-plans but robust canned strategies for dealing with life on the one extreme, and the approach of spending an excessive amount of time and energy planning, but not having an effective response once events unfold that were not foreseen in those plans on the other. Of the two approaches, which do you think is more likely to produce a desired result?

Of course, none of us has to manage from one extreme end of this theoretical scale or the other, so let’s employ the Pareto Principal. Which manager do you think will be more successful over the long term, the one who is 20% up-front planning, 80% robust response to the unexpected, or vice versa? GTIM Nation veterans are familiar with my other oft-cited use of the Pareto Principal, where I assert that the 80th percentile best managers with access to 20% of the information needed to obviate a given decision will be consistently out-performed by the 20th percentile worst managers with 80% of the information so needed. Crucially, the information needed to obviate the vast majority of decisions has to do with the level of Project Team performance, and changing circumstances in the execution of the projects’ scope. In the PM world, such a distinction would manifest like so.

Imagine two Project Managers, A and B, working mid-sized projects. PM A has spent considerable resources creating a detailed Work Breakdown Structure (WBS), establishing the Performance Measurement Baseline (PMB), and has a detailed, resource-loaded Critical Path schedule network down to the Work Package. A’s project also has intense interactions with the risk managers, who have established a risk management plan, a risk analysis report, and have generated the recommended contingency budget reserve based on a Monte Carlo simulation of the guessed-at raw speculation professionally projected alternate task and activity scenarios. The up-front work has been extensive. However, once the project actually launches, PM A is okay with a lackluster effort from the Control Account Managers when it comes to providing monthly status to the performance measurement systems. Most of the Control Accounts are measured using the Level-of-Effort Earned Value method, and those that aren’t often give their “status” as being 8.33% more complete than last month.

PM B doesn’t have much complexity in the PMB. She has adequately captured the scope, both as a hedge against scope creep, and as a defense against ex post facto charges of non-performance. She has also set up the WBS to an appropriate granularity, and documented the time-phased budget at its reporting level. She also has a Critical Path network, but only down to the Control Account level. There is no contribution from the risk managers. However, PM B insists on an accurate status pull at the end of each reporting cycle. All LOE activities must verify that they truly have no tangible scope output, and the CAMs’ percent complete estimates are often challenged during the mandatory Project Management Review meetings, held monthly, without fail. Her Estimates at Completion are calculated, never re-estimated, at the reporting level of the WBS, and out-of-threshold variances are directly addressed at the project reviews.

Does any member of GTIM Nation doubt which PM will be more consistently successful?

In the case that there is doubt, let me put the dichotomy another way. When presented with an unmapped box of chocolates, would you adopt a strategy of analyzing the odds that a given confection contains (the dreaded) “coconut” filling, based on the cartesian coordinates of its place in the box, and cross-reference the manufacturer’s tendencies in coconut-filled chocolate placement and/or the nominal outward appearance of treats so filled?

Or would you just poke a fingernail into the top of it?

 


[i] Retrieved from https://quoteinvestigator.com/2017/11/18/planning/ on September 30, 2019, 08:46 MDT.

Posted on: September 30, 2019 09:22 PM | Permalink | Comments (5)

Agility And Alignment

Type “teammates running into each other” into the search bar in YouTube, and a bunch of videos pop up, the first of which involves (American) football players taking down their own teammates. It’s pretty funny, but sympathy-inducing at the same time. These are professional athletes, after all, and they train at an intensity level that would probably kill me. There are so many moving parts in a game, and even the best-coached players are going to have episodes where their comrades are in the wrong place at the wrong time, leading to (often) game-changing collisions. It got me to thinking what an analogous situation would be in …

Meanwhile, Back in the Project Management World…

On more than a few occasions I’ve discussed the axiom, Quality, Availability, Affordability – pick any two, as it pertains to PM. Circling back to ProjectManagement.com’s theme for September, Organizational Agility, I do not think that this means that Availability need always be one of the selected attributes of an organization in order to achieve this “agility.” Rather, I believe that a simple strategic alignment is in order.

When Project Management was entering into its boisterous, early-acceptance phase, the term “Matrix Management” entered into the lexicon. Matrix Management is predicated on another theme I’ve often written about, that Asset Management and Project Management are two different things, with differing objectives, techniques, and supporting information systems. Matrix Management’s early theorists (like the brilliant David Cleland) pointed out that, in order for an organization to position itself for project success, there had to be an agreement among the owners of the assets and the PMs so as to avoid projects crashing due to unavailability of the resources needed to complete the scope in the time promised. Companies often (almost exclusively) organized around their assets and those assets’ capabilities (organization charts, also known as the Organizational Breakdown Structures, were in existence wayyy before anybody came up with the first Work Breakdown Structure), with the owners of the scope – PMs – viewed as almost outsiders, seeking their cooperation. In reality, of course, the owners of the scope were also the owners of the budget. However, if the organization wasn’t managing its portfolio very well, the owners of the assets were in for a tough time. One week their quality engineers would be working overtime, while the designers had nothing to do (and therefore no charge code to pay them), with the next week bringing in the exact opposite scenario. It wasn’t at all unusual for one of the companies I was working for in the 1980s to wait until a proposal had actually won before they would make the preliminary attempts at collecting the resources needed to execute the scope – and this was before the age of on-line recruiting.

So, we’ve had this disconnect/rivalry between the Asset Managers and PMs for some time. Organizations where the PMs made the final determination of the resources working on specific tasks were known as “strong matrix” companies, while those where that decision resided with the Asset Managers were known as “weak matrix.” Strong matrix organizations were better positioned for project success, but their employees were often stressed out, not knowing if their next paycheck would be their last, and seeking more secure positions with other companies. Strong Matrix organizations were natural fits for a strategy of pursuing Quality and Affordability, making them highly attractive to potential customers, but at the expense of Availability. Like I said, sometimes they didn’t even bother to begin to assemble the needed resources until after the contract had been announced in their favor.

To Become Agile, Align Your Strategic Priorities

Back when I was carrying on about how the PMO needed to decide which two of the three characteristics it was going to pursue, I was rather specific in deriding those “managers” who refused to acknowledge the relationship among the three, and insisted on attaining Quality, Availability, and Affordability simultaneously. This is the first roadblock to organization-to-project alignment, when the PMO either doesn’t have, or hasn’t clearly articulated, their strategic approach to selecting their priorities.

In those instances where the manager performs in a Strong Matrix organization, a robust, even formal communication relationship with the owners of the assets is the only way to achieve an “agile” position. Asking the line managers to suddenly and dramatically increase or decrease a given capability is always going to be a tall order – talent takes time to attract, cultivate, or re-assign, almost always more time than the interval between a contract announcement and the commencement of the period of performance. Conversely, in Weak Matrix organizations, the more robust communication avenue must be from the Asset Managers to the Portfolio Managers, who decide which types of scope the organization will pursue. Knowing what types of projects are likely to be proposed means foreknowledge of what kind of scope will be walking in the front door, making obtaining/retaining the necessary skills much easier than it would be under a Strong Matrix environment.

I kind of get a kick out of imagining an NFL locker room, where the players are perusing The Project Management Journal, and calling out to their comrades “Hey, check out where this weak matrix organization is complaining about a lack of resources available for activities on their critical path!”

Posted on: September 23, 2019 10:04 PM | Permalink | Comments (4)
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