Game Theory in Management

Arthur Conan Doyle’s Sherlock Holmes once commented to Dr. Watson that a person should be able to conceive of vast oceans teeming with life from simply observing a glass of water. Of course, had Victorian England’s favorite fictional detective had access to an electron microscope, he would have realized that the glass of Victorian-era well water was a vast ocean teeming with life.  And so it is with the main information tools of the PM trade, Earned Value and Critical Path Methodologies. Well, perhaps not exceedingly large environments teeming with life, but certainly much more useful information can be gleaned from these information streams than just that which appears named in a column heading of a Cost Performance Report (CPR), Format 1. The basis for gleaning this bonus information has to do with the fact that, while Project Management theories, techniques, and practices may come and go, many of the human elements remain the same. And, since PM will always have to do with actual people, these aspects of human nature will be having an outsized influence on cost and schedule performance for far longer than the theory-generators will be around.

Meanwhile, Back In The Project Reviews Conference Room…

Imagine participating in the next round of Project Reviews as a member of the organization’s Project (or Program) Management Office, or PMO. For this particular mental exercise, let’s posit that the portfolio is comprised of around twenty projects, each in the $1M to $5M range, and represented at this Review by its PM and Project Controls Analyst. To get through the entire portfolio’s performance and complete the meeting within a couple of hours, each project has five minutes to present (1) its current and cumulative cost and schedule performance, (2) a brief variance analysis if things are going badly, (3) planned corrective actions (if necessary), and (4) at-completion estimates, both in cost and schedule. Prior to the pandemic, the act of reading the room was fairly straight-forward. According to lifesize.com, between 70 and 93 percent of all communication is non-verbal.[i] With the PMs and Project Controllers actually in attendance, all the PMO staffers had to do was to note things like how people were dressed, how they carried themselves, their tone of voice and body language, etc. But with the advent of widespread virtual meetings, the act of reading the room to glean additional insights of the true health of the projects in the portfolio became much more difficult. If the attendees are using Zoom filters, it can get even harder, and even stretch into the realm of the unreal (“I am not a cat!”). Add to all of this a few tenets of basic PM human nature, such as:

• The PM rarely likes being there. He’d rather be off doing that PM stuff rather than explain to his superiors how he’s been performing, especially if there are problems (and there are always problems),
• The PM is usually convinced of his ability to correct his issues, and would rather not have any outside interference while doing so,
• Based on the first two bullets, few PMs have any incentive for early reporting of aspects that could threaten cost or schedule performance, even if the EVM and CPM systems have provided early detection of the same,

…and the PMO staff members find themselves at a distinct disadvantage. What’s a PMO to do?

Fortunately, a good deal can be gleaned from the Earned Value information, as shown in the following table.

I could go on (and often do), but GTIM Nation sees my point. The data tell a story, one that was formerly enhanced by direct interaction with the principals, but can now be gleaned from the values in the CPR.

Even if the presenting PMs look like cats.

[i] Retrieved from https://www.lifesize.com/en/blog/speaking-without-words/ on July 12, 2021 16:20 MDT.

The assertion inserted into the titular question is absolutely consistent with the Superman mythology. Kal-el was born on the planet Krypton, which orbited a red star. The people of Krypton were pretty much like you and me, unable to fly from place to place, lacking extreme strength, and speaking modern American-English. It wasn’t until Kal-el’s father, Jor-el, placed him into a spaceship and sent him to Earth, a planet that orbits a yellow sun, that he attained his super powers, eventually maturing into Superman. Indeed, any Kryptonian who made the escape from the doomed Krypton and made it to a star system with a yellow sun would have attained such powers (e.g., General Zod, Ursa, Non, the entire population of Kandor, should they get out of the bottle), though it’s somewhat ambiguous if an Earth native would have had a similar up-power surge if they had moved to a planet with a red sun.

Meanwhile, Back In The Project Management World…

(I can almost hear Cameron thinking “how on [this] Earth is Michael going to make this transition?”) The distinction of the environments where Superman (and other Kryptonians) have their power and where they don’t will serve us well as we segue into ProjectManagement.com’s theme for July, Power Skills. You see, the PM world is very much bifurcated in a similar fashion, just with an epistemological basis instead of a cosmic one. Recall my Irrefutable Rule of Management (I forget the number), that all Management Information Systems (MISs) must have the following three characteristics in order to have any value at all:

• They must be accurate – inaccurate information is obviously useless,
• They must be timely – management information doesn’t age like wine or cheese, and…
• They must be relevant.

I’d like to evaluate these rules along with another Irrefutable Rule (again, I’ve forgotten how I numbered these things), that PM has two purposes: (1) to put into the hands of decision-makers the information they need to make, well, informed decisions, and (2) to provide something of an audit trail, so those decisions can be evaluated for efficacy by future PMs. One more item to keep in mind: MISs aren’t free, and, most often, they aren’t even cheap.

In World Number 1, those PMs (or PMO Directors, or Project Controls Specialists) who have the ability to evaluate which information streams are relevant, and which are not, have PM superpower. They can not only match the proper level of Earned Value or Critical Path rigor to the size and scope of the project, but they can also go light (or even eliminate altogether) superfluous systems, such as risk management (no initial caps), inappropriate levels of Quality Management, or extreme Communications Management arrangements. By doing so, they not only deliver valuable information to the decision-makers, they also avoid wasting money, time, or expertise on the marginally useful (or even useless) ones, regardless of what outside quasi-PM forces maintain. While they (generally) do not wear capes or oddly-fonted letters on the front of their clothing, they are irreplaceable in the fight to establish an appealing cost-to-value ratio in the PM information system generation and maintenance arena, and often find themselves at odds with…

Coming from World Number 2, those PMs (or PMO Directors, or Project Controls Specialists) who are more focused on fulfilling the terms of requirements (note the word – it will come up again soon), which are almost always addressed towards some sort of generic project, who insist that projects must have, say, an advanced risk management (no initial caps) capability, when, in reality, no such need exists. Nevertheless, the requirement remains, and must be enforced, else some “expert,” who has absolutely no idea of the nature of the specific scope being executed, will maintain that some form of PM transgression has occurred, and will inflict whatever damage such ones can wreak. Caught in such an environment, the relevance-detecting PMs lose their superpower, and are forced to waste time, energy, and budget on non-essential pursuits. They become frustrated, weak, and suffer extreme pain as they slowly begin to glow green, having been imbued with the specific radiation generated from Kryptonite, as they slip nearer to…

Ha, ha! Just kidding about that last part. But those PM-types with the relevance Power Skill will become frustrated, more so if some entity either within the organization or from some outside agency performs some sort of review or audit, and begins to pepper them with extraneous or immaterial corrective actions. At that point, it will make no difference if the PM-type was born with the relevance Power Skill, or attained it based on the environment where they work. They will no longer be super.

Ahhh, causation, that fickle, fickle mistress. “Not so, Michael!” I can hear GTIM Nation say. “Sure, it’s widely misunderstood, but its basics, particularly in the field of law, have been thoroughly researched and vetted, and can be reliably used in uncovering the root causes of systemic failures, or other wicked problems.”

“Fair enough” would be my reply. “But can someone then please tell me why, whenever that most wicked of PM problems, the successful advancement of Project Management capabilities within a given organization, overcomes the PMO, the reason for the failure seems to always be laid at the feet of ‘culture’?” The main derivatives of Flip Wilson’s famous tag line, adapted here as “the organization’s culture is to blame for my PMO becoming overpriced and under-utilized,” include:

• Higher-level executives failed to force the organization to do PM “right,”
• Lower-level managers and Team members were averse to change, and
• Legitimate attempts at “changing the culture” met unexpected and unreasonable opposition.

The alert reader will recognize that these three are essentially the same causal argument, simply distributed to different targets. In my thinking, the same causal argument being used against several targets makes it rather fickle, hence my opening line.

Part of the reason “culture” is such an easy scapegoat is that its precise definition is rarely articulated, and the reason that its precise definition seems elusive might be due to the generalized confusion of its denotative meaning. For example, here’s the definition most relevant to this discussion, from the Merriam Webster online dictionary:

1 b: the set of shared attitudes, values, goals, and practices that characterizes an institution or organization.[i]

Interestingly, this definition (note that it’s 1 B) does not appear in Webster’s New International Dictionary, Second Edition Unabridged, published in 1949. The closest definition from the Second Edition Unabridged is:

5 a: A particular state or stage of advancement in civilization or the characteristic features of such a stage or state; as primitive, Greek, Germanic culture. b The complex of distinctive attainments, beliefs, traditions, etc. constituting the background of a racial, religious, or social group; as, a nation with many cultures.[ii]

A quick note on the sources: I’m confident that the Second International represents an authoritative source, if for no other reason that the thing weighs sixteen pounds. Also note that the closest definition that could apply to this discussion is all the way down to 5 a, whereas the online version is 1 b. The linguists in GTIM Nation will easily recognize that, when discussing a business model environment, the dramatic change in the generally-accepted denotative meaning of the word culture would almost certainly have been driven by the change in its connotative meaning. It’s this delta between the word’s denotative and connotative meanings that gives failing PMO directors ample room to misdirect blame for their failed PM-advancing initiatives. Those executives intent on enforcing accountability for failure can’t put their hands on “culture,” meaning that, if this excuse stands, there’s no accounting for the poorly-formulated technical agenda of the PMO.

But if the PMO director is intent on modifying (or out-and-out overhauling) “the set of shared attitudes, values, goals, and practices that characterize” the target organization toward a more PM-friendly footing, what’s their implementation strategy, specifically? ‘Cuz I can tell you right now that, in the order of the bullet points above,

• Capability maturity cannot be advanced by leveraging organizational authority,
• Very few Team members will follow a manager who has failed to articulate the optimal (or even workable) technical solution, and
• Any opposition to capability maturity isn’t a symptom of an incapable organization; rather, it is a sign that the implementation strategy is either weak, or actually unworkable.

I’m well aware that there are, in fact, some organizations that are highly resistant (if not impervious) to adapting even a basic PM capability. But I also know two other things about such organizations: (1) they are not based on anything resembling a meritocracy, since those companies that create and maintain a PM capability will generally out-perform their competition, and (2) non-merit-based organizations are a magnet for Jungle Fighters[iii] and Company Men[iv], and repel Craftsmen[v] and Gamesmen[vi]. In the former case, the organizational behavior and performance barriers that accompany non-meritocracies should be evident from the get-go, meaning that blaming the “culture” after the fact is disingenuous. In the case of the latter, it simply means that, in order to advance PM (or any other capability, for that matter) in the target organization, some way must be found to attract Craftsmen and Gamesmen, while repelling Jungle Fighters and Company Men, prior to engaging the implementation strategy. But in no case should “culture” be considered a valid version of a wicked PM problem.

It’s almost always just a convenient excuse for not developing an adequate implementation strategy.

[i] Retrieved from https://www.merriam-webster.com/dictionary/culture?src=search-dict-box on June 27, 2021, 10:18 MDT.

[ii] Websters New International Dictionary, Second Edition, G&C Merriam Company, 1949.

[iii] From [iii] Maccoby, Michael. The Gamesman: The New Corporate Leaders. New York: Simon and Schuster,1976.

[iv] Ibid.

[v] Ibid.

[vi] Ibid.

Any discussion of problem solving/wicked problems (ProjectManagement.com’s theme for June) should probably proceed from a very basic question: does the Project Team, particularly its PM, really want the problem solved? Of course, in PM space, the central “problem” is how to bring in the properly-executed scope on-time, on-budget, preferably in such a way that the customer would be willing (if not eager) to do business with the organization again. I’ve already spent considerable pixel ink exposing that our friends, the Accountants, do not necessarily share the belief that this is the central problem facing management, preferring instead to spend their efforts “maximizing shareholder wealth.” Indeed, of the four possible combinations of successful project/maximized fee, the Asset Managers’ preferences being at odds with the PM World becomes clear in the following payoff grid:

Since everyone’s on the same page in Scenarios B and C, I’ll jump straight to A and D. Scenario A isn’t as anomalous as it appears. Customer-recognized contingency events, or events of force majeure can easily make it impossible to complete a given project under the terms of its original cost and schedule baseline, but the customer still needs the final product/service. Any time an Over-Target Baseline (OTB) request is approved by the customer, though, one would have to believe that at least some level of consternation remains – unless, of course, you’re an Asset Manager, taught that the point of all management is to maximize shareholder wealth, and the contract in question is a Cost-Plus Percentage Fee. Based on their training, I would have to believe that this scenario is tolerable, if not acceptable to our friends, the Asset Managers.

Conversely, consider a relatively young organization that puts in a bid for some project work in a field that the company has targeted for growth. The Request for Proposal (RFP) stipulated a Firm Fixed Price (FFP) contract, and the organization, being new to this type of work, squeezes the Basis of Estimate (BoE) until it approaches the density of depleted uranium. The proposal team is elated when the contract is awarded to them, and most of their members become the core of the Project Team. They complete the work on-time, on-budget, down to the very dime. The Project Team is elated, the organization has attained a foothold in a targeted industry, has added the talent necessary to pursue more work in the field, and everyone attending the end-of-project celebration is in a good mood.

Well, almost everyone. That fellow in the corner, in the suspenders and bow tie, peering out at the Project Team members like he has an axe to grind? That’s the head of Finance and Accounting, who is well aware that, for FFP contracts, the difference between the final costs and the total project value is pure profit, and the organization didn’t get any. Those other benefits don’t appear on his Profit-and-Loss sheet, so he’s, well, unhappy.

There’s another dynamic going on in the whole does-everyone-really-want-the-problem-solved world, and for that I will turn to my favorite Organizational Behavior and Performance analysis structure, the Maccoby Archetypes. The absolutely brilliant Michael Maccoby theorized that there are four basic types of people in the organization:

• The Company Man tends to assume the persona of the team around him.
• The Craftsman really doesn’t care about for whom he works, but does care deeply about the quality of his output.
• The Jungle Fighter gets ahead by calumny and cloak-and-dagger tactics, and does not have the best interest of the organization in his heart.
• The Gamesman sees his compensation not as food on the table or roof over his head, but as tokens in some elaborate game. This archetype tends to be the most successful due to a combination of knowing the rules to the “game” better than others, combined with an enhanced willingness to take risks[i].

Now let’s consider the whole problem solving/wicked problem question with these archetypes in mind. The Gamesman would be the odds-on favorite for finding the optimal solution to a wicked problem, since he’s the type most likely to think unconventionally, and to take risks to pursue a non-template technical approach. Similarly, the Craftsman, caring deeply about the actual outcome of his energies, will readily recognize when a conventional approach will not deliver a satisfactory outcome, and will know when to abandon it.

But the Company Man? He’s going to be terrified of venturing outside of the norms set up by the macro-organization. He’d rather be chasing the wrong technical agenda while demonstrably within company procedures than actually right and outside the approved template. As for the Jungle Fighter, they live for the internal conflict generated by a Project Team confronted by a wicked problem. It gives them much more space to maneuver in those smoke-filled rooms.

Make no mistake: if your PMO is made up of more than a dozen PMs, the odds that they are all Gamesmen or Craftsmen is extremely small. Which brings me back to my original question: are you sure the PM even wants to solve the problem?

[i] Maccoby, Michael. The Gamesman: The New Corporate Leaders. New York: Simon and Schuster,1976.

When I saw ProjectManagement.com’s theme for June, Problem Solving/Wicked Problems, I asked myself what, exactly, makes a given problem “wicked,” by which I assumed to mean “excessively difficult,” as opposed to a problem that goes away if you pour water on it, as in The Wizard of Oz. I think the answer lies in the specific problem’s novelty: problems that are easy to address and correct may not have started out that way, but, once a workable solution was developed and demonstrated, subsequent appearances of said problem were readily addressed with a known remedy. Problems without precedent are a different matter. I remember seeing a definition of intelligence that asserted that true intelligence lay in the ability to encounter a novel situation or problem, recognize how it is similar to an analogous, previously-encountered difficulty, and providing a response that is either consistent with the previously-observed remedy, or the opposite of a previously-attempted but failed response. If you need to drive to work, and your Mazda automobile won’t start, and you recall that a Honda Accord of similar vintage had occasional battery problems, a suitable remedy might be to get a jump from a neighbor. If, however, your Mazda has somehow transformed itself into a large pterodactyl, seeking a pair of jumper cables would have to be considered a sub-optimal response.

Meanwhile, Back In The PM Robot World…

This aspect of truly difficult problems is one of the things that gives me hope that we PMs won’t be replaced by robots, at least not in the near future. Robots are essentially mobile computers, and computers (in 2021, anyway) aren’t that good at nuance, or recognizing analogous situations. Yes, I’m aware of the concept of Fuzzy Logic, where certain parameters do not have to be precisely stated or met in order to illicit a specific response, but this characteristic is a long way away from an ability to address unusual or unique problems. Interestingly, one of the definitions of the word “robot” refers to humans who behave in an automatic, reflexive fashion, which brings me back to the PM Robot world. I have worked with my share of PM robots (going by the latter definition), people utterly convinced that the solution to the problems they are facing is fully documented in procedures, the PMBOK Guide®, or even ProjectManagement.com blogs, and only awaits discovery. For these people, deviating from an approved template approach to PM problems represents some form of heresy, an unacceptable bending of the rules, automatically exposing its perpetrators as ignorant or incapable.

My take is more aligned with the Pareto Principle, this derivative being that, yeah, around 80% of the problems most PMs face has been dealt with before (“What has been will be again, what has been done will be done again; there is nothing new under the sun.”[i]). As for the other 20%, most of that set has also been encountered previously, it’s just that the most appropriate way to approach said problem hasn’t been agreed to, or documented, rendering it effectively unique. As for the residual, now we’re talking about the truly singular problem, in need of some sort of problem-solving technique.

Unfortunately, many problem-solving techniques don’t necessarily perform well in the PM world. Mazda is said to have engaged in an extensive trial-and-error approach to finding a suitable material to make its rotary engines’ rotor apex seals, resulting in hundreds of ruined engine casings before a suitable apex seal was discovered. But that was for an engineering process project, meaning that, once the apex seal problem was resolved, its “answer” could be replicated over and over. Most PMs, by definition, face work that is itself unique, aimed at delivering a product or service over a set period of time with a known quantity of resources. The trial-and-error approach, depending on the number of parameters being evaluated in combination, can take a very long time, and burn through many resources. Indeed, the team of engineers working the rotor seal problem at Mazda gained the reputation for wasting money that could have been better spent on other projects.[ii] Another problem-solving technique, using the process of elimination to discover a suitable technical approach from among a known set of alternatives, has the same time-and-resource-consuming issues.

So, what do you do if your Mazda has turned into a pterodactyl? Catch it, and sell it (it’s yours, after all, assuming you owned the car from whence it came). A living pterodactyl is, no doubt, worth millions, meaning you probably won’t have to drive to work for some time. Catching it shouldn’t be that big of a deal, as average adult pterodactyls were about the size of a large seagull. Now, if your car has turned into a Pteranodon, which could have a wingspan of over seven meters, that’s an entirely different problem.

But fetching a set of jumper cables is still not the solution.

[i] Ecclesiates 1:9

[ii] Retrieved from https://www.mazda.com/en/innovation/stories/rotary/newfrontier/ on June 14, 2021.