Game Theory in Management

My oldest son graduated from a prestigious law school and works as a trial attorney. During a recent visit home he and his fiancé disagreed about the hair color of the opposing council at a trial she had seen. After hearing them go back and forth a couple of times, I interjected.
“Objection! Evidence not corroborated by the witness!”
“That’s gibberish” my son replied.
“Not according to the law shows I’ve seen.” 
“How would you like it if I were to just place near-random project management terms together as some sort of assertion?”
“Sadly, it would be nearly indistinguishable from much of what passes for legitimate PM writing” was my reply. And, in an instant, I knew what I wanted to blog about this week.

Valid theories in science – even management science – do not need catchy but inchoate phrases to gain acceptance. Light travels at 186,000 miles per second. This hypothesis turned theory when it was supported by experimental evidence. But consider some of the things we, as PM practitioners, accept as axiomatic, but haven’t been supported by anything but the most subjective and anecdotal of evidence.

For example, a comment on one of my blogs was “Quality needs to be buil(t) in, not controlled and managed in.” The commentrr, I’m sure, didn’t come up with this on his own – it had surely been repeated multiple times in classrooms, professional society chapter meetings, or in his workplace. But I don’t even know what that means. When creating products or providing services, if you have a good design/technical approach, use the appropriate tools, materials, and methodologies, and employ people with the appropriate level of expertise, barring human error a quality product or service will be delivered. The distinction between building, controlling, or managing “in” is fairly amorphous, rendering the distinction functionally irrelevant. And yet we, as a PM community, are somehow expected to accept this saying uncritically. I think the true nature of the assertion that “quality needs to be built in, not controlled and managed in” could be articulated as “hire more quality engineers, and pay them better, or else you will be made to look stupid for not knowing the difference between ‘built-in,’ ‘controlled-in,’ and ‘managed-in.’” (Actually, it might be kind of fun to isolate a dozen or so Quality Engineers, and have them define “built-in,” “controlled-in,” and “managed-in” in sufficient detail as to be able to differentiate any quality initiative as belonging to just one category, and then compare their answers.)

Another commonly-accepted idea is that all project managers must “engage stakeholders.” I think this term was created to be deliberately vague, in order to push the poorly-articulated theories of the communications experts (how ironic is that?). Take the first part of the term, the word “engage.” According to dictionary.com, this term can have polar opposite meanings, ranging from “to attract or please” (#4) to “enter into conflict with” (#7)i.   

The definition of “stakeholder” isn’t much more precise. According to BusinessDictionary.com, the definition is “A person, group or organization that has interest or concern in an organization.”ii  By this definition, the Washington Redskins are stakeholders of the Dallas Cowboys (which pretty much necessitates “engage” definition #7 to be used).

So, just to be clear, a term that can have as wildly differing meanings as “attract or please your employees” to “enter into conflict with your enemies” has no practical meaning at all on its face. And  yet, to “engage stakeholders” has become so uncritically accepted in modern PM circles that to even challenge it is to risk being permanently identified as hopelessly backwards in the management sciences. Does that seem right?

Now, excuse me as I prepare to “control-in” my “engagement” of the “stakeholders” who leave comments in the comment section…

  i Definition of “Engage,” retrieved from Dictionary.com, http://dictionary.reference.com/browse/engage, August 23, 2015, 11:38 MDT.
 ii  Definition of “Stakeholder,” retrieved from BusinessDictionary.com, http://www.businessdictionary.com/definition/stakeholder.html, August 23, 2015, 11:43 MDT.
 

As my regular readers are aware, I take a rather dim view of the entire risk management arena, and have, on more than one occasion, referred to it as “institutional worrying, tripped out in statistical jargon.” I have also accused them of pushing their ideas of management information generation and analysis way past their  proper epistemological boundaries, wasting time and resources that could be better spent on the creation or maintenance of legitimate information streams. And, while I still hold these views, it occurs to me that the risk managers could actually provide a much-needed service to the project management world.

This much-needed service has to do with the second accusation I’ve leveled against them – that they push their Gaussian-curve-based notions of management information creation into areas where they simply don’t work. This is also something our friends, the accountants, do all the time. To be fair, business schools across the world regularly teach that virtually any piece of management information that involves money must originate with the general ledger, and their students simply take this notion into the real world. However, once a project has been provided its actual costs by Work Breakdown Structure element at the reporting level, the general ledger has no further contribution to the information systems that allow the assessment of project cost, scope, or schedule performance, period. None. Zero. Zilch. Nada.

Ah, but the accountants will never accede to that notion. Need an analysis on the cost variance? They’ll be happy to compare your budgets to your actuals, and can’t be convinced that that’s not a cost variance. Need an estimate at completion (EAC)? They will gladly provide a number based on the rate that you are spending, without taking into account (or even recognizing, really) the role of the actual performance against the project’s scope. It’s just the way they roll. It is futile to try to reason them out of these analysis techniques – they’re convinced of their efficacy, and similarly convinced that all who disagree with them are rubes. What’s a project management information system analyst to do?

Call in the risk managers!

Look at all the damage they do to legitimate PMISs. Surely, with a little redirection, they could inflict similar devastation on the accountants! I remember in the early 1990s, I saw a whole host articles from contributors who would perform some sort of statistical analysis on the float (both free and total) from complex schedule networks, trying to tease out some kernel of insight. It would take a few attempts to read the entire article, since these tended to be about as interesting as watching grass grow. 

Just think of all the introspection that could be caused by a statistical analysis of some similarly irrelevant data sets, such as the number of transactions within a given project compared to the variability of labor overhead rates! It sounds really insightful, yes? But it’s completely irrelevant, much like the “information” the risk analysts force upon project teams. Something similar has already occurred – the whole statistical analysis of how much women make compared to men. That this analysis has been completely debunked once one takes into account the nature of the work, the degree requirements, the general preference of women to take jobs that provide more schedule flexibility, etc., etc.,  doesn’t stop the statistic of “X number of cents for every dollar men make” from being lobbed about ad infinitum. 

Also, by Metcalf’s Law, any comparison of the average wages earned by any disparate demographic groups will yield a variance. It’s irrelevant, which will make the accountants’ jobs far, far more frustrating as they attempt to round those square epistemological pegs. Let the risk managers perform their analyses on the data sets within the general ledger! With the accountants’ energy so diverted away from advancing their misguided agenda, the risk analysts will have finally contributed significantly to the advancement of PM!

“Hi, this is Ron, and I’m here with my partner Verne to call the 30th annual Business Management Championship. Verne, it’s pretty much been just the asset managers in blowout victories every year. Kind of makes you wonder why they bother having the competition in the first place, much less give it world-wide network coverage.”
“Well, Ron, you’re right about the accountants dominating the series thus far, but I think this year may be different. For one, the project management team isn’t just the Project Management Institute® – this year they’ve added ProjectManagement.com to their roster, and they look much more modernized. I mean, have you ever actually performed an internet search on ‘accountants.com’? I have, and it’s completely lame. Also, due to the success of the AMC hit series ‘Mad Men,’ the strategic managers seem to have a handle on the concept that they can’t win by playing the other teams’ games, that it’s all about market share to them.”
“But what can either of the latter two do against this asset management team? They dominate in almost all phases of the game – their pet theories are in all the business school texts, and their adherents are on all of the corporate boards.”
“That’s right, Ron, but their overuse of that one play – the Return on Investment – is going to come back to haunt them.”
“We’ll see as the players take the field. The asset managers are in their lederhosen, with suspenders and wire-frame glasses, and wing-tipped shoes. The project managers are a bit more stylish, in their khakis, polo shirts and penny loafers, and finally here come the strategic managers, and what a sight they are. They’re dressed in suits and ties, but their clothes look like they’ve been worked in all day, partied in all night, and worn unapologetically the next day!”
“Here come the teams as they approach the center of the Y-shaped field. The asset managers are in their traditional maximize-shareholder-wealth formation, where they’ve been unstoppable. But wait, what’s this? The project managers appear to be picking off the accountants from the poorly-performing organizations! Their juggernaut is slowing down!”
“I see it, Ron, but look a little closer to what’s happening on the project management bench. The risk managers, who we know have nothing at all to do with actual project performance, are claiming the credit for all of PM’s success! And there it is – a penalty flag for inappropriate celebration!”
“Amazing, Verne. Nobody has scored a point, and those risk guys are acting like they’ve won the game on their own!”
“Meanwhile, over in the strategy management camp, they seem to be having their own problems. The advertising guys – wait, are they disoriented, or something? It almost looks as if they’ve been drinking…”
“Or, maybe they just have no idea what the business management game is truly about, even though they are clearly indispensable to the strategy managers’ overall efforts.”
“In any event, the advertising squad of the strategic management team appears to be wandering aimlessly around the field, even as the asset managers make inroads into strategic management space!”
“Now here comes the PM team – they’re advancing into the asset managers’ territory – I’m seeing their leads now, the Agile and Scrum Teams, from the IT squad! What do we know about them, Verne?”
“They burst on the scene a few years back, and have been talked about on many business publications, even past the usual PM coverage.”
“Well, they’re making significant progress towards the goal at the end of the asset managers’ side of the field, they may score, but …. Ohhhh! Agile and Scrum just got slammed by the asset managers’ goalies, the Human Resources and Payroll players!”
“Is that even legal? If the asset managers can simply waylay anyone who disagrees with their business model by not hiring or promoting them, what chance does anyone else have on this field?”
“Yeah, I think we just saw why the asset managers keep winning this ‘competition’ year after year…”

I think that one of the funniest bits from the late Douglas Adams’ Hitchhikers’ Guide to the Galaxy (misnamed) trilogy involves a scene where Ford Prefect and Arthur Dent are getting a ride on a ship populated by 1/3 of the people from their home world. The backstory is that they were told their planet was about to be destroyed cataclysmically, and so the population was loaded onto evacuation ships and divided into three groups:
•    Those who actually produced food, goods, and materials;
•    Those who actually produced building designs, literature, computer programs, and other intellectual properties, and
•    Those who served as middlemen, such as advertising agency employees, or phone sanitizers.
Ford and Arthur find themselves with this third group, when it becomes apparent that their home world wasn’t in any danger – the other two groups of people simply figured out a clever way of ridding their world of, essentially, non-productive people.

In my previous two blogs I discussed the dichotomy between two types of project management practitioners, whom I labelled Processors and Effectives. Since the August theme is Business Project Management, I thought I’d take an opportunity to evaluate some of the distinct disciplines within PM, to see which ones are of more value to the overall enterprise management information feed, and which, well, are not. In short, I want to make the case for which PM sub-groups we ought to put on their own starship and send them away. Okay, that might be a little harsh, but I have to admit that, now that it’s written down, it might not be such a bad…

Just kidding! From an overall business point of view, the most valuable PM-type is the one who knows which kinds of work ought to be managed as a project, and which should not. Much harberdashery exists here, with accountants trying to provide insight on project performance, critical path schedulers being asked to perform staff allocation, and risk managers pretending it’s all about Gaussian Curves. 

On the question of whether or not some element of work ought to be managed as a project or not, one simple question represents the litmus test: what percent complete have you accomplished? If asked of legitimate project work, a usable answer can be provided. If asked, say, of the document preparation organization, as an organization, there can be no sensible response. These ought to be managed as an asset, and not a project. Besides, if you were to ask them to develop a critical path methodology baseline, it would just be a series of constrained activities, yielding no usable performance information.

At the opposite end of the spectrum, the least valuable PM-types are those whose analyses provide little or no value when it comes to bringing the project in on-time, on-budget. Among these I list:
•    Accountants (bookkeepers, yes – the project team has to know how much it has spent. Accountants – no. They keep pretending that comparing budgets to actuals on a line-item basis or the return-on-investment calculation creates usable project management information – they also dress funny.)
•    Risk Managers (yeah, I know, I keep banging this gong, but someone has to point out that these guys do nothing more than counsel institutional worrying, tripped out in statistical jargon.)
•    Human Resources (how many organizations claim that their people are their most valuable asset, or resource? This capability, valuable as it may be, does not belong as part of project management. Don’t believe me? Invoke the litmus test: “Hey, HR director, what percent complete have you accomplished?”)

These are the ones I recommend putting on the epistemological starship, and sending away from planet Project Management. Also, I understand that recent developments on an electromagnetic drive could power a ship to the Moon in four hours…
 

In my last blog I made the observation that those seeking to advance project management capability in the macro organization tend to fall in to one of two groups, whom I called the Processors and the Effectives. Processors, as one might guess, love the process of performing project management practices, and tend to define PM success as having a project team demonstrate compliance with procedures. Conversely, Effectives will define PM success as actually bringing their projects in on-time, on-budget, or even early and under-budget. I wrapped last week’s blog speculating that the Processors, by definition, had very little opportunity to bring innovative approaches to the table. That may have been a rash assertion.

If others on the project team aren’t “doing” project management, there are two broad categories from which the Processors can pull their tactics: if the Processor is of high rank, they can attempt to leverage their organizational power to compel compliance. However, if our Processor is of equal or lower status, they are reduced to whining and eat-your-peas-style hectoring to change the behavior of their associates. 

The first category, that of attempting to leverage organizational power to compel an advancement in project management capability, never works in the long-term. Some short-term “success” may be realized, sure, as the project team becomes painfully aware that the prospects for their continued employment may hinge on how effectively they can perform the added requirements placed upon them as they pursue the project’s objectives. However, as soon as they can opt out, they inevitably do, leaving the macro organization no better off than before. This is especially true if the added procedural burden doesn’t have any clear link to the project’s overall success in cost, schedule, or scope performance. Indeed, the leaned-on project team will often come away with an embittered perspective on project management in general, and will tend to avoid (or even openly eschew) it in the future, all thanks to the way the Procedurals like to try and advance PM in their teams.

The second category – hectoring and whining – can (and often does) assume the audio acceptance level of a dentist’s drill on a molar needing a filling replaced. But there is a variety of hectoring that invites innovation, and is, in fact, somewhat compelling. This is the appeal to sophistication.

The appeal to sophistication works on Processors like catnip. Not only can they nakedly assert that others ought to be doing that project management thing they way the Processors want, but it goes without saying that to do otherwise is, well, kind of dumb! How convenient! Leveraging off of the fear of the project team’s members looking intellectually backwards, the Processors can advance all sorts of charlatanisms, to wit:
•    Gaussian curves have nothing to do with project performance. But the risk managers have many, many bamboozled to believe that, without a “proper” risk management analysis and plan, their projects are doomed.
•    Past letting the project team know how much they’ve spent, the General Ledger has nothing to do with project performance. However, the accountants have led so many to believe that any insight on business information that involves costs simply must come from them that virtually all textbooks on quantitative analysis in business begin and end with the return on investment calculation, which is virtually worthless in PM.
•    Communications are great – except when they’re not. Keeping “stakeholders” abreast of project performance is nominally a good thing … except when the definition of “stakeholder” includes those who actively oppose your project attaining its objectives, which the definition held forth by the communications experts often does. In those cases, keeping these “stakeholders” apprised is sheer idiocy.

I could go on (and often do), but I’m sure my readers see my point: Processors don’t actually advance project management as a science; rather, they use pseudo-science tripped out in PM phrases as leverage to try and convince others to do as they say, and respect them for saying it.

And I think that’s dumb.