Game Theory in Management

A regularly recurring premise in this blog has to do with my adaptation of the Pareto Principal, that the top talented 80% of managers who have access to only 20% of the information needed to obviate a given decision will be out-performed by the least talented 20% of managers who have access to 80% of the information they need. Add to this the fact that you can put fifty project managers in a room and they will not agree on the color of an orange, and the task of “managing” PM talent quickly approaches an insurmountable attempt to bring order out of chaos.

So, how to recognize the top management talent, since actual performance involves far more parameters than can possibly be captured, let alone quantified and compared? It’s been my experience that the truly talented among the PM ranks will throw off clues that their lesser acolytes won’t, and I’ve developed this little guide to help my readers more readily differentiate between the two.

Notice that I am not engaging in the sort of eat-your-peas hectoring that so many other PM writers use. If you’re a schmoe, you’re a schmoe, and there’s really very little point in trying to egg such a one on towards acting better. 

However, there’s still my application of the Pareto Principle! If you’re a schmoe, you can perform like a pro if you can only get your hands on the cost and schedule performance information you need to obviate the decisions before you! Ah, but there’s the rub – unless  your organization’s internal project management procedures say stuff like “cut all of the procedural corners you need to get a basic Earned Value or Critical Path information stream into the hands of the decision-makers,” you schmoes have been hoisted on your own petard. No Processor in the universe would write such a sentence in an internal procedure.

The best bet for the lowest 20% of talent? Get contentious about the “proper” utilization of published PM principals – it seems that’s where all the low-talent PMs I’ve encountered go.
 

In a previous post I described the two basic types of project management practitioners, whom I categorized as “Processors” and “Effectives.” A quick re-hash: Processors believe a project has been properly managed when the project team has demonstrably complied with all of the PM-oriented procedures, with the project’s actual outcome being a secondary consideration, if at all. Effectives, conversely, believe a project has been properly managed if it meets all of its scope requirements, on-time, on-budget (or even early and under budget), with strict observance of proper procedure being a secondary consideration, if at all.

Normally the Effectives (the category in which I count myself) could simply sit back and let the unblinking, unfeeling free marketplace weed out the PM practitioners who either leaned towards the Processor category, or were completely immersed in it, as their organizations’ projects failed at a prodigious rate (but, hey! They were in compliance!), leaving the Effectives as the only ones claiming to be PMs who were actually drawing a paycheck. I actually had hoped that this sort-of Darwinian-style weeding out of the Processors would take on an aspect of the slowest-runner-in-a-Jurassic Park – movie; alas, it was not to be.

The primary reason the Processors remain entrenched in the PM-brand epistemological arena is because they dominate the procedure-writing departments (naturally), and these procedures are becoming positively ubiquitous. There are lots of organizations pumping out documents that pretend to have some sort of insight that compels PM practitioners to do things the way their authors want, or else … well, or else you people are simply not “doing” PM right.

Now, for those of you who want to point out that my blog’s publisher, the Project Management Institute®, engages in this very action and has done so for some time, I have two things to say:
•    We were here first!
•    Besides, the Institute has become so large that the competition to be on the teams that write anything on the topic of project management has become so intense that it’s a near impossibility for anyone but genuine experts to even get close to those projects.
Which leaves the opinionated others to make their marks with the other management science societies, organizations, and associations, and make their marks they do.

I won’t take on the risk guys again – frankly, as a target they’ve become far too easy. But consider this quote from one association’s guide to implement an Earned Value Management System consistent with the ANSI Standard (748):

"The program established cost charging structure will help to ensure that actual costs are collected so that direct comparison with associated budgets can be made at the appropriate WBS level(s)." 1

For those of you who don’t have time to read the ANSI Standard on Earned Value, I can tell you that it does not include any discussion about making a “direct comparison” of budgets to actual costs. None. A Cost Variance is defined as making a “direct comparison” of the earned value to actual costs. A Schedule Variance is defined as making a “direct comparison” of the earned value to the budget. A “direct comparison” of actual costs to budgets yields no useful information in Earned Value space. And yet, this quote is from a guide that’s supposed to be consistent with the Standard.

Look, if these Processors want to crank out procedures, instructions, and guides that tell everyone else how they are supposed to be “doing” project management properly, I say they should knock themselves out, and write anything and everything that makes them happy. But to the extent that management science maintains some claim to actually being scientific, then its assertions ought to be connected to observable results in the business world. 

Think of it this way: if you were to have a sudden and acute need to know the best way of evading meat-eating dinosaurs, would you rather hear from a track-and-field coach, or someone who had actually spent a lot of time on Isla Nublar, successfully evading said dinosaurs?

1  National Defense Industrial Association, “Earned Value Management Systems EIA-748-C Intent Guide,” April 29, 2014.

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

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

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

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

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

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

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

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

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

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

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

Call in the risk managers!

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

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

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

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