What Project Managers can Learn from Day Traders

A Little bit about Day Traders

In the world of financial services, day traders have existed since the first days of formalized markets.  What distinguishes a day trader is that they have to close out all their positions every night.  Meaning, they start with everything in cash in the morning and end with everything in cash at night.

So, if I’m a day trader and I start with $1,000,000 in the morning and after I close out all my positions I have $1,200,000, I made 20% on the day.  If this happened, I would be an extraordinarily happy person.

A day trader will make thousands of trades in the course of a day.  They watch what’s happening on the market and try to get a sense of the direction it is going in, and with this sense stay one step ahead of the market.

If they see a gap between the price someone wants to buy a stock at and the price someone else wants to sell a stock at, the day trader will try and fill that gap and make their profit in the process.  It is a very fast moving world where one succeeds figuring out what’s happening before other people do.  If you get it right, you can make a lot of money.  If you get it wrong, you lose a lot of money.  And every day, at the close of the day, you know the score.

What Project Managers can Learn from Day Traders

Project Managers try and makes sense of what is happening on a project.  They understand where the project is supposed to go, they try and understand where the project is going, and they try to fill the gap so the project goes in the right direction.

Things to think about:

• If you had to close your position every day, how would it look?
• If you resolved everything you did in the course of a day into one metric, like a day trader does money, what would that metric be?
• Would you want everyone on the project and at the company to know that metric?
• How would that change what you do?

Inquiring minds want to know…

Henry Ford would tell you, Methodologies (PMI, Agile, PRINCE2, etc.), like History, are Bunk

Dr. Martin Luther King used to end speechs by quoting a prayer from an old slave preacher.  It’s an apt description of approaches to projects today: “Lord, we ain’t what we want to be; we ain’t what we ought to be; we ain’t what we gonna be, but, thank God, we ain’t what we was.”

On July 15 2008, PMI presented the finding of their four year, $3M study looking to see if project management added value. You can see their presentation here: PMI Presentation.  What did they find?  Dr. Janice Thomas and Mr Mark Mullaly found what most of us know; PM is messy, painful and immature, but what are the alternatives?

PMI, Agile and PRINCE2 all try and provide methodologies or frameworks to increase the chances of project success.  This is difficult as projects often pull people from different departments together to work on a project. While that is what the project requires to be successful, what does that mean for the people pulled from the different departments? Is the project of primary importance to them or is what’s happening in their department of primary importance?

Business in Silos
When the modern corporation was formed, different departments were organized around specific functions. Accounting, Marketing, Sales, Finance, Operations and even IT all had separate requirements, required different skills and had different, recognizable purposes. These departments offered structure, communications channels and common ground which was the basis for working.

Large projects rarely fit in any of those silos.  People are drawn from across the organization, often temporarily, to work on that one project. Where is the common ground or structure?  Where does their loyalty lay?  Can any externally supplied methodology or framework replace corporate power, communication and funding structures?

What is Project Management?
According to the PMBOK guide, “Project Management is accomplished through the application and integration of the project management processes of initiating, planning, executing, monitoring and controlling and closing.”

Whether constructing a building, making dinner or developing software; there are processes that will help one be more successful. At its core, that is project management.

Different Industries are Different
Is the process for constructing a building the same as the process for making dinner? Is it even similar to the process for developing software? No, the processes must be different. Are the skill sets required to succeed at each step similar? No, safety concerns in construction are obviously different from cleanliness concerns in cooking or complier concerns in software.

Can the Processes in One Make you Better in Another?
The roots of project management probably come from construction. The Romans realized foundations were needed before building walls and roofs. Specialized skills and the coordination between them are as appearant in the Roman Coliseum as in a modern sky scrappers.

At a very generic level, the ideas of critical paths, deadlines and dependencies may cross industries, but do the specialized skills to be successful in each area align? No. Safety concerns in construction are paramount. Cranes falling in Houston are catastrophic to that project, but not a concern to someone running a restaurant. Cleanliness hopefully is an overriding concern to the restaurant owner, but unfortunately isn’t so critical to software developers.

What is Project Management?
According to the PMBOK guide, “Project Management is accomplished through the application and integration of the project management processes of initiating, planning, executing, monitoring and controlling and closing.”

Whether constructing a building, making dinner or developing software; there are processes that will help one be more successful. At its core, that is project management.

Different Industries are Different
Is the process for constructing a building the same as the process for making dinner? Is it even similar to the process for developing software? No, the processes must be different. Are the skill sets required to succeed at each step similar? No, safety concerns in construction are obviously different from cleanliness concerns in cooking or compiler concerns in software.

Can the Processes in One Make you Better in Another?
The roots of project management probably come from construction. The Romans realized foundations were needed before building walls and roofs. Specialized skills and the coordination between them are as appearant in the Roman Coliseum as in a modern sky scrappers.

At a very generic level, the ideas of critical paths, deadlines and dependencies may cross industries, but do the specialized skills to be successful in each area align? No. Safety concerns in construction are paramount. Cranes falling in Houston are catastrophic to that project, but not a concern to someone running a restaurant. Cleanliness hopefully is an overriding concern to the restaurant owner, but unfortunately isn’t so critical to software developers.

Are the Methodologies Bunk?

History is bunk.  What difference does it make how many times the ancient Greeks flew their kites? — Henry Ford (Source: NYT, October 28 1921, p. 1)
The methodologies can be a starting point, but too often its easier to focus on the methodological steps rather than thinking long and hard about what is happening on the project and the future.

• What is the business environment your company is working in?
• How is that environment changing?
• What is happening inside the business?
• What is the state of the project?
• Where does it need to go?
• What needs to happen to get it there?

Maybe they are not bunk, but rather like training wheels.

Project Manager - Right Person, Wrong Title

Words ought to be a little wild, for they are the assaults of thoughts on the unthinking.        - John Maynard Keynes

We are living in times of great change.  In two years, few of us will be where we are now.  This week I will publish five posts that attempt to live up to Keynes’ advice.  Please join me and be a little wild with your words.  Today, let’s think about and vote on what our job title should be.  Based on voting and suggestions, other options may be added.  While this election may not be as captivating as the US Presidential elections, let’s make it a relevant assault on our thoughts.

Before we begin, I have a confession to make.  I’m more technical architect than project manager.  I’ve project managed because the PM was “asked to leave” and being the architect, political expediency dictated that I fill both rolls.  If my view is jaded, it’s because I am.  I also have the scars to prove I’m not unfeeling.

Experience teaches that we should beware of fancy titles.  They often forewarn of responsibility without the power to execute.  ‘Project Manager’ and its grandiose cousin ‘Program Manager’ are both wonderful titles, but do they accurately represent the job?

Please consider the following and vote:
Project Journalist
In an ideal world, the senior person responsible for suggesting the project and getting the budget should have their future with the company tightly linked to the success or failure of the project.  If the project succeeds, they should get bonuses and recognition.  If it fails, they should forfeit this year’s bonus, return the previous year’s bonus and lose 10% of their salary to recompense the company for some of the project costs.

The project sponsor would need someone who could give them an accurate picture of what is happening on the project.  Where schedules are, who’s confident, who’s nervous, where are things going well, where there are problems and maybe even well thought out ways to improve.  A project journalist: someone who is savvy, interested in seeing the project succeed and capable of providing an unbiased account of what’s happening and why.

Project Scapegoat
Honesty is the best policy.

Project Enzyme
Enzymes are biological catalysts, or chemicals that speed up the rate of reaction between substances without themselves being consumed in the reaction. (Source)
This would be the perfect title if it didn’t have the worst abbreviation – PE.  Consider the following:
•    “Oh god, you’re the PEe on my parade.”
•    “Oh look, it’s the PEon.”
•    “Don’t look now, but here comes the PEze Corp.”
•    “Honey, I got promoted!  I’m a PE!… Why are you looking at me that way…Where are you going…”

Project Manager
Voting is strictly anonymous, so no one will know the troglodytes who vote for this title.

Other
If you have other suggestions, please make them comments section.  Meaningful additions will be added as options. Think of this election as being like Illinois politics- vote early, vote often, VOTE HERE.  You don’t even have to pay…

Interesting bit of Self Assessment

If you write a blog and you want to see what it tell you about your personality, check this out: Site

ISTJ - The Duty Fulfillers

The responsible and hardworking type. They are especially attuned to the details of life and are careful about getting the facts right. Conservative by nature they are often reluctant to take any risks whatsoever. 

The Duty Fulfillers are happy to be let alone and to be able to work int heir own pace. They know what they have to do and how to do it. 

The site is interesting, but I don't know what they mean about not taking risks.  Now if you'll excuse me, I'm going to put on my hiking boots, grab an umbrella and take the garbage out.

What should you look for in a project?

Many projects fail and many projects are going to be dropped.  Many of us will be handed projects we have to manage, good bad or otherwise, others will scramble to find work, so this question maybe pointless.  But it's not a pointless question, I think it's the most important question to ask.

Three elements determine a projects success more than anything else:

1. What is the project going to do?
   
2. Why is the project doing it?
   
3. How will the project be done?
   

PMI and Agile and other approaches dwell on the "how" element of project management.  This area is important, the devil is in the details.  However, I believe the other two elements: 'what is being done' and 'why is it being done', will tell you more about a projects chances of success than 'how it's being done'.

What are we trying to do?  

Is the project going to increase sales?  Is it going to improve productivity?  Is there enough real value in the outcome to justify the costs and keep people focused when the environment changes.

If you're wondering about this, think of it this way: If our company's stock price (or sales) fall by over 50%, is what we're doing compelling enough to continue the project?  If the answer is anything other than an unambigious "yes", think long and hard about whether you really want to devote large parts of your life and energy to a fantasy.  

My old boss drilled into my head that the difference between hallucination and vision is whether its worth the effort. [Editor: Funny, your dates give that reason for dumping you.]

Why is the project being done?  

If it's some managers pet project, even if that manager is the CEO, the chances of it's successful completion drop dramatically.  If the devil is in the details, god is in the "why".  If the "why" is compelling enough, almost any project will find a way to succeed.

There are two really compelling whys:

1. The project will increase sales.
2. The project will decrease costs.

If one or both of those goals are intuitive, obvious and achievable, the projects chances of success are excellent.

I'm all infavor of understanding the "how", but if you can pick which projects you work on, think about the "what" and they "why" too.

Understand the Long Term Effects of Decisions

Many times people get so focused on what is happening day to day that they miss the larger, slower moving things.  If you are going to intelligently make long-term decisions, make sure you understand the long-term direction of the business you work in and the industry that it works in. [Editor: You don't really want to ask that question, do you?]

Today Michael Lewis has a wonderful article explaining how decisions made by John Gutfreund, the Sr Partner and CEO of Salomon Brothers, changed finance.  

When investment banks were private partnerships, the partners who ran the firm were risking their own money.  Their interest were aligned and they balanced the opportunity to make a profit with controlling the risks their traders were taking.  When Salomon and then the other investment banks IPO'd, it absolved partners/CEOs/directors from having to understand the risks by transfer that risk to stockholders.  People running the firms kept the profits, while the investors and ultimately the goverment held the risks.   

Now, there are no investment banks and Wall St is essentially dead.  The article is a wonderful and humorous description.  Michael Lewis became famous with Liars Poker and he continues the tale with this article.

http://tinyurl.com/EndWallSt

It's a wonderful article relating how a CDS is similar to Fantasy Football, how Steve Eisman worked out the perverse logic that subprime loans were going to be the ultimate undoing of the financial system while sitting in a conference for subprime brokers, and includes the delicious line: "You can’t really tell someone that you asked him to lunch to let him know that you don’t think of him as evil."

It's a wonderful example of looking at how people didn't look at the direction of the industry they worked in, the companies they worked for or what was happening in the world.  As the world changes over the next few years, these will be important questions you want to ask.  If firms like Goldman Sachs, Merrill Lynch, AIG and others can be brought to their knees, how are you and your firm and your firm's marketspace doing?

Photoillustration by: Ji Lee

Beware the Medusa Effect

Many people are aware of part of the Medusa story, that she was so hideous that looking at her would turn men into stone and the Greek hero Perseus used his shield and only looked at her reflection to kill her.  However, many people are not aware of the first part of the story.  

Medusa was not born ugly, in fact she was mythically beautiful with many suitors chasing her.  So great was their desire to be a part of her life, that they would sacrifice everything.  Possibly, what turned men to stone was what that life entailed, not her looks.  

What if Medusa wasn't ugly but rather so desireable that she would lead people to give up everything else?  What if the myth of her being hideous was more the reflection of what happened to the suitors who were so enraptured?  

How many people become so enraptured with ambition and work that they neglect everything else?  Friends are work friends, discussions are work discussions, thoughts are work thoughts with all that that entails.  Couldn't the internal work struggles make people inpenetrible like stone to others?  The Greek myth doesn't mention how long it takes to turn to stone.  

I have moved to twenty different cities, states and countries in pursuit of Medusa, I mean ambition.  How much of a stonifing effect has it had on me?

Have you felt the Medusa effect?