Watch out for project management data extremes and making them seem like they are normal or reacting to them as if they are the normal. This article was motivated by a Bloomberg Businessweek article reporting that we had more terrorist bombings in the 70s, for example, than we’ve had since 9/11, but that polls showed a belief of an increase in terrorism.
Most news reports, magazine covers, political comments, etc., are often about the extreme highs or lows of something that is happening. Most of us know this intuitively, but when bombarded everyday with the extremes, we unconsciously begin to feel that it is a reality, instead of a statistical exception.
The same applies in business and finance in general. There are techniques such as Six Sigma or economic analysis that are used to measure and understand what things really mean. I wrote an article about personal financial planning and how doing it well helped one to be ready to manage business finances. In this article I mention how once I had a financial plan and understood the assumptions underlying the plan, then as the economy — stock market, unemployment, gas prices, etc. — went up and down, I could readily tell what the real impact was to my family and what was just hype.
Along these lines I would hear pundits regularly claim how it will take years to get back to the high points in the economy and stock market in particular (as of this writing, we are once again at an all time high).
Let me explain.
Like any process, the stock market goes through some variations in its ups and downs. I will argue that this is not significantly different from the ups and downs in the amount of time it takes us, for example, to get to work everyday.
If one day while commuting to work we encounter an accident that causes us to be an hour late to work we don’t immediately think that everyday we will now encounter an accident. Instead we understand that it is an exception. We might see with time that it is taking us longer and longer to get to work, as our community grows and gets more congested. But the extremes we understand and we don’t panic when they happen (ok we might, if we are late for an important event).
The same is true of the stock market. But we understand that … at least intellectually. However, I suspect most people don’t understand this at the gut level. We get the gut level understanding by living through many of these events. It is called experience and paying attention, and it does not come out of text or history books no matter how well they are written (though they provide great hints). Real experience comes from truly paying attention and living through what goes on around us.
The “so what” of all this is that in our financial planning we probably had a number that represented what the expected *average* growth rate of our finances would be. Mine for example was about 8% and represented the long term average growth rate of the stock market as a whole.
Jumping quickly to the conclusion, we don’t care when the stock market gets back to that last high. But we do care when it gets back to the average (or similarly a metric gets back on track for a project). This is the average economic growth we needed to meet our financial goals. If we, and I am guilty a bit of this the last time through, started counting our chickens based upon the market highs then we fell for the same hype we see everyday in the media. We love to hear about and react to the extremes. It is what the entertainment-like news media is all about. With time we get addicted and need even more an extreme to feel entertained.
Projects are no different. When we run into a problem we should know objectively (based upon research, experience and planning) whether the issue is something normally encountered or if it is something out of the ordinary. Typically I’ve noticed the time it takes to fix defects, how long it takes to figure out the details for a project requirement and how long it takes to complete similar projects. Too many managers (project, line, senior) go into a panic when something “goes wrong.”
Make sure we understand the data we are seeing and if it is a high or low or other exception. In a business setting we might take an action to help smooth out the highs and lows or we might simply let the team handle it without our intervention. We always need to be able to distinguish between the normal and the extreme when managing a project, team or business.
Can you distinguish between normal and extreme problems on your project and handle them appropriately?