Game Theory in Management

Yeah, I know PMI® would just assume that only people of good character and are willing to abide by its code of ethics should receive the Project Management Professional certification, but hear me out on this. While Vader’s appearance, sounds from his labored breathing, and expertise with a light saber are all captivating aspects of the character, when we actually look past these visually amazing distractions we are presented with direct knowledge of his “scope” in each of the three original movies in the initial trilogy:

• Star Wars (later re-titled A New Hope) – retrieve the stolen plans to the first Death Star.
• The Empire Strikes Back – capture the Millennium Falcon, with its crew and passengers alive.
• The Return of the Jedi – capture Luke Skywalker, and deliver him to Emperor Palpatine.

In previous blogs I have made the distinction between Project Management, Asset Management, and Strategic Management, so:

• Asset Managers seek to “maximize shareholder wealth,” and their primary information source is the general ledger.
• Project Managers seek to execute their defined scope and accomplish it under the customer-driven parameters of cost and schedule. Earned Value and Critical Path Methodologies drive their information streams.
• Strategic Managers seek to maximize market share in whichever industry their organizations belong.

It seems to me that, in virtually every line of dialogue emanating from Darth Vader, he clearly places himself into the PM bin. For example, when he boards Princess Leia’s starship and is informed that the plans to the Death Star – which he knows have been transmitted to the ship – aren’t on board, he immediately surmises that the plans must have been put into one of the escape pods that had been ejected during or immediately after the battle. What would each of the management types have said at this point?

1. “Perform an evaluation of the Return on Investment for the effort of sending an entire battalion of the Empire’s best men to locate one specific escape pod. If the analysis returns a number greater than one, go ahead and do it. Otherwise, it won’t be worth it.”
2. “She must have hidden the plans in the escape pod. Send a detachment down to retrieve them. See to it personally, Commander.”
3. “I’m just not seeing how retrieving those plans will translate into more star systems joining our Empire.”

Before you write down your selection’s number, consider which response is most closely aligned with the scope statements for each movie from the first bulleted list, and then proceed to mental exercise number two.

In The Empire Strikes Back, Vader is determined to capture Han Solo’s ship, the Millennium Falcon, along with its passengers and crew. When the fleet of Imperial Star Destroyers – rather large, ponderous ships – find her, she escapes into an asteroid field. Newly-minted Admiral Piett informs Vader that the fleet dare not follow the far more nimble Millennium Falcon into the asteroid field, due to the excessive damage they can expect to endure. Again, which statement is most closely aligned with the Project Management approach?

1. “Thank you for that insight, Admiral. Our people are our greatest asset. Could I trouble you to perform another cost-impact analysis of having the fleet enter the asteroid field?”
2. “Asteroids do not concern me, Admiral. I want that ship, not excuses.”
3. “I’m sure the Emperor wouldn’t want to risk half the fleet in an endeavor that won’t add to the number of star systems under his purview.”

Write down your answer, and proceed to mental exercise number three.

In Return of the Jedi, Vader receives a prophecy from Emperor Palpatine himself, that (spoiler alert!) Vader’s son, Luke Skywalker, will seek Vader out, somewhat undermining Vader’s proposed scope of tracking down and capturing Luke himself. Nevertheless, Vader begins to search for Luke and, just as Palpatine had foretold, is surprised when Luke surrenders himself on the forest moon of Endor. Vader takes possession of Luke’s lightsaber, and, after ordering the guards to leave them alone, has a conversation with Luke where Luke urges Vader to abandon the dark side, and join the Rebellion. Again, which response is most consistent with a PM approach?

1. “After all of the assets we’ve spent leading up to my presenting you, captive, to the Emperor, based on the invalidity of the Sunk Cost fallacy, I’m going to let you go now.”
2. “You don’t know the power of the dark side. I must complete my scope obey my master.”
3. “Yeah, I’m still not getting how this is going to add to the star system total. Is it happy hour yet?”

Since GTIM Nation is known for its management acumen, I’m going to go ahead and predict that everybody’s answers are all twos, proving that Darth Vader was clearly PMP® material.

He may have even ended up writing a blog for ProjectManagement.com, under the pen name “Michael.”

Ancient medicine was pretty scary, but we really don’t have to look too far into history to see some terrifying stuff done in the name of making us better. Bloodletting was a common practice for hundreds of years, for example. As late as the 1830s, France imported over forty million leeches per year for just this purpose[i]. I don’t mean to pick on the medical community – the capacity for a group of self-proclaimed experts to develop a certain way of doing business or performing a task (ProjectManagement.com’s theme for September – the ways of doing business part, not the self-proclaimed experts stuff) and asserting this method as optimal, even in the face of data that challenges or even completely overturns that certain way, is boundless. It’s just that this tendency among members of the medical community has an eewwww factor that’s missing from (most of) the conversation over on the management science side.

Meanwhile, Back In The Project Management World…

In the Project Management world, there are very few widely-experienced management problems that have the exact same optimal strategies as the preferred remedy. When Consolidated Aircraft corporation first started manufacturing their famous PBY Catalina flying boat, they didn’t have a water tank large enough to test the fuselage/hull’s watertightness, so they simply filled the interior with water and checked for leaks from the outside. Indeed, I would speculate that the majority of human advancement has come about due to some person coming up with a solution to a problem that was not only novel, but initially perceived as absurd. Bouncing back to medical community analogies, Penicillin was originally called “mold juice.” Can you imagine what must have been the reaction in 1929 when Alexander Fleming announced that he thought it would be a swell idea to inject sick people with mold juice? And yet today we think of the discovery of penicillin as one of the most dramatic scientific breakthroughs in history.

In Thomas Kuhn’s brilliant book The Structure of Scientific Revolutions (University of Chicago Press, 1962) an all-too-familiar pattern emerges whenever a new hypothesis is introduced that directly challenges or overturns an existing, widely-accepted theory: almost every “expert” hates it. The tendency from the entrenched nomenklatura is to challenge, then minimize, and, finally, ridicule the new theories and those who attempt to advance them, and the reasons they tend to do so are clear. Their existing positions in industry, management, and academia are predicated on the currently-existing and widely-accepted version of things, and any attempt to undermine those theories represents a direct attack on them personally. Among this blog’s favorite challenges to widely-embraced management science champions are:

• The Asset Managers’ notion that the point of all management is to maximize shareholder wealth. What actually goes on during the merger process provides more than enough data to dismiss this old canard, yet it persists.
• The Communications crowd, who loves to insist that PMs need to communicate project status openly and often with anyone who has a claim to being a “stakeholder.” Since the stakeholder moniker explicitly does not exclude those who wish to see your project fail, this is clearly, ahem, sub-optimal.
• The “Bottoms-Up” Estimate at Completion (EAC) fans. Simple Earned Value calculations offer a quicker, easier, and more accurate EAC than the re-estimators can offer, at any level of the Work Breakdown Structure. Unfortunately, the widespread adoption of this alternative lacks the appeal of its archaic rival.
• The overuse of the Return on Investment (ROI) calculation, particularly when selecting which projects to pursue for a given portfolio. There are simply too many parameters to identify, much less quantify in getting this figure to an accuracy level that could be considered even remotely reliable, and yet, this, too, is taught far too often in today’s business schools.
• And then, of course, are our old friends, the risk management (no initial caps) crowd. Two ironclad rules are all that’s needed here:
  1. The future cannot be quantified, and
  2. Gaussian Curves do not change the validity of ironclad rule #1.

And yet risk management (no initial caps) remains a multi-billion-dollar industry to this day.

Still, all of this points to the beauty of the free enterprise system on the management sciences. If it works (and is legal), then the marketplace will reward the consensus-challenging ideas with on-time, on-budget projects and portfolios. If it doesn’t, then those who have embraced the poorly-thought-out notion (or adhere to the obsolete ones, once the competition has moved on) have a choice: either abandon their current business model and embrace a better one, or else turn to the PM dark side (what is the PM dark side? I’ll go over it in my next blog. Darth Vader would be proud.)

[i] Retrieved from https://allthatsinteresting.com/bloodletting on September 6, 2021 15:16 MDT.

One of the main reasons that the United States declared war on Great Britain in 1812 had to do with the impressment of American seamen. So desperate was the Royal Navy for crews that they resorted to intercepting American-flagged shipping on the high seas, and would essentially kidnap sailors to help man their vessels. To be fair, such actions weren’t that different from the nominal recruiting techniques for actual subjects to the Crown, as many a young man living in a deep-water English port would abruptly discover. But the young United States was rather put off by this, and decided to push back in dramatic fashion. The War of 1812 would, somewhat uncharacteristically for the time, result in no transfer of land ownership either way, but did succeed in gaining some measure of relief from the practice of “recruiting” American seamen to man British vessels.

Meanwhile, Back In The Project Management World…

Much of the discussion of the word “inclusion” in a business sense has centered on the idea that a deserving person has been unfairly excluded from some organization or team, but what about the opposite scenario? Let’s start by focusing on this term’s main denotative meaning, to wit:

in-clu’sion, …n., …1. Act of including, or state of being included.

This is the definition from Webster’s New International Dictionary, Unabridged, originally published in 1934, with new words added in 1939 and 1945. The thing weighs 15.8 pounds, which by itself speaks to its authority. Based on this definition, let’s employ one of the Game Theorists’ favorite tools, the Payoff Grid, as it applies to inclusion/exclusion in the formation of Project Teams:

If Project Team member X should not have been made part of the Team, and hasn’t been, then everything’s okay. Similarly, if they should have been included, and have been, it’s also okay. Much of the literature on the subject of inclusion focuses on Scenario A1, so I won’t bother to add to that volume of analysis.

But I believe a significant percentage of us PM-types have found ourselves in Scenario B2, due to an acquisition, merger, or changing out of an executive team. These times of organizational upheaval are almost always accompanied by a change in management strategy and business philosophy in addition to the transformation of the organization’s executive lineup, and those changes commonly create issues far more significant and long-lived than can be resolved through a nominal Tuckman Forming-Storming-Norming-Performing cycle. For example, should the new executive team arrive with something they view as a strong PM culture, they may be given to viewing any deviation from their business world view in the new organization as an indicator of backwardness, or lack of a key capability. Even in those circumstances where the newcomers’ business model could use some tweaking to make it compatible with the host organization, attempts to articulate the case for such an adjustment may well be viewed, not as an insightful attempt to help, but as a sign of disloyalty to the new management structure. This, in turn, can lead to a whole plethora of additional business model pathologies, including:

• An “us versus them” view among the newcomers and extant personnel,
• Promotions and raises based on clan identification/membership, rather than merit,
• …which, taken together, breeds mistrust within the Project Teams affected,
• …causing disruptions in vital communications avenues at crucial times in the Projects’ life-cycle,
• …leading to poorer performance than had been realized prior to the management change-up,
• …exacerbating the whole “us versus them” view.

GTIM Nation is familiar with the old saw “Affordability, Availability, Quality – pick any two.” As a bit of extension,

• An affordable good or service that’s available immediately is unlikely to be of high quality;
• A high-quality product that’s available right now is not likely to be cheap, and
• A high-quality product that’s affordable will almost always involve a lead time to acquire.

Now imagine two organizations within the same industry, suddenly brought together under the same Organizational Breakdown Structure. In addition to the asset managers seeking to eliminate redundant functionality or facilities, it’s highly likely that these two organizations came by their market share via different business models with respect to the axiom cited above. What’s basic to one org is dopey to the other, and vice versa. What’s the impressed seaman suddenly included PM to do?

Of course, all such occurrences come with a vast array of relevant parameters, making a one-size-fits-all response impossible. But if I were to recommend a broad-brush strategy, it would be this: focus on your Project Team, and its scope. “Nothing succeeds like success” goes the old saying, and those Project Teams that bring in their scope on-time, on-budget can only be ignored by the most clannish of executive teams.

For those who are not in a position to establish relative worth through performance, consider that it could be worse. The Royal Navy didn’t ban flogging as a disciplinary tactic until 1880[i].

[i] Retrieved from https://militaryhistorynow.com/2012/06/29/this-is-gonna-hurt-military-punishment-throughout-the-ages/ on August 30, 2021, 14:10 MDT.

I’m not sure that everyone is aware of the impressive Project Management-themed movie from 1966, Fantastic Voyage. It had a large special effects budget, extensive world-wide release, and introduced American movie star Raquel Welch. The plot centers around a technology that miniaturizes matter at the atomic level, but only for one hour (who knew sub-atomic physics could be so punctual?). A scientist has discovered how to make the effect permanent, but has suffered an injury resulting in a blood clot in his brain during an assassination attempt. The clot is inoperable from the outside, so a five-person crew is loaded into a small submarine, miniaturized, and injected into the scientist in an attempt to dissolve the blood clot with laser rifles from the inside. The sub and its crew are made so small as to evade detection by the scientist’s immune system; however, once the miniaturization effect begins to wear off, they will become visible to the scientist’s white blood cells, and can be expected to encounter a fate that oddly resembles being consumed by a giant glob of shaving cream.

“Perhaps, Michael” I can hear GTIM Nation say, “Fantastic Voyage is not recognized as a Project Management movie because it has little to do with PM and is, in fact, just a good old-fashioned 1060’s-style science fiction romp,” to which I say “au contraire! It has some extremely useful PM insights, needing only a prescient reviewer like me to point them out!”

Take, for example, the fact that, even with a five-member Project Team crew, one of them, Dr. Michaels (the medical chief and circulatory specialist, no less) turns out to be a traitor. Here we have an extremely important, potentially world-altering project, with a Project Team hand-picked for their technical acumen, and even here we have a (Maccoby archetype) Jungle Fighter, in a key technical position. I have addressed this phenomenon in a couple of different ways in this blog, one using the Maccoby archetypes (Craftsman, Gamesman, Company Man, and Jungle Fighter), the other taking a more Gaussian Curve angle. This take involves the recognition that, for any given novel technology or PM strategy,

• A small percentage of the organization/Project Team will readily accept the approach,
• A larger percentage – about one standard deviation from the mean on the left side of the bell curve – will accept the approach, but only after having been convinced of its efficacy.
• Another standard deviation to the right of the mean will maintain a high level of resistance, and must be (almost literally) dragged kicking and screaming into the realm of contributors.
• Finally, a remnant will never be truly on board with the stated technical agenda, even if they maintain a façade to the contrary.  The earlier the PM can identify this type and get rid of them, the better the chances of attaining the scope, on-time and on-budget.

In the movie, Dr. Michaels isn’t identified as the saboteur until very late, and nearly succeeds in killing the patient (wait – don’t doctors take some kind of oath?). So late, in fact, that the miniaturization effect has begun to wear off, and Michaels, trapped in the relatively exposed pilot house portion of the submarine, is drowned in a huge glob of shaving cream dissolved by a now-aware white blood cell.

The next PM lesson apparent in Fantastic Voyage has to do with the aforementioned introduction of Raquel Welch. She would go on to star in many other movies, becoming something of an icon. What does this have to do with PM? Well, if in a five-person submarine crew Project Team you can have a Jungle Fighter/Traitor, it’s also extremely likely you have a future star, perhaps even a (Maccoby archetype) Gamesman. This person doesn’t need special attention to execute the current project’s scope; however, if you anticipate that this person will be with the organization for future projects, it’s probably a good idea to help guide them in the more nuanced aspects of Project Management. There will be lots of times that the scope must be suddenly and radically changed, and these types’ presence on the Project Team is your best guarantor of being able to still come in on-time, on-budget.

Perhaps the most useful PM insight that Fantastic Voyage brings has to do with the whole too-small-to-be-noticed-by-the-white-corpuscles business. One of the most damaging organizational behaviors to attempts to mature a given capability is the slow roll/silent veto treatment. This is where members of the organization claim to your face that they are on-board with your initiative, but simply don’t show up when their actual participation is required. This is one management pathology that should be considered big enough to merit a response the moment it’s encountered, even if it appears small. Most of the time, simply noticing it and calling it out is sufficient for eradication.

By observing and calling out this behavior, you’re actually doing your contrarian a huge favor. After all, you wouldn’t want them attacked by a huge glob of shaving cream…

Karl Landsteiner performed the seminal work in blood typing at the beginning of the 1900s, and would receive the Nobel Prize in medicine for it in 1930[i]. His discovery of the different plasma types would allow for safe transfusions, which is critical in many medical procedures. The first successful human-to-human transfusion had occurred in 1818[ii]; however, without the ability to screen for type, there was always a risk of a transfusion reaction which, in rare instances, can be fatal[iii] -- except, interestingly, in the case of A, B, or AB patients receiving O-type blood. Anybody can receive that type without the risk of a transfusion reaction.

Meanwhile, Back In The Project Management World…

In the Program/Project Management world there are many instances where an existing program, portfolio, or facility will change management teams, with the highest level execs often invoking the metaphor of “bringing in new blood.” Even in organizations where this isn’t done wholesale, the introduction of a new executive, or Chief Executive or Operations Officer (CEO/COO), will almost automatically entail a different management philosophy, driving a change in technical agenda or implementation strategy. Unless the outgoing CEO or management team is retiring, there’s a reason for their departure, and fully acceptable performance probably isn’t it. But if the organization is figuratively bringing in new blood, how does anyone know if these new approaches are compatible with the existing organization?

Whether the evaluation for compatibility is being done on a person (via the job ad/resume collection/interview process) or a team (via the Request for Proposal/evaluation/contract award process), the people making the decision almost always look for a history of similar work having been successfully conducted in the recent past. I believe this skirts past another, critical parameter: were the candidates’ previous organizations analogous to the new one(s)? The new exec/management team will arrive at their new assignment with their own extensive stacks of education and experience, technical approaches and implementation strategies. It’s basic human nature to expect that those approaches and strategies that worked previously will work in the novel environment to which they are being transferred and, if they don’t, well it’s likely to be a fault of the existing organizational/facility personnel, or culture. Re-evaluating whether or not the previous success of the particular blood type technical approach is counter-indicated for the new patient organization is usually not a consideration. Of course, there are far too many parameters to establish one reliable standard or Litmus Test for whether or not the new technical agenda is incompatible with the existing organization. There are, however, a couple of clues that can help indicate when that’s the case.

Clue #1: look for the phrase “culture change” in any of the communications of mission statement, objective, or goals of the new line. The use of this phrase points to a canned approach which has probably already been determined a priori, and it’s up to the organization to accommodate this method. Also, use of this phrase is an indicator that the aspects of the various PM business models that could serve as alternatives have not been vetted, and the advancement of the Project Management capability may be seen as an organizational behavior and performance issue.

Clue #2: GTIM Nation knows of my fondness for the Maccoby Archetypes, The Gamesman, Company Man, Craftsman, and Jungle Fighter. Of the four, The Gamesman is the only type that has a high probability of readily recognizing when a canned strategy is unlikely to succeed, and pivoting to one that has a better chance. Craftsmen care deeply about their output, but are not otherwise known for embracing the kind of risk inherent in changing a traditional technical approach broadly. If the new person/management team is comprised mostly of Company Men, forget about it. These are far more comfortable with a failed outcome as long as they can establish that they had done everything by the book. And Jungle Fighters? Puh-leeze. They wouldn’t recognize a novel-but-optimal technical approach if it fell out of the sky, landed on their faces, and started to wiggle.

If your organization is suffering from symptoms of frayed leadership style, inchoate technical agenda communications, or a reversal in PM capability maturity, it may be suffering from Technical Agenda Transfusion Reaction. I wonder if we could persuade PMI® to open an emergency room at the Newton Square facility…

[i] Retrieved from https://www.thoughtco.com/karl-landsteiner-4584823 on 9 August 9, 2021, 11:51 MDT.

[ii] Retrieved from https://www.redcrossblood.org/donate-blood/blood-donation-process/what-happens-to-donated-blood/blood-transfusions/history-blood-transfusion.html on 9 August 9, 2021, 11:55 MDT.

[iii] Retrieved from https://ashpublications.org/blood/article/113/15/3406/24952/Transfusion-related-mortality-the-ongoing-risks-of on 9 August 9, 2021, 12:02 MDT.