Since the beginning of the COVID-19 crisis, I have stopped counting the number of times a colleague from the world of project management made an observation or drew a parallel between the coronavirus pandemic and the “Black Swan” phenomenon.
You may be familiar with this theory, often associated with project risk management, that a “Black Swan” is an event that meets 3 criteria:
- The event was unforseeable or unpredictable;
- The event has major consequences and is quite disruptive;
- After the first example of this event, it is rationalized as if it could have been expected or anticipated. This is known as ” Hindsight bias”.
However, I think a wise project manager will see another phenomenon at play as well as the importance of not calling this particular event a “Black Swan”.
First, it is difficult to credibly claim that the COVID-19 pandemic was unpredictable. The Black Plague, Cholera, the Spanish flu of 1918, SARS, H1N1 or even Ebola are all recent and not so recent examples which should suffice to demonstrate that a crisis of the scale of the one we are experiencing had been foreseen by a vast majority of experts. However, we chose to ignore thos experts. Why?
Among the many reasons is the fact that humans suffer from many well-known and documented cognitive biases including “Narrow Framing”. Narrow Framing is a common mistake that we all make at one time or another when we allow ourselves to be influenced in the evaluation of a problem by its formulation. For example, most consumers would not hesitate to drive 15 minutes to save $50 on a $100 item of closing but would not do the same to save the same to save $50 on a purchase of $1000.
These phenomena are due to the fact that our brain uses 2 modes of thought to solve problems: systems 1 (the Intuitive brain) and 2 (the Rational brain). These thought patterns have been extensively studied by psychologists and economists such as Daniel Kanheman, Richard Thaler and Dan Ariely to name a few. The challenge is that we too often use our system 1 to solve challenges that would be better solved by our system 2.
For example, we collectively chose not to prepare for a pandemic because the immediate costs of dealing with it (well-known and high) seemed much more painful to us than the longer-term costs of doing nothing ( much higher but less well known).
What does this have to do with a blog about project management you say?
For many years, all sorts of experts have developed multiple recipes for managing projects. Each recipe attempts to mechanize project management. If you do A and B, it will result in C. It’s reassuring, it sells well. You give it a cool and sexy name, a purchase price and a certification to boot and that’s it. But we’re missing a crucial ingredient.
Human beings have an advantage over computers. We are capable of emotion. Unfortunately, the same emotional capacity often leads us to make many errors of judgment and evaluation.
For some time, many experts have been interested in psychology and the science of behavioral economics to improve the principles applied in project management.
Here are some examples of cognitive biases and other quirks of the human mind that can affect the conduct of your projects:
- Loss aversion: a loss causes twice as much pain as a gain brings pleasure (Montreal Habs hockey fans hardly recall Alain Côté’s famous 1986 goal while Nordique’s fans still have nightmares about it!). This aversion means that some managers will be reluctant to admit that a project is in trouble and will delay raising the flag.
- Confirmation bias: can prevent us from considering potential solutions or issues in our projects because they do not fit our beliefs or convictions.
- Optimism bias: our search for success ( combined with loss aversion loss) leads us to understimate the risks or the effort required to carry out a project.
- Anchoring and availability heuristics: our propensity to use our intuitive judgement pushes the brain to let itself be influenced by insignificant data when it is not given sufficient time to perform rigorous calculations.
It is possible to counter these phenomena provided that we are aware of them and that our management methods take them into account.
For example, an organization that continually underestimated its capital projects found a way to reduce errors of judgment arising from overly intuitive estimates. They now require a pre-initiation investment of $50, 000 for any project in order to prepare a more detailed submittal accompanied by more rigorous cost and schedule estimates.
The same organization obtained more reliable performance reports by insisting that project sponsors refrain from asking the usual question to projects showing yellow KPI’s: “Why is it yellow and what are you doing about it?” Instead they suggest using the question: “How can I help you get back to green?” They are thus transforming a perceived loss to a gain.
The world of project management has lots to gain from the fields of psychology and behavioral economics and in understanding and mastering the unconscious biases that affect individuals and organizations alike.
So what about our “Black Swan”? It seems to me that describing the pandemic this way carries the risk of allowing people to avoid accountability. Indeed, if a pandemic of this magnitude was so unpredictable then no mistakes were made. Perhaps, if we instead admit our failure and accept the feeling of loss that comes with it, we may just learn not to commit the same error when we face our next major collective decision. Did anyone say climate change?