Game Theory in Management

I have a theory about the three indispensable attributes of successful managerial leadership; but, because they tend to be somewhat subjective, the only way I can reasonably establish their relative value is to evaluate what happens when any of the three are absent in a so-called leader who has gained the position through means other than verifiable merit. What happens? Usually, disaster.

The first of these indispensable attributes is technical competency, if not out-and-out excellence. If a leader in a management position does not know the most effective, economical way of pursuing the organization’s goals and objectives, the project team will quickly come to realize it, and lose all enthusiasm for participating in attaining said scope. It’s been said that Ulysses S. Grant – a natural leader if ever there was one – was reluctant to step up to lead the Union forces during the American Civil War until he perceived how badly McClellan was flailing about. Then and only then did Grant more aggressively pursue both his battlefield objectives and his personal ambitions, with the results known to history. Few things are more frustrating for the members of a project team than to come to know that the technical agenda they are expected to execute is the wrong one, and that all their efforts will most likely fail to ever come to fruition, and frustrated project teams equal failure.

The next key attribute has to do with the managerial leaders’ relationship with the project team. While it’s natural for managers to hope for, expect, or even demand performance from their teams, the teams must never be led to the conclusion that their manager/leader does not care for them personally. I’m not implying that managers have to get involved in their employees’ dating lives or children’s scholastic challenges. What I am saying is that each team member has to have at least an inkling that their leader has what’s best for them at heart, even if it’s only to evaluate which members of the organization are the best candidates for promotion. When managerial leaders do not care for their charges, the members of the team come to know it, and fast. Should the team learn that their leader doesn’t care for them personally, you know what happens? They tend to not care for the leader nor the agenda, and this lack of caring quickly manifests in the project team’s cost and schedule performance.

This is something that really can’t be faked. The leader either (a) cares for his people and successfully conveys it, (b) cares for the team but has a tough time communicating it, or (c) does not care about the team. The first scenario is no problem, and the second can be addressed. The third can not, to the point that persons appointed to leadership positions who cannot bring themselves to care about their people should resign, and resist ever again being placed in a leadership position.

The third crucial aspect of the managerial leader is a single-minded intent to attain the project team’s goals, even under those circumstances where the rest of the team is tempted to give up. This high-energy commitment to the technical agenda conveys both a willingness to commit herself to attaining those goals, but also a confidence that the technical approach selected is the right one. The example I like to use for this aspect is that of another General, George S. Patton. Based on the things he said and did upon being assigned to the European Theater during World War II, I have no doubt that Patton would have single-mindedly attacked the Nazis, even had he been deprived of the U.S. Third Army and needed to parachute into occupied France solo in order to do so. His men knew it, too, and largely shared in his personality-consuming drive to overcome the enemies of the United States. Of course, few of us have projects whose execution has such world-changing consequences, or requires such an overwhelming commitment. But you see my point – the project team recognizes and appreciates true passion, and is keenly aware leadership that is bereft of it.

So, there you have it, the Three Ps of managerial leadership: Proficiency, People, and Passion.  Without them, you get the Three Horsemen of the Leadership Apocalypse, Ineptitude, Independence, and Indifference (coincidentally all beginning with “I”).  Once Human Resource departments can successfully test for these attributes, we’ll all be free from lame managerial leaders forever, right?

Right?

As September’s theme comes to a close, I want to make a few remaining points on project sponsorship that may, of course, strike many as being counterintuitive. But, hey, counterintuitive is what I do, so…

The ability to demonstrate your organization’s “superior” project management information systems means less than you think to your typical free-market potential customers. All they care about is your performance on their scope, as evidenced by what happened with projects similar to the one for which your company is being considered (and whether or not your company’s bid is lowest, or at least reasonably arguable). Obviously, if your organization’s PMs are informed on a timely basis of their cost and schedule status, they are far more likely to make the decisions that lead to successful project completion, making the overall performance against the portfolio look good. But from the outside looking in, the existence of such systems, in and of themselves, is pretty much expected.

Those organizations that have spent time and energy developing their proposal and contract backlog management information systems have a distinct advantage over those that haven’t. The information feed from these systems influences decisions in all three management areas, Strategic, Project, and Asset.

The Strategic Management angle is obvious. You can’t know what your position is relative to the competition without a handle on the likely contract backlog going forward, as calculated by the proposal backlog management system (your proposal management backlog system can’t calculate the most likely revenue stream going forward? Dude!).

Project Management is more of a contributor to the portfolio management system, since a key component to managing your projects’ sponsors is knowing which types of projects your organization performs better than others (your project management information system doesn’t inform you which projects perform better than others? DUDE!).

The General Ledger comes in dead last when it comes to providing the management information needed to help in the project sponsorship management arena.  I mean, seriously, when was the last time you predicated a purchasing decision on whether or not the vendor’s last profit-and-loss statement contained good news?  That won’t stop your Chief Financial Officer from asserting a place at the manage-the-sponsor table, though. He’s convinced that every single piece of management information that has anything to do with budgets or revenue simply must come from the General Ledger. He’s wrong about this, but can’t be convinced as such. You simply must release Amazon Basin Goliath Moths into his office prior to the project sponsorship board meeting, and see if he can extricate himself from the situation in time to “contribute” to the meeting (you don’t have ready access to Amazon Basin Goliath Moths? DUDE!!!).

There’s a reason why scope creep is so deadly to the prospects of brining projects in on-time, on-budget. Many (if not most) project sponsors realize that their vendors are eager to cultivate positive relations, and this eagerness can be leveraged into asking for the occasional “extra.” During the transition period, from contract award to baseline approval, these sponsors will attempt to gauge the extent that they can presume upon the contractors’ good will to get more than what was specifically spelled out in the contract. The managers of these new pieces of work need to be clear-eyed about how far they are willing to go to cultivate these relationships, and know how far is too far. Again, there’s a reason why scope creep is so deadly to the successful completion of projects.

And that reason is only tangentially associated with a lack of ready access to Amazon Basin Goliath Moths…

Mr. Miyagi’s advice to Daniel in The Karate Kid also applies to the selection of strategies when it comes to attracting projects, programs, and portfolios. Project sponsorship is a tricky field of endeavor, and, if your organization is a novice to it, the other companies in the market will gang up and bully you right out of contention (though, hopefully, not while dressed in skeleton costumes).

In the last two weeks’ blogs, I reviewed opposite ends of the spectrum when approaching the problem of securing sufficient projects to not only keep your organization’s head above water, but to actually have it thrive. The first example involved a very large Beltway Bandit that placed extraordinary emphasis on increasing the number of jobs being credibly bid, while giving short-shrift to the existing project backlog and its performance.

This company went out of business.

Next, I examined another company I worked for, with the opposite problem: as a designated small, minority-owned business, a certain portion of the (U.S.) federal government’s procurement budget was “set aside” for companies with this designation, so that the projects would often be awarded to this organization with little or no effort on behalf of its proposal preparation team. However, the “set aside” status doesn’t last forever, and, when it expired…

This company also went out of business.

The trick, then, is to set up a management information system that can help inform the company’s decision-makers on which types of work ought to be pursued, from which customers, and how much of it should be in the proposal backlog. The first two are relatively easy – the third, well, isn’t. But I’ll give a primer on the look and feel of these MISs my best 700-800 word shot.

Which types of work should your company pursue? Which do you do best? Don’t bother asking the tenders of the general ledger for that one – if you don’t have (at least a rudimentary) Earned Value Management System covering your project work, you have a lot more problems than just the info feed for your strategic management system. If you do, this data point naturally falls out of it upon inquiring.

Ditto on which customers.

Now for the size of the targeted proposal backlog. Did anyone notice how I inserted the word “targeted” into the mix there? Yeah – clearly, simply bidding on everything that tickles the organization’s fancy that shows up on the Commerce Business Daily is a strategy for disaster. To best manage your company’s project sponsors, some handle on the following parameters is necessary:

·         Project performance, by type of work and customer

·         Size of the target market

·         Position of the competitors in that market

Then, an analysis that takes into account the organization’s position with respect to Asset, Project, and Strategic management will allow a clear vision on the strategic direction the company should take. It’s informed balance, the kind that can’t be attained by doing different-footed chicken-kicks off of Oceanside pillars.

Or, absent this insight, your organization could simply get the stuffing beat out of it by the Cobra Kai-trained competition.

In last week’s blog, I reviewed an organization where I was employed that was positively obsessed with the concept of project sponsorship, to the exclusion of developing its personnel or actually executing the work it had in-hand to the best of its ability. Instead, this organization doomed itself by focusing its primary resources on bringing in new work, with all else receiving short-shrift. The organizational pathologies that developed because of this skewed focus were fascinating to watch unfold, even though they caused the staff much unneeded pain and anguish.

My next serious gig was with a company that had the exact opposite issue: it really didn’t care much about project sponsorship, and that perspective gave rise to an entirely different set of organizational pathologies which were similarly fascinating to watch unfold. This phase of my employment was with a company that claimed status as a minority-owned, disadvantaged firm under Paragraph 8, subsection A of the U.S. Small Business Administration rule book, which pretty much required a certain percentage of the government’s procurement budget be sent to companies so classified. Rather than have to spend considerable resources anticipating requests for proposal (RFPs), bidding on them, and breathlessly awaiting the results of the procurement cycle, this company’s contracts were often rewarded with a minimum amount of fanfare or strife. Life at this end of the spectrum was a trip.

It was, as stated, a small company, and its owners tended to treat the employees like family. This was a very strange experience for me, having come from a beltway bandit corporate giant that only gave lip service (if that) to its perception of the value of any individual employee. These owners were really neat people, and the staff had a far, far more relaxed attitude as they performed their projects’ scope. At the beltway bandit, virtually every member of the staff was constantly aware, if not positively petrified, of the possibility of imminent layoff. At this 8a firm, virtually every member of the staff hardly gave that possibility a second thought. Though, at first, I was somewhat skeptical about the 8a’s ability to perform at an optimal level, I soon began to realize that even I could perform much better when I wasn’t spending so much time looking over my shoulder, fearing a manager sneaking up behind me with a pink slip in-hand.

Eventually, however, signs of trouble in paradise began to become apparent. My new company/family was particularly poor at projecting revenue, since that particular information stream is definitely outside the capabilities of either the general ledger, or even a project management information system for that work that was not already in-house and baselined. With the strategic management function running on auto-pilot, there was no real push to develop the information systems that could have enabled informed decision-making in that arena – meaning that the project sponsorship function was essentially atrophying away.

As the date for “graduating” from the 8a program approached, and the project work would cease simply walking in the front door, efforts were undertaken to get a handle on the project sponsorship capability. These efforts resulted in what I nicknamed as the “Messiah Complex,” where new vice presidents would be hired from outside the company in the (vain) hope that they would bring new business in. These new veeps would be given charge over significant chunks of the company, and set loose. When the new project work was late (or never) in coming, another new veep would be brought in .. but the old ones would not be released. It wasn’t long before the organization became impossibly top-heavy, even as the new project work remained elusive.

This company attempted an IPO, but was hopelessly in debt by the time the lawyers and accountants were ready to pull the trigger. It was purchased, like the beltway bandit, by a competitor, and, like the beltway bandit, was a shell of its former self.

So, given these two extreme cases, is there a method for identifying the appropriate level of management attention to the project sponsorship role? Absolutely!  The best approach is…

...look at that! Out of space again. I’ll have to take this up next week…

To send a little sunshine Cameron’s way, the selection of the ProjectManagement.com theme for September, Project Sponsorship, was brilliant. Almost all of what’s written about project management begins when the contract is in the door. But a ton of that management stuff goes on before that blessed event, and it’s high time we insightful bloggers turned our gaze upon it.

A little history – my first gig out of college was working for a beltway bandit, assigned as a technician at an Air Force Weapons Laboratory radiation effects test site (I assure you, the title is far sexier than the actual work was). This organization (the beltway bandit, not the lab) was all about project sponsorship, and to excess. In fact, its over-the-top focus on project sponsorship led to its eventual downfall.

I first got a taste of this skewed perspective when I was making the transition from hourly-pay technician to staff member. All new staff members were required to go through a ten-hour training session, over three evenings, after normal working hours and on our own time. I recall the high-point of this training, where we were presented with a case study involving two managers, nicknamed “The Craftsman” and “The Wizard.”

The Craftsman’s story was this: he had been the senior engineer on a high-dollar, high-profile Department of Defense project, which was coming to a close. The project was coming in on-time, and under-budget, with all of its technical goals achieved in satisfactory fashion. The customer had written glowing letters of commendation to the project team. Everything seemed to be going swimmingly, except for one little detail: the project engineer had failed to procure any follow-on work, not with the program, and not with the customer. For this reason, The Craftsman was being held up as an abject failure.

Then came the story of The Wizard (I swear I am not making up these names – they’re actually the ones this company used in the training). The Wizard was also a senior engineer on a project, but this project was in  trouble. It was late on several key milestones, and it was running a sub-par Cost Performance Index for some time. Everything appeared to be going hideously, except for one little detail: this project engineer had already procured several follow-on task orders with the program.

The instructors were making a brave attempt at depicting each scenario as equally troublesome, but the truth would come out when one of them was pressed to compare the two. “I can tell you” the instructor stated ruefully, “we have a lot more Craftsmen than Wizards.”

And, indeed, upon becoming a staff member, it was quite obvious that the organization’s main focus was on attracting new business, with performing at a high level on the existing contract backlog coming in at a distant second place (if that).

Here was the basic problem with this approach: since the extra effort at marketing for new business had to take place after the nominal 40-hour work week, and since the staff was forbidden from charging for it, all of this extra effort was free to the organization, but burdensome (to say the least) to the staff. The unstated, but very real hierarchy in-place involved essentially spending 50, 60, 70 or more hours per week at work in order to avoid the layoff list. Predictably enough, while the proposal backlog expanded, the performance on the existing work fell off. The truly talented members of the staff could readily obtain employment under better terms elsewhere, while the mediocre (or poor) employees were left behind, spending more and more of their evaporating free time in an attempt to prevent the inevitable.

The company, as big and successful as it had been early-on, entered into an elongated decline cycle, and was sold to one of its rivals who, presumably, had a more realistic perspective on the relationship between project sponsorship and project management. The company went under, and the direct cause was its “success” in the project sponsorship arena.

Next Up: the other side of the spectrum. I will discuss my next serious gig, where project sponsorship was neglected, and the entirely predictable outcome.