Game Theory in Management

In the Star Trek original series episode Friday’s Child, Captain Kirk, Commander Spock, Doctor McCoy, and Lieutenant Grant beam down to planet Capella IV in order to negotiate mineral rights with the planet’s inhabitants, a tribal people with an aggressive, warrior culture. The Enterprise contingent is quickly reduced by one, as Lieutenant Grant instinctively draws his phaser weapon upon seeing a Klingon among the Capellans, prompting one of their warriors to throw a kleegat at the unfortunate officer (and, yes, he was wearing a red shirt). This kleegat weapon bears a striking resemblance to a table saw blade, and the Capellans throw them much like we humans would throw a frisbee, except overhanded. As it turns out, the unfortunate red-shirt’s instincts were correct: the Klingon is present to help stage a coup d’état on behalf of Maab, who seeks to control the planet’s Ten Tribes in place of the current Teer, Akaar.

Meanwhile, Back In The Project Management World…

We PM-types have lots and lots of tools at our disposal, so many, it seems, as to obfuscate why we’ve been hired by our organizations in the first place (cough, risk register, cough). Rather than mock the use of the particularly superfluous ones, I’d rather focus on the over-engineering of one of the more fundamental ones, the Earned Value Management System (EVMS). In many business environs the EVMS actually bears the title of “Cost Processor,” though that’s not really its function. Costs are collected by the General Ledger, which leads me to the first of the invalid but commonly accepted business practices, that of attempting to understand cost performance as a function of spending. The way (not how much, mind you, but how) that an organization – including Project Teams – expends its resources is important to Asset Managers, since spending behavior often determines tax rates. It has nothing to do with Project cost performance, as the following mental exercise clearly demonstrates.

Imagine you are the PM of a $100,000 (USD) project, and in your winning proposal’s Basis of Estimate (BOE) you have bid $75K in labor, and $25K in equipment. At project completion you have spent $25K in labor, and $75K in equipment so, by Project Management standards, you’re fine, right? I mean, you came in on-time, on-budget. Obviously, you had to make several major changes in management strategy in order to get to an acceptable PM outcome, but that’s what Project Management is all about. If it could be done successfully using a template or robot, there wouldn’t really be a need for even the Project Management Institute®, amirite?

Don’t believe it for a second. Those “analysts” who pore over the spending reports are completely freaking out at this turn of events. You’ve overspent on equipment! And underspent on labor! This is a disaster, in their eyes. The insistence that project spending needs to mirror the original BOE or else the project is a failure has to be one of the most intellectually vacuous notions permeating the business world, and yet it will not go away. I think it stems from the concept that all management information dealing with costs simply must come from the General Ledger, where deviations from plan represent the only way of assessing cost performance from that particular source.

The other dopey notion I want to address has to do with the belief that EVMSs simply must have such features as an automated link to the General Ledger, Critical Path Scheduling package, or risk management (no initial caps) documents, or a dozen other aspects that really have nothing to do with its core function, that of reliably quantifying actual project performance. As I’ve mentioned many times in this blog, probably the most valuable pieces of PM information – at this rate of performance, how much will my project cost at completion, and when will that happen? – can be accurately (within ten points) derived from three data points. How much will it cost? Divide cumulative percent complete into cumulative actual costs, and there’s your answer. How long will it take? Take the same cumulative percent complete, and divide it into cumulative duration. Oh, sure, you can have an extremely sophisticated EV package, that can do all sorts of gee-whiz analyses, many of which I’m convinced are unnecessary, just as a wood working shop can have a variety of table saws with different blades installed for specific effects.

Or, you can just take the table saw blade, call it a kleegat, and throw it at anyone who’s threatening your life. It really doesn’t need to be installed on a powered-up machine to be planetary-government-changingly effective, just as EV information doesn’t need to have all the extra stuff attached to it to be operant. It just needs someone who knows how to throw use it.

“If you can’t explain it simply, you don’t understand it well enough” is a quote commonly attributed to Albert Einstein, though its authenticity is somewhat in doubt. Not to challenge a man whose very name is synonymous with “genius,” but I think there’s another possibility when it comes to reasons why people don’t explain things simply: they don’t want to. It could very well be that these people understand it all too well, and are deliberately choosing to obfuscate. Unfortunately, such people are not rare in the realm of Project Management.

The most dramatic and far-reaching implications of this tendency towards obfuscation has to do with the development of the Scope Baseline. Back when I was training new PMs on basic concepts, I liked to define the “project” as existing off into the future, with its only present-day artifacts consisting of:

• The Schedule Baseline describes the project in terms of units of time,
• The Cost Baseline describes the project in resources required, and
• The Scope Baseline documents the project using words to describe its intended end-state.

The Schedule Baseline can be documented in extremely precise terms, as can the Cost Baseline. But Scope? Imagine the amount of latitude a PM would have if the Cost Baseline was only defined down to the nearest $1M (USD), or the Schedule to the nearest year. Absurd, right? For some reason, having Scope defined at a proportionally higher level doesn’t seem to set off the nonsense detectors the way the other baselines do. As any seasoned (and quite a few newbies) PM can tell you, vaguely-worded Work Packages present a remarkable vulnerability for that deadliest of project pathologies, scope creep. From the customers’ point of view, imprecise wording in the WPs provides an avenue for under-performance, the bane of client representative PMs throughout history. With the stakes of mis-using smart-sounding-but-utterly-nonsensical terms so high, what can we do in PM space to provide early detection when such an affliction is headed our way?

While use of the most common corporate word-salad terms may work for things like company mission or values statements (if you haven’t seen Weird Al Yankovic’s video on the topic, you should), they’re highly detrimental for any statement of scope, whether in Work Packages, Control Account Plans, WBS Dictionaries, or (especially) Baseline Change Proposals. But rather than assert that GTIM Nation should set an extreme hair-triggered response to these terms, I thought it would be better to make a game of it, similar to this famous strip by Scott Adams, with a singular twist:

• If 1 – 2 of the terms from the table show up in a BCP, the Baseline Change Control Board members should roll their eyes (and reject the BCP),
• If 3-4 of the terms appear, question the legitimacy of the author to “do” PM (and crumple up the BCP, laughing as you throw it in to the trash can from across the conference room), and…
• If more than 5 of the terms appear, call out “Bingo!” (then roll up the BCP, place it into the body of a model rocket, go outside where the launch pad has been prepared, and set off the model rocket engine).

Here’s my recommended grid:

As for the use of these terms in a presentation slide deck, I believe they should only be considered ludicrous if they are paired up, such as “leverage scalability,” or “meaningfully seamless.” Another consideration for presentation slides should be the use of text ovals/circles/squares that have ill-defined lines connected to other text ovals/circles/squares. When these kinds of presentations show well-defined relationships, such as is represented by an organization chart, I have no problem with that. It’s only when those lines take on vague characteristics that my baloney detector goes off, such as those slides that conflate lines of communication, process flow, programmatic or organizational hierarchies, and the role of various functions or groups (“quality” comes to mind). Such disjointed presentations point to an incoherent strategy or technical approach, if not deliberate obfuscation.

Think I’m exaggerating? Let’s do a little thought experiment, where we replace a key word or phrase in a famously inspirational quote with a less-precise one, and see what that does to its context.

“Give me liberty, or give me some severe affliction.”

“…that if the British Empire and its Commonwealth last for a thousand years, men will still say, ‘This was their finest early-evening.’"

“Mr. Gorbechev, stop maintaining this wall.”

In closing, I would urge GTIM Nation, as well as all PMs everywhere, to refuse the use of vague language in constructing Scope Baselines or articulating business strategies. I think they should holistically leverage scalable transitioning symmetry to do something else.

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.