Game Theory in Management

The effectiveness of game theory is based upon the idea that certain artificial situations analogous to real-life circumstances can be created, with the utility of various strategies tested in comparison to others. As I discuss in my must-have second book, Game Theory in Management (https://books.google.com/books/about/Game_Theory_in_Management.html?id=OwAgeMZQzt4C) there are many such artificial situations – “games” – used to compare these strategies, including the Ulitmatum Game, the Prisoners Dilemma, or the Pirate Game. But one particular game tends to be used rather often when evaluating participation/defection strategies. Its name is Hawk/Dove.

The parameters of the Hawk/Dove Game are pretty simple. Imagine two birds in a common environment. These birds each have two basic strategies available to them – they can peacefully forage for food, and keep or consume all they gather, or else they can act aggressively, and attempt to take the other’s food by force. The population involved in this game maximizes their payout if they behave like doves all of the time. However, if the available food supply should drop below the level needed to keep both birds alive, the last one to switch to Hawk strategy will be the first one to starve.

The same basic truths are present when the population of birds is increased to 100, with some additional insights. In a population of 100 birds who have all employed the Dove strategy, if just one bird switches to Hawk, then other birds in the population will begin to do so in order to maximize their personal payoffs, and will continue to make the switch until something known as the Nash Equilibrium is reached. The Nash Equilibrium, named after Thomas Nash, the central character in the movie A Beautiful Mind, is:

a solution concept of a non-cooperative game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy (emphasis in the source).[i]

In Hawk/Dove, the Nash Equilibrium is reached when the 100-bird population assumes a behavioral profile of 25% Hawk, 75% Dove, expressed as either 25% of the birds always act like Hawks, or else each bird acts as a Hawk 25% of the iterations, and like a Dove the remaining 75% of opportunities (known as a “Mixed Strategy”). Again, note that the overall population’s payout is maximized when every bird behaves Dove-like 100% of the time.

Meanwhile, back at the 100-person office, the organization’s shareholders have a natural incentive for everybody to act ethically (or dove-like), since the population’s payout is maximized when they do so. By “ethically,” I mean that the workers pursue the organization’s stated objectives, and do not act aggressively towards their co-workers. However, with the introduction of even one aggressive member of the project team, the entire team’s cooperative dynamic changes, and not for the better. Typical unethical behaviors in this case study include calumny, over-claiming on members’ achievements, exagerating other workers’ failures, and just generally acting in a manner consistent with what Michael Maccoby described as Jungle Fighters in his seminal work The Gamesman. Of course, the exact point of the Nash Equilibrium in such circumstances will change from organization to organization, but it’s a rare company that can expect the entire population to return to consistently selecting a non-aggressive strategy once at least one member has successfully engaged in aggressive tactics. This is especially true if the organization is in decline, or is perceived as such, and its members believe that they must act hawk-like, or lose their jobs. Is there a managerial strategy to forestall such a downward spiral? I believe there is, and its characteristics include…

Wow! Look at that – out of blogging space again! I’ll take up other aspects of the Ethics Game, and useful strategies for its successful completion next week, in Part 2 of The Ethics Game.

[i] Nash equilibrium. (2016, February 3). In Wikipedia, The Free Encyclopedia. Retrieved 20:40, February 6, 2016, from https://en.wikipedia.org/w/index.php?title=Nash_equilibrium&oldid=703036567

One of the coolest aspects of belonging to an organization like the United States Chess Federation (USCF, now US Chess) is that you know your precise value to that organization. It’s your score – if you have a score of 2000, you are an Expert; over 2200 gets you National Master status, and over 2400 makes you a Senior Master.  Points are attained by playing in sanctioned tournaments or matches, and are adjusted for the players’ relative strength. Chess, by its nature, is unforgiving of poor play – if you lose a chess game, it is fairly difficult to blame poor officiating, the weather, aggravated injury, the venue, and so forth. In essence, no amount of arguing, manipulating, charming, or spinning will influence your score, and along with it your standing in the US Chess organization. Its beauty is in its nearly perfect basis in the objective measurement of merit relative to the organization.

At the other end of the spectrum, I imagine, would be participating as a member of the faculty of a liberal arts college within a state-run university. I once took a sophomore-level literature survey course (“survey” – right. It ran the gamut from George Elliot to the Bronte sisters) from a woman professor who was so predjudiced against male students that none could ever attain above a C in her classes, whereas no female could be graded below a B. There was simply no way that objective evidence of the relative scholastic merit of her students could be introduced into a review or assessment of her grading tendencies. As it turns out, just prior to the drop deadline a couple of friends (one male, one female) gave me the inside baseball on this professor, and I escaped her course. But she did inadvertently teach me an extremely valuable lesson: the more subjective the basis for evaluating and assigning merit, the more slanted and vicious that method becomes.

Which brings us to Project Management. Some of the best managers I have ever encountered have been highly educated and certified, and some of the worst have been (in my opinion) under-educated, and without certifications. Unfortunately, the exact opposite is also true: a couple of the best PMs I have ever met had neither a degree in business nor management, with zero certifications, and at least two of the worst have had a BBA or better and one of the professional certifications associated with project management. And when I say “the worst,” I don’t mean these managers merely drove virtually any piece of scope for which they were responsible into the proverbial ditch. These would, despite their wretched histories, insist on playing roles of influence in the ways in which the other PMs within their organizations managed their work, inflicting managerial damage far beyond their nominal reach. How did these poor managers get into positions of influence far beyond what would be indicated by their actual merit? The same way that the predjudiced professor did: by arguing, manipulating, charming, or spinning their way past any objective basis for evaluating their true value to their respective organizations. 

However, while certs and scholastic achievement are susceptible to significant variance in predicting who is or is not a genuinely talented PM, it has been my experience that the best share a characteristic that is consistently lacking in their poorly-performing counterparts. That characteristic is humility.

By “humility” I do not mean a tendency towards low self-esteem; quite the contrary, genuine humility is usually marked by a quiet confidence, that the winners have a clear-eyed grasp of their authentic value to their organizations, and therefore have no need to elbow-aside competitors, insult or put down potential rivals, unctiously flatter superiors, indulge misandry, or engage in any of the other manipulatory behaviors that their arrogant associates must pursue, lest anyone see past the fascade and realize the arrogant ones are not as valuable as they purport to be. Just something to keep in mind: when you encounter people within your project team engaged in arguing, manipulating, charming, or spinning, they’re probably not advancing a merit-based agenda.

And, while I can prove that Bobby Fischer was a better chess player than George Elliot (pen name of Mary Ann Evans), not even my old English Lit professor can prove that Elliot was a better writer than Fischer (being, as she was, hopelessly maudlin).
 

It was yet another dark and stormy night. I had just sent my secretary home, when a dark shadow passed over the frosted glass door bearing the stencile ylnatS yrrebpsaR, etavirP eyE. The brass doorknob slowly clicked open, and in stepped one of the most brooding visitors I have ever had.
“You Raspberry?”
“That’s what the door says.”
“I didn’t ask the door. I’m asking you.”
“Yeah, I’m Raspberry. And you are…?”
“My name is Sigh Nemup. I’m a talent scout for radio networks across the country. I ‘discover’ talent, and get them on nationally-sydicated radio shows.”
A sense of excitement arose in me suddenly. 
“Are you recruiting me for a nationally-syndicated radio show?”
“Don’t be an idiot” Sigh replied. “You’ve heard, I’m sure, of the Dee Johnson PM radio program?”
Dee was a radio show host who would take calls from project team members who were suffering through problems, dispense sage advice, and then play a song that had a tenuous connection to the called-in problem.
“Sure.”
“Well, she’s had a project emergency, and we need a fill-in host. I went to the yellow pages under ‘PM Consulting Detectives,’ closed my eyes, hit the page with my index finger, and your name was the one I chose.”
“When do you need me to do this gig?”
“The car’s waiting outside.”
        *           *          *
“Good evening, and welcome to the Dee Johnson show. My name is Stanly Raspberry, Private Eye, and I’m filling in for Dee. Let’s go to our first caller, Mandy. What’s your story, Mandy?”
“Well, my customer keeps commenting on my arrival times, and he’s changed in a lot of other ways, as well. He keeps wanting me to do more than what was, I think, included in the original Statement of Work, but I’m reluctant to go there. I heard Dee advise on a similar case, and I thought I’d ask you what should I do?”
“Wait, that’s it? That’s your question?”
“Well, yeah.”
“I’m sorry, but I can’t possibly be expected to make a viable recommendation based only on what you’ve told me. For example, you said your customer keeps commenting on your arrival times. Are you consistently late?”
“Why do you want to know that?”
“Because if you aren’t, then such inquiries may be inappropriate. But if you are chronically late, then they could easily be sincere expressions of innocent concern for what’s happening in your day-to-day activities, or even a hint that he would like you to be on-time to meetings.”
“Nevermind that, then. What of his pushing me to do things that aren’t in the SOW?”
“Again, I really don’t have enough information. You originally said that your customer wanted you to do more, ‘I think.’ Why don’t you know? Are you unfamiliar with the SOW, or was it written in such a way as to allow for some ambiguity?”
“I don’t really remember … wait – Dee never whines about not having enough information to make a recommendation. Just the other night I heard her give a clear and definitive answer to a similar question. Why can’t you do the same thing?”
“Look,” I began, “I understand that, in the project management realm, there are some precepts that are considered inviolable, and any transgression against them invites an automatic or formulaic response. I also get that asking a contractor to do more than is in the Statement of Work – the classical definition of scope creep – is one such hard-and-fast rule. But if you’ve read Michael Hatfield’s books or blogs, you would know that the top 80% of managers with access to 20% of the information they need to obviate a given decision will be out-performed by the 20% worst managers with 80% of the needed information. You’ve given me maybe 2% of the information I need, and you expect me to give you a usable recommendation?”
“Yes.”
“You must have me confused with a risk manager, but, as my answer to you, I will play We’ve Got the Beat, by the Go-Gos.”
“What on Earth does that have to do with my problem?”
“My point exactly.”

One of my favorite all-time books is Once A Cowboy, by Walt Garrison (Random House, 1988). In it, Garrison relays many of the hilarious stories that came out of his time playing for the Dallas Cowboys Football Club (United States), and some of those stories had to do with his rookie season. One particular story that stands out had to do with a practical joke some of the veterans would play on rookies during training camp. One of the veterans would approach the targeted first-year player and tell him “Coach Landry wants to see you in his office, and bring your playbook.” Knowing that such a meeting meant that the player was about to be cut from the squad, the rookie would show up at Tom Landry’s office, crestfallen, playbook in hand and expecting to have to surrender it, only to be told “I didn’t call for you. Now get back out on the practice field.”

Don’t get me wrong – I’m not advocating for anything resembling hazing of you freshly-minted PMP®s. But, as something of a veteran myself, I must tell you whippersnappers that many of you do tend to manifest some attitudes and behaviors that make it really tough to refrain from engaging in a tiny bit of good-natured comeuppance, let alone taking y’all seriously. So, in the spirit of getting you past your rookie-season mistakes quicker, here are a few tips for you to keep in mind as you unpack your personal stuff into your brand-new cubicle.
•    Got your PMP®? Outstanding. So do 628,523 other people (1).  Since PMI® has been around for a little while, the PMP®is being seen more often as a basis for admittance to the club, not a golden ticket that guarantees the insightfulness of its bearer. So, odds are that other people on the project team have one as well, but they don’t spend a lot of time bragging about it. There’s a reason for that.
•    Have you had an amazingly successful stint on an amazingly successful project? Who hasn’t? Prior to writing and submitting a paper abstract about your amazing insights about what went right, go back and re-read the first bullet.
•    The members of your organization who are either reluctant to accept your way of doing things, or are actually actively opposed, are not ignorant of the particulars of your technical agenda, so stop pretending that all you need is better communications or more cooperation from them to get them to see the error of their ways. They know all about your technical approach, and simply disagree with it. It’s not their responsibility to recognize the value you bring to their project teams – it’s your responsibility to demonstrate that the management information streams your techniques and methodologies can provide are game-changers in a competitive environment.
•    For all you freshly-minted MBAs, here’s a special tip for you. Think about this: if your business school professors truly had command of some analysis technique or management science theory that constitutes a major factor between an economically successful endeavour and a failing one, why wouldn’t they just start or acquire a business, implement their ideas, and enjoy the benefits of being a corporate winner? I’m not saying that you didn’t need to learn what they had to teach, not by a long shot. But consider: when major universities feel the need to set aside additional funds for retaining key faculty members, those instructors typically belong to one of three colleges (Medicine, Law, and Engineering), and Business isn’t one of them. Of course, I’m aware that there is a lot of personnel transfer between the corporate and academic circles. All I’m doing is asking the question: which of those two groups of management experts is making more money?

As I mentioned in a previous blog, there are generally three ways of learning: by study, by observation, and by personal experience. If my rookie readers can glean some insight from this blog, then great. If not, then Coach wants to see you in his office.

And bring your playbook.
 

  (1) Project Management Professional. (2016, January 6). In Wikipedia, The Free Encyclopedia. Retrieved 03:01, January 18, 2016, from https://en.wikipedia.org/w/index.php?title=Project_Management_Professional&oldid=698427550

Concerning the new practitioner of project management – knowing what I know now, if I could go back in time to when I was 25 years old, and beginning to make the transition between technical writing and project management, and give that version of me a present not associated with stunts like Grey’s Sports Almanac (the book that Marty McFly attempts to bring back to the past in order to get rich betting on sports events in the movie Back to the Future, Part II), I think it would be a brief roadmap of the mines in the PM minefield that I was, epistemologically speaking, about to attempt to cross. But, since time travel (into the past, anyway) is impossible, I can only contemplate how much easier things would be if I had not gone charging into the minefield, blissfully unaware of the dangers, and proceeded to step on mine after mine, initiating some pretty spectacular career-endangering explosions.

What kind of a roadmap are we talking about here? I’m reminded of a former supervisor, Donn Byrnes, who had been a Colonel in the U.S. Air Force prior to working at the same contractor where I was employed. We were on the same project team, and one day he took me aside and told me “Michael, if you’re going to make it in project management, you have to remember three things: one, learn the rules of the game. Two, play by the rules of the game. Three, win using the rules of the game.” At the time I thought this advice was hopelessly cryptic, but I would learn that it was profoundly insightful each time I neglected the three rules. 

So, if I could teleport a document back to 1985, I think it would contain the following:
•    Sell everything you have and buy Apple® stock! (Just kidding – actually, “spend more time thinking about what Donn told you.”)
•    There are going to be people (perhaps, even, a majority) on your project team(s) who are ambivalent about the project’s success. After all, another project is expected to be following this one. However, they will always care deeply about their own personal advancement, and will do anything – anything – to attain it. If those tactics involve using calumny to ruin you, they will not hesitate. Takeaway point: don’t be so generous with your trust.
•    Project Management, as a discipline, is a natural competitor to finance and accounting. Most accountants have been trained to believe that their take on business is the final word, and any precept or person who challenges their maximize-shareholder-wealth meme, in their view, is either ignorant or misguided. As a natural competitor, a key component of your job will be to convince management, both project and executive, that the Earned Value and Critical Path Methodologies provide an irreplaceable information stream that has nothing to do with the General Ledger. IF you succeed – and this is, by the way, in no manner guaranteed – then some of the accountants, rather than sit back and watch your proffered information be perceived (rightly) as being more important than theirs, should be expected to employ any tactic at their disposal to discredit you, your reports, and project management in general. It’s simply the way they’ve been taught. Takeaway point: they're nice people, but the accountants are not your friends.
•    Risk management is a waste of time, money, and energy. Takeaway point: risk management is a waste of time, money, and energy.
•    In organizations that a structured as a strong matrix management environment, their projects will be more successful more often, but they will care nothing about you personally. You are just a highly replaceable cog in a machine to them. Weak matrix organizations care about you as an asset (or even as a person), but their project performance will not be as good. Takeaway point: the brutal ones tend to be more successful, but you will be miserable working for them.

I may not be able to communicate these points to the 25-year-old me, but there’s hope for you new practitioners of PM who also happen to be ProjectManagement.com blog readers.