Game Theory in Management

I was once in an independent cost evaluation (ICE) meeting when one of the customer representatives, a young woman who presented with quite the attitude, challenged the project controls coordinator about an element in one of the Earned Value reports.

“Why doesn’t the cumulative Earned Value amount equal the actual costs?” she demanded.

“Because that’s not what Earned Value is” came the response.

The rep exploded. “Do you know PMI®?!” she stormed. “I’m a PMP®!”

As if that was supposed to trump the rules of basic cost performance management.

Which simply goes to show one of the dangers inherent in certification, the ProjectManagement.com theme for July. Although obtaining a certification such as the PMP® can be quite the challenge, what with the assembling and presenting of education and professional credentials, as well as passing the test, it’s not an end-point. It’s really more like the starting line which, like an oval race track, has the starting and finishing lines at the same place.

Don’t believe me? Consider that medical doctors were first being certified in the United States in the early nineteenth century. At that time it was considered perfectly acceptable for certified doctors to do the following:

• Prescribe narcotics for very young children as a “remedy” for their acting like, well, very young children.
• Cut off part of the tongue for stutterers.[i]
• Inject paraffin wax in order to smooth out wrinkles[ii] (will future M.D.s view our use of Botox with similar abhorrence?).
• Bloodletting was considered a viable treatment for a wide variety of ailments.

I could go on, but not without getting kind of gross, but you see the point. Certification, in and of itself, is no guarantor of advanced capability or expertise. It only means that the certified person is up-to-speed on what the current state of the technology happens to be at that time.

So, in the next century, which project management practices will lead those with PMP® numbers in the tens of millions to look back and wonder “what were they thinking?” Well, what do the now-considered absurd medical practices have in common? They weren’t based on the scientific method (with the exception of giving narcotics to young children. I have no doubt they worked as intended, based on measurable and observable data. They just didn’t properly consider the long-term or side effects). Not only were the absurd practices not based on the scientific method, they were apparently based on a few experts’ opinion, or speculation.

Now consider: which PM practices currently in vogue are not based on observable, quantifiable data and analysis, but are instead predicated on group speculation, or opinion? A quick distinction is in order: feedback data is factual in nature, made up of observations of those things that have already occurred. Conversely, feed-forward data isn’t really data at all – it’s someone’s idea about what should be expected in the future, usually based on that person’s experience. As my regular readers know, usable management information must have three characteristics:

• It must be accurate,
• It must be timely, and
• It must be relevant.

Leaving aside the relevance discussion for the moment, feedback-type data is accurate (if it’s been collected properly), but often suffers from not being timely enough, due to how long it takes to collect and present. On the other hand, feed-forward data is timely, in that it looks to the future. It is, however, notoriously inaccurate, since an accurate look into the future is considered so rare as to be usually attributed to divine inspiration, if not intervention. A whole bunch of highly subjective assumptions must come about for any feedforward data to be of use.

So, this being the case, can we use the rubric of scientific-method derived theories, based on objective data, providing the basis for the ideas we embrace, while rejecting the subjective, speculative ones?

While that works for me, I doubt it will work for the PM world in general. For if we use the next-to previous sentence as our litmus test, we’ve just obliterated the majority of risk management, communications management, some portions of human resources, and even a little bit of quality management. Each of these disciplines have their advocates, who can be expected to push back on any attempt to diminish or eliminate their favorite notions.

Which brings us back to our racing oval. Congratulations on getting certified! It’s a wonderful thing. You are now set to more critically examine and engage the current thinking in the project management sciences. Oh, by the way, that finish line you just crossed? It’s also a starting line.

So let’s get started.

[i] Retrieved from http://www.cbsnews.com/pictures/15-most-bizarre-medical-treatments-ever/4/ on July 3, 2017, at 8:30 a.m. MDT.

[ii] Retrieved from http://www.cbsnews.com/pictures/15-most-bizarre-medical-treatments-ever/14/ on July 3, 2017, 8:32 a.m. MDT.

I’ve worked with some truly inspirational and brilliant executives over my career, and have spent considerable time thinking about what that highly disparate group of people had in common. As different as they all were in age, background, education, culture, and personality, they did have the following three attributes in common (which, taken together, would become Hatfield’s Rule of Management #12):

• They genuinely cared about their people, either on their project teams or in their line organizations (if you are reading this to glean tips on how to advance into executive management, and you don’t really care about your people, then do us all a favor and enter a profession that does not require managerial leadership to advance. You can only fake this attribute for so long).
• They consistently figure out the optimal technical approach to the problems facing the organization, or else readily recognize when someone else has done so. This attribute is a tricky mix of expertise and willingness to accept input from others, as evidenced by the payoff matrix below:

Note that the only instance in which the so-called communications management people and their unending urging of “engaging all of the stakeholders” represents an appropriate response is the bottom-left-hand payoff scenario. In another instance such urgings are superfluous; for the remainders, they’re flat-out wrong.

• Once they have arrived at the optimal technical approach to either pursuing the project’s scope or resolving a technical issue, they execute their strategies with passion. I like to use the example of American World War II General George S. Patton, (I’m pretty sure) should he be parachuted in to Northern Europe by himself in 1943, would not have waited around for the rest of the 3^rd Army to arrive before he started attacking Nazis.

Of course, one does not have to be a good manager to be successful, and even really good managers will experience failures at some point. But when it comes to maximizing the odds of the successful outcome of a given endeavor, the people who demonstrate these three attributes can be expected to consistently out-perform those who do not. And it is those who do not whom I wish to discuss today.

I have noticed a consistent trend among those managers who are either weak or void in the first two attributes I listed, caring for their people and arriving at the optimal technical approach. Recall Hatfield’s Rule of Management #11: the 80^th percentile best managers who have access to only 20% of the information needed to obviate a given decision will be consistently out-performed by the 20% worst managers who have access to 80% of the information so needed. I believe that most of the managers who have a hard time discerning the optimal (or even sufficient) technical approach to a given problem know this, deep down inside, and will present as constantly hungry for information. The competent manager knows the precise nature of the information streams needed for project success, and how to set them up and keep them running. The manager to avoid will flail in a sea of data, some necessary, some irrelevant, and not know which is which.

This brings me to a list of the symptoms displayed by the managers who don’t know the optimal technical approach to their jobs, and really don’t care about their people. One sure-fire tell that you are dealing with such a manager is that they will insist on setting up and maintaining a database of the things that they need to pay attention to. Such systems have a variety of names, such as “Action Item Tracking,” or “Issues Management” systems, among others, but their purpose is the same: to inform the sub-optimal manager of the things that need their attention. Don’t get me wrong – institutional issues management systems can and do provide a vital information stream to execs several levels removed from the projects’ trenches. No, the systems I’m talking about seem to be always predicated on a model that includes a central repository of data, surrounded by input/output nodes. This “poll” is, of course, an invalid management information system structure, since it has absolutely no ability to differentiate between subjective or objective data, nor information that is feedback-based as opposed to feedforward. It also has the drawback of displacing legitimate systems, such as those predicated on Earned Value or Critical Path methodologies.

Add to the existence of these invalid information systems a tendency to call multiple meetings designed to simply check on what everybody is doing (or else, more insidiously, some confidant spying on what everyone is up to), and there can really be no doubt: the person you are dealing with can’t benefit from any legit lessons learned analysis, since they have a poor concept of which information streams are relevant to the successful pursuit of the technical agenda at hand.

So it all comes down to this: if a given manager is incapable of discerning relevant and irrelevant information in the here-and-now, why should they suddenly be able to discern it from lessons learned reports?

During the May 1916 Battle of Jutland, elements of Great Britain’s Grand Fleet fought to keep the Kaiser’s High Seas Fleet from breaking the naval blockade of Germany. Hundreds of ships were involved, but when the smoke cleared the Germans had failed to significantly change the ratio of capital ships between the two belligerents, and the blockade remained in place. One American journalist summed up the massive naval action thusly: “The convict assaulted his jailer, but he is still in jail.”

Along those lines, I think much of what passes for chapter and verse of lessons learned reports can be boiled down to its essential elements, and documented so. A few examples on the topic of the PM’s technical approach:

• On Earned Value reporting: (a) just because you are spending money on a project does not mean you are accomplishing anything, (b) we can prove it, and (c) if you tell me how much you have spent, and how much progress you have made, I can tell you within ten points how much your project is going to cost when it’s done.
• On Critical Path methodology: (a) if you are “managing” your schedule via an action item or milestone list, you’re doing it wrong, (b) we can prove it, and (c) tell me when you started, and how much progress you’ve made, and I can tell you both when your task will be completed, and how that impacts the other activities in this project.
• On Critical Chain theory: if you get done early, help any other members of the project team who are behind.
• On (modern) Communications Management theory: tell everybody you think of everything that’s going on in your project, and nothing bad will happen to you.
• On (modern) Risk Management Theory: you might want to worry about stuff that could happen to your project.
  • Hey! Risk Management also involves “Opportunity Management!”
  • Says who?
  • SAYS US!!! We’re members of the risk management community, and we’re more than a little tired of you accusing us of engaging in “openly fraudulent management science.”
  • Are you aware that none of the authoritative dictionaries of the English language make any references to “opportunity” (other than in listings of antonyms) in their definitions of “risk”?
  • That doesn’t make any difference, since we’ve arranged to have almost all of the PM organizations include our “upside risk equals opportunity” tripe
  •  in their glossaries of terms.
  • Okay, how about “you might also want to concern yourselves with opportunities that may or may not arise.” Happy now?
  • Yes, you may proceed.

The following elements are extremely common to (truthful) lessons learned reports coming from failed or overrun/delayed projects:

• We should have used Earned Value and Critical Path methodologies far earlier than we did.
• The “bottoms-up” Estimates at Completion (EACs) were always optimistic, and often catastrophically so. Conversely, the calculated EACs were always accurate, and could have notified management of difficulties far earlier than the re-estimated versions.
  • On a related note, that project controls person who told us that, in order for our EAC to be accurate, our cost performance would have to go from a cumulative Cost Performance Index of 0.7 to a To-Complete Performance Index of 1.4, and that that had virtually no possibility of happening, and that our posted EAC was therefore nonsense – well, that person was right.
• The tasks that drove most of the project’s overrun were subject to significant amounts of scope creep, and we should have listened to those PM-types who were harping about better and more detailed descriptions of the original scope.
• An “overly optimistic original estimate” explanation in the Variance Analysis Reports (VARs) of negative cost variances will only work a few times before the customer catches on that it’s really our pitiful performance causing the variance.

As with anything that gets condensed, these lessons learned can be significantly harder to digest than their more verbose equivalents. But if the lessons to be learned are couched in phrases designed to soft-pedal the truth, I have to ask: did anybody really learn anything from the past projects’ failures?

Towards the beginning of the motion picture The Return of the Jedi, Luke Skywalker, having just witnessed his mentor Yoda pass away peacefully, has a chance to confront his original tutor, Obi-Wan Kenobi. Luke had a right to be put off – he had learned at the end of The Empire Strikes Back that his antagonist, Darth Vader, was, in fact, his father, even though Obi-Wan had told Luke in the first movie, Star Wars (later renamed A New Hope), that Vader had “betrayed and murdered” Luke’s father. When Luke confronts the holographically-represented spirit of Obi-Wan with this jarring inconsistency, Obi-Wan begins his defense with the immortal words “”Luke, you’re going to find that many of the truths we cling to depend greatly on our own point of view.”

To which Luke replies, incredulously, “A certain point of view?”, a line delivered by actor Mark Hamill as if to imply “is that really the best defense the writers could come up with for this massive plot reversal?”

Of course, the character of Luke had every right to be incredulous at this turn of the narrative. Yes, the revelation that Vader is Luke’s father is considered to be one of the most astonishing reveals in all of cinema history, but there’s a reason for that: nothing, and I do mean nothing, in the dialogue of the previous two films offered up the remotest hint that Vader and Luke were even related, much less father-and-son, prior to Vader’s infamous line to the contrary. And, as Luke pointed out, Obi-Wan had told Luke a very different story about what happened between Anakin Skywalker and Darth Vader. And now that complete reversal was to be somehow explained using the “point of view” defense?

Riiiiiiight.

Meanwhile, in a galaxy very, very close to ours, and a few short minutes ago,

ProjectManagement.com’s theme for June, Lessons Learned, got me to thinking about how narratives are formed and then documented, and how sometimes these narratives are inconsistent with the facts. A few examples:

• Senator Joe McCarthy never wrongly accused anyone of being a communist or communist sympathizer.
• Kirk never said “Beam me up, Scotty”, and Lassie never saved Timmy from a well.
• Julius Caesar was never emperor of Rome (he was assassinated the morning the Senate was to vote him that title and those powers).
• There is absolutely no evidence that Marie Antoinette ever said of starving Frenchmen, “Let them eat cake.”
• Richard III was only 32 years old when he died at the Battle of Bosworth Field, and never said “A horse! A horse! My kingdom for a horse!”

I could go on (and often do), but you see my point. These narratives take on a life of their own, and any hard data that challenges (or even overturns) them is ignored or disputed.

This being the case, what are the chances that your organization’s lessons learned documents flawlessly reflect the precise nature of the causal elements of its previous project successes and failures?

I would guess the answer to that is “pretty darn low.”

Can “Point of View” factors even be quantified?

 It’s been my experience that the people who prepare such documents can’t even articulate the difference between proximate cause and material cause, let alone in the highly complex/near chaotic environs where Project Management actually happens.  The Big Apple website has a list of the six phases of a project (which were probably originally developed in the early 1970s):

1. Enthusiasm
2. Disillusionment
3. Panic
4. Search for the guilty
5. Punishment of the innocent
6. Praise and honor for the non-participants

Since almost all humor must have at least a little bit of truth in it, and since most PMs I know would find this list at least a little bit funny, ask yourselves:  why are numbers 5 and 6 funny? Could it be that it’s a common foible of human nature to mis-remember what actually happened in a given project’s history to promote a narrative at variance with the facts?

If the answer to the previous question has even a possibility of being “yes,” then my readers should keep something in mind: that moment at which you are in the Project Management-equivalent position of being on a narrow ledge above an abyss, with your ultimate adversary preventing any apparent escape or remedy, is a really bad time to learn that key assertions from your organization’s lessons learned documents may be 180 degrees out-of-phase due to “a certain point of view.”

During my last semester in High School I narrowly missed out on a drama scholarship to the University I was going to attend anyway.  Of course, to even be considered for such a prize, one had to spend a lot of time on-stage, in costume, pretending to be a different person, and speaking that person’s words as written down by the playwright. In order to perform well, the people on-stage had to have a good idea about what their character was about, why they thought the way they did, what made them tick … in essence, we needed to know the characters’ motivation for the role in the action being portrayed.

Flash forward to my time spent behind a podium, presenting papers or track courses on the topic of Project Management. As with being on-stage, a lot of people would pay good money to hear what I and the other conference/seminar presenters had to say. Unlike the stage, they weren’t there to be entertained, and we weren’t speaking other writers’ words. The peeps were there to hear about recent or overlooked research or advances in PM, and we selected presenters were there to give that to them.

Well, maybe.

Why are we here? (The non-existential version)

I found myself thinking about those radio advertisements where a person offers to teach you how to make a killing in the stock market. These “experts” claim to have discovered a highly formulaic approach to trading stocks and, for a fee, will share this approach with potential investors. Why would they do this? I mean, if you know a secret to making a lot of money in the stock market, why don’t you just continue to make a lot of money in the stock market? And, depending on the formula, one gets the sense that, if everyone was employing the identical approach, this approach would quickly cease to be lucrative. Stock markets, after all, are not money printing machines. Not everyone can buy low and sell high. So, why would these guys offer to sell their secret, when doing so is almost guaranteed to make it less effective the more the secret is disseminated?

Similarly, if I come across an idea that makes my organization far more effective in bringing in projects on-time, on-budget, why would I want to share this idea, particularly if my organization’s competitors might have employees in the room at the time I share the insight? If that’s not sufficiently suspect, consider this: I’m paying for the opportunity to help enlighten perfect strangers. Does this seem right?

This is the kind of effect that occurs when management science swerves away from genuine research that can establish causality. Consider the opposite alternative, that of a seminar presenter who does not have a genuine insight, but wants the audience to believe that he does. He will point to a particular process as representing an enlightened approach to PM, but will (predictably) be light in proving its connection to actual project success. Clearly there’s some other motivation in play here, and I think I know what it might be.

Always suspect free-lancing researchers

I think that there’s this idea out there that there are roving bands of powerful executives, each of whom desires to acquire a PM expert, and will pay handsomely for the right one. Such an idea is anathema to performers, but it acts like catnip on processors. I believe that the processors think that (a) if their pet process becomes widely accepted, and (b) they have become strongly associated as the subject matter expert in that particular process, they will (c) reap substantial benefits. Hence the seemingly endless paper presentations on some sort of process that can’t seem to firmly establish itself as the proximate (or even material) cause of project success.

Of course, it’s always dangerous to reverse-engineer motive based on outward behaviors, and I could easily be wrong in my speculations.  But ask yourselves – if you had a formulaic approach to consistently out-perform the competition in anything, and being known as the expert for a particular process was not your motive, how eager would you be to blab about it?