Published April 2010


Musings Index

Other People's Washing

The other day, a new-found Email friend on the other side of the planet by the name of Steve Jenkin drew my attention to a blog that he had posted on the Internet. It is titled: "Forget the best, embrace the rest" and reads in part as follows:

"It appears to me that 'Homo Corporatus' (the 'management classes') rejects, seemingly actively, the need for maintaining 'Lessons Learned' and adopting in practice the best theories and principles known. The Operant Methodology seems to be:

Forget the best, embrace the rest.

This isn't a little or accidental. It's endemic and universal.

Look to General Management: Has day-to-day management improved in the last century or two? What about over the last two millennia? Did the Roman Empire/Army do much worse?

The real changes, like OH&S, Superannuation (Pensions), Recreation & Long-Service Leave, Overtime and Penalties, and 40-hour weeks, are those that are enforced by law. The same observations apply to Project Management, especially within my field of IT and IS, but without any legal backing. Can you name just two proven, established Management theories or systems that have become entrenched and established and are practiced universally? If you can, I'm really interested to know.

Either "Management doesn't Matter", nobody cares how effectively/well organizations are managed or nobody with the influence or power create lasting changes cares ... None of which should be true.

In my working life there have been so many management fads, fashions and enthusiasms that I can't count or remember them. What they all have in common is their passing ... Implementing each of these fads caused a lot of upheaval, heartache and hard work. Their failure/passing wasn't due to incompetence, undermining or ignorance by the workface grunts like myself. Something larger and more subtle is at work."[1]

Which prompted me to respond:

"Yes, entrenched in 'entitlements' as it is, the western world has become fat and flabby and lost contact with reality. Or, it is easier to run around taking in other people's washing than it is to make the clothes dirty in the first place."[2]

Which elicited this response

"Love your comments on the Current/Global Financial Crisis. All the political posturing and noises are fine - but I've yet to hear anyone come up with the necessary prerequisite to a good solution: Why did things go wrong? For me the answers lie in a failure of Control Systems - and nobody is talking about that.[3]

To which I could not help replying

"I will now trespass into very dangerous waters . It is true that no control means out of control. However, too much control means socialism, pure and simple. And socialism means that instead of exercising moral judgment, every one is trying to defeat the system. Unfortunately (as we have seen) some people get very successful at it! But, as you say, no one is talking about that![4]

That did it, and I got this response

"I concur - the USSR (and maybe Red China) proved in around 5 decades that Centralized Planning - with implied full Political Control - doesn't work (cannot work?) I was thinking more of micro-effects - dealing with OPM (Other Peoples Money) should never be risk free

Traders and investment 'managers' have no downside, only upside. There is no incentive to 'first, preserve capital'. Whatever happens (gain, loss, wipeout) they get paid, but never lose and take a cut of all gains

Think of an investment trader in this context: a 'runner' makes bets for you with bookies. (You might choose the venue but they choose the bets.) You don't pay the runner an hourly rate, but a percentage of what he places ... Good for him, bad for you

Then they get a cut of the winnings as an 'incentive'. But of course, you wear all losses - 'it's your bet'. And somehow the Government has mandated that everyone who works have to play this game for their pensions - so there are many clients and many 'runners'

The optimal strategy for the runner is 'take risk' - i.e. place some really wild bets. As runners compete for customers by pushing their incredible talents at picking winners, they are all forced into making even more wild bets just to keep up. The risk taking of 'runners' spirals up and up. Statistics say that some runners will do very well for a time while others will hit losing streaks (and lose all clients)

The outcome for the mug punter depends on the underlying market

  • For all markets this strategy leads to all traders adopting the riskiest bets, maximizing losses for punters (and forcing out most of the conservative brokers).
  • How quickly punter's money drains away depends on: frequency of bets and % payoff; the spread of risk on the bets (1:2 or 100:1) and proportion of portfolio in each bet; and % loss on 'bet the whole field' (around 15% for bookies).

The control-system fix I was thinking of was

  • Anyone who invests others' money has to cover all or part of any losses. And just for fun, CEOs and their 'team' should have their salaries capped at some multiple of average earnings. They can get the benefits of being an owner by buying shares at normal commercial rates. If they want to 'leverage' their shareholding, they can go get commercial loans. Lou Gerstner did this when taking over IBM - all his execs had to put their savings/investments into IBM shares.
  • There's no commitment without 'skin in the game'. In the early 1990s Steve Ballmer bet everything he had on Microsoft - he ratcheted up his shareholding to around $10B, (yes, billion!)

Sorry for the length .[5]

Now let's see. How does all that "control-system fix" affect project managers? Projects, by their very nature, are uncertain endeavors that cost money. Those who lead them must make choices and "the optimal strategy for the [manager] is 'take risk'." But, if things don't work out, "they are forced into taking even more [risks] just to keep up." The risk taking spirals up and up. However, what is at stake is someone else's (the project sponsor's) money. So, according to the suggested "fix", like the CEOs and their teams in the analogy, project managers should be saddled with some direct financial consequences for the outcome of their projects.

Somehow, I don't think that would be a popular idea. In fact, I think we would see a lot fewer project managers around, although those that remained would be much more proficient. But with today's liabilities for responsibilities real or perceived, no wonder many people would rather "Forget the best [and] embrace the rest". Or, in arm-chair critic lingo, "run around taking in other people's washing [rather] than making the clothes dirty in the first place"

2. By Email, 3/28/09
3. By Email, 3/29/09
4. By Email, 3/29/09
5. By Email, 3/30/09
Home | Issacons | PM Glossary | Papers & Books | Max's Musings
Guest Articles | Contact Info | Search My Site | Site Map | Top of Page