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EconTalk was one of my favorite podcasts. I listened to it yesterday. The episode was about credit.
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What about default swaps, and more generally what financial problems we have gotten into? This morning, I was reading this article in The New York Times: “U.S. Credit Bailout shifts to the Consumer
[Editor:? Is it possible to digress so early in the article? My first impression was that we handed the Treasury Department $700 billion without any plan as to what we would do with it. One could argue that they are being adaptive, changing their execution methods and scope in response to new information. I believe they had a bad plan, and now they are shooting from their hips.
I would like to talk about the necessity of failure. (Don’t worry, this will be tied into project management at some time!) Arnold Kling made a great point in EconTalk. Did we bail out all the internet start-ups that failed during the internet bubble? No.
Companies that operate in a way that is likely to lead to failure should be allowed the chance to fail. You create an implicit risk-reducing factor that reduces the market’s risk, which can lead to more problems in the future. You also support organizational structures and models that do not sustain themselves. What is successful is not dependent on its own merit. It is important to continue using what works .??? Others can see what works and adapt it. (For example, I just adopted the [Editor] style in this blog post by Andy Meyer! This is evolution. Systems improve when they aren’t “helped” artificially.
This happens in all kinds of projects. This is a common problem in projects. Companies continue to pour money into projects that are not viable or should never have been funded. Portfolio management is essential for organizations. It should not be tied to the project and functional departments. It is unlikely that sponsors, stakeholders, or the project manager will press for the end of their project. They are likely to support the continuation of the project because of their incentives. They will be able to use a larger budget if it is more expensive. They are expected to plan well if they get more money that is not tied to scope increases. It is not acceptable, no matter what type of project you are working on: waterfall, lean, agile, spiral, lean or lean. A project manager should be capable of giving a reasonable estimate with a +/– range if the scope is known.
Arnold also mentioned the fact that while many analysts and “geeks,” in these organizations knew about the risks and what was happening, top management doesn’t listen to them. This is a great lesson for project managers. Your stakeholders and staff collectively know more about the situation and the risks than you, your sponsor or any one individual. How can you make communication easier and more transparent, and how can you leverage your collective knowledge? Recommended reading: Two Great Wastes at ReformingProjectManagement.
Let me know what you think. Leave a comment!