Game Theory in Management

It’s not every week I get to use two different terms that need explaining in the title of this blog, but that’s what’s called for with this topic. “Moat dragon” is slang for a person of low-to-middling status within an organization who assumes some measure of the authority of the person they serve by acting as a sort of filter, or regulator for people who seek access to the organization’s decision-makers. Sixty years ago, this person may have been called a “secretary,” and basically controlled the executive’s calendar, as well as screening their incoming phone calls. At a certain level, answering the telephone and scheduling meetings and appointments for another person in a 1960’s-era office presents as fairly mundane work. From another angle, though, this function effectively controls, or highly influences, the information flow in and out of this executive’s office, a very powerful sway indeed. Communications have rightly been referred to as the life-blood of the organization, making this person analogous to that organization’s beating heart, or at least its carotid artery. Rather than prolong the anatomical metaphor, I’ll return to the feudal version, with the executive as the king of the castle, his knights as the Project Team, the moat as the exec’s outer office, and the filter/influencer impacting the communications in and out as the … well, you know.

Now, just because rotary telephones and pen-and-ink day planners are a thing of the past doesn’t mean that communications controllers/influencers aren’t having an outsized impact on those communications, and, by extension, decisions coming from the execs. I have written previously about an effect that I’ve referred to as “the black box syndrome.” This is where an organization has been sold on the idea that, if they were to buy this one particular software package, it can feed its decision-makers all of the information they need to successfully lead their Project Teams, or facilities, or portfolios, or … well, anything up to and including the whole enterprise. I find black box syndrome to be a particularly pernicious business model pathology for a variety of reasons, not the least of which is the fact that the Management Information System (MIS) that enabled informed decision-making last year is, in all probability, making notable progress towards obsolescence in today’s competitive environment. The need for more timely, accurate, and relevant information never goes away. Recall the Information Technology (IT) axiom “begin with the end in mind.” For specific applications, this is undeniably true. But in the macro sense, the successful manager does not know what the essential information output that will be needed next year looks like.

From the Project Management Office (PMO) perspective, we already know what the proverbial 80% solution looks like. Even a simple Earned Value Management System, preferably derived from baselines generated from a Critical Path Methodology-based network, used by each and every part of the project portfolio provides invaluable insights into that portfolio’s cost and schedule performance. This information can be further distilled to predict at-completion costs and dates, indicate which types of work the organization performs best, which customers are more reliable or profitable, the types of market strategies that ought to be pursued, and which ought to be abandoned. Many PM-types can spend their careers pursuing this 80% solution, arrayed against our friends, the Asset Managers, as well some within our own camp (cough, risk managers, cough), and delivering an organization into a place where they can become significantly more competitive by embracing the tried-and-true. It can be very rewarding. However, when black box syndrome strikes an organization that’s pretty good at the basic PM stuff, the capacity of those oversold and underperforming software systems to begin to function as moat dragons becomes manifest.

For example, virtually every “enterprise” or “portfolio” management software will claim as its most significant payoff a measurable increase in efficiency. This is, of course, an Asset Management goal, with little appeal to we PM types. To engage in a bit of hyperbole, PMs flat do not care if the printer/copier/scanner they are using to produce a deliverable report was purchased, leased, or what kind of service contract came with it. We just want to know if we’re going to be able to deliver said report to the customer on-time, on-budget. Also, I have yet to encounter any of these enterprise or portfolio management information systems that takes into account the organization’s underlying strategy with respect to the Quality-Affordability-Availability, pick any two, structure. This is not a trivial oversight – the MIS that claims to deliver all the relevant information needed to attain success across a portfolio or enterprise that emphasizes certain points of view at the expense of others causes damage by influencing decisions in a particular, perhaps (probably) inappropriate direction.

In the 1960s, moat dragons could change the course of an organization by frustrating people, and, by extension, their ideas, from receiving a hearing before that organization’s executives. In the 2020s, this function (or malfunction) is potentially taken over by overhyped computer programs and companies susceptible to black box syndrome. So, yeah, feel free to upgrade your portfolio/enterprise Management Information Systems. Just take a peek inside that black box prior to plugging it in.

It might have a dragon inside.

The reality television show Married at First Sight, currently aired in the United States through the Lifetime network, is premised on the idea that “experts” pair volunteer singles to get married to each other, but there’s a catch: as the title implies, these singles don’t meet each other until they are literally participating in their own marriage ceremony. I pretty much view the series as a milestone on the downward trajectory of American culture. That’s not to say, however, that it’s without a capacity to demonstrate some of the more interesting aspects of group behavior.

One of the things that I found to be a glaring example of the “experts” not doing a very good job of screening candidates has to do with the fact that virtually every couple has to deal with an issue or problem that probably should have been detected during the pairing process. A Season 2 groom threatened to harm his bride, and she eventually took out a restraining order on him.[i] One groom found out almost immediately after his wedding that his new bride had an outstanding arrest warrant. A majority of the couples end up divorced, if not at the end of that particular season, then later[ii]. If I’m in a charitable mood I can be led to believe that these red flags were simply missed by the “experts” conducting the matching process; however, I can’t help but to recall that conflict is one of the main reasons people are attracted to reality shows. Consider that, should each of the couples promptly fall in love with each other, and consistently demonstrate that they will elect to stay married at the completion of the season, the series would become mind-numbingly boring to all but the most sentimental of viewers. To be clear, I am NOT accusing these “experts” of allowing an easily-detectable issue to go unaddressed until after the paired couples exchange vows in order to attract more viewers when the inevitable conflict manifests itself. Nope, not doing that at all. Not at all.

Meanwhile, Back In The Project Management (Office) World…

When a project-oriented organization grows to the point that it decides to establish a group or team that handles PM issues and technical agendas in a coordinated fashion, to ignore how its own business model is bound to influence the nascent PMO’s functioning would be a blunder (not that it doesn’t happen). If the new PMO Director thinks they can simply harangue upper management with PMBOK Guide® quotes to advance the PM capability maturity, ultimate failure is virtually guaranteed. What’s critical in the start-up (or restart) phase is an assessment of the particular PM-centric needs of the macro-organization, combined with a clearly articulatable strategy for how the PMO will meet those needs within the constraints of the prevailing business model, whether or not those constraints are documented, or even acknowledged. And for this, we’re going to need some, ummm, experts.

What would these experts be looking for? Besides a familiarity with the specific marketplace and the organization’s place within it, a basic assessment involves the Quality-Affordability-Availability, pick any two paradigm. The organization that has succeeded by concentrating on affordability and availability is not going to be well-served by a PMO that insists that its Project Managers strictly adhere to the drivel more rigorous edicts of the guidance-issuing community. A (very) basic PMO structure alignment analysis would look like this:

• Organizations known for providing projects on a ready basis (availability), for a competitive price (affordability), should have a PMO that makes available cost/schedule management information systems on a “cafeteria” basis. The individual PMs can pick and choose which information streams help them, and at what level of rigor.
• Companies that deliver a higher-quality service, and can do so presently, will need a PMO with a high level of demonstrable expertise. An advanced training program will be needed. Also, this PMO will need some level of insulation against attacks from the Asset Managers whenever budget defense time comes around.
• The implication of organizations that deliver a high-quality service/product, charge a competitive rate for it, but aren’t generally available (customers need to queue up) is that they need to expand. The PMO that delivers insights into which types of projects perform better than others will match this profile best.

I can’t help but to recall that a natural conflict exists between the business model/world view of Asset Managers and PMs. Consider that, should the new PMO succeed, our friends the accountants would no longer be the exclusive source and residence of the information streams needed to keep the company afloat. To be clear, I am NOT accusing Asset Managers of, generally speaking, deliberately failing to provide a modicum of support for the PMO in order to maintain their positions atop the management information stream hierarchy. Nope, not doing that at all. Not at all.

[i] Wikipedia contributors. (2022, March 8). Married at First Sight (American TV series). In Wikipedia, The Free Encyclopedia. Retrieved 00:40, March 12, 2022, from https://en.wikipedia.org/w/index.php?title=Married_at_First_Sight_(American_TV_series)&oldid=1075875406

[ii] Ibid.

In their excellent book The Fourth Turning (New York, Three Rivers Press, 1997), authors William Strauss and Neil Howe point out that our concept of time and progress has changed since ancient times. In prehistorical societies, the view was (probably) of events occurring somewhat randomly with respect to when their tribe might interact with food, or changing weather, or conflicts with other tribes, or reality in general. As humans moved towards a more structured societal setting, we began to observe (and count on) the cyclical nature of events in order to predict when the phases of the moon would occur, or the optimal time to plow, or plant, or harvest, or set up the lottery season for allocating deer-hunting licenses. Some cyclically-based projections, like the best time to launch a Mars probe, represent the best approach to the problems before us. Others, like having formally dressed men pull a groundhog out of a burrow every February 2^nd  in rural Pennsylvania, well, ummm, not so much.

The third concept for interpreting unfolding events mentioned in the book, that of a progressive world view, is a fairly recent phenomenon. This is the idea that things will progress steadily in an upward trajectory, towards an optimal environment for economic, personal, or even managerial success. I believe that this take on how the future can be expected to unfold is both inaccurate and dangerous; inaccurate because Metcalf’s Law (aka the Butterfly Effect) renders such rosy projections hopelessly unquantifiable, and dangerous because it leads to a sense that committing serious resources to attain robustness in our personal lives and organizations represents a waste of time and energy. Why brace for disaster, when the most likely, if not near-certain outcome is going to be beneficial?

Meanwhile, Back In The Project Management (Office) World…

Nobody launches a Project Management Office (PMO) with the idea that it will eventually crash and burn. But I’m sure GTIM Nation is familiar with the “Six Phases of a Project[i],”

• Enthusiasm
• Disillusionment
• Panic
• Search for the guilty
• Punishment of the innocent
• Praise and honors for the non-participants

While originally intended to describe the six phases of a project, I’m not so sure that it isn’t an accurate description of the phases of many a PMO. While these “phases” describe a cyclical (and cynical) view of how events unfold, I think that many PMO start-ups operate under the assumption that the superior expected structure is the constantly-improving one. But in order for that to be true, a few elemental features must be in place, specifically:

• The head of the PMO must have, if not the optimal technical approach, at least a workable one in mind,
• …and must be able to articulate a practical implementation strategy.
• The PMO head also must have manageable talent as the technical agenda/implementation strategy is pursued.

The alert reader will recognize that the word “must” appeared in each of the previous bulleted assertions, and there’s a reason for this. If any of these features is ignored or abandoned, ultimate PMO failure is virtually guaranteed, and no amount of pointing to the “proper” way of conducting business in a project-oriented organization will save it.

So, what’s the best strategy for keeping your PMO from following those Six Phases? I think it’s largely contingent on the Maccoby Archetype that’s heading it. Consider:

• A Company Man will only proceed with a technical approach that’s completely consistent with the organization’s norms, as documented in policy and procedure – in other words, a familiar, template-like method. This raises the question: if the template approach works, why does anybody need a manager to implement it?
• To a lesser extent this problem will also afflict the Craftsman. This person will seek to produce a high-quality product/service, which is all well and good, save for those instances where an affordable, available product/service is called for. In that case, we’re probably headed back to the Six Phases cycle.
• A Jungle Fighter is incapable of developing (or even recognizing) the optimal technical approach, and is only in a PMO leadership position due to their ability to influence the higher-ups. Interestingly, they will recognize their deficiency, and will find a Craftsman (or, more rarely, a Gamesman) to develop the tech approach/implementation strategy for them, by showering the Craftsman with attention and promises of promotions. But make no mistake: if this PMO happens upon some level of success, the Jungle Fighter will betray the experts who made it happen. They can’t help it. They simply can’t have the true source of the PMO’s success correctly identified, leaving the JFs on the outside looking in.

GTIM Nation knows where this is headed: your best bet for having your PMO escape the Six Phases cycle, and placed on a trajectory consistent with the progressive model, is to have a Gamesman (or Gamesman-esque) director leading, or at least setting the technical agenda for, the PMO. It’s the only archetype known for being both a master of the “rules” of the “game” being played, and be willing to risk deviating from a formulaic technical approach.

The PMO that believes its fate is entirely driven by random, external forces won’t last long, leaving the successful ones seeing their fates as either consistent with a cycle, or on a long trajectory upward. You want the long upward trajectory for your PMO? Break out of the cycle.

[i] Retrieved from https://www.smart-jokes.org/six-phases-project.html on March 3, 2022, 21:49 MST.

According to SlangLang.net[i], the quote in the title was inaccurately attributed to musician Randy Jackson, a judge on the television show American Idol, presumably condensing the reasoning behind his eminent “no” vote for a contestant. In some ways American Idol was similar to the late 1970’s variety show The Gong Show, where members of the three-judge panel could interrupt the contestant in the middle of their performance by taking a mallet and striking a large gong. I’ve never watched an episode of American Idol, but I have seen scenes from other shows in its genre, such as America’s Got Talent, and I have to admit that seeing people with varying levels of talent performing in front of a team of judges (usually four of them) for a chance to advance towards additional performances and some ultimate prize reminded me of the corporate board room setting, where the director of a new Project Management Office (PMO) would be making a pitch for the other executives to, essentially, manage their work differently. One or two enlightened members of the organization’s upper management have somehow procured the resources to set up a PMO, and its leader must now convince the other high-level decision-makers of its utility. And the responses from those judges executives are often the same as this blog’s title, only expressed in management-ese. When I say these rejections come couched in management-ese, I’m referring to statements such as:

• “Our work is mostly level-of-effort, so any cost or schedule performance measurement system won’t apply.”
• “We can’t create a baseline, because the nature of the work is constantly changing.”
• “We don’t want a ‘full-up’ Earned Value Management System. They’re too difficult and expensive.”
• “Our customer doesn’t require those PM-based schedules or baselines, so why should we?”
• “If you’re going to do PM right, you’ll need to have Scope, Cost, and Schedule baselines, with actual costs being collected at the appropriate level of the Work Breakdown Structure, plus a full-up risk register (no initial caps) and formal Project Review meetings, and we just don’t have the time for all that.”

Of course, none of these objections are valid, as anyone with a gram of managerial acuity can readily attest. But, somehow, they seem to carry the anti-PM narrative forward, planting the seeds of eventual PMO failure. In a way, it would be better if these pseudo-executives would just grab a large mallet, and strike an outsized conference room-placed gong. That way the talent that the PMO director had assembled could just go ahead and find better gigs, rather than waste all the time trying to steer the organization’s business model towards something more rational.

It must be pointed out, though, that, if we PM-types were to be brutally honest with ourselves, much of the resistance towards advancing a Project Management capability within the macro-organization resides with us. Supreme confidence in the efficacy of the PMBOK Guide®, coupled with a dismissive attitude towards all who don’t recognize its utility, almost always produces an implementation strategy that simply doesn’t work. Generations of business school graduates who have been inculcated in the idea that the point of all management is to “maximize shareholder wealth,” or that the only true source of cost information is the general ledger, will rarely accept the new PM-oriented business model paradigms at face value. Nor will these be influenced by the threat of PMP®s tut-tutting resistance to the idea that they must now hire on multiple schedulers or cost performance system professionals. The notion that an organization’s PM capability can be advanced via eat-your-peas-style hectoring is both nonsensical and widespread, much like the reflexive resistance to it among the poorly-educated managerial class.

Adding to this level of inherent opposition from our end of the PM spectrum are those who insist that only robust (meaning, implemented and maintained the way they think it should be done) cost and schedule control systems can ever be considered acceptable, or even tolerable. The truth is that rather simple Earned Value Management Systems can produce powerful information streams, but many self-proclaimed experts relentlessly push for resource-loaded schedules, highly-detailed Work Packages, and few activities employing the milestone estimate method for collecting percent complete data as a bare minimum for all such systems. This, of course, has the effect of making EVMSs more difficult, expensive, and time-consuming to set up and maintain, while feeding into the inaccurate (and unfair) accusation that all EVMSs are difficult, expensive, and time-consuming to set up and maintain. In a very real sense, those who assume the intellectual high ground simply because they are PM-types, combined with those pushing for only thoroughly robust system implementation, are doing the rest of the PM world a huge disservice.

No wonder all of those outsized gongs are being installed in corporate board rooms.

[i] Retrieved from https://www.slanglang.net/memes/thats-gonna-be-a-no-from-me-dawg/ on February 21, 2022, 10:56 MST.

Sodium thiopental, marketed as Pentothal, is a drug that was used as anesthesia in the United States way back when I was having my wisdom teeth removed. For a long time it had the nickname “truth serum,” and when I was administered it I quickly found out why. It’s a good thing my oral surgeon and his assistant had my mouth propped open and full of gauze and instruments for the procedure – I would have told them anything they wanted to know, had they asked. To this day I’m not quite sure why. I seem to remember an overwhelming urge to be accepted by these two relative strangers. Also, I didn’t feel any pain.

Meanwhile, Back In The Project Management World…

Now, Pentothal’s use as a means of extracting an accurate account from a reluctant person has been reduced to near-elimination, with critics equating its use for this purpose as torture. That having been said, I must admit to being occasionally reminded of my experience with Pentothal during monthly project review meetings, particularly in those cases where the project being reviewed is passing cost and schedule performance data indicating that it’s clearly in trouble, but the PM is unwilling to own up to that fact. Sometimes they will seek to avoid any mention of difficulties, no matter how pronounced. An explanation of this phenomena is perhaps best illustrated by the Game Theorist’s favorite tool, the payoff grid, so:

Since every project wants to be in Scenario 2.A., we’ll skip straight to its congruent cousin, Scenario 1.B. Even if the PM perceives he is in over his head and doesn’t mind publishing the nature and extent of the project’s difficulties, this is an undesirable Scenario. It’s something of an admission of failure on the part of the PM, that the particular circumstances of the project were more than a match for that PM’s skills.

Where we get into PM nightmare territory is when there’s a disconnect between the cost and schedule performance information on a given project and that project’s reality. If the system is showing overruns or delays, when everything is really okay (Scenario 2.B.), then the organization’s executives are likely to become involved, potentially making decisions that (a) are best made by the PM, and (b) performance-neutral, or even counter-productive. If the PM didn’t have a problem before, she has one now. Its non-congruent partner, where the project really is in difficulty, but the cost/schedule performance systems aren’t alerting to it, is where “surprise” overruns and scheduling delays originate. And few things will irk a Program Manager more than learning that the projects in the portfolio, which were showing everything proceeding fine, are, in fact, comprised of elements in trouble.

This is where the invisible random flying Pentothal darts come in. In most project review meetings, there will be at least one person who is both savvy in the workings of Project Management Information Systems and is willing to challenge projects that show symptoms of even approaching Scenario 1.A. But to make such challenges, depending on the organization’s particular corporate culture, can be hazardous, even a career-limiting move (the dreaded CLM). I used to think that these challengers were either very brave or extremely naïve, but then I realized there was another possible explanation for people blurting out a truthful observation in an environment where it was dangerous to do so: they may have been injected with a tiny amount of Pentothal. But if it wasn’t administered via hypodermic needle, then how? Perhaps a small dart with its tip dipped could have been employed, but these must have been rendered invisible. Additionally, I noticed that these challengers wouldn’t take on all of the projects being presented in the review, and sometimes more than one person would assume the role of challenger. There must be some sort of randomizing element in the way these darts fly about the conference room.

As to who’s launching all these invisible, random flying Pentothal darts, I may take that up in a future blog, though I must admit to a certain fascination with the idea that PMI® has finally developed a more robust enforcement mechanism than publishing and certification training (I don’t really think they’re doing it. I’m just fascinated with the idea.). For the present, suffice to say that, if you happen to be in a project review meeting, and you are suddenly overcome with the urge to challenge anomalous cost/schedule information being presented in an everything-is-okay narrative, and you are neither exceptionally brave nor naïve, you may have been hit by one of these darts. This could be bad for your career.

That’s why you should beware of them.