Game Theory in Management

A few weeks ago I was complaining about the fictional Sherriff of Nottingham influencing (or even setting) modern organizations’ business models. This week I want to point out another dubious source of such influence, that being those wretched surveys, or polls.

Family Feud is an American television game show, which pits two teams of (usually) closely-related contestants in attempts to guess the answer to questions previously posed to the studio audience, based on the most popular response, the next most popular response, and so forth. Originally hosted by British actor Richard Dawson, subsequent hosts have included Ray Combs, Louie Anderson, Richard Karn, John O’Hurley, and Steve Harvey. Perhaps one of the most iconic lines that these hosts repeated in each show is uttered after a contestant has offered up what they believe was an audience response. In order to queue the operator of the board to show the correct answer, one of these hosts would call out “Survey says…!”[i] When a contestant’s answer appeared to have absolutely no connection to anything on the board, comedy gold could be had.

Meanwhile, Back In The Project Management World…

All valid Management Information Systems (MISs) have the same basic architecture, with three sequential steps:

1. Collect Data
2. Process the data into information
3. Deliver the information.

First, data is collected, based on some sort of discipline. Accountants, for example, need to know expenses, budgets, and other details about the assets they are tracking in the General Ledger. The data is then processed into usable information based on some sort of methodology. We PM types primarily use Earned Value and Critical Path methodologies. Finally, the information is presented to decision-makers in a format that’s actually usable. Pushing a balance sheet in front of a manager who is unfamiliar with GAAP is probably not the best way to support a business-related assertion.

Unfortunately, there are a good number of so-called MISs that do not follow this basic architecture, the most common invalid alternative being what I’ve nicknamed The Poll. The Poll is basically a central database or data depository, surrounded by input/output nodes. Going under names like “Action Item Trackers” or “Issues Management Systems,” these systems not only fail to incorporate a legitimate methodology, what they collect is often not even objective data. Opinions and unquantified observations can constitute a significant portion of the “data,” rendering these holding largely subjective, and, therefore, unreliable. Indeed, a handy litmus test for whether or not an entry into a poll-structured MIS has any merit resides in the answer to the question, “is this actionable right now?” If the answer is no, then the entry is suspect.

These Polls should not be confused with systems that record events that have already occurred. Lists of accidents or infractions can be informative as long as they’re not being used to try to precisely predict future occurrences. If Plant N has had 1.3 accidents per month that led to at least one worker having to spend time away from work, that can be valuable in assessing the overall safety environment. It’s kind of useless, though, when trying to predict the exact place and time of the next such accident.

The main problem with polls is that there’s always someone with more recent, accurate, or complete “data.” In an attempt to overcome these types of systems’ inherent unreliability, the protocols for access to them are usually pretty loose. Essentially, anybody within the organization who has an “observation,” “action item,” or “issue” can sign on, and make an entry. The more advanced versions of this type of system will accept downloads from scheduling systems that incorporate the Critical Path Methodology, but that simply raises the question, if the scheduling system is the source and residence of this data in the first place, why not just view it in the original?

Then we have the problem of how all of these “issues” or “action items” are to be categorized, or binned. By date, either of occurrence, or estimated resolution? By organization? Place? Project? Severity? No matter how these entries are categorized, some impacted manager will want to see them presented differently, in line with their specific function or area of expertise. Besides, if a worker becomes aware of a problem like an unsafe condition or activity, doesn’t the immediacy of such a situation demand that they stop work and alert those responsible, rather than going to a computer terminal to do some data entry?

Finally, poll-structured MISs have the inherent problem of answering the question “So what?” Randomly submitted “issues” or “action items” will need to be assigned to someone to “correct,” or else be dismissed. Just so we’re clear, random action items getting assigned to PMs is a clear example of the dreaded scope creep, in that it’s a piece of work that is (typically) not part of the original baseline, has not been formally added via the BCP process, but nonetheless has to be accomplished. And scope creep is poisonous to projects.

So, the next time a PM is hit with some “action item” that needs addressing stemming from an information system predicated on the poll model, and flunks the actionable test, that PM should feel free to imagine its contents being spoken by a Family Feud host, after the words “Survey says…!” Because what follows is not really reliable, and well may be better suited to game shows.

[i] Retrieved from https://www.shmoop.com/quotes/survey-says.html on July 14, 2023, 21:34 MDT.

Few things in the management world are as infuriating as having a good, or even great, initiative blown to smithereens by office politics. To be precise, I would like to define office politics as those actions taken by members of the organization that benefit themselves personally, while being neutral or even detrimental to the goals of the group or team with whom they are working. By this definition, office politics encompasses everything from idle gossip about coworkers, all the way to arguing against a course of action, not on technical merits, but because the person (or persons) making the counter-argument have something to lose should that action be adopted. I discussed in last week’s blog the brilliant Michael Maccoby, particularly his book The Gamesman; The New Corporate Leaders (Simon and Schuster, 1976). In it, Maccoby asserts four basic archetypes in the workplace:

• The Craftsman doesn’t care so much about for whom he works, but does care a great deal about the quality of his individual output.
• The Company Man tends to assume the persona of the organization around him.
• The Gamesman, after whom the book is named, doesn’t see his benefits as translating to a roof over his head or food on the table. Rather, he sees his renumerations as some kind of token in a grand game he’s playing. Because of this, he is both more likely to master the rules of this “game,” and be willing to take risks.
• Then we have the Jungle Fighter, who gets ahead through calumny and cloak-and-dagger tactics.

Jungle Fighters are both vile and ubiquitous, and are typically at the forefront of office politics. In an organization of any size, there will inevitably be some, and in those cases where the organization is based on a flawed (or, especially, pathologically flawed) business model, they may even represent the majority archetype. If a member of GTIM Nation finds themselves in such an organization, the only – and I do mean only ­­­­– solution is to get out, and as quickly as possible. For the rest of the business world, where the Jungle Fighter population is more manageable, and emergency disengagement is not necessary, your working life may still be made considerably worse by the presence of these people. What can be done?
First rule of dealing with Jungle Fighters actually comes from Sun Tzu, and The Art Of War, and it is this:

Do not engage an enemy more powerful than you. And if it is unavoidable and you do have to engage, then make sure you engage it on your terms, not on your enemy’s terms.[i]

Unless you are yourself an advanced Jungle Fighter (I prefer to believe there are very few or none within GTIM Nation), you cannot engage them on their terms. They’re too good at engaging in ex parte conversations and calumny, and they almost always get away with it. And, no, I’m not so Pollyanna-ish as to assert that these people can be overcome through sheer comparative accomplishments. Jungle Fighters will typically possess an amazing ability to be perceived as being highly involved in successful projects, and having relatively little to do with struggling ones.

Based on the assertion that these are the Jungle Fighters’ two favorite tactics – calumny and glomming onto successful work while distancing themselves from poorly performing tasks – two counter-strategies can be rather effective, if engaged in a timely manner. Number One: if you are a PM, and a member of your Team wants to discuss another member, stop them immediately, and invite the target to the discussion. End all ex parte conversations dealing with other Team members, their performance, or assignments. This is the Jungle Fighters’ bread-and-butter tactic. Without it, much of their power evaporates away.

Number Two: document your Scope Baseline in detail. Most PMs are familiar with the Responsibility/Accountability Matrix, or RAM. This is a matrix with the Work Breakdown Structure on one axis, and the Organizational Breakdown Structure on the other, so that each Control Account or Work Package in the Project has its performing organizational element identified. Once you have a detailed Scope Baseline arranged in a RAM, everyone’s role is clear. You won’t leave any ambiguity space for the Jungle Fighter to assert a contribution outside of their RAM assignment, nor will they be able to escape an association with a poorly-performing Work Package if, indeed, they were part of that assignment.

The easy strategy, of course, is to simply stay off of the Jungle Fighter’s radar screen, and, if you can accomplish this reliably, then fine. But if you can’t, I’ll leave you with one final Sun Tzu quote:

What is of supreme importance in war is to attack the enemy’s strategy.[ii]

[i] Retrieved from https://www.azquotes.com/quote/548824 on July 10, 2023, 18:16 MDT.

[ii] Ibid.

In the United States, considerable political punditry pixel ink has been spilled on “The Swamp,” the nickname for the layer of bureaucrats whose collective decisions can seem to have a greater impact on public policy than those elected to office. But this hijacking of the authority to make key decisions within the organization is by no means confined to the civic sphere – it’s alive and well in the business sector, as well, and ignoring it only enhances its ability to shape the business model, often in ways that are counterproductive.

How did this management version of The Swamp get here in the first place? GTIM Nation knows of my reverence for the excellent Michael Maccoby, particularly his book The Gamesman; The New Corporate Leaders (Simon and Schuster, 1976). In it, Maccoby theorizes four basic archetypes in the workplace:

• The Craftsman doesn’t care so much about whom he works for, but cares a great deal about the quality of his output.
• The Company Man tends to assume the persona of the Team around him.
• The Gamesman doesn’t see his paycheck as food on the table or a roof over his head, but as a kind of token in some elaborate game he is playing. Because of this, the Gamesman archetype tends to (a) master the rules of this “game,” and (b) be more inclined to take risks.
• The Jungle Fighter gets ahead through cloak-and-dagger techniques, rarely through legitimate technical contribution.

So, how did the Jungle Fighter make his way into your organization, or, worse, your Project Team? He must have presented himself in his interview as being technically advanced, or at least more competent than the others applying for that job. I mean, he might have been straight-forward, and shared that his favorite workplace tactic was to engage in such toxic calumny that other Team members became afraid to even challenge the JF’s assertions in Team meetings, thereby assuming a patina of expertise, but I kind of doubt it. The very presence of any Jungle Fighter in the organization – and, I can assure you, there’s going to be at least one in any organization of size – means that some semblance of the dreaded Swamp is sure to follow.

Once this sort of unmerited managerial influence has a foothold, it’s enhanced by all of the members of the organization who have attained their positions through anything other than technical ability. I’m somewhat embarrassed to admit that, at one time, I sincerely believed that people advanced within their organizations based purely, or even mostly, on merit. Then I turned 14.

The reasons that people attain their ranks within a given hierarchy (other than entities like United States Chess) are often influenced by factors other than their technical capability. That’s not necessarily a bad thing, since each member’s ability to function within a team often makes the difference between success and failure. But being able to function at a high level with respect to inter-team relations does not make up for a lack of technical expertise, in my experience. If those in a position to determine, or even influence, the selection of the technical approach that the Project Team will be pursuing don’t know what they’re doing, no amount of interpersonal skills will save the project.

Meanwhile, In The Poker-Playing World…

In the game of poker, a “tell” is a change in a player’s expression or behavior that can serve as a clue as to their assessment of their hand. As with so many other games of skill with elements of randomness, some aspects of poker are highly analogous to the world of Project Management, and the presence of tells is one of them. If there are people in your organization in a position to influence the selection of the technical approach to the accomplishing of your Project’s scope, but are actually pretty clueless, how can they be identified? What are their tells?

It's my belief that one of the most obvious tells that someone who’s trying to influence the technical approach to accomplishing your project’s scope doesn’t really know what they’re talking about is a gross misjudgment of the level of rigor of the Project Management Information Systems, or PMISs. Most PM-types are wearily familiar with those who want little or no application of basic PM capabilities when some level is obviously called for, but the opposite is also true. Many projects that operate with highly detailed baselines, exhaustive Work Breakdown Structures, and over-regulated Critical Path schedules could operate just fine with far simpler information systems, but are prevented from doing so by their home organization’s policies and procedures.

Those pushing for little (or no) PM-based Management Information Systems are pretty much outing themselves as swamp critters, but what about those who insist on an overly burdensome system? A good litmus test here has to do with the question, Which is more important, attaining the scope on-time, on-budget, or provably following each and every requirement in the PM procedures? Of course, there are other tells (cough, insisting on a risk management [no initial caps] program, cough), but over-reliance on PM procedures to the point that they crowd out perfectly reasonable technical approaches to the Project’s central problem has to be one of the easiest to recognize.

So, look out, swamp people within the PMO! GTIM Nation knows how to recognize you when you bluff. You might just get called.

Yeah, I know it doesn’t seem that way. In fact, our workaday world often presents as the exact opposite, with the assertions of the Asset Managers and the whims opinions of the Strategic Managers always seeming to have more traction in the board room than those of we poor PM-types. But appearances can be deceiving, particularly in the management sciences, and this is one of those times. Believe it or not, the rest of the organization, either directly or indirectly, works for the PMO.

Let’s start with our friends, the accountants (a.k.a., Asset Managers). They know (or think they know) the value of the organization’s holdings, right down to the mechanical pencils in the supply cabinets. Interestingly, due to a concept known as “depreciation,” the last mechanical pencil in the box purchased one year ago is somehow worth less than any of the pencils in the box bought last week, despite no ascertainable difference in appearance or performance. But that aside, what is to be done with all of these assets? Do they generate revenue just on their own? Of course not. They only generate revenue when they are used in the pursuit of – wait for it – attaining scope. And, before anybody challenges me on the grounds that many investments, such as Certificates of Deposit or commercial paper holdings, generate revenue but are not matched against scope, I would argue that they are indeed matched to scope, albeit indirectly. Your Asset Managers might be holding the actual commercial paper or T-bill, but the person with its M1 equivalent is starting a business, or performing some other aspect of Project work.

The second type of management is PM. As I’m confident GTIM Nation is fully aware, it’s all about executing scope. And among the three types of management, which one is dedicated to the best way of executing scope? The answer is so obvious that it tends to generate a kind of low-level competition, or even resentment, against PM-types from the Asset Managers.

Finally, we have the Strategic Managers. I may be unique among management science writers in making the distinction between Asset, Project, and Strategic Management, but that doesn’t mean such a distinction is inaccurate or unwarranted. Even a rudimentary review of the types of information streams used by each type reveals that such a distinction is in place, and probably always has been. Within this structure, the Strategic Managers seek to maximize the organization’s market share, meaning that their actions and strategies are made with respect to the relative position of the organization’s competitors. If we set aside the activities of the advertisers, we have the proposal teams performing most of the work for the Strategic Managers. Of course, many Project Team members have been drafted kidnapped invited to participate in proposal preparation, but for those who haven’t had the honor, it typically involves responding to a Request for Proposal, or RFP, for – again, wait for it – project work consistent with the organization’s capabilities and experience. Since many (if not most) of the winning proposals are let on the basis of the lowest bidder who can perform the actual work, a kind of strange little dance goes on between the kidnapped Project Team members/ Subject Matter Experts and the Proposal Team Lead, where the head of the Proposal Team simultaneously seeks to assert technical competence (if not supremacy) at the most economical price they can muster. In a sense, those issuing the RFP are seeking to install a rather cold, hard filter, one that allows through the one contractor who has the most underpaid but competent workers.

Enter the PM-types. If the organization’s Project Teams can’t execute the work in the RFP for a competitive price, the Proposal Team is in a very difficult position, indeed. They can price the proposal at a point where they have some level of confidence that the organization can perform the work, and almost certainly fail to be the lowest bidder; or, they can price the proposal where they think it has a shot at winning, but will almost surely be at a price point where the under-performing Project Team will overrun. Conversely, if the organization’s Project Teams are efficient and effective, the Strategic Managers in general, and Proposal Team Lead in particular, are in a far superior position in relation to the competition. Not only will they be able to project a price point that has a shot at winning, they can point to the accomplishments of the Project Teams in accomplishing similar work in the verbiage of the proposal itself.

So, yeah, the PMOs might not appear to be very highly placed in the org charts, but both the Asset and Strategic Managers really need we PM-types to be on top of our game for them to have a shot at succeeding. No, we’ll never receive the kind of recognition we deserve with respect to the other two management types, but that’s okay. It’s all part of that “servant-leadership” business.

But, to the rest of the organization, the PMO has every right to say “you work for us.”

I’m of the opinion that the seminal double-entry bookkeeping body of knowledge (get it?) came about due to two drivers:

• A mostly mathematical exercise by Luca Pacioli, in the 15^th century,[i] and
• A method to fairly extract taxes from a rapidly expanding and more sophisticated business sector at that time.

Prior to double-entry bookkeeping, taxes were generally collected on a rather subjective basis. Unless one was a member of a feudal court, the display of personal wealth made for a natural target of the tax collector(s). As the wealthy sought to downplay conspicuous displays of affluence, tax collectors would have a more difficult time differentiating between those who ought to pay more, and those who had already paid their “fair share,” and then some. If you think about it, this entire dichotomy is the basis for the Robin Hood legends, where King John I of England was forced to raise taxes in order to meet the ransom demands for retrieving King Richard I from the Austrians. Since the actual collection of revenue was performed by the constabulary, this duty fell to the fictional Sherriff of Nottingham, the villain in the Robin Hood legends. Lacking a solid basis for such assessments, it would have been next to impossible to fairly and even-handedly perform this function. Notably, King John reigned from 1199 until his death in 1216, whereas Luca Pacioli didn’t publish his treatise until 1494.[ii]

But, once double-entry bookkeeping became common, specific laws targeting particular types of transactions or holdings could be passed, and evenly enforced. No more tax booths by the side of the road, demanding of passerby a percentage of their possessions based on superficial appearances. From a legal and financial point of view, it was brilliant, but it does raise the question: if not for the obligation to pay taxes, or to provide a consistent standard for valuing economic entities, would businesses today predicate almost all of their budget or money-related Management Information Systems (MISs) on the general ledger? My point is that I’m rather dubious that it got to that position based exclusively on its management utility, as opposed to its use for governments to raise money. It’s also easy for me to believe that, since every business had to use double-entry bookkeeping anyway, it was a relatively small management science/narrative step to assert that the point of all management was to “maximize shareholder wealth,” a bit of information that can only be derived from – you guessed it – the general ledger. And from there the expansion of the codex asserting double-entry bookkeeping as the ultimate authority when it comes to informed management decision-making just seemed to make sense.

I can almost hear rookie members of GTIM Nation saying “But Michael! There’s a vast difference between the knavery of the fictional Sherriff of Nottingham and modern-day Chief Financial Officers! For example, the Sherriff of Nottingham would make decisions about the collection and distribution of funds based on insufficient information and/or his own personal prejudices, leaving some interests overburdened and bitter, while others were unfairly and almost arbitrarily rewarded. Conversely, the modern-day CFO makes decisions or bases advice about the collection and distribution of funds based on the data in the general ledger, perhaps influenced his own personal prejudices. It’s completely different.”

Adding to the dynamic that provides the information from the general ledger appearing to be more valuable than its counterparts from the Project or Strategic Management realms is the immediacy of its apparent payoff. A generic employee approaching a generic manager and demonstrating that they had saved the company X amount of money appears to have made a strong case for their own personal contribution’s value. Not as clear is the immediate value of the Project Team member who informs their PM that they have averted a cost overrun in a specific Work Package. Success in the PM realm is often not realized until the project is actually finished, sort of like the way some colleges will award grades exclusively on the final exam. And, about that generic employee with their “savings.” Eliminating, say, a salesperson from the floor will “save” the company that person’s salary. It is also likely to frustrate customers who can’t get help during peak traffic hours with their purchase decisions, meaning that, in the mid-to-long term, such “savings” may actually hurt the organization in both the PM (customer-focus) and Strategic Management (market share) arenas.

Of course, I don’t anticipate the content of the GTIM blog to overturn the commonly-held notion of the supremacy of the general ledger in generating management information streams. I’m just posing some long-overdue questions about it. Please don’t send the Sherriff of Nottingham to take all my stuff.

[i] Retrieved from https://en.wikipedia.org/wiki/Double-entry_bookkeeping on June 4, 2023, 19:47 MDT.

[ii] Ibid.