Game Theory in Management

What is the purpose of a Project Management Office? Before you answer, consider the analogy of the purpose of your local newspaper. Why do you think it exists? To inform its subscribers of goings-on? To chronicle the occurrences that influence the community?

No. The purpose of a newspaper is to sell advertising space. Not what the J-schools would ever admit, but undeniably true. Before I re-ask the question in the first sentence, let me invite GTIM Nation to reevaluate the purpose of the PMO along similar lines, because I want to submit that it’s not what most of us have been led to believe. What follows is a short list of the things that the PMO should never attempt, much less internalize as a key goal.

1. The PMO is not there to dazzle the other parts of the organization with their advanced expertise in the way their projects ought to be managed. This is true for two main reasons: (a) the people actually performing the technical scope of the project tend to focus on just that, and will see non-technical people from outside their particular project team as interlopers at best, interference agents at worst, and (b) our friends the accountants have a 500-year head start on creating the narrative that Generally Accepted Accounting Principals (GAAP) are the way of tracking cost performance on any business endeavor. This means that any group that attempts to advance a different notion of the optimal business approach will be seen as interlopers at best, interference agents at worst.
2. The PMO is not an agent of organizational change. Yes, I know this is a radical assertion, but consider: the project team that is being forced to accept what the PMO has decided is advanced PM techniques against their wishes will abandon them the nanosecond they are allowed to do so. The project team that has elected to employ the services of the PMO will continue as long as the PMO offers a desired service at an acceptable price point.
3. The PMO is not a vehicle for upper management to harangue the project teams into performing better. I’ve witnessed this mal-formed strategy time and again. Recall from last week’s blog, the step where the organization’s executives, stung by a prominent project overrun or delay, has agreed to invest in the creation of the PMO. When this strategy is being employed, the PMO is typically started with a generous overhead budget. As the new PMO begins to churn out official procedures and policies, mandating what the project teams must do in addition to what they’re used to, some level of resentment becomes imbedded in the organization. When the project teams begin to opt out of the reporting requirements, executive frustration sets it, but not with the non-performers themselves. It’s always with the PMO. The PMO was supposed to change the poor performers into good or great ones, right? What then follows is a reduction of the overhead budget for the PMO, with a requirement that its members charge more of their time directly to the projects they “support” – the very same projects that have been incurring resentment-by-proxy against their agitating superiors, with predictable results.
4. The PMO also isn’t there to kibitz about what could go wrong, phrased in Gaussian-curve jargon (GTIM Nation didn’t think I’d get all the way through this list without an anti-risk management snark, did you?).

In short, the PMO can’t directly change behavior, can’t educate the uninterested, and will fail as a proxy for frustrated upper management. Again, what is the PMO there to do?

Simple, but utterly at odds with conventional wisdom: the PMO exists to put into the hands of the decision-makers what they need to make informed decisions. Assuming this simple mission is the correct one (and it is) brings with it some specific strategies, again well outside conventional approaches. These include:

• Wherever possible, don’t change anything about the way the project teams currently conduct their business. It sounds impossible, but it’s not. For example, need a basic Earned Value Management System, but you’re unable to pin down the project team’s principals in order to get a Performance Measurement Baseline in-place? Here’s a quick solution: the Estimate at Completion (EAC) can be accurately (+/- 10%) calculated by dividing the project’s percent complete into its cumulative actuals. That’s right: TWO data points, one of which is already available via the General Ledger. Compare that to the project’s budget (also available through the General Ledger), and you have a usable Variance at Completion, which I would argue is the single most important piece of information that an EVMS can generate. (Extra credit PM hack: the same formula works for duration.)
• When you absolutely, inescapably need to change some part of the business process, make it as falling-off-a-log easy and simple to do. This will become essential when…
• In those instances where even a demonstrably simple change is blocked, respond immediately to the ones who are not participating. Make it clear to whatever organizational element that gave the PMO its initial authority how easy and simple it would be to comply with your suggested change.
• Every single person who cooperates with your implementation is golden, even if they are providing schlock data. Better data can be taught, cooperation cannot.

Counter-intuitive? Sure. However, as available strategies for implementing your PMO go, this one has one distinct advantage: it’s aligned with the true purpose of the Project Management Office.

And that advantage is really all you need.

There’s an off-chance that I know a thing or two about this month’s ProjectManagement.com’s theme of Project Management Offices, or PMOs. PMI® actually published my book on the topic, Things Your PMO Is Doing Wrong (PMI Publishing, 2008), where it spent a bit of time on its Marketplace bestseller list. As the title indicates, much of the book addresses common but ineffective (or even counter-productive) strategies that PMOs use in the pursuit of their objectives. I was inspired to write that book, not because of my predilection to be the highly-irksome fellow in the corner of the conference room who is constantly of the opinion that everyone else is getting it wrong, but due to the sheer frequency of the employment of these flawed strategies. It’s almost as if the most formidable barrier to successfully advancing Project Management as a capability across the macro-organization was receiving short-shrift, if not invisible altogether.

Before I get to naming this PMO-wrecking monster, let’s review the typical life-cycle of the failed PMO:

1. A medium-to-large organization encounters either one massive project disaster, or a series of medium-sized overruns and late deliveries, which wakes them from their PMO-less slumber and motivates a change. At least one person in the upper levels of management has heard of those people over at the Project Management Institute®, and decides to…
2. Create the PMO. They’ll start by pinging existing staff to see if there are any PMP®s in the bunch, and will combine a couple of them with another who’s a new hire.
3. The newly formed PMO will meet to assess the current PM maturity level of the organization. Panic sets in.
4. The team will start to generate policy documents that require all projects, or projects above a certain size, to establish things like a Performance Measurement Baseline, or Critical Path Schedule (resource-loaded, in order to do the PMB), and a calendar for pulling status monthly. The head of the PMO will also schedule project reviews, where the cost and schedule reports stipulated in the recently signed-off policies will be presented.
5. The first project review is held. Most of the projects will be in marginal compliance with the policies, but others won’t even try. Notably, at least one project definitely over the compliance threshold won’t present, and will offer up some excuse why they couldn’t. Upper executives will allow it, either because they’re not convinced of the added value of these new meetings, or else because the titular PM of the defecting project is too highly-placed to confront.
6. At the next project review meeting, other projects begin to opt out of reporting. After all, the dumpster fire that led to the creation of the PMO is fading from memory, and those responsible have convinced those that created the PMO that the previous failure was due to some anomaly, and is unlikely to happen again.
7. The no-value-added crowd, oh-so-ever subtly supported by the accountants, find common cause with those who maintain that the new policies are too difficult to follow, leading to more project defections.
8. The plug is pulled on the PMO. Its members, firmly believing that they would have succeeded with a little more top management support, are reassigned, or leave for an organization in Step 2.

I’m fairly confident that many (if not most) of GTIM Nation will recognize this pattern, either having seen it unfold in this manner, or else having lived it. I would like to pause and point out things that were not part of the template: the ultimate failure was not due to a lack of talent, nor a poor selection for the Critical Path or Earned Value Methodology software platforms. It wasn’t due to a lack of a risk management capability, nor did quality issues sink the effort. And none – none – of the documents churned out by the non-certified guidance-generating organizations could have presented the insight needed to push the PMO over the long-term sustainable goal line.

After this set-up, my choice for the most common and dangerous PMO-killer is pretty clear, but I’ll go ahead and state it anyway: the coin of the PMO sustainability realm is cooperation. I believe that a primary reason that this barrier has such an effective cloaking device (note to editors: please reset the weeks-since-the-last Star Trek reference meter to zero) is due to the initial enthusiasm of the PMO-creating organization, way back in Step 2. Coming right out of the starting gate not only do the upper executives express their support, but the existing PMs offer their backing as well. How could they not? At that point in the overall process, they’re under a performance microscope. To openly oppose the PMO creation initiative would be career suicide, at least within that organization. But make no mistake – if these PMs could make a plausible argument on why they should be allowed to escape upper management scrutiny, they will. It’s basic human nature. They’ll slow-roll or silent veto the policy requirements, or assert that their projects fall outside the parameters for policy compliance, or push the idea that their project is so well run as to not need any additional overhead expense, or…

The list goes on and on. I’ll be maintaining this until I exhaust all of the pixel ink ProjectManagement.com gives me each week: the key to creating a sustainable PMO is achieving the cooperation of those in the macro organization. What is the best strategy for this kind of implementation? Well, first you…

Wow, look at that! I’ve used up all of my ProjectManagement.com pixel ink for this week. Tune in next week for the key aspects of the optimal

Delilah Rene is an American radio personality with an audience of an estimated eight million listeners.[i] Besides the music she chooses to play herself, she takes calls from people in relationships who seek to either communicate some feeling or thought for a distant significant other, or are looking for some sort of insight into their particular situation, leading Delilah to select an appropriate title and play it. Since Delilah’s eight million listeners are quite probably more numerous than the entire population of GTIM Nation, I should probably refrain from offering up any criticism. Still…

Here's my problem with Delilah’s show: when she’s merely passing along long-distance expressions of gratitude or affection, the segment is merely sweet. But, in those instances where she’s giving out advice, “Dear Abby” style, in the “Delilah’s Dilemma” segment, she does so in almost every instance without what I would consider a sufficiently in-depth knowledge of the particulars of the circumstances she’s advising. Besides the fact that she’s only hearing from one of the parties, which represents a classic ex parte situation, the callers I’ve heard on her show rarely have more than sixty seconds to lay out what’s going on. I don’t know about the rest of GTIM Nation, but I don’t think I could adequately describe my strategy for loading an automatic dishwasher inside of sixty seconds, much less inform an independent consultant of the particulars she would need to know in order to render anything resembling insights into a problematic personal relationship.

Meanwhile, Back In The Project Management World…

What would happen if there were a PM-themed equivalent of Delilah’s show, where overly distressed managers could call in, seeking to send a message to customers or co-workers, or receive some insight based on an extremely brief description of the problem, accompanied by a particular song selection? For the purposes of this parody, and to further establish that I’m presenting a farcical derivative of Delilah’s show, I’ll name my PM-guru host “Samson,” and I’m thinking it would go something like this:

Samson: Welcome to Wednesday night’s show, I hope you have all had a good first half of the week. Tonight I want you to relax, unwind, and be grateful for the Project Management opportunities that have come your way. We have on the line Kevin – Kevin, welcome to the program, what can I play for you tonight?

Kevin: Hi, Samson. I have a Baseline Change Proposal due to be evaluated by the Change Control Board tomorrow morning, and two of the members of that board are from my customer’s management team. I need this BCP to cover some stuff that these two board members added – informally, I would like to point out – to my scope, but I don’t think they will admit to committing scope creep. I think they want to present as if the cost overrun is due to poor performance. I just want to let them know that I’m on to their scheme, and they had better not put up a fuss on this review process. Can you help me communicate that?

Samson: Of course, Kevin. I’m sure you know that these relationships can be complex, and customers don’t just push additional scope requirements onto your baseline unless they think you’ll be compliant, and allow it to happen. It makes them look good to their superiors, after all, and if you ever appeared to be a pushover…

Kevin: No, I never did! They just…

Samson: Of course not, Kevin. But I do have just the song to send to Kevin’s two customers, who took advantage of his spinelessness.

(Plays “Money,” by Pink Floyd.)

Samson: I hope Kevin’s customers heard that selection, and will act accordingly at tomorrow’s BCCB, which is to say, should they recognize Kevin, they won’t seek frustrate him. Oooh, wouldn’t that be something if every single PM named “Kevin” who has a change proposal before a change control board tomorrow, were to fail to get approval, just because of this show? Next on the line is David. Hello, David. What’s on your mind tonight?

David: Well, first off, based on what happened to Kevin, I’m using an alias. “David” isn’t my real name.

Samson: Whatever makes you comfortable, “David.” What can I play for you tonight?

David: My customer is the ultimate nitpicker. He pours over every single Cost/Schedule Performance Report. The reporting level of the Work Breakdown Structure is set below the Work Package, and the Variance Thresholds are locked in at 5%. I can’t have a foreman call in sick without incurring a 5% variance at the WP level, for crying out loud. Can you pick a song for my customer, that leads him to take a more reasonable position on project reviews?

Samson: Sure I can, David. Your customer, if he’s listening, will be inspired, I’m sure. Using an alias may prove futile – “David” or no, how many major projects are out there that (a) have a reporting level below the Control Account, (b) have a Variance Analysis Threshold at 5%, and (c) has a role of “foreman” in the current task list? If this oppressive client of yours is listening, I’m sure he will recognize the project, and therefore yourself.

David: Hey, I didn’t call him those things! You did! I was just trying…

Samson: Of course not, David (snickers). But here’s the song I’ve selected just for you and your scrutinous customer. (Plays “Everybody Wants To Rule The World” by Tears for Fears. After the song finishes playing…)

Samson: I’m hearing from my producer that “David” is still on the line. Is that right?

David: Yeah, that’s right, and I just want to say that you never actually offered any advice, and, while your choice of song to play was pertinent, it didn’t help my situation at all.

Samson: Never underestimate the power of PM radio, David. At the very least, you could have served as a cautionary tale to others to never allow your customer to set the reporting level of the WBS below the Control Account level. Well, that will just about do it for tonight’s show. You’ve been listening to Samson.

(Finis)

[i] Wikipedia contributors. (2019, October 23). Delilah (radio host). In Wikipedia, The Free Encyclopedia. Retrieved 01:08, November 3, 2019, from https://en.wikipedia.org/w/index.php?title=Delilah_(radio_host)&oldid=922667066

No discussion of social media in PM would be complete without a review of the comment sections that follow social media posts, articles, blogs … virtually any idea that’s written down and transmitted is susceptible to readers who like to comment on it. I think it’s a fascinating dynamic, in that the people who read these published ideas clearly like to read, otherwise they wouldn’t ingest the material in the first place in order to comment on it. But, with (usually) a veil of anonymity, the level of discourse quickly becomes something you’d expect out of the pixel-generated equivalent of an unsupervised playground of 4^th graders with IQs over 130. The comments can be brilliant and profane, insightful or completely tangential, all within the span of a few lines. It got me to thinking…

Meanwhile, Back In The Project Management World…

…what would happen if the sharply adversarial contributors to a typical news or political opinion (not much difference, sadly) site were to be people steeped in the Project Management world? Not the way PMI®/Project Management.com does it, which requires the commenters to identify themselves. No, this only gets really entertaining (and gnarly) when a level of anonymity is present, like so.

Scene: the comment section of a news story that cold fusion had been successfully attained, during an experiment at a nuclear accelerator. The commenters (well, most of them) are PMP®s, using pseudonyms, and they’re in a caffeinated mood.

Scope Manager (SM): What do you want to bet they were looking for something else entirely, and came across the formula for cold fusion by accident?

Earned Value Manager (EVM): What difference does that make? Whatever the Performance Measurement Baseline for that project, what they delivered is going to be worth it!

Communication Manager: (CM): Hey, what about those guys, Pons and Fleischman, didn’t they do that already?

SM: No, you idiot, that was fake.

CM: I’m not the idiot, you are.

SM: No, you are.

CM: No, you are.

Quality Engineer (QE): I noticed they didn’t publish the failure rate. This one is probably a fake, too.

Procurement Specialist (PS): If you think about it, if they actually attained it, but had to spend more in parts and materials than the amount of energy produced, it’s wasteful. I could probably buy a million candles to do the same thing.

QE: You’re an idiot.

PS: I’m not the idiot, you are.

QE: No, you are.

PS: No, you are.

Risk Manager (RM): What are the odds?

SM: Now that’s dopey. They did it! Computing the odds of it ex post facto is completely irrelevant.

RM: No, it’s not! It can inform future portfolio management decisions about how to most effectively spend research and development dollars!

CM: Bingo! The risk manager just put me over the top in “business jargon bingo!”

Anonymous Poster #1 (AP1): I hate Trump!

Anonymous Poster #2 (AP2): I support Trump!

Anonymous Poster #3 (AP3): I hate Brexit!

Anonymous Poster #4 (AP4): I support Brexit!

AP1, AP2, AP3, AP4: You are all idiots!

CM: All you anonymous posters realize that you’re commenting on a story about the attainment of cold fusion, right?

AP1: It would have happened earlier if not for Trump!

AP2: It happened because of Trump!

AP3: It would have happened earlier if not for Brexit!

AP4: It happened because of Brexit!

QE: Hey, communications expert, don’t feed the trolls. I would have expected an expert in communications to know that.

CM: Yeah, and I would have expected a quality expert to avoid using identical phrases in consecutive sentences.

SM: Guys, you’re still outside the scope of the article. Cold fusion, remember?

AP1: Wait, all of the people on this thread are project managers? Don’t you people just talk about “free float,” or “cost performance indexes?”

CM: That’s “cost performance indices.” There, fixed it for you.

AP2: We don’t need no “communications expert” playing the role of grammar police. Its not okay.

CM: Double negative, and it’s “it’s,” not “its.”

AP2: You %^&*( piece of #$%^!

Comment Section Moderator: Due to the profane and irrelevant nature of this thread, this comment section is now CLOSED.

* * * * *

It may well be that some topics should never be subjected to anonymous commenting. And, to that end, I feel compelled to dissuade GTIM Nation from commenting on this blog using any of the pseudonyms used above. This is not a dare.

Probably.

The title, of course, is a derivative of Metcalf’s Law, which pertains to network theory. My interpretation is that relatively small perturbations in far-flung parts of a large network can (and do) initiate cascading events that end up having massive impacts on other parts of the network, sometimes even its central, major structures. In popular culture, Metcalf’s Law is often reduced to the rhetorical question “if a butterfly flaps its wings in Brazil, does that cause a hurricane in Texas?” As less fanciful (and observable) reduction can be seen in those instances where a sharp noise causes an avalanche, which brings me to ProjectManagement.com’s theme for October, social media and PM. If social media represents a threat to Project Management, my guess is that it’s due to the implications and manifestations of Metcalf’s Law.

Consider the elements that go into a typical risk management plan. Weather might affect construction projects, rate changes will affect subcontractor-heavy projects, and technology advances are notorious for disrupting Information Technology projects. And yet, none of these are relatively small perturbations. They’re pretty large, and seasoned PMs are expected to be on the lookout for them, and have Plans B, C, …N at the ready for when they occur. And yet, according to Sandboxmodel.com, one in six IT projects surveyed experience a 200% cost overrun.[i] If this is the case for IT projects in general, and the causal elements are recognizable prior to the establishment of the cost baseline in such a way that they could be expected to make an appearance in the risk management plan, then an awful lot of unforeseen (unforeseeable?) causal elements are afflicting IT projects, and on a consistent basis. Could it be that the issues that cause overruns and delays are sufficiently invisible until such a time that they have already initiated a cascade effect, and it’s too late for managerial intervention to stop them from damaging project performance? Nassim Taleb refers to such manifestations as “black swan” events, defined as (again, my interpretation) occurrences that (1) have a significant (or even catastrophic) impact, (2) that nobody saw coming, (3) but which invariably invite some sort of analysis that determines that such an occurrence could have been predicted, if only the right people were employing the correct methods. In the PM world, the analysts pushing Black Swan Element #3 are the risk managers. I get it. It’s human nature. But it’s also flawed due to Metcalf’s Law, and such ex post facto kibitzing has no place in modern management science.

Circling back to social media and PM, does the existence of large, highly interconnected enhanced communication sites, such as the giants of social media, provide a natural environment for the kinds of cascading events predicted by Metcalf’s Law? To ask the question is to answer it: of course they do. Such sites have literally millions of participants. If the entire population of Earth is connected to each other within six degrees of separation[ii], then surely social media has reduced that number by at least a couple, intensifying the conditions for a cascading effect.

So, we have the first condition for applicability of Metcalf’s Law in place, in that we are dealing with a large and potentially powerful network when we’re discussing social media and its broad participation. Can small perturbations have a cascading effect? Absolutely, as is amply documented here and here, among many other sites. I would like to point out that many of these “small perturbations” represented blatantly absurd rumors which, nonetheless, spread like wildfire across large populations who took them as truthful, and made manifestly unwise decisions based on that assumption.

In the case of social media’s impact on PM, what we have here, in my humble opinion, are conditions that are extremely powerful, utterly unpredictable, and fall entirely within the realm of communications management. What can be done?

My first recommendation flies in the face of conventional communications management (yeah, I know GTIM Nation is shocked), the notion that all stakeholders should be “engaged” throughout a given project’s life-cycle. I think this strategy makes projects more vulnerable to the negative consequences that can easily and unpredictably come about from cascading events in communications, consequences that have become even more powerful, likely, and unpredictable with the advent of social media platforms.  I believe that a far better approach would be to keep one’s project scope, cost, and schedule as quiet as possible. Customers on Cost Plus work, of course, need to be kept informed on an ongoing basis. For most other PMs, the marketing aspect of landing your project work has already taken place – now it’s up to the PM to deliver on something that’s already been marketed and sold. If the project represents some slick new technology being brought to market, with implications of new opportunities for analogous advances, let the organization’s Strategic Managers[iii] handle it. The highly volatile nature of intra-project communications, augmented to Cecil B. DeMille proportions by social media via Metcalf’s Law, renders the whole “engage all stakeholders” axiom dangerously misguided.

Am I being overly fussy about this? Perhaps. But there’s a reason loud noises are discouraged in known avalanche zones, and following conventional wisdom on stakeholder engagement in the presence of social media, in my view, is like handing a twelve-year-old a shiny new starter pistol as you’re driving through one.

[i] Retrieved from http://www.sandboxmodel.com/content/project-failure-rates-facts-and-causes on October 20, 2019, 15:18 MDT.

[ii] Wikipedia contributors. (2019, October 19). Six degrees of separation. In Wikipedia, The Free Encyclopedia. Retrieved 21:41, October 20, 2019, from https://en.wikipedia.org/w/index.php?title=Six_degrees_of_separation&oldid=922076946.

[iii] Reference my previous blogs, where I define the role of Strategic Management as dealing with issues of the organization’s market share.