Project Management

Game Theory in Management

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Modelling Business Decisions and their Consequences

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Communicating With The Future

Maybe The PMP® Logo Should Be A Longship

PM Really Is Different From All Other Management Types, And I Can Prove It

Our Own Version Of “Back To The Future”

The Two Biggest Anchors Slowing The Movement Towards A Project Economy

Communicating With The Future

Typically when I write about communication (ProjectManagement.com’s theme for August) I tend to get on my soap box about the dopey idea that it should be considered beneficial for the Project Team to communicate anything and everything under the sun that might be considered useful to the so-called “stakeholders.” I rather enjoy pointing out the obvious fact that among these stakeholders can be found those who not only have zero interest in your Project Team achieving the target scope, but can be counted on to actively oppose your project coming in successfully. But for this blog I’ll give that theme a rest, and instead focus on an area where Communications Management experts can actually increase the odds of bringing in your project on-time, on-budget, and that’s dealing with the ever-increasing issue of communicating with members of the Millennial generation.

The generation born between 1981 and 1996 has been nicknamed “Millennials,” and, fairly or not, are assumed to share a certain set of characteristics inherent in coming of age around the turn of the century/millennia. Some of these characteristics are considered noticeably different from previous generations (Gen X, Baby Boomers), and include:

  • A reluctance to highlight manual labor-intensive jobs in their work history,
  • Multiple awards or other types of recognition for scholastic achievement,
  • An enhanced sense of self-importance leading to the belief that they, even as relative newcomers, have the answers to some of the most intransigent issues facing the organization,
  • An aversion to working a standard eight-hour day, five days per week, in a separate office building,

…but perhaps most importantly, the introduction of a particular vernacular when it comes to communicating with each other, and, increasingly, with the rest of the culture. Now, I’m well aware that ProjectManagement.com has an international readership, and that many who see this blog will be blissfully unafflicted by the communication phenomena that I’m evaluating. But for those who are seeing the entirely natural uptick in the number of people ages 24 – 39 being added to their Project Teams, this blog could prove highly useful indeed.

Rather than supply some sort of glossary, I think I’ll use a more PM-world-specific example. Variance Analysis Reports are a regular part of performing project work, particularly if the client happens to be a United States Government agency or branch of the Armed Services. What follows is an example of a transmittal e-mail containing a VAR synopsis, with its Millennial-generated equivalent following.

May 4, 2020

Good morning, Colonel Smith.

Attached is the Cost Performance Report (Format 1) and Variance Analysis Report for the (Project Name), covering the reporting period of April 2020. This report contains a correction of the cumulative figures from the previous CPR, as recommended by Major Jones during last month’s Project Status Review (PSR) meeting.

The project has two (2) active Control Accounts. The first (CA 2.1.3) is showing an out-of-threshold negative Cost Variance in the current period; however, the cumulative Cost Variance remains positive. Such cross-zero variances are to be expected as the overall positive performance more closely aligns with the original baseline.

The second active CA (2.1.6) has the opposite effect. Its current period Cost Variance is out-of-threshold positive, indicating the progress the project has been making in resolving the issues driving the cumulative negative CV. The overall project is within the variance threshold for both cost and schedule.

Please feel free to contact me with any questions or concerns, and we look forward to seeing you at the next PSR.

Regards,

And now, if my sources[i] are reliable, the Millennial version:

June 15, 2020

Sup, dawg.

Yeah, we’re a month and a half late with the cost/schedule stuff, but spare us any adulting. Besides, we totes slayed the report you asked for on our project’s 411. We fixed the issue brought up by Major Ratchet, so now we’re completely on fleek.

The two happenings have some sus going down. The one – humble brag – has been like totally yaaas, while the other is like the struggle is real, but it’ll be lit before you know it. The current period and cumulative variances like totes cancel, because duh, but we can discuss at the next blowout.

Tootles,

As for whether or not such trends in communication take hold in the PM world on a more widespread (or even global) basis, I don’t care to speculate. Nor do I wish to offer an opinion on whether or not such communication represents the greatest threat to the English language since the introduction of lower-case acronyms of common text messaging terms (e.g., “lol” or “rotfl”). But I will say…

Ooops! Look at that. I’m out of pixel ink for this week, so I totally need to bounce.

 


[i] Bestlifeonline (retrieved from https://bestlifeonline.com/things-millennials-say/ on August 2, 2020, 17:00 MDT).

Posted on: August 03, 2020 10:36 PM | Permalink | Comments (0)

Maybe The PMP® Logo Should Be A Longship

The construction of the Antonine Wall, begun in 142 A.D., marked the farthest northward extent of the Roman Empire into Britannia. From around 165[i] on, the Roman military’s ability to secure those territories was uneven, at best, and by the mid-6th century Rome had no controlling interest in England at all.  In the aftermath, Jutes, Saxons, and Vikings would raid, or invade, or settle, or …

It all boils down to arriving, and either leaving with all the stuff they could carry, or not leaving at all. But even this overly-simplified version of the span between the Romans leaving and the Normans arriving is fuzzy, since the aforementioned Jutes, Saxons, and Vikings were all peoples from Northern Europe and Scandinavia, each of whom had spent considerable time raiding, invading, and settling in each other’s “territory,” as much as such areas could be defined by the present-day concept of borders. Indeed, immediately prior to the Battle of Hastings in 1066, English king Harold Godwinson had just defeated a Viking army at the Battle of Stamford Bridge, leading an army of Anglo-Saxons against their distant cousins.

Meanwhile, Back In The Project Management World…

As GTIM Nation well knows, I have oft complained of the prevalence of the Asset Managers’ business model, especially when it conflicts with Project Management's version. But there’s simply no denying that that approach to business was in place from the dawn of the Industrial Revolution up to the present day, albeit in an ever-lessening capacity. The reliance on this model is never going away, since it is almost universally the basis for governments levying taxes. Sure, there are other ways for governments to raise revenue, but the major portion has been and almost assuredly always will be the information gleaned from companies’ general ledgers. So, as more and more organizations replace their business models with the demonstrably successful and aggressively effective PM versions, leading the industrialized world to move towards a Project Economy (ProjectManagement.com’s theme for July), those organizations with a overarching management schema more closely aligned with the Asset Managers can be expected to continue to lose business opportunity territory to their more PM-centric competitors. As this effect becomes more widespread, what other vestiges of the traditional, Asset Management-predicated business models can we expect to see slip by the wayside?

When discussing a shift from a focus on Asset Management towards Project Management may sound anodyne in the abstract, one concrete example is the movement away from defined-benefit pensions and to defined contribution plans. According to Investopedia,

Up until the 1980s, defined-benefit pensions were the most popular retirement plan offered by employers. Today, only 17% of private-sector workers have access to one, according to the Bureau of Labor Statistics’ 2018 National Compensation Survey.[ii]

Actually, this trend makes sense in an increasingly projectized macro economy. As labor and expertise become more aligned, however subtly, with a commodity-like supply and demand curve, it makes less sense for organizations pursuing project work (which is, by definition, a series of unique undertakings) to sign up for long-term asset care, which is what defined benefit pension plans are at their core. Another sign that the projectized economy warriors are knocking at the fortified gates of the business college faculty redoubts can be found in none other than the Harvard Business Review. This is from an HBR article from five years ago:

A better way to frame the debate? We should be talking about “good work” not about “good jobs.” Replacing the idea of “good jobs” with the idea of “good work” doesn’t diminish the value and importance of regular full-time employment, but it places it in a context that acknowledges emerging work options — and it holds those new options to a higher standard, rather than simply dismissing them in favor of regular full-time employment.[iii]

Since “work” is synonymous with “scope,” and “job” is equal to “function,” I’m interpreting this passage by Mr. Boudreau as a full-throated endorsement of the need to more completely recognize a change that has already taken place, a move towards a Project Economy. Any large-scale shift in the prevailing business model is going to be difficult, and more so to those still enmired in the non-PM approaches to management.

To summarize, while the Project Management incursion towards a more dominant role in executive-level business decisions won’t, of course, come close to representing the type of violent upheaval documented in the Anglo-Saxon Chronicles referring to Viking raids, it will signify a kind of slow-motion large-scale paradigm shift. And, for you Chief Financial Officers, if the head of your organization’s PMO has everybody else at the board room table talking about Work Breakdown Structures instead of the profit and loss statement, you may be witnessing the modern-day business equivalent of seeing a longship sail up the river past your village.

 


[i] Retrieved from https://www.antoninewall.org/ on July 27, 2020, 18:44 MDT.

[ii] Retrieved from https://www.investopedia.com/articles/retirement/06/demiseofdbplan.asp on July 26, 2020, 18:27 MDT.

[iii] Boudreau, John, ”We Need To Move Beyond The Employee vs. Contractor Debate,” Harvard Business Review, July 8, 2015, retrieved from https://hbr.org/2015/07/we-need-to-move-beyond-the-employee-vs-contractor-debate on July 26, 2020, 18:41 MDT.

Posted on: July 27, 2020 10:15 PM | Permalink | Comments (3)

PM Really Is Different From All Other Management Types, And I Can Prove It

GTIM Nation is familiar with my go-to delineation of the three management types, and how they use different tools, methods, and processes, because, well, they’re really different. For newcomers to this blog, these types are:

  • Asset Management, whose goal is the cliched “maximize shareholder wealth,” Their main source of information in pursuing this goal is the general ledger, which has led to the rather strange business model pathology of believing that any piece of information having to do with costs must be derived from the GL.
  • Project Management’s goal is to achieve the customers’ terms of scope, cost, and schedule. The PMs’ primary source of management information is derived from Critical Path or Earned Value Methodologies (CPM/EVM) in the form of Gantt Charts or Cost Performance Reports (CPRs).
  • Strategic Management is often confused with a hierarchical function, such as that typically performed by personnel rather high up on the org chart. This is inaccurate. Strategic Managers seek to maximize the organization’s market share, either through such benign actions as investing in an advertising campaign, or via more belligerent tactics, such as hostile takeovers.

Rather than spend pixel-ink re-defining these categories, I thought I’d introduce a table that more clearly supports that these three are different by type, and not degree.  Consider the following delineation of the three types’ goals in various industries.

 

Management Type/

Industry Goals

Asset

Project

Strategic

Law Firm

Maximize billable hours

Win the most cases possible

Handle the largest percentage of available cases in the vicinity

Football Team (NFL)

Get the furthest below the salary cap/ fill the stadium with fans

Win the most games possible

Own the largest percentage of fans, television ratings, and licensed apparel

Hospital

Recover the maximum amount of expenses, keep revenue ahead of costs

Cure or successfully treat the maximum number of patients

Attract a higher percent of (paying) patients than the other medical providers in the area

Software Company

Maximize profits, minimize costs (kind of general, but it’s also applicable to the other industries as well

Create software that will be used/enjoyed by the targeted customer base, and get it on the market soonest.

Dominate the market to the point that the organization is the go-to solution provider

 

This table makes clear a few takeaways, including:

  • The Asset Managers’ focus is almost exclusively inside the organization. If making a customer happy or acquiring greater market share is not capture-able in the notorious Return on Investment analysis (and, for the record, these are not), then it simply does not enter into their realm, and, therefore, will not have a place in the Asset Managers’ array of recommended strategies.
  • The Project Managers’ central efforts are always customer-oriented. To engage in a bit of hyperbole, they couldn’t care less about the decision to rent or buy the copier, unless it impacts their ability to meet customer expectations.
  • Strategic Managers may not realize it, but they are more heavily dependent on the PMs than they are the Asset Managers. Making customers happy on a consistent basis easily segues into more market share, based on (if nothing else) the old axiom that it’s five times more difficult to attract a new customer than it is to retain an existing one.[i]

Which brings us to the topic of talent management, ProjectManagement.com’s theme for July. Based on all this bloviating analysis, the cues for the most appropriate approach to attracting talent become:

  • If you are consistently achieving your clients/customers’ goals, and enjoy a high rating from them (from whatever feedback mechanism is available), and are moving up in market share, but are still losing money, then (mark this moment, GTIM Nation, for it will never happen again), you need to attract more Asset Management talent.
  • If you are making a good profit margin, and your customers are consistently seeing their needs met (or even exceeded), but there are organizations in your industry who still dominate, then your talent needs are in the Strategic Management world.

However, if your organization is hurting for lack of clients/customers, then there’s really only one type of manager who can set things aright. (Just BTW, I’ve occasionally wondered if I could write a blog where my signature transition phrase would be appropriate as the very last sentence. Today’s that day.)

Meanwhile, Back In the Project Management World…

 


[i] Retrieved from https://www.invespcro.com/blog/customer-acquisition-retention/ on July 18, 2020, 19:25 MDT.

Posted on: July 20, 2020 10:52 PM | Permalink | Comments (2)

Our Own Version Of “Back To The Future”

As we note the movement towards a project-based economy (ProjectManagement.com’s theme for July), I can’t help but recognize much of the scenery coming through the windows of our 1983 DeLorean. Is it just a fit of déjà vu, or has some serious scholarship already gone into such a trend, and would therefore be available to PMs now that the trend is accelerating?

Of course, it’s the latter.

David Cleland was the first writer I was aware of that tackled the difficult subject of organizational and macroeconomic changes inherent in shifting the business model towards producing goods and services in a way that satisfied the customers’ parameters of scope, cost and schedule – the very heart of Project Management. Indeed, Cleland has been called “the father of Project Management,” being, as he was, one of PMI®’s founding members. PMI® actually has an award named after him, the David I. Cleland Project Management Literature Award. I referenced him extensively in my own Master’s Degree thesis, based on his seminal work in (what was then called) Matrix Management. Dr. Cleland pointed out something we PM-types tend to take for granted now, but was actually rather novel in the 1980s, that organizations tend to focus on either their project portfolios at the expense of their resources (including personnel), or vice-versa, with the standard being to focus on the resources. This duality was called Matrix Management, owing to the recognition that PMs would pursue their customers’ objectives, whereas resource (or “line”) managers would focus on keeping their people paid, trained, and capable, and that these two goals were not entirely compatible. The former organizations were referred to as having a “strong” Matrix, with the latter categorized as a “weak” matrix.

So, what changes did occur in organizations that qualified as Project Management’s early adapters? One of Hatfield’s Incontrovertible Rules Of Management (I’ve lost track of the actual number) is a derivative of the Pareto Principal, and it goes like this:

The 80% best managers who have access to 20% of the information needed to obviate a given decision will be consistently out-performed by the 20% worst managers who have access to 80% of the information so needed.

This being the case, early PM theory adapters, by generating valid Work Breakdown Structures (WBSs), and using them to create Earned Value and Critical Path Management Systems would become the beneficiaries of critical information streams, vastly increasing the odds of their bringing in their projects on-time, on-budget. As “strong matrix” organizations began to out-perform their more traditionally-structured competitors, they could point to an ever-lengthening list of happy customers and successful outcomes, always helpful at bid evaluation time. Once the strong matrixed organizations won more project work, they had to get their resources from somewhere – usually, the most talented members of the losing weak-matrixed organizations.

There was, however, a dark side to this cycle (cue the sound of challenging bellows from Biff Tannen in the background), and it was this: a key component to being cost-competitive was to minimize overhead rates, meaning that an almost maniacal emphasis would be placed on employees being able to charge their time directly to a project. At one extremely strong-matrixed company where I worked, those workers who were 100% direct billable would command significantly higher salaries than those belonging to indirect-funded groups, while, paradoxically, the latter category were expected to put in far more than 40 hours per week, without charging for it. This kind of widespread but never articulated hierarchy brought with it some rather bizarre business model pathologies, such as the poor engineer who nevertheless had a knack for writing winning proposals being considered far more valuable to this organization then the more technically advanced engineer who failed to attract more work.

The company’s org chart was pretty useless. Very little or no effort would be made to smoothly transition personnel away from ramping-down projects, or any other employment-confirming action. If the new PM knew of available resources needed, he would hire them away directly, saving their targets from the oh-so-casual receipt of a pink slip. The only training that occurred was either offered in-house (unpaid overtime for both instructors and students), or else paid for directly by the external customer. Their view that the project portfolio was all-important came with a very dark corollary: despite the “our employees are our greatest asset” proclamations, the project teams were golden, while the line organizations were held in virtual contempt.

Granted, this strong-matrix organization was, in all probability, a badly-managed anomaly. They were, however, one of the top ten employers in my State at the time, so they were doing the PM-stuff effectively, if ruthlessly. I’m not saying that these trends will automatically afflict the management world as we move towards a project economy, but I do think it would be a good idea to keep an eye out for them, lest we find ourselves returning to a future where whole landscapes have been altered for the worse, and our DeLorean in critical need of repair.

Posted on: July 13, 2020 10:20 PM | Permalink | Comments (1)

The Two Biggest Anchors Slowing The Movement Towards A Project Economy

The discussions swirling around the topic of the macroeconomic trend towards a “project economy” tend to skirt past a question: if we’re moving towards a “project economy,” where are we now? Where have we been all this time? GTIM Nation regulars are aware of my high-level distinction between the three types of management: Asset, Project, and Strategic Management. For newbies, my working definitions are:

  • Asset Management concentrates internally on the organization’s assets, and seeks to “maximize shareholder wealth.” Its main source of usable information is the general ledger.
  • Project Management looks outside the organization to its customers, and seeks to deliver goods and services on-time, on-budget, fulfilling all of the conditions of the customer-specified/expected scope. Its main source of usable information comes from the output of Earned Value and Critical Path methodologies.
  • Strategic Management is all about market share. These guys couldn’t care less if the organization is leasing or purchasing equipment, or processing record-low Baseline Change Proposals. They do care very much about how the organization is doing in relation to its competitors.

As I’ve been pointing out for some time (hey, when I’m right, I’m right) the fundamental principles of business and management taught at the college level are firmly rooted in the Asset Managers’ domain. Virtually all of them still teach the easily-disproved drivel about how the point of all management is to “maximize shareholder wealth,” and its adherents have been known to actually disparage anyone who disagrees with that notion.

But the wheels have been coming off of that epistemological vehicle for some time now. In the 1980s it was the Strategic Managers’ insights running counter to the Asset Managers’ that led to the business world phenomena of the hostile takeover, which by itself should have overturned the “maximize shareholder wealth” mantra. Previously, the (rather simple) formula for deciding whether or not a company should stop doing business was based on the idea that (from Investopedia):

…a firm should never produce whenever it cannot cover all of its production and distribution costs in the long run. In the short run, a firm's willingness to produce should continue up until the point where its marginal cost curve is no longer above average variable costs.[i]

Notice how each of the parameters listed above are both (a) internal to the organization, and (b) derived from the general ledger. It’s as if those who created the classical models for deciding whether or not a given company should continue doing business could never dream of a scenario where a competitor was willing to take a short term loss in order to buy up a controlling share of the target company, and force them into bankruptcy, with no thought whatsoever of the target’s variable costs, marginal cost curve, or any other factor other than its market share. (As an aside, right there is another hint that the Asset Managers don’t have a handle on the ”point” of “all management.” Market share is obviously very valuable, and yet never appears in the asset side of the ledger.)

Meanwhile, Back In The Project Management World…

To the extent that those aspects of the PM codex that mildly challenged (or even out-and-out overturned) the long-standing Asset Managers’ take were adopted by project-centered organizations, those organizations began to (generally speaking) out-perform those that didn’t. In classical survival-of-the-fittest style, the companies whose business strategies were entirely enmired in the maximize-shareholder-wealth model began to lose out to the ones with a greater customer-focus, who were willing to sacrifice asset performance if it meant greater customer satisfaction on a broad basis. I can just imagine the reaction that an early-adapter of PM would receive the first time she said out loud in a board meeting “I don’t care if it reduces shareholder wealth! We’ve got to do something about delivering our product/service on-time, on-budget, or we’re toast!”  In this sense we have been moving towards a Project Economy since the time PMI® came on the scene and began to codify and publish these strategies, in 1969.

Okay, but what about that anchor business?

The one anchor that’s been holding back the natural macroeconomic move towards a Project Economy is the whole maximize-shareholder-wealth business that I’ve been ranting about for literally my entire business-writing career. The other one is far more subtle, but almost as difficult: the notion of economies of scale.

PMI® President and CEO Sunil Prashara discusses some key factors in the move towards a Project Economy in this YouTube video, including workers’ ability to perform more than a single or limited number of functions. While this is undeniably true, it does raise the question, How did we get to a broadly-adopted model predicated on a narrow set of functions for each worker? I believe its material (if not proximate) cause was the American industrial revolution, with its centerpiece being the introduction of the conveyer-belt method of manufacturing, which took full advantage of economies of scale.  Prior to Henry Ford’s remarkable innovation, more broadly and highly skilled workers would produce fewer automobiles, and at a greater cost. The conveyer belt allowed Ford to dramatically out-perform his competitors, but the tradeoff was that the consumer had to accept whatever Ford was willing to produce within that price range. When Henry Ford himself famously said that he wouldn’t even offer any color other than black for the Model T, I don’t think he had accommodating the customers’ varied stylistic tastes in mind.

So, where does this leave us in 2020? Yes, we’re headed toward a Project Economy, but the progress is slower than it would otherwise be, weighed down by two management axioms taken from the Asset Managers’ narrative, and at odds with the PM version. We PM-types have been fighting the ideological battle since 1969, but perhaps we don’t have to do that any longer. The macro-economy, with its (somewhat merciless) tendency to separate winners from losers based on the validity of their business models, will do this for us as we inexorably move towards the Project Economy.

It would still be fun to see how much faster we’d get there if we cut those anchors loose.


[i] Retrieved from Investopedia, https://www.investopedia.com/ask/answers/062415/what-factors-go-determining-businesss-shutdown-point.asp, July 5, 2020, 15:16 MDT.

Posted on: July 06, 2020 10:46 PM | Permalink | Comments (1)
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