Practical Decision Making

Project managers seem to be becoming too focused on risk averse decision making and scientific ‘studies’ to determine the right answer in situations where there is probably no right answer (or the ‘scientific knowledge’ is not available). Better information should lead to better decisions but there’s usually competing issues of urgency and the cost of deciding

This is where experience cuts in. Medieval stonemasons knew the proportions needed to construct Gothic Cathedrals centuries before the science of engineering design evolved. These ancient structures were designed according to semi-empirical rules based on few simplified mechanical principles; nevertheless, their structural performance has been rather good in most cases. The ‘rules’ of proportions evolved over centuries and were passed on through the guilds. Similar sets of knowledge informed shipbuilding, and most other technical endeavours before the 19^th century.

This accumulation of context specific knowledge is the genesis of the engineering method: Solving problems using heuristics (rule of thumb) that create the best chance of a workable solution, using the available resources, in a poorly understood situation. 

The engineering method can be used to solve practical problems before full scientific knowledge is available and can be particularly useful in most aspects of project management – no one knows the future. But you also need to be prepared to find out you have made a mistake.

To paraphrase René Descartes, Discourse on the Method: ‘Situations in life often permit no delay, and when we cannot determine the course which is certainly best, we must follow the one which is probably the best. …… This frame of mind also freed me from the repentance and remorse commonly felt by those vacillating individuals who are always seeking worthwhile things that they later judge as bad[1].

For more on practical decision making see: https://mosaicprojects.com.au/PMKI-TPI-010.php#Decisions

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[1] The full quote is: ‘And thus since often enough in the actions of life no delay is permissible, it is very certain that, when it is beyond our power to discern the opinions which carry most truth, we should follow the most probable; and even although we notice no greater probability in the one opinion than in the other, we at least should make up our minds to follow a particular one and afterwards consider it as no longer doubtful in its relationship to practice, but as very true and very certain, inasmuch as the reason which caused us to determine upon it is known to be so. And henceforward this principle was sufficient to deliver me from all the penitence and remorse which usually affect the mind and agitate the conscience of those weak and vacillating creatures who allow themselves to keep changing their procedure, and practice as good, things which they afterwards judge to be evil’.

The problem with paradox

Paradox lies at the center of many business decisions. The problem with paradox is that it’s a persistent contradiction between interdependent elements that resist a simple binary choice, for example, the need to mitigate risk to provide ‘certainty’ and the need to take risks to seize opportunities.

When dealing with most decisions, good managers decide – lucky ones get it right, you make your decision and can move on. Paradoxes are in a completely different place after you have made a decision on how to balance the paradox, the paradox remains – there is no clear-cut solution to the paradox and everyone can have a different opinion based on their view and hindsight!

Our latest article, The problem with paradox describes the problem and suggests some options for living with paradox: https://mosaicprojects.com.au/Mag_Articles/SA1058_The_Problem_with_Paradox.pdf

For more articles on decision making see: https://mosaicprojects.com.au/PMKI-TPI-010.php#Decisions

To kill or not to kill……

Two linked articles on the free ‘Project Manager’ website discuss the reasons so many bad decisions are made about continuing or stopping projects and other business endeavors.

– Avoiding sunk cost syndrome on your project.

– How not to kill a project.

We will be taking both of these concepts forward in a few weeks.

Fine Tune your detectors

The quality of any decision you make is determined by the quality of the information and advice you receive. Good information does not necessarily mean a good decision, but bad information will almost certainly lead to a bad decision.

The decision making process and the types of decision a project manager, and almost anybody else, has to make are discussed in WP1053 Decision Making.  The closely aligned process of problem solving in WP1013 . Good information and advice is an essential input to both of these processes.

The right information has the potential to reduce or remove the uncertainty at the centre of every decision. If you are lucky and the information or advice removes all of the uncertainty, then there is nothing left to decide! Usually even with good advice, there is still some uncertainty and you still have to make the decision.

In reality, we rarely if ever have enough information; the challenge is to get as much information as is sensible in the circumstances and then make a timely decision accepting there will inevitably be gaps in your knowledge potentially leading to suboptimal outcomes.

However, simply collecting vast quantities of information does not help (unless you are using data mining). Generally information has no value, unless it has the potential to change your decision! The critical thing in decision making is having the key elements of information available when needed, in a useful form, which improves your awareness of the situation and your ability to decide.

But no information or advice is perfect. Before making use of any information, the decision maker has to evaluate the reliability and accuracy of the information or advice and look for any vested interests or bias on the part of the people developing the information or proposing the advice. Good decision makers usually have very finely tuned ‘bull s**t’ detectors.  And whilst this skill often seems to be innate to an individual many of the skills can be learned.

Some of the elements to consider when weighing up information are:

1. As a starting point, everyone is biased and most people have vested interests.
   The antidote to bias and vested interests are to consider what effect these influences may have. The more effort someone has committed to developing a set of information, the greater their vested stake in the work. See more on Biases.
2. Beware of factoids!
   You will be pleased to know, you are one of the 1635 people who have read this post, and as a consequence are now aware of factoids.How do we know this? We don’t. I just made it up; but you can’t call me wrong, because you don’t know, either. A factoid is something that looks like a very precise fact.  The antidote to factoids is source information. Good source information in the statement above would be ‘our web counter shows that you are visitor 1635 to this page’. Start worrying if the source is nebulous ‘our webmaster advises’ or ‘based on a sophisticated time related algorithm…’.
3. Beware of false precision.
   Almost everything that affects project decisions is a guess, assessment or estimate (the terms are largely synonymous) about something that may occur in the future But no one has precise information about the future! False precision damages credibility (see: Is what you heard what I meant?) and is generally less than useful.  The antidote to false precision is to ask for ranges and the basis of the range statement.
4. Lies, dam lies and statistics 1.
   Some statistics result from the counting of real things. If you trust the people who do the counting, the math and the reporting, the data is as good as you are going to get. However, most statistics are estimates for a large population, derived from the extrapolation of the results from a small sample. Professional statisticians and pollsters attach a calculated margin of error to their work – this margin is important!  The antidote to false statistics is to ignore any that do not come with a statement of the margin for error and how this was derived.
5. Lies, dam lies and statistics 2.
   Understand the basis for comparison – it is very easy to distort information. Project A will increase the profit on the sale of widgets by 50% whereas project B will only increase the profit on our training business by 10%, if both projects involve a similar cost outlay which one is best??? You need to know the basis for comparison to answer the question: a 50% increase in profits from a base of $100,000 = $50,000 which is half the value of a 10% increase in profits from a base of $1 million.  The antidote to statistical distortion is to largely ignore percent changes and statements such as ‘fastest growing’, ‘biggest increase’, etc.  It is always easier to be the ‘biggest’ if your starting point is the smallest.
6. The ‘one-in-a-million’ problem
   Discussed in The role of ‘sentinels’  many ‘one-off’ problems are symptoms of a much deeper issue. Our entire working life is less than 20,000 days so the chances of you encountering a genuine ‘one-in-a-million’ event, just once in your working life, is about 2%. Other phrases that should trigger concern include; ‘she’ll be right’, ‘no-problems’, ‘it’s easy’, etc…  The antidote to these type of expression is to simply reverse the statement:
   – one-off / one-in-a-million = there’s probably a structural cause to be discovered;
   – she’ll be right = I have no idea how to fix it (and its definitely not OK);
   – no-problems = this is a major problem for me;
   – it’s easy = this will be very difficult (unless the ‘easy’ is followed by an explanation of how it is easy).
7. The false prophet
   False prophecies are allegations and unsubstantiated statements made with the expectation that the ‘expertise’ of the person the statement is attributed to will cover the statement with absolute credibility. If the statement is improbable, it is improbable regardless of the alleged source.  The antidote to false profits being quoted in the ‘third party’; eg, “Einstein said controlled nuclear fusion was easy”; is simply to seek authentication from the source. If the ‘prophet’ is present, ask them for more information.  Real experts know both the upside and the down side of any course of action they are proposing – they understand the uncertainty. Wannabe experts pretend there is no downside or uncertainty.

8. Well known facts
   Remember, most ‘well known facts’ are in fact commonly held misconceptions (this statement is a factoid but also useful).  The antidote to ‘well know facts’ is to dig deeper and gather actual facts.

These are just a few ways bad advice and information can be introduced into a decision making process. Taking a few minutes to verify the quality of the advice you are being given, ditch the unsound advice and information, and then use what’s left to inform the decision will enhance the probability of making the best decision in the circumstances.  This is not easy to do (but good decisions are rarely ‘easy’); the consolation is once you develop a reputation for having a good ‘bull s**t’ detector, most sensible people will stop trying to use it on you. Then all you need to do is make the right decision.

The implication of bias

Every decision is influenced by a range of preferences and biases. I touched on this subject last month in my ‘Voices on Project Management’ post for PMI (see the post) but the effect extends to every cost and time estimate, the way every communication is received and understood and every decision.

As part of our work to upgrade Mosaic’s PMP materials (see more on the updated course) to align with the new PMP Role Delineation Study, we have developed a White Paper focused on the causes of bias including our innate cognitive biases, learned biases and emotional affective factors.

It is impossible to remove many of these biases; but being aware of them allows their effects to be mitigated, too read more: Download the White Paper.

Lessons from a Lift

Do you suffer from ABPS or know someone who does??? This newly defined syndrome can be highly counterproductive……

People in a lift (elevator for those who speak American) fall into two broad groups; the first group walk into the car, push the button they want and wait for the control systems to do their job. Others believe that the more they push the buttons the more likely the elevator is to respond.

In reality the vast majority of control systems log the first call and then optimise the movement of the elevator to meet all of the different calls from different levels of the building. The second and subsequent ‘button pushes’ add no value at all.

However, people with Accentuated Button Pushing Syndrome (ABPS) receive positive feedback from their actions, the elevator arrives after they have pushed the button 4, 5, 6 times, or more, therefore the multiple pushing clearly made a difference……

In an elevator, ABPS makes no difference and anecdotally I understand many ‘close door’ buttons have no wiring behind them, they are in the lift simply to make people with ABPS feel in control even if they are not.

ABPS in the workplace is an altogether different issue. When a project is running behind time, overrunning costs, or experiencing other difficulties; the equivalent of the elevator being slow to respond; many managers demand additional meetings, more frequent reports and other responses from the project team that consume time and money that could be better spent working on the project deliverables. These project resources are being diverted to placate the manager’s ABPS to the detriment of the project.

This phenomenon has been recognised for some considerable time without the underlying syndrome being defined. Cohn’s Law states: The more time you spend in reporting on what you are doing, the less time you have to do anything. Stability is achieved when you spend all your time reporting on the nothing you are doing…… (this should not be confused with Cole’s Law which is thinly sliced cabbage!).

Unfortunately, when the project is eventually delivered, the manager’s ABPS is reinforced because obviously all of the extra reports and meetings helped achieve the outcome; unfortunately correlation is not the same as causation! There is no easy way of measuring how much sooner the project would have finished if the resources had not been diverted by ABPS, but the manager feels ‘in control’.

This is not a clear cut situation, frequently there is need for better information to base decisions on (see more on decision making). However, it is easy to slip from requesting useful information that will help inform decisions (useful information is useful because it is used) into ABPS where the requested reports and meetings are actually counterproductive and make the situation worse.

So next time you are considering requesting more reports or extra meetings think about ABPS, will the diversion of resources from the project’s work to respond to your requests be constructive or detrimental? There’s no easy answer to this question!

If you are a victim of your managers ABPS the only antidote is to try and make the person with ABPS aware of the resource being consumed by their ‘syndrome’. A temporary solution may be to identify your version of the unconnected ‘close door’ button where the manager feels in control but there is minimal to no effort expended in response to the button pushing.

For more thoughts on ‘Advising Upwards’, my new book will be published mid year.

Australia’s new Prime Minister – Julia Gillard

It has been a fascinating 24 hours in Australian politics. The former Prime Minister Kevin Rudd was dumped and we now have our first female Prime Minister Julia Gillard. The unfolding drama was a mixture of ruthless efficiency in the coup to oust the previous Prime Minister, immediately followed by the start of a process of inclusion and healing.

Managers faced with difficult decisions can learn a lot from today’s events. My thoughts on several key issues are:

1. Ethical dilemmas are always difficult and need decisions. As Henry Kissinger said: “Competing pressures tempt one to believe that an issue deferred is a problem avoided, more often it is a crisis invented”. There is no right answer to a dilemma, every option has a downside. Leaders choose a way forward and live with the consequences.
   [See: Ethics and Leadership]
2. When you do decide on a course of action, don’t hide the issues that created the dilemma in the first place, explain your reasoning and acknowledge both the greater good and the consequential harm. When a Deputy takes over from her leader there are inevitable questions of loyalty and trust, honest reasoning lets observers understand the reasons for the decision.
3. Conversations and transformational negotiations lead to better outcomes than win-lose transactional negotiations but often you need to make the first concession to start down this path [see: Win-Win Negotiations]. The Government and the mining industry were locked in a head to head battle over a new tax. In the space of 5 hours the new Prime Minister had unilaterally cancelled government advertising over the issue and offered open negotiations. The mining industry had reciprocated and suspended their advertising campaign. The negotiations may or may not reach a consensus (no one like having their taxes increased) but both sides are likely to end up with a better outcome if the transformational negotiations work.
   [See: Negotiating and Mediating]
4. In a disagreement over principles, you only need to achieve your objective; you don’t need to destroy the other party. The former Prime Minister has been offered a position of his choosing in the new government. If accepted, this means his talents and knowledge are still available to the team. Reluctant allies are better than committed opponents.

It’s certainly been an interesting day watching a really effective communicator in action in action; I feel as though I have learned a lot.

Complex Decision Making Explained

Complex decision making is a vital project management skill; required not only by the project manager but also by the project’s sponsor and client / customer among others.

Some of the key areas involving complex decisions include risk management, many aspects of planning (particularly optimising choices) and dealing effectively with issues and problems in a range of areas from scope and quality to cost and performance.

There is an underlaying assumption in project management (derived from traditional scientific management) that decisions will be based on a rational assessment of the situation to optimise outcomes. Unfortunately this is not true! As complexity increases assuming a ‘rational decision making paradigm’ becomes increasingly unrealistic. Human decision makers become ‘predictably irrational’.

Understanding the built in biases and ‘predictable irrational’ decision making processes used by people confronted with complex decisions can help managers requiring optimised decisions to craft strategies to minimise suboptimal outcomes. But where can busy project managers access this information?

I have just finished reading the most amazing paper on the subject that canvases the whole spectrum from risk aversion to behavioural economics in a practical, easy to read format; and it is free!

Behavioural economics and complex decision making: implications for the Australian tax and transfer system has been written by Andrew Reeson and Simon Dunsttall of the Australian national science agency, CSIRO. The report was commissioned by the ‘Henry Review’ into the Australian taxation system and is published on their web site. Whilst you can safely skip the last section which focuses on applying the knowledge to our tax system. The preceding 7 sections are focused on how people make complex decisions in any sphere and are just as relevant to complex project decisions as to complex investment and taxation decisions.

You can download this free resource from the review panel’s website: download the paper (a copy is also on the Mosaic web site on the assumption the Government site is temporary and will close once the Henry Review has reported: download from Mosaic).

If you find the report useful and you don’t live in Australia, you can buy the next Australian you meet a beer; it was his or her taxes that paid for this amazingly useful report. I know I will be keeping my copy handy for a very long time to come.