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
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.
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:
- 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.
- 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…’.
- 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.
- 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.
- 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.
- 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).
- 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.
- 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.
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.
Posted in Communication, Scheduling, Stakeholder Management
Tagged Bias, Cognitive biases, Communication, Complex Decision Making, Complex Decisions, Decision Making, PMI Credentials, PMP, Project, Project Governance, Project Management, Project Management Training, Scheduling, Stakeholder Management
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:
- 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]
- 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.
- 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]
- 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.
Posted in Thoughts & Musings
Tagged Communication, Decision Making, Effective Communication, Ethical Dilemmas, Ethics, Julia Gillard, Kevin Rudd, New Prime Minister, Project Governance, Stakeholder Management, Transformational negotiations, Win-Win
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.
Posted in Complexity, Risk, Stakeholder Management
Tagged Benefits Realization, Communication, Complex Decision Making, Complex Decisions, complexity, Decision Making, probability, Project, Project Controls, Project Governance, Project Management, Project success, Stakeholder Management, Stakeholders