Game Theory in Management

Within the Marvel Comics Universe (MCU) there are a wide variety of villains, but then, there would have to be, right? I mean, if you are to introduce a character with super-human abilities, it would be rather disappointing if that character were to, say, use their amazing powers to ensure people used the correct recycling bins. No, the antagonists in these stories must have the following characteristics:

• Unmistakable evil intent,
• …impacting either (a) a few loved ones, or (b) millions of randos (or both), and
• Some advanced capability that renders them invulnerable to nominal law enforcement, i.e., they have a super power too.

Now, some of these villains, while having an advanced capability, aren’t really impervious to traditional law enforcement techniques. “Doctor Octopus,” a.k.a. Dr. Octavius from Spider Man II (2004) has infused onto his spine four robotic arms, alternately directed by him and by an artificial intelligence mechanism that’s part of the arms. While there’s no question that these arms make Dr. Octavius formidable, they don’t make him, well, bullet-proof, and hand guns are pretty much the universal weapon of American constabulary. Nevertheless, it falls to Spider Man himself to thwart the Doctor’s reckless plans. At the other end of the spectrum is “Thanos,” from The Avengers: Infinity War (2018), who, with a single act (“The Blip”), wipes out at random half of all living things in the universe[i] (not the galaxy, mind you, but the universe. As a point of reference, NASA’s 2016 estimate of the number of galaxies in the observable universe is 200 billion[ii]). How could one describe such a villain? As a super, super, super villain? An omni villain?

Meanwhile, Back In The Project Management World…

While the typical new PMP® certification holder is not given to changing wardrobe in order to include skin-tight, brightly-colored costumes, there is a subtle but clear mandate to oppose – extremely powerful criminals? No, shoddy management practices, no matter how deeply entrenched in your organization, nor how widely-accepted they are in the business world. As GTIM Nation is well aware, some of my favorite Super Management Villains (SMVs) include:

• The notion that the point of all management is to “maximize shareholder wealth,”
• The overuse of Return on Investment,
• risk management (no initial caps),
• The idea that PMs should “engage all stakeholders,”
• The “bottoms-up” Estimate at Completion,

…among others. But today I want to make the case for distinguishing between actual Project performance, and the Management Information Systems (MISs) that measure Project performance, and why this distinction matters in the realm of combatting PM supervillains.

Let’s step back, and take the 35,000 foot view of Project Management. From this perspective, what’s the point of PM? If you said “to help ensure that projects are brought in on-time, on-budget,” go to the head of the class. How does PM writ large accomplish this? By showing how to set up the Management Information Systems that allow actual Project Managers to know where to devote their limited time and energy, towards problems that represent barriers to accomplishing the scope on-time, on-budget, and away from those areas of project execution that are going just fine without the additional attention. I want to reiterate this distinction, because it’s important: the PMI®s, ProjectManagement.coms, and all PM-oriented academe do not exist to make decisions for the PM; rather, they exist to help the actual PM know what they need to make better, if not absolutely optimal decisions.

So here’s how we can start identifying our SMVs. Know that the ones who are interfering with the nominal PM’s decisions, while certainly villains, are not the super variety we’re after. This is Dr. Octopus-level management villainy. Lack of managerial latitude in executing decisions is an organizational behavior and performance issue. What will lead to the switching on of the ProjectManagement.com searchlight/signal (actually, that’s an awful lot to put on a spotlight/projector. Let’s stick with PMI®) is going to be those pseudo-management techniques and practices that not only fail to inform our nominal PM person, but will actually consume time, energy, and resources to deliver irrelevant, or even misleading information streams, increasing the odds of poor decisions being made, and steering the so-afflicted projects towards delays and overruns. To the extent that these poorly-formulated techniques generating marginally useful information streams become entrenched and commonly accepted within the macro PM community, they become more and more difficult to overturn. Worse, should they become so identified with the nominal PMO that typical executives are no longer able to differentiate between valid and invalid PM techniques and practices, we’re looking at a scale of management knavery that could have a profound negative impact on …, well, not the universe. I’ll confine my alarmism to the arena of management science.

What’s to stop all this from happening? That depends. Your butler just came into your study, and has called your attention to the PMI® signal (with or without the “®”) high above the city’s skyscrapers. What are you going to do now?

[i] Retrieved from https://en.wikipedia.org/wiki/The_Blip on April 17, 2023, 21:20 MDT.

[ii] Retrieved from https://www.nasa.gov/feature/goddard/2016/hubble-reveals-observable-universe-contains-10-times-more-galaxies-than-previously-thought on April 16, 2023, 1500 MDT.

Whenever I see an article that asserts the need for Project Management Offices to emphasize “adding value,” I think such statements beg the question, “value” as determined by whom? What is the nominal value generated by the typical PMO? Before I delve into what this PMO-generated “value” is, let’s take a look at what it is not. Almost all of the hits I saw when searching “What does a Project Management Office do?” included the following:

• A governance function.
• Training.
• Establishing “best practices.”
• While many of the hits described the overall soft boundary layers of definition between “project,” “program,” and “portfolio” management offices, they usually indicated some sort of “coordination” function.
• I saw a lot of mentions of changing or improving corporate culture to be more accepting of PM.
• They were also very keen on the PMO performing resource allocation.

It probably won’t surprise GTIM Nation that I find all of this to be fairly objectionable. But before I can demonstrate why all of this is not only mistaken, but may actually be harming the advancement of Project Management writ large, let me remind everyone of Hatfield’s Incontrovertible Rule of Management #3:

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^th percentile worst managers who have access to 80% of the information so needed.

Keep in mind that, when we’re discussing the kind of information streams needed by Project Managers in general, this information is distinct from what’s needed by Asset Managers, or even Strategic Managers. The source and residence of the data Asset Managers need is the general ledger, and the techniques they use consume data from that source (e.g., the grossly overused and imprecise Return on Investment). Similarly, since Strategic Managers’ proper focus is on market share, the information streams they rely on allow them to compute the value of that parameter, and evaluate the various strategies that can be used to improve it.

Not so the PMs. While the Scope Baseline is certainly integral to all other derived information within this realm, it’s the Cost and Schedule Baselines, set up to allow Earned Value and Critical Path Methodologies to function, that create the main source of the needed project insights. The implication here is that, all other things being equal, the primary purpose of the PMO is to put into the hands of the decision makers the information they need to make the best management decisions for their projects. It’s based on this definition of the value that PMOs bring to the table that I reject the previous list of what they do, to wit:

• Governance? Please. Consider a scenario where we have two PMs, “A” and “B.” PM-A takes on new technology-based projects, and consistently brings them in on-time, on-budget. However, she pretty much ignores the PMO’s prohibitions on start-to-start relationships among the activities in her schedule baseline, and doesn’t do risk management at all. PM-B works fairly basic, familiar projects, but is consistently late and over budget. He also follows the PMO’s guidance to the letter. Whom among them, do you think, would be more worried should the organization face a sudden and dramatic downturn in contract backlog?
• Training is a line management function, not a Project Management function.
• What represents a “best practice” is highly subjective. Don’t believe me? Look at all the overhead (or even Project!) budget wasted on the risk managers (no initial caps).
• The “coordination” of the projects within the Program or Portfolio, when done properly, will take into account the kinds of work the macro-organization does best, what the competition in that arena looks like, the nature of the current and anticipated proposal backlog, among others that all fall squarely into the realm of Strategic Management. And those managers can’t do their jobs properly if they don’t have access to the kinds of cost and schedule performance measurement systems that can inform them of the macro-organization’s strengths and weaknesses, again pointing to the need for the PMO to provide PM-centric information streams.
• I’ve already done a recent blog on the futility of attempting to directly change corporate culture.
• Resource allocation is another line management function. The PMs, of course, must specify their needs, but it’s up to the non-PM-centric parts of the organization to recruit, retain, or train the personnel to fill those needs.

Note that each of these functions that these sources contend are supposed to be part of the PMO consume time, energy, and budget. If what I’m pointing out is accurate (which, of course, it is), then all of that time, energy, and budget is … well, I won’t say “wasted.” “Not really germane to PM…” will suffice. And, if these efforts aren’t really germane to PM, they become value-neutral – at best. By shouldering organizational responsibilities outside of the PM discipline, they consume resources that would otherwise be used to generate the value PMOs ought to provide.

So, yeah, before we can have an intelligent discussion about how to increase the value brought by the PMO, let’s start by agreeing to not take it away.

This is going to be a tricky blog to write, so let me make one distinction up front: when I use the word “ignorant,” I’m specifically referring to Merriam-Webster’s second definition, “Unaware, Uninformed.”[i] Other definitions tend to include an aspect of a lack of intelligence, or some other form of mental inadequacy, and, for the purposes of this blog, that’s not what I’m talking about. Now, we are all probably familiar with how learning can be contagious, particularly as a member of a high-performing team. In medicine, there’s even an axiom for disseminating proper technique, “See it, do it, teach it.” It’s why, in organizations that value quality and performance, the more mature PMOs will tend to act as a macro-organizational enhancement, steadily increasing the odds that the projects in the portfolio will come in on-time, on-budget.

But the dark side of organization-wide learning is the very real possibility that the cumulative learned skills of the Project Team or PMO could unravel, leaving it weaker than it had been previously. This effect is more likely to come about under two circumstances:

• For Management and Operations (M&O) contractors at facilities attempting to deal with a long-standing PM problem, bringing in managers – particularly high-level ones – from other, similar facilities can be iffy, especially in destinations that perform a unique function. The reason is because people new to the hiring facility will likely not be familiar with many of the nuanced barriers to template-derived management strategies or technical approaches. The new executive may have been extremely effective in correcting a similar problem at another place and time, but the hard fact in many of these instances is that the barrier that can render this carried solution completely ineffective is both subtle and undefeated. New managers and executives hired from the outside, in my experience, will place a high value on loyalty within their new organization, not necessarily talent, meaning that the very members of the Project Team who are best able to assist in offering up course corrections are also the ones who will likely be seen as opposing the new manager, thereby eroding their organizational standing. It also means that the really-not-that-analogous solution being bolted on to the current problems will drive out better options by force of leveraging organizational power, reducing or even eliminating the chances of negotiating those very nuanced yet undefeated barriers.
• Then we have the situations where the manager(s) determining the technical approach did not attain their position through merit. Very few true meritocracies exist. The only one I’m aware of is United States Chess, where your ranking in that organization is your current points accumulated. Your score is what it is, and it alone determines your rank in USC. So, given that in the business world, the people in positions to make the final determination as to technical approach and implementation strategy didn’t necessarily attain those positions through merit, it stands to reason that some of those determinations will be flawed, perhaps irretrievably so. Hatfield’s Rule of Management #24 (a) clearly states that the first of the three critical characteristics of managerial leadership is the ability to identify the optimal, or at least workable, technical solution(s) to the problems being addressed by the Team. However, those who have attained positions of managerial leadership deficient in this ability, sometimes by even the smallest degree, will not only tend to default towards more familiar template-based solutions, I have seen them actively seek to defeat a better technical approach should it be offered up by any other Team member. Consider what this effect will have in the aggregate: the person pushing the sub-optimal, template technical strategy/implementation approach is overcoming the person advocating for the superior, if not truly optimal approach.

In each of these scenarios, ignorance is advancing at the expense of the macro-organization’s ability to effectively handle novel or difficult managerial problems. Essentially, ignorance has become contagious, and is working against the organization’s ability to make informed decisions on a consistent basis. And the sure-fire indicator that the ignorance-contagion effect is unfolding in your organization? It’s when the new/not meritorious exec finally comes to the realization that their techniques have failed, and places the blame directly on the insouciance of the Project Team in carrying out their flawed management strategies. This “explanation” almost always carries with it the assertion that their strategy would have been successful, if only upper management would have provided sufficient support, or backing (i.e., threatened to fire those members of the Project Team who failed to miraculously make the flawed approach actually work).

But here’s the thing: those “insouciant” Project Team members taking the blame for the failure were most likely the most educated ones, recognizing that the technical approach being pushed by the PM was flawed. As the stigma of failure gloms on to the educated, and insulates the unskilled PM from that failure, ignorance advances, and the managerial effectiveness of the macro-organization retreats, rendering ignorance very contagious indeed.

[i] Retrieved from https://www.merriam-webster.com/dictionary/ignorant on March 26, 2023, 15:26 MDT.

Empathy demands I cringe a little bit for any employer who lists a job ad that includes as part of the winning candidate’s skill set the ability to “change the culture,” or be an “agent of cultural change.” This seemingly benign requirement is, in fact, a tacit acknowledgement that the existing organization is incapable of executing its business model satisfactorily, which, in turn, points to at least one of the following causes:

• The organization lacks the overall level of talent needed to execute the selected business strategy, or
• The organization itself is fine, but the business strategy is sufficiently flawed so as to preclude a successful execution as articulated.
• And, of course, both could be true.

Then we have the problem of what, exactly, are we talking about when the term “corporate culture” is bandied about? Investopedia is as good a source as any, and here’s how they define it:

Corporate culture refers to the values, beliefs, and behaviors that determine how a company's employees and management interact, perform, and handle business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people that the company hires.[i]

I think this definition is good, but I would like to add to the “values, beliefs, and behaviors” list one more item: priorities. If the organization’s management and employees do not have a shared set of priorities, then even a superior business model, perfectly aligned with the economic environment in which it functions, is vulnerable to a failed implementation due to the lack of cohesion among those performing the actual work. For example, if a new restaurant chain has an equal mix of employees and managers who believe that their top priority is either to give customers a very pleasant dining experience or to, say, maximize shareholder wealth, then customers will have a very different experience at that establishment, depending on who serves them. Note also the reference to how corporate culture “…develops organically over time from the cumulative traits of the people that the company hires.”[ii]

I juxtaposed the serve-the-customer and Asset Managers’ goal as priorities in the previous example for a reason. Placing the priority on meeting (or exceeding) customer expectations with respect to scope, cost, and schedule is firmly within the Project Management domain, confirmed by the nature of the management information systems that support PM. For decades business colleges have taught that the point of all management is to “maximize shareholder wealth,” and I’m pretty sure that is still being taught today. Curious how that little axiom never seems to make its way into an organization’s Mission Statement, or Vision Statement if it is, indeed, the point of all management. Among the sixteen best Mission Statements according to Biteable, only one mentions a return on investment at all, and even then it’s somewhat tangential. That one belongs to Spotify, and reads:

To unlock the potential of human creativity — by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.[iii]

None of the other Mission Statements on the list made mention of Asset Management objectives at all. But all sixteen did call out providing some sort of benefit to existing and potential customers, leading me to believe that PM is far more central in providing the basis for a coherent, successful corporate culture than Asset Management. This is true even for the very business colleges offering courses in the management sciences. I did a web search on the question “Why should I attend business college?” and none of the many responses included the faintest hint of “to shore up the college’s endowment.”

So, does this mean that PM is the optimal vehicle for changing corporate culture? Well, yes, but it’s complicated. While I do believe that corporate culture is downstream from the efficacy of the organization’s business model in delivering goods and services within the customers’ cost and schedule parameters, I’m also convinced that the whole “cultural” thing, as defined earlier, falls mostly within the realm of Organizational Behavior and Performance, which is (ironically enough) part of Asset Management. This means that, even with a superior business model/technical approach laid out by the PM, success is far from guaranteed, particularly if the organization happens to have a preponderance of Jungle Fighters and Company Men rather than Craftsmen or Gamesmen (the archetypes from Michael Maccoby’s excellent book The Gamesman [Simon and Schuster, 1976]). Essentially, if you want to “change the (corporate) culture,” don’t expect PM to get you all the way there.

But it’s the right place to start.

[i] Tarver, Evan, Corporate Culture Definition, Characteristics, and Importance, retrieved from https://www.investopedia.com/terms/c/corporate-culture.asp on March 12, 2023, 19:36 MDT.

[ii] Ibid.

[iii] Biteable, Mission Statement Examples, 16 Of The Best To Inspire You, 15 June 2021, Retrieved from https://biteable.com/blog/mission-statements/ on 13 March 2023, 18:39 MDT.

When I saw that ProjectManagement.com’s theme for March was Personal PM, I naturally assumed that most of the so-themed offerings would be along the lines of pointing out Project Management’s amazing capacity for scalability. After all, the exact same type of schedule logic (mostly finish-to-start) goes into properly ordering the activities in a wedding as it does in properly ordering tasks to build and launch a space shuttle. But there’s another aspect of Personal Project Management that goes beyond the applicability of its precepts in pursuit of private objectives, and it has to do with our ability as managers to separate our business techniques from our view of ourselves. It’s only natural to have an emotional attachment to our work, in addition to the intellectual and energy investment in making a living. How does one go about making a distinction between the two worlds? Well, let’s start by taking a look at Mario Puzo’s classic, The Godfather.

The line in the title (or a variant) is repeated several times in the movie. As noted, the version in the title comes from a scene where Tom Hagen is having an intense discussion with Sonny Corleone about the recently-thwarted second attempt on his father’s life, with a partial repeat of the quote happening seconds later. It makes a third appearance in two minutes and fifty-three seconds, when Michael states his plan to kill both Sollozzo and the corrupt policeman who broke Michael’s jaw and works as Sollozzo’s bodyguard, McCluskey. Sonny accuses Michael of taking his injuries from McCluskey personally, and invokes the axiom thirty-three seconds later, for a total of four. The quoting or direct reference to this axiom four times in around 3 ½ minutes of dialogue means two things, (1) that all parties to the discussion consider it valid, and (2) the tactics that they are discussing at least have the appearance of breaching that guidance.

So, why is this axiom widely-held, and generally accepted? If I were to attempt a paraphrase, it would be along the lines of “allowing personally-held beliefs to influence what would otherwise be an anodyne management science – based analysis and resulting decisions would expose that analysis and those decisions to irrelevant influences, increasing the odds of a bad outcome.” Since my paraphrase is 49 words long, and “It’s business, not personal” is much shorter and to the point, I can understand why hardened gangsters would prefer the axiom version.

Meanwhile, Back In The Project Management World…

I’ve had the unfortunate experience of being contradicted by a contractor/consultant (who was new to the PMO) during a high-level meeting, on a matter that (1) was trivial, (2) I was completely in the right, but (3) ended up making me look silly in front of my organizational superiors. I understood in an instant why this person had done so – it was fairly clear that this consultant was attempting to establish credibility, so as to increase the odds of future billable hours, and the opportunity to do so just happened to be at my expense. Alternately, this person could have been simultaneously snarky and wrong, excessively so on both counts, but I’ll give them the benefit of the doubt. But I came to understand that they were taking their Project Management rather personally, as if the basis of their analysis was somehow interwoven with their presented persona, in such a way that one could not have one without the other. This, of course, is in direct contradiction to the not-personal-it’s-business axiom, particularly in my verbose but more precise paraphrase. For if one cannot dispute a given approach to a PM-centric problem without challenging the expertise of the people pushing it, then virtually all subsequent attempts at evaluating other solutions to the problem at hand turn into little more than résumé-based hierarchical angling. With the discussion environment thus compromised, you’re almost guaranteed to come up with a sub-optimal solution. You would, in fact, be lucky to escape without selecting an option that would be, in a more rational room, easily identified as a mistake – hence the reminders in The Godfather to keep clear the distinction between the personal and business decisions.

Ultimately, the axiom we are discussing comes down to the efficacy of the Economic Man theory (essentially that people will always make decisions that will benefit them, personally and economically), and therein lies the problem. Many a calculated Game Theory solution has been shown to be unworkable in the real world due to reliance on the Economic Man theory, indicating that it’s really rather common for people to make business or management decisions based on personal, unquantifiable, entirely subjective elements.

And those elements won’t go away, even if you’ve got Tom Hagen reminding the Project Team emphatically that that shouldn’t be the case.