Decision-Making Under the Influence: SME, HiPPO, and BOGSAT

The most significant driver of cost and schedule variance in the execution of any project is indecision. While most projects can absorb a few bad decisions or even course-correct without a hitch, delaying a decision almost invariably creates damage. Agile practitioners will typically defer decisions until required to move forward so that the Decider has as much information as possible, but a lack of information isn’t always—or even usually—the problem. Sometimes the Decider just doesn’t feel empowered, and sometimes they are having trouble reconciling input from different Influencers. And there are several common types of Influencers.

SME: The Subject Matter Expert

The SME understands the business process, constraints, data records, information security concerns, and so on. In a lot of cases, the SME is the person who owns—or will own—the results of the decision, but doesn’t have the authority to make the decision. So the Decider—rightly—looks to the SME for input, trusting that the expert opinion will not be influenced by the impact of the decision. Usually, it isn’t. Usually.

The wise Decider will usually align with the SME, unless something else comes up. Usually, this takes the form of another Influencer.

HiPPO: Highest Paid Person’s Opinion

Inviting a very senior person to weigh in on a decision they aren’t being asked to make is like prospecting for uncertainty and doubt. Numerous studies have verified the existence of the HiPPO effect—junior team members defer to the expressed opinions of the Highest Paid Person, because they assume that they are paid so much due to their greater knowledge. And the Highest Paid Person may actually have greater knowledge in some area—but that doesn’t mean their Kung Fu is the best for this particular decision.

An even worse situation can occur when the Highest Paid Person asks a clarifying question, which nearly always raises doubt in the minds of the Decider and SME. I once saw a SVP of Human Resources stop a presentation cold by asking whether a bullet point referred to something that was done, or that needed to be done. I had to help the stunned Decider find her car.

“It’s the Heisenberg Principle…me asking the question changes the answer.” – Barack Obama

BOGSAT: Bunch of Guys Sitting Around a Table

It’s good to network, but parents worry about peer pressure for a reason. I once worked for a guy who used the term “strap-hangers” for those he perceived were just along for the ride. As he put it: if they didn’t have any skin in the game, their opinions shouldn’t matter. I used to think that was a bit extreme, but as I’ve come to understand the dynamics of making choices under conditions of uncertainty, it’s become plain that not all points of view are valuable. I had a client defer a decision until she could reach out to confirm whether the passing comment from a friend in another company was relevant. It wasn’t.

Uncertainty, Assumptions, Influence, and Decisiveness

Uncertainty is a given—we are rarely asked to make decisions with all the facts. Usually, at least some things are unknown or even unknowable. So we have to make assumptions in order to close the gaps. Those assumptions represent risks, which have to be managed. We seek out the opinions and counsel of those we trust and respect in an effort to assess the risks and proceed with a decision, and in many cases that additional input makes the issue and choices more clear. But reconciling different opinions and different points of view should not take precedence over making a timely decision.

Managing Transitions Between Outsourcing Vendors

With apologies to Sir Walter Scott: Oh, what a tangled contract we write, when first we practice to outsource. Having managed outsourcing projects on behalf of both the customer and the third-party administrator, and managed transitions from one outsourcing firm to another on behalf of several clients, I have a lot of anecdotal evidence that outsourcing generally works best on a spreadsheet—in practice, results tend to be rather variable. But because most business decisions are driven by spreadsheets, businesses keep outsourcing.

That’s not to say that migrating to a better outsourcing relationship isn’t a net positive—only that changing who does what across organizational boundaries is stressful for all concerned, and that increased stress level and instability tends to last longer than most decision-makers expect. And when transitioning from one third party to another, you get something like a long, drawn-out divorce where the spurned spouse is required to help tailor her wardrobe to the mistress, who arrives with an extensive list of demands.

Transition Projects and VUCA

VUCA is an acronym originally coined by the US Army War College to describe a state of increased volatility, uncertainty, complexity, and ambiguity. Transition projects have it in spades:

  • Volatility: Disrupting the current state produces lots of process change points, and most are not under the control of the client.
  • Uncertainty: There are a lot of opportunities for all parties to be surprised, from the customer decision-makers to the employees of the departing administrator. Do not underestimate the emotional impact of being asked to help a stranger take over your job—some folks resign the same day they get the news.
  • Complexity: Since the only contracts are between the customer and each of the two rival firms, the customer must act as intermediary in all things. Issue management quickly becomes a significant challenge, since each party wants to avoid blame. Cause and effect can become blurred, and even disconnected.
  • Ambiguity: There is so much potential for miscommunication and differences in terminology that even simple discussions require extreme care. Insist on a common set of terms and acronyms and what they mean, or you’ll be discovering gaps nearly every day.

Over the years, I’ve adopted a few techniques for facilitating projects built on a team of rivals, and I’ll share a few of them here.

The Central Clearing House

While every firm has a preferred collaboration and file sharing tool, it is vital for the common client to provide the tools for secure file sharing and provide equal access to both incumbent and replacement. The client must manage the content and organization, no matter how eloquently the replacement firm pitches their approach. All fingers should point to the client, or the potential for blamestorming becomes unmanageable.

The Cheshire Cat

Since the rivals have no contractual relationship, the client (or their representative) must chair every joint meeting. Over time, the individuals on each side develop relationships with their counterparts, and collaboration becomes natural. As this happens, the potential for emotional conflict gradually diminishes, and the client can gradually be less visible, although still present and ready to step in.

The Captain’s Table

Dave GordonOnce the transition is under way, the project leaders for all three organizations need to collaborate on resolving issues, following up on requests, and otherwise executing on their joint plan. This joint meeting should be scheduled as often as necessary, whether weekly or daily, and chaired by the client’s project manager. Avoid having more than one person from each organization, so internal politics don’t bleed over into the project.

An experienced project manager is used to leveraging influence in the absence of direct authority. What most of us are not used to is influencing people who are about to lose their jobs, when we want them to work with their replacements. It isn’t just about the need for emotional intelligence, but the need to preserve the dignity of the employees of the departing incumbent. I’ve seen some folks take the opportunity to move on to much better circumstances, and I’ve seen some fall into deep depression. You might not get the chance to influence that outcome, but be sensitive to the fact that these people are not just numbers on a spreadsheet.

Estimating Based on a Model of Project Execution

I initiated and managed a lot of projects over my career of 30 years or so. Along the way, I observed some common mistakes, both my own and others, that impact the quality of estimates for cost and schedule. Much of this comes down to the way these estimates are prepared. I’ve got a few thoughts to share on managing the preparation of preliminary estimates, so that proposed projects can be approved based on information that the decision makers can believe reflect an understanding of both the problems and the solutions, and how to achieve them.

An Estimate is Based on a Model

Any estimate of the labor and non-labor costs of planned work must be based on an understanding of what work needs to be done, how it will be accomplished, and who will perform the work. In other words, a project plan. A good estimate should reflect a range of possible values, with a confidence level, and should document identified risks and related assumptions, including an assumed start date.

A Schedule, Not A Plan

A project plan is not merely a schedule, depicted in a Gantt chart. It reflects a number of decisions, from scope and high-level requirements to how the transition from the current state to the end state will occur. It takes constraints, non-functional requirements, and relevant organizational processes into consideration. In addition to direct work on deliverables and supporting activities in the Work Breakdown Structure (WBS), it includes plans for activities such as acquisition, staffing, cost reporting and budget management, risk management, security, and likely others. All of these plans are combined in what is known as integration management. Taken together, they constitute a model of how the project will be executed, which can be used as a basis for meaningful estimates.

What, How, and Who

The matter of what work is to be done is reflected in the WBS. The most meaningful estimate of project costs is rolled up from estimates for each work package. Note that initial work package estimates should assume that all inputs and other resources will be available. Dependencies must be planned for, but work on that when scheduling, rather than when when estimating. There are usually few completely new tasks in most projects, and past experience should drive estimates, even if different people will perform the work. Three-point estimates should be prepared for each work package—most optimistic, most likely, and most pessimistic. These parametric estimates can then be used in Monte Carlo simulations of the project.

 

 

How the work will be accomplished is a technical matter. An architecture or technical approach document, based on the high-level capabilities required for the delivered product, is a practical minimum. A more detailed design document is better, if available for an initial estimate. Either way, know how you’re going to skin this cat! Make any necessary assumptions and document them to be delivered as part of the overall estimate model.

Note that the who doesn’t usually need to be a specific, named person. It’s helpful to have an assigned team before any estimates are required, but that isn’t usually the case, unless it’s a purely internal project to be performed by an established team. It is conventional wisdom that those who will perform the work provide the most accurate estimates, but that isn’t always the case.  For projects where some of the work will be performed under contracts or by contingent workers, you may have to make estimates with a lower confidence level, but that doesn’t mean that they can’t be useful.

Reducing Uncertainty

The goal of estimating should be to reduce uncertainty to a level where decisions and commitments can be made. Not commitments to a precise cost or schedule, but simply to proceed, in pursuit of specific benefits. And that decision to proceed must always be contingent on evidence of progress commensurate with expectations. As the project progresses, actual cost and labor figures can be used to update the estimate, further reducing uncertainty, so that decision makers can re-commit to continuing the project. As the project plan and schedule evolve, the estimate model should track that evolution. A baseline estimate is necessary, but so is a current estimate.

The best estimates open a dialog. You wouldn’t seriously support the Hashtag, “#NoCommunicating,” would you?

In Closing

We should not manage on a ballistic trajectory, where nothing can change between pulling the trigger and impact on the target. Like modern guided missiles, continuous corrections must be made, in order to optimize the effects of scarce resources—human, financial, and calendar. Agile methods are commonly used these days, but there are others, such as stage gates. Whatever governance model is used, a detailed estimate model, updated throughout project execution, will provide much better decision support than a round number.