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Game Theory in Management

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Modelling Business Decisions and their Consequences

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Strategies of Deceit

Categories: Strategic Management

…and they’re not necessarily evil.

In last week’s blog (“Here’s a Communication Strategy: Don’t Communicate Your Strategy!”) we covered the folly of communicating any of the particulars of the organization’s intended strategy, due to one of three outcomes:

·         It’s so general that it really doesn’t communicate anything, and so wastes your intended audience’s time,

·         It’s accurate, true, and insightful, delighting your customers and shareholders alike, but tips off the competition to what you’re about to do, and

·         It’s inaccurate and untrue, angering your customers and shareholders.

As I discuss in my recently-released, must-have book, Game Theory in Management, one very interesting game that illustrates the dangers of transmitting your strategy is Diplomacy, regarded as the board game that has triggered more fist fights amongst friends than any other.

Diplomacy was supposedly the favorite game of both JFK and Henry Kissenger. It’s played on a board that has a representation of a map of Northern Europe just prior to the First World War. Each player is assigned a nation (or a part of a nation), and ground forces that can be used in either attacking other players’ territories or defending your own. The individual players don’t take turns – all players move their markers simultaneously. But here’s the catch: prior to the players actually moving, they spend time talking amongst themselves, making deals and scheming, and forming alliances, both true and fake. When it’s time to perform the move, the players write down on a piece of paper the move they will actually make. Then, at a given signal, the papers are turned over, and the markers moved accordingly.

The fascinating thing about Diplomacy (both the game and, I suppose, actual diplomacy) is that it’s virtually impossible to win without engaging in deceitful strategies. If, during your pre-move communications, you are always truthful, you have no hope of winning. In this, Diplomacy is very similar to Poker. The Poker player who always bids up winning hands and always folds on poor ones will be taken to the cleaners by the other players at the table.  At some point the strategies of underselling a winning hand, or overselling a losing one (“bluffing”) are called for, if, for no other reason, so that the other players (read: competition) do not have solid basis for anticipating your next move. Generally speaking, if your competition can accurately anticipate your next move, you will lose, and lose big. Consider the amount of energy going into keeping the timing and placement of the Normandy and Inchon landings a secret, not to mention Pearl Harbor. Preventing your competition/adversaries from correctly anticipating your next move is a very large part of strategic management, indeed.

As I’ve been writing repeatedly, asset, project, and strategic management are different animals, with different goals, tactics, and information systems. If you neglect or dissemble in your asset management information system, then you are engaged in fraud, and you will probably go to jail (e.g., Enron). If you fail to set up or ignore your project management information system, you  should have never been placed in a managerial role, since you are inviting disaster (e.g., the National Ignition Facility). However, if you fail to insert some level of deceit in the strategic management information coming out of your organization, then it won’t take long for the other players at the table to come to a place where they can correctly anticipate your next strategic move. When that moment comes, your organization’s days are numbered.

Of course, the implication from the previous paragraph is that, for any software package that pretends to support the strategic management function, some level of informed deceit must be included. But, since this is never the case, the inescapable conclusion remains: none of the so-called enterprise or portfolio management systems currently available can truly fulfill those functions.

And those assertions, dear readers, are completely devoid of deceit.

Posted on: March 03, 2013 06:10 PM | Permalink | Comments (2)
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