Game Theory in Management

Type “teammates running into each other” into the search bar in YouTube, and a bunch of videos pop up, the first of which involves (American) football players taking down their own teammates. It’s pretty funny, but sympathy-inducing at the same time. These are professional athletes, after all, and they train at an intensity level that would probably kill me. There are so many moving parts in a game, and even the best-coached players are going to have episodes where their comrades are in the wrong place at the wrong time, leading to (often) game-changing collisions. It got me to thinking what an analogous situation would be in …

Meanwhile, Back in the Project Management World…

On more than a few occasions I’ve discussed the axiom, Quality, Availability, Affordability – pick any two, as it pertains to PM. Circling back to ProjectManagement.com’s theme for September, Organizational Agility, I do not think that this means that Availability need always be one of the selected attributes of an organization in order to achieve this “agility.” Rather, I believe that a simple strategic alignment is in order.

When Project Management was entering into its boisterous, early-acceptance phase, the term “Matrix Management” entered into the lexicon. Matrix Management is predicated on another theme I’ve often written about, that Asset Management and Project Management are two different things, with differing objectives, techniques, and supporting information systems. Matrix Management’s early theorists (like the brilliant David Cleland) pointed out that, in order for an organization to position itself for project success, there had to be an agreement among the owners of the assets and the PMs so as to avoid projects crashing due to unavailability of the resources needed to complete the scope in the time promised. Companies often (almost exclusively) organized around their assets and those assets’ capabilities (organization charts, also known as the Organizational Breakdown Structures, were in existence wayyy before anybody came up with the first Work Breakdown Structure), with the owners of the scope – PMs – viewed as almost outsiders, seeking their cooperation. In reality, of course, the owners of the scope were also the owners of the budget. However, if the organization wasn’t managing its portfolio very well, the owners of the assets were in for a tough time. One week their quality engineers would be working overtime, while the designers had nothing to do (and therefore no charge code to pay them), with the next week bringing in the exact opposite scenario. It wasn’t at all unusual for one of the companies I was working for in the 1980s to wait until a proposal had actually won before they would make the preliminary attempts at collecting the resources needed to execute the scope – and this was before the age of on-line recruiting.

So, we’ve had this disconnect/rivalry between the Asset Managers and PMs for some time. Organizations where the PMs made the final determination of the resources working on specific tasks were known as “strong matrix” companies, while those where that decision resided with the Asset Managers were known as “weak matrix.” Strong matrix organizations were better positioned for project success, but their employees were often stressed out, not knowing if their next paycheck would be their last, and seeking more secure positions with other companies. Strong Matrix organizations were natural fits for a strategy of pursuing Quality and Affordability, making them highly attractive to potential customers, but at the expense of Availability. Like I said, sometimes they didn’t even bother to begin to assemble the needed resources until after the contract had been announced in their favor.

To Become Agile, Align Your Strategic Priorities

Back when I was carrying on about how the PMO needed to decide which two of the three characteristics it was going to pursue, I was rather specific in deriding those “managers” who refused to acknowledge the relationship among the three, and insisted on attaining Quality, Availability, and Affordability simultaneously. This is the first roadblock to organization-to-project alignment, when the PMO either doesn’t have, or hasn’t clearly articulated, their strategic approach to selecting their priorities.

In those instances where the manager performs in a Strong Matrix organization, a robust, even formal communication relationship with the owners of the assets is the only way to achieve an “agile” position. Asking the line managers to suddenly and dramatically increase or decrease a given capability is always going to be a tall order – talent takes time to attract, cultivate, or re-assign, almost always more time than the interval between a contract announcement and the commencement of the period of performance. Conversely, in Weak Matrix organizations, the more robust communication avenue must be from the Asset Managers to the Portfolio Managers, who decide which types of scope the organization will pursue. Knowing what types of projects are likely to be proposed means foreknowledge of what kind of scope will be walking in the front door, making obtaining/retaining the necessary skills much easier than it would be under a Strong Matrix environment.

I kind of get a kick out of imagining an NFL locker room, where the players are perusing The Project Management Journal, and calling out to their comrades “Hey, check out where this weak matrix organization is complaining about a lack of resources available for activities on their critical path!”

Not long after PMI® awarded me my first monthly column in PMNetwork magazine, The Variance Threshold, in 1997, I received an invitation to be the keynote speaker at a conference held in Silicon Valley, entitled The Future of Project Management. I don’t remember the precise title of my talk, but its topic was something that I felt was fairly self-evident: that there were charlatans among us in the PM ranks, and that their ideas should be challenged before they made their way into the common PM codex. At the end of my talk most of the attendees handed in their speaker eval forms, rating me on a scale of one to five.

My composite score was a three. Nobody gave me a three. They all gave me either a one or a five.

I was somewhat discombobulated by this, but not the conference’s sponsor. He told me that that was the result he had hoped for when he issued the invitation, having been disappointed by more anodyne speakers in the past. He told me that, having read my articles, he was confident I would be anything but anodyne. It did get me to thinking, though: was the legit/illegitimate divide in PM really that close to being right down the middle?

Sometime later I was invited to participate in PMI®’s issuance of the Earned Value Management Practice Standard, which I gladly accepted. I was asked by the PM to take a stab at the Introduction and Chapter 1, and to have it ready prior to the editorial committee’s first meeting, in Costa Mesa, California. I wrote a few thousand words, polished them, transmitted the document, and set out for Costa Mesa. The editorial team in attendance comprised about a dozen people, and we were meeting in a hotel/conference center, in a ballroom with tables set up in a “U” pattern. The PM and I were at the bottom of the “U,” with a laptop hooked into a projector throwing my words onto a screen opposite. Five “contributing editors” (who hadn’t actually written anything, but were, apparently, there to evaluate what I had written) were seated on each side of the “U.”

The PM projected the first few paragraphs of my Introduction onto the screen. My memory is that all of the “contributing” editors to my left hated it, while all the ones to my right thought it was well-written and insightful. After what seemed like hours of haggling over those 300 words, the PM advanced the file to the next 300 words. Again, my perception, but all of the people on the right side of the tables, who had just gotten done praising the Introduction, ripped into the projected text, while the ones on the left praised it as well-written and insightful. This went on the entire weekend. I’m fairly sure none of the advanced polarization abated by the time we all went back to our real jobs.

I have dozens of other, similar stories, where a collection of PM aficionados would prove to be sharply divided on certain elements of the trade. I’ve long maintained that you can get fifty PMs into a room and they won’t agree on the color of an orange, and this notion has only been reinforced by the number of self-anointed Project Management “experts” I have encountered who, in fact, reveal themselves to be hopelessly misguided, and on a consistent basis. When challenged, these invariably crank up their belligerence while tossing aside any semblance of logic or the rules of evidence, confident that no one will continue a challenge in the face of such adversity.

A few of the topics that seem to draw the sharpest polarizations include:

 What do Camp A’s assertions have in common? A few things, to wit:

• They are all based on a priori assumptions, i.e., no thorough analysis has been performed to test their validity (see my posting from a few weeks back, When Did A Priori Become A Priority?).
• They will often show up included as paper presentations at PM seminars, either on their own or as part of a larger argument.
• Their adherents are absolutely convinced of their efficacy, even in light of direct evidence to the contrary.
• And, finally, whenever I encounter someone who holds these positions, my respect for their level of expertise is severely eroded (not that that counts for anything, it’s just part of the pattern).

Since the Project Management Institute® in general, and ProjectManagement.com in particular, are predicated on a scholastic model, you won’t find any grand, sweeping official proclamations for or against either set of assertions as being valid or invalid – it’s just not the way they rock. Here in the blogosphere, though, it’s a different matter. I can pass along to GTIM Nation that I believe Camp A is invalid, and Camp Z is (sweepingly) right, and readers are welcome to challenge to their hearts’ content in the comments section.

So, yeah, Camp Z is on the right side of these particular divides.

Change my mind.

Scene: Far into the future, a professor leads a small team of graduate students around the ruins of multiple buildings. One tall young man begins asking the professor a question.

“It’s amazing to think that all of this was only recently discovered when the New Philadelphia Subway Bullet Train extension project accidentally came across it. What evidence do we have that this was the site of the discovery and propagation of Project Management?”

“A few things” the professor responds. “But to explain it you have to know some things about the way the ancients viewed the management sciences. Back then, they had three levels in their managerial caste system, and the most insightful were comprised of people they referred to as ‘accountants,’ but we know them as beancounters. We know this because, of the very few electronic records that survived the Coronal Mass Ejection of 2056, their ledgers were far more common than the artifacts from the Project Managers, or even the Strategic Managers.”

A young woman graduate student with red hair speaks up.

“It’s hard to imagine a time when Project Managers were rejected for their beliefs.”

“Wait a second” interjects the first young man. “Isn’t ‘rejected’ kind of a strong word?”

“Perhaps” responds the professor. “But ‘ignored’ is probably too kind a word. You see, back then they didn’t see Asset, Strategic, and Project Management as co-equal, vital aspects of conducting business. Since the government collected taxes solely on the basis of the profit-and-loss statement, every business had to have a robust Asset Management capability, whereas having any PM capability at all was purely optional.”

“’Optional’ only in the sense that a business wants to succeed” adds the red head.

“We know that now, but back then only the best-run organizations had embraced it, and they weren’t about to tell their competitors the key to success.”

“But that information was widely available, wasn’t it?” asks an eager, blonde man.

“Yes, and that’s part of the reason I’ve brought you to this dig. We have reason to believe that the high levels of project success we’ve enjoyed as a civilization may have started here. Over one thousand years ago, this place was called ‘Newton Square,’ and this particular set of buildings housed the Project Management Institute®.”

“Wait” exclaims the tall young man. “Are you talking about the Project Management Institute®, the immediate predecessor to the Galactic Management Institute?”

“The same, the very same” responds the professor.

“I thought that was a just a legend” adds another student.

“No, it was very real. And, when they began their work of discovering, refining, and publishing their findings, it challenged much of the conventional wisdom of the time. For example, many companies were comparing time-phased budgets to actual costs to try and get a handle on their cost variances.”

At this, the group giggles.

“Didn’t they know about Earned Value?”

“Sure, thanks mostly to the Project Management Institute®. But the practice went on for some time. These companies were also known to ‘manage’ their schedules based on lists of action items.” The group gasps in astonishment.

“Perhaps that’s because they had such simple projects back then.”

“No, we know that they could and did perform projects with thousands, or even tens of thousands of activities. But, again, only the most successful companies used Critical Path Methodology, and the others, well, made do.”

“Wait a second, professor” interjects the eager blond man. “If ancient managers’ main source of information was from the accountants, and they had only uneven access to Project Management information systems, how did they know which tasks required their direct attention, and which could be left mostly alone? Even back then the managers’ time wasn’t infinite.”

“That’s a good question. There is some speculation that ancient PMs may have been forced to use a variation of Gaussian Curve analysis that attempted to predict which activities were ‘riskier’ than the others. They called this approach ‘risk management.’”

“No … way!” the entire group exclaims, in unison.

“Really. There are actual paper fragments of the document that led post-apocalypse analysts to believe that the Project Management Institute® may have been an actual organization, the predecessor to the Galactic Management Institute, and these fragments make reference to risk management.”

“What are the odds?” the red head jokes, and the group laughs.

“It would have been so interesting to live in those times” the tall man speculates. “Knowing what we know now, of course.”

“I’m afraid it might not have helped all that much” rejoins the professor. “Do you see this manuscript, which one of my colleagues unearthed two weeks ago? That fellow wearing those fabric bands over his shoulders, known back then as ‘suspenders,’ we speculate was an accountant. See how he sneers at the woman across the meeting table? Now, take this magnifier, and zoom in on her lapel pin, the gold object on her shirt.”

“P … M…P … what’s a PMP®?”

“It was the main certification of the Project Management Institute®. We believe it stood for ‘Project Management Professional®.’ But look at the contempt with which the accountant holds her. We believe that most of the era’s universities and business colleges taught that the point of all management was to ‘maximize shareholder wealth,’ leading to PMs being seen as possessing an alternate management science world view.”

“Absolutely amazing, all of this. Thank you so much for bringing class out to this site, professor” begins the red head. “But tell us, wasn’t there anybody who had insights about the true nature of management science, and Project Management’s place in the overarching structure?”

“Well, there was this one group of people known as ‘bloggers’…

It was another dark and stormy night. I was sitting at my desk, reading the stenciled letters across my frosted glass office door, yrrebpsaR ylnatS, evitceteD etavirP, when I got a call from my point of contact at the Project Homicide Division, Cameron.

“Get down to the Monolithic Mansion Project Office – there’s been a bloody overrun. I’ve collected all of the suspects in the Hatfield Conference Room.”

“The what conference room?”

“It’s in the basement. It’s named after some obscure ProjectManagement.com blogger. Just get down here.”

I drove through the rain to the Project Office, and was escorted down to the basement conference room where the principals from the Project Team, executives from the customer’s organization, and Cameron were gathered around a large table. The room had been converted in to some sort of project “war room.” Gantt Charts on ANSI E-sized plots and those insidious traffic light charts hung on the walls, like giant garish but unframed children’s art projects. Another Gantt Chart plot was on the table, the subject of everyone’s interest. A quick glance revealed why: the bright red status bar extended well beyond the Project Complete milestone. A nearby Cost Performance Report (Format I) showed, in the lower right-hand corner, a humongous negative Variance at Completion. Yes, a gravely serious PM crime had been committed, and everyone in the room seemed to have a different opinion about who was responsible. I took a seat near the wall, and listened as Poor Initial Estimate was in the middle of a heated exchange.

“I know everyone likes to believe that I’m responsible for this project disaster, but it couldn’t have been me! I’ve been completely consistent with all the commercial project cost databases for this type of project from the get-go!”

One rather slovenly fellow was quick to respond.

“If that’s the case,” began Poor Performance, “how do you explain your presence in almost all of the Variance Analysis Reports?”

“All of you always blame me, but it’s virtually never my fault! At this point, it’s almost as clichéd as the butler committing a murder in a mystery novel! Even though I get most of the blame, it’s been my experience that it’s you, Poor Performance, who’s usually guilty, but no one likes to admit it!”

“Not so” Poor Performance began. “It’s been my experience Changing Rates is usually the culprit.”

“Which one of us?” one of a pair of pretty twins queried, “Changing Labor Rates…” with a nod to her sister, “or Changing Other Direct Costs Rates?”

“Either. Or both.” sniffed Poor Performance.

“Well, it wasn’t me” began Changing ODC Rates. “I can prove that I wasn’t a factor – none of my changes were above the inflation rate. You did adjust for inflation, didn’t you, Poor Initial Estimate?”

“Of course.”

“Well, I did change” began Changing Labor Rates, “but the Project Team adjusted the labor mix among senior and junior personnel to compensate, so it couldn’t have been me.”

“That also seems to vindicate me” added Poor Performance.

“Not necessarily” interjected Scope Creep.

“Don’t think so?” snapped Poor Performance. “What about you? Do you have an alibi?”

“Yeah” replied Scope Creep. “It’s called the Change Control Log.”

“Change Control Logs track formal changes to the baseline, which really has nothing to do with you, does it? You’re all about informal changes” Poor Performance needled.

“Nobody thinks I did it, do they?” a small child’s voice asked. She was so young and small I didn’t notice her when I walked into the room.

“No, sweetie” replied Poor Initial Estimate. “Nobody really thinks that No Risk Management Plan could ever bring down a project.”

“Then, who? The responsible party is in this room” Changing Labor Rates stated coolly.

“I think I can help narrow it down” I stated, as everyone turned to look at me.

“Raspberry! I’ve heard of you, some sort of PM Detective hot-shot.” Scope Creep stormed. “Since you’re such an expert, why don’t you tell us what happened?” he taunted.

“A little process of elimination is in order. Poor Initial Estimate is right – she couldn’t have done it. I’ve been comparing the original Performance Measurement Baseline against the estimates databases for similar work, and she’s telling the truth. The initial estimate, if anything, was a bit on the high side. Changing ODC Rates’ story is also consistent with the facts—she didn’t change significantly, and her sister Changing Labor Rates is also being truthful. Cumulative labor costs are consistent with the original estimate. That leaves only…”

“Me and Poor Performance!” spat Scope Creep.

“Do we have the minutes from all of the project review meetings?” I asked.

“Why do you want to see those?”

“Because they would show if there were ever any communications along the lines of asking for more work than what was captured in the original Scope Baseline.”

Everybody started looking at each other, nervously.

“No, we didn’t make it a point to have those communications documented” Changing Labor Rates explained.

“Then Scope Creep had the opportunity, and we know he had a motive. Did he have the means?”

Scope Creep gave Poor Performance a look that could curdle milk. Almost reflexively, Poor Performance gave a sideways glance to Poor Initial Estimate. All who saw it instantly recognized what it meant: that, if Poor Initial Estimate didn’t take the fall, things would go badly for everyone in the room. Poor Initial Estimate began, “I suppose I should have taken into account…”

“Taken into account the poor weather conditions!” interjected Scope Creep. “I just remembered that I have access to some Contingency funding that will cover this entire overrun, which means that this project has not overrun its Total Project Cost, after all. We can all go home now.”

*  *  *  *  *

As I walked out of the Monolithic Mansion with Cameron, I felt strangely ill-at-ease.

“What just happened in there?” Cameron asked.

“I’m pretty sure I know, but I’m also pretty sure it’s best left unsaid. I’m going home. I feel like I need a shower.”

According to Merriam-Webster, a “macguffin” is

an object, event, or character in a film or story that serves to set and keep the plot in motion despite usually lacking intrinsic importance.[i]

An example which is probably readily recognized by a majority of GTIM Nation would be the blue diamond in the necklace given to Kate Winslet’s character in the movie Titanic, named The Heart of the Ocean, but a better example (in my opinion) would be the Maltese Falcon figurine in the movie of the same name. In that 1941 film, while all of the characters appear to be obsessed with the location and ownership of the jewel-encrusted statue, murders actually take place, with the protagonist (the original Sam Spade, played by Humphrey Bogart) often taken to be the murderer. In fact, when the Maltese Falcon statue finally shows up, it proves to be a fake. One final example would be the Ark of the Covenant in the movie Raiders of the Lost Ark, where the actual Ark, after being intensely pursued by virtually all of the characters in the movie, ends up portrayed as being unceremoniously boxed in a wooden crate, to be relegated to near-oblivion in a massive government warehouse (which we learn later is located in Area 51, Nevada, of all places). So, just to be clear: the macguffin, by definition, lacks in “intrinsic importance.”

Meanwhile, Back In The Project Management World…

I would like to reference my three criteria for usable management information. It has to be:

• Timely (old management information has a value similar to old sushi),
• Accurate (inaccurate information is worse than useless, it’s actually misleading), and
• Relevant!

So, what we have in a macguffin is a plot device widely considered to be irrelevant, but used anyway in order to move the story forward. While macguffins can lead to wildly successful movies (Raiders of the Lost Ark earned $384M USD against a budget of $18M[ii], while Titanic earned over $2.1B USD[iii]), it would be good to remember that this is a device used in fiction.

With the use of a macguffin in fiction as a backdrop, let’s revisit some of the nostrums associated with “doing” PM “right.” Keep in mind that we’re not talking about inserting energy or conflict into a story – we’re looking at which techniques or strategies commonly associated with Project Management actually improve the odds of bringing projects in on-time, on-budget, with all of the scope particulars satisfied. I’ll score the techniques so:

• We’ll start with the Critical Path Methodology. Easily one of the earliest management techniques associated with PM, a properly-done CPM network will alert you to problem activities within your project and, just as importantly, inform you which tasks are doing fine and do not need extra attention. Score: Notamac.
• Next let’s look at communications management. Much of the theory here involves “engaging all stakeholders,” which I contend is not only to be avoided, but positively counter-productive. A far more relevant application would be to develop a “zipper plan,” so named because it identifies whom within your Project Team should serve as the voice for specific stakeholders on the outside based on their areas of expertise. Since zipper plans are fairly easy to establish and execute, they provide a nifty technique for ensuring consistency in project communications. Score: Heart of the Ocean.
• What kind of a management blogger would criticize Quality Management? Well, my kind, for one. In those instances where scope delivery with even the mildest of variances from requirements or parameters could have a devastating effect on customers, sure, use all of the fishbone diagrams and “Five Why’s” analyses that you want. I am of the opinion, however, that such projects represent a distinct minority in the PM community, whereas the push for enhanced Quality Management implementation is becoming a majority opinion. Again, if you need it, use it, by all means. But if you don’t, well, don’t. Score (assuming you don’t really need it): Maltese Falcon.
• GTIM Nation veterans probably know what’s next: our friends, the risk managers. Risk analysis techniques require significant investments in time, energy, and expertise, and not just from the analysts loading the decision-tree or Monte Carlo analysis software. These analysts invariably need considerable access to the Project Teams’ subject matter experts, in order to assemble the various alternate scenarios, along with these scenarios’ cost and schedule impacts and odds of occurrence. Even if the data collected is reliable (highly unlikely, given the amount of pure speculation involved) and the analysis techniques sound, the ultimate product is simply a series of things the PM should worry about, tripped out in Gaussian curve jargon. If the risk analysis highlights a possible negative-impact scenario that leads the PM to develop a Plan B that didn’t exist prior, fine. In all other instances, my opinion is that risk analysis is a waste of time. Score: Raiders’ Ark.

Now, if, upon opening the Ark in the movie, the Nazis discover both the Maltese Falcon and the Heart of the Ocean inside of it immediately prior to having their faces melted, then that would make me rethink this whole irrelevance business.

[i] Retrieved from https://www.merriam-webster.com/dictionary/MacGuffin on August 17, 2019, 19:42 MDT.

[ii] Wikipedia contributors. (2019, August 15). Raiders of the Lost Ark. In Wikipedia, The Free Encyclopedia. Retrieved 03:43, August 18, 2019, from https://en.wikipedia.org/w/index.php?title=Raiders_of_the_Lost_Ark&oldid=910923959

[iii] Wikipedia contributors. (2019, August 17). Titanic (1997 film). In Wikipedia, The Free Encyclopedia. Retrieved 03:45, August 18, 2019, from https://en.wikipedia.org/w/index.php?title=Titanic_(1997_film)&oldid=911224908