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.

Stakeholder Management featured in CEO

Chief Executive Officer’s editor, Michael Jones, is featuring an excerpt from my book, Stakeholder Relationship Management, A Maturity Model for Organisational Implementation. CEO is an online industry resource for senior executives.

The excerpt Why stakeholders matter follows the saga of the Heathrow T5 from construction through to its public opening in 2008, and examines whether the passage of time can alter those perceptions. To read the full article go to: http://www.the-chiefexecutive.com/features/feature68469/

SRMM Book Now available from Amazon

My book, Stakeholder Relationship Management, A Maturity Model for Organisational Implementation has launched on Amazon (www.amazon.com) and is selling well – last look there were only 4 left in stock (with more on the way). I also did a book signing at the CIPSA conference in Melbourne last month, with the Co-op Bookshop last month with very good sales.

Overall it seems Stakeholder Management is becoming a topic of interest to a wide range of organisations.

More later…..

Temporary Knowledge Organisations (TKOs)

The concept of temporary organisations has been recognised in project management literature for many years. The primary tool of project management, the project team, is a temporary organisation.

The concept of TKOs builds on this concept and recognises the team is a network of complex responsive human connections and disconnections focused on creating the new knowledge needed to successfully deliver their project. This human network is non-linear. People’s actions and responses may be more or less proportional to the stimulus; unexpected, emergent actions will arise; and emotions, uniformity and diversity are all played out within the team. Consequently, traditional, linear approaches to project management are no longer likely to be adequate for meeting the needs and emergent outcomes of project teams in contemporary organisations.

The new management paradigm, which the TKO represents, is a shift from technically determined mechanistic activities to socially organised learning, co-constructed knowledge creation and problem solving through sense-making processes within the complex adaptive system of the project team. The individual team members co-create meaning and order, rather than having it imposed.

The role of leadership in a TKO is ‘we-centred’ rather than ‘I-centred’ participative leadership that will:

• guide, mentor, assist, coach, partner with team members
• co-create and co-evolve meaning and context
• keep an eye on the network horizon; what connections are happening between team members and with the external stakeholder community?
• give feedback based on performance/execution of project tasks to facilitate learning and improvement

Traditional project artefacts such as schedules still have important roles to play as communication and sense-making tools within the TKO. This is a totally different concept to the old paradigm of ‘control tools’.

Can project management adapt to this new environment? To read more on the challenges see some of the papers by Patrick Weaver:

• Scheduling in the Age of Complexity
• Project Controls in the C21 – What works / What’s fiction
• A Simple View of ‘Complexity’ in Project Management

The Stakeholder Cycle

One of the implicit elements of the Stakeholder Circle® methodology is the cyclical nature of the overall stakeholder management process. But this is not a simple circle.

The Stakeholder Cycle

The starting point is Step1 – Identification. Whilst this is the critical first step, the methodology suggests that a fresh scan of the environment is undertaken on a regular basis to understand changes in the overall stakeholder community. This process can be usefully timed to support a routine risk review (there is a strong correlations between stakeholders and risk – this will topic for s future post.). Identification includes assessing the stakeholder’s needs, perceptions and expectations on the one hand and what we need from the stakeholder on the other (mutuality).

Step 2 – Prioritization ranks the stakeholders based on a combination of power, proximity and urgency. Power and proximity are associated with the stakeholder’s position and should be relatively stable. Urgency is more subtle and includes how likely the stakeholder is to take action and how significant the stakeholder’s stake in the project is to that person. If the stakeholder feels comfortable with the overall running of the project, these factors are likely to be low. If the stakeholder is unhappy with the overall shape of the project they are likely to be higher. Managing these perceptions by effective communication is the core skill in stakeholder management (steps 3 and 4). Effective communication is likely to reduce the levels of ‘urgency’ and consequently reduce the stakeholder’s level of prioritization.

Consequently, after the initial prioritization, there are two inputs to re-prioritization, the current, changed, attitude of existing stakeholders who have been the subject of targeted communication plus any new stakeholders from identification.

The last of the processes in this phase of the cycle is Step3 – Visualization. The management team is looking for trends and patterns to understand what’s happening both to individual stakeholders and the overall stakeholder community. This information feeds directly into the engagement process.

The Stakeholder Cycle

Step 4 – Engagement involves the planning and implementation of the stakeholder communication process. This should encompass everything from face to face meetings through to routine reports and newsletters. But the ‘doing’ of communication is not sufficient. It is critical that the effectiveness of the communications are monitored in real time and appropriate adjustments made to the messages and communication plan.

Step 5 – Monitor, is focused on this. Providing a continual watching brief delivering short term feedback to the communication process day-by-day, and a more comprehensive analysis to the next major review cycle. The inputs to monitoring should include formal assessments and informal ‘intelligence’ picked up by different team members as they go about their business. The core element in this step is the proactive seeking of information and then putting the information to effective use.

Just like the penny-farthing the stakeholder cycle has a large and small wheel – and both cycles are critical for effective stakeholder management.

Stakeholder Relationship Management: Book Launched

My book, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation has been published at last!!

Stakeholder Relationship Management

The Introduction and Chapter 7 are available to pre-view, no obligation, and stocks are available from both the publisher, Gower, and from our business in Australia.

To pre-view or buy visit:

• Gower Publishing
• Mosaic’s bookshop (Australia)

Effective organisational stakeholder management requires understanding and support from everyone, from the CEO to the short-term contractor. This requires the concepts and practices of effective stakeholder management to become embedded in the culture of the organisation; this book provides the ‘road map’ to help organisations achieve these objectives.

Stakeholder Management with apologies to Dr. Seuss

When beetles battle beetles in a puddle paddle battle and the beetle battle puddle is a puddle in a bottle…
…they call this a tweetle beetle bottle puddle paddle battle muddle.
Excerpted from: Tweetle Beetles, ‘The Fox in Socks’, by Dr Seuss

The connection between a book written to be read to under 5s and business stakeholder management is the ‘puddle muddle’ otherwise known as the stakeholder pool. The challenge of managing stakeholders is a factor of the disturbance caused by dozens if not hundreds of battles most of which, the person attempting to efficiently manage his or her stakeholders has no control over whatsoever.

Most stakeholder management methodologies start by assessing the stakeholder from the perspective of the work. This is not unreasonable but can easily miss many important factors.

Figure 1: The Stakeholder Pool

Figure 1 shows ‘the stakeholder’ in the overall stakeholder pool being influenced by the ripples created by your battle in your part of the pool (your puddle). Unfortunately the stakeholder pool is a much bigger, more turbulent place.

Figure 2: the Stakeholder Pool with turbulence

Show some of the other disturbances in the pool and you start to see the stakeholder buffeted by waves and impacts from all directions, in Figure 2. ‘The stakeholder’ is continually being buffeted by waves from other projects, the organisation and many other influences. These other waves are one of the prime reasons stakeholder responses to your perfectly reasonable needs or suggestions are frequently so unpredictable. All of these influences, both current and past have helped shape the stakeholders perceptions and attitudes towards your industry, your organisation and ultimately, you.

Consequently, a single view point is really not sufficient! Effective stakeholder management needs an organisational approach. Successful stakeholder management requires all of the influences perceived by the stakeholder to be coordinated and authentic. And this can only be achieved by the organisation as a whole adopting mature, ethical stakeholder management as a core discipline.

Very little has been written about mature organisational stakeholder management until recently. To date, the focus of most papers have been one dimensional focusing on CRM and the ‘customer experience’ or one dimensional focusing on the relationship between the stakeholder and a project (or other organisational activity).

My new book, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation, takes this next step to define the interaction between the organisation as a whole and its stakeholders using the Stakeholder Relationship Management Maturity (SRMM®) model.

Effective and ethical stakeholder management cannot happen overnight and cannot happen in isolation. The preconceived perceptions of stakeholders towards your work are based on multiple experiences over an extended period of time, and the stakeholder-to-stakeholder conversations that occur outside of your hearing or control. To actively improve these conversations and create a positive and supportive stakeholder environment needs a long term consistent effort, organisation wide.

The SRMM model offers a practical framework that can be used by organisations to build from ad hoc, single project attempts to manage stakeholders to a situation where stakeholder management is a core skill used by the organisation as a whole to maintain a competitive advantage. As with any culture change, this cannot happen overnight but at least my book provides a road map organisations can use to improve their management of stakeholder relationships to the benefit of both the stakeholders and the organisation.

Stakeholder Relationship Management: A Maturity Model for Organisational Implementation is published by Gower, ISBN: 978-0-566-08864-3

The power of deadlines

Dan Ariely’s excellent book Predictably Irrational, describes an interesting study. He divides a class of students into three groups, which were required to hand in three papers during a course. He gave the three different groups different instructions concerning these papers.

Group 1: Could hand in the papers at any time of the semester. The student would themselves set the deadline for each paper. If the self proclaimed deadlines were not be met, there would be a penalty. All students had the option to set the deadlines on the last day of the class but they could also use the deadlines to force themselves to start working earlier and work during the whole semester.

Group 2: This group would have no deadlines and they could hand in their papers at any time and there was no risk of penalties as long as they did hand in their papers before the end of the class.

Group 3: This group were given specific, evenly spaced deadlines for each paper and there penalties if the deadlines were not met.

One paper was a proof reading report. These are the results:

Group Performance

 

The third group consistently had the best grades and the second group got the worst grades.

The results of the first group were more interesting. Only 27% of the students chose to submit all three papers on the last day of class despite this being the logically best option that gave the greatest flexibility. Most appeared to be aware of their tendency to procrastinate, and set themselves deadlines to help them get through the work. The studies show that these deadlines did improve performance over only having a deadline at the very end. However, the results are still suboptimal compared to the subjects who were given equally spaced externally imposed deadlines.

Ariely points at our tendency to procrastinate, which makes us delay important tasks and the best way to avoid this is for a formal figure to give us specific deadlines. Self imposed deadlines help but are not as effective. So why do we procrastinate? This is an effect psychologists attribute to ‘hyperbolic time discounting’: the immediate rewards are disproportionally more compelling than the greater delayed costs. In other words, procrastination itself is the reward.

This book and the studies offer powerful insights for PMOs and project managers when dealing with stakeholders and in particular, contrators. The results clearly suggest that contract deadlines at the ‘end’ of a project are of no real benefit; they are too far away to matter until it is too late.

Optimal performance is likely to be achieved if the PMO or project manager can impose a series of milestones that ‘matter’, with penalties attached, that are evenly spaced throughout the course of the work. If this is not feasible, then the next best option is to encourage the contractor or stakeholder to develop its own deadlines and monitor these closely.

There is a paper on the Mosaic website written in 2002, ‘The Power of Regular Updates’ that reached similar conclusions. Apparently relying on the good intentions of others is not the optimum solution for anybody.

The influence of Personal Branding on communication

The ability of a manager or consultant to influence others is very strongly influenced by how the person is perceived. Very few business situations involve communication between people who know each other well; more often the building blocks of a relationship are based on perceptions.  This is where personal branding becomes critically important.

The concept of personal branding was first introduced in the 1980 book: “Positioning: The Battle for your Mind”, by Al Ries and Jack Trout, since then, the idea that has been gaining momentum. The basic concept is that we, as individuals, have an opportunity to create a brand identity for ourselves that can have a significant impact on the way people see us. Fortunately, we have the ability to adjust our brand to influence how we want people to perceive us and consequently influence the way they interpret our communication.

For long term effect, it is important your brand is authentic. Whilst within reasonable, and ethical, limits you can make a big impact on what the brand is, it is important to stay ‘real’. It is nearly impossible to maintain a brand that is not authentic, and in losing credibility, you destroy trust and relationships.

The key to branding is the impression we make on the people we work with while we are with them and after we have moved on. Every interaction we have with a person has an impact on how they perceive us. This means that each time we connect with another person we have an opportunity to establish, build and maintain our own personal brand, or conversely damage it.

Once established, our personal brand becomes part of the encoding and decoding process and influences every message we send. If the people you work with perceive you as someone they can trust and rely on, then they’ll be more likely to believe your message even when the news is bad.

To develop a credible brand you first need to work out what you want to do for the rest of your life, setting goals, writing down a mission, vision and personal brand statement (what you do and who you serve), and then create a development plan.

Some aspects to consider include:

• Wardrobe: Your personal style is tangible and is extremely important, select clothing that best represents you.
• LinkedIn and Facebook profiles: people will look at both. LinkedIn allows you to establish your brand through professional credentials and a professional network, Facebook adds another more social dimension but be careful! Tools like Facebook can be a double-edged sword, you never really know who is looking at your collection of photographs. These tools are powerful, but without care, they can easily have a negative impact on our individual brands.
• Work performance: Last but most important. Looking good is of no value unless you have a solid track record. However, the key element is effective relationship building and communication within the work.

These are just a few ideas, if you want to develop a personal brand there are heaps or resources available on the internet. But without a brand, many of your communications will simply be noise that is ignored by your intended recipient.

Organizations seek High Performance PMs

According to a survey undertaken by the PMO Executive Council (part of the Corporate Executive Board: http://www.executiveboard.com/) organisations need to develop high performance PMs to survive. The snapshot survey, Attributes of a High Performance PM – 2007, found very little correlation between project management certification and project management effectiveness, or the number of years a person has been in project management roles and project management effectiveness.

The survey found the drivers for project management effectiveness were behavioural attributes such as problem solving and the ability to relate effectively with key stakeholders. Whilst many people may initially want to disagree with these findings, they are consistent with many other trends and on reflection quite logical.

Firstly, the survey did not look at the PM’s track record, merely the time the PM had been in project roles. It is reasonable to assume highly effective PMs will have a relatively short PM career and then move on and up the organisational hierarchy. Less effective PMs are likely to stay in their PM role focused on process and technology.

Secondly, whilst PM credentials such as PMP remain very effective tools in the job market; passing your PMP does not make you an effective project manager (see more on PMP). The PMP knowledge framework gives you the knowledge to be an effective project manager. Being effective requires you to become a competent project manager.

Competency has three aspects, knowledge, skills and behaviour:

• what you know,
• your ability to apply the knowledge (essentially personality traits) and
• your willingness to use the skills effectively (essentially behavioural traits).

Qualifying project managers based on behavioural competencies is in its infancy. The Australian Institute of Project Management (AIPM) has recently moved its professional certification program (RegPM) from a procedural view of competency (eg, do you have a project schedule – the artefact?) to a behavioural view of competency (how effectively do you manager the schedule on your project?). This is ground breaking work and still has a long way to go.

PMI have adopted a different, but similar approach in their program management certification (PgMP) with a 360 degree review testing how effective the candidate is in the workplace. These trends have a long way to go but are likely to be the next step in project certification.

Of more direct interest in the short term is the demonstrated link between how effectively a project manager engages with his/her key stakeholders and high performance outcomes. These skills are a core element in a number of workshops we run including Successful Stakeholder Management and The Science and Art of Communicating Effectively, and are supported in part by our Stakeholder Circle® methodology and tool set.

Learning how to apply the skills in the workplace though is not quite as simple as attending a workshop or buying a set of tools. Soft skills are very hard to acquire and use. My feeling is they are called ‘soft’ because they change shape and texture depending on the environment they are being applied within. The calculations for EV or CPM are universal; the best way to engage a senior stakeholder is totally dependent on the culture of the organisation. Some elements remain consistent (eg, the need for an effective relationship) but the way this is achieved varies.

Developing these advanced skills that are the attributes of high performance project managers requires context sensitive coaching and mentoring rather then formal courses (see: Executive PM Coaching & Mentoring). Ideally organisations seeking to develop high performance PMs will move beyond certification towards implementing internal mentoring systems – it’s the best way to ensure they are contextually relevant.

However, where we differ from the survey findings is that we believe certifications such as PMP are still relevant. Passing a PMI credential such as PMP or CAPM (see more on the PMI credential framework) is a positive demonstration of the initial knowledge component of competency; it’s just that knowledge alone is not sufficient.

Achieving this next level of high performance PMs will also require organisational competence in at least two domains. Process competence measured by tools such as PMI’s OPM3® framework and relationship management maturity measured by tools such as my SRMM® framework.

These are definitely interesting times for our profession.