That’s the opinion of Nobel Prize-winning economist Daniel Kahneman. Here’s the full quote from a Strategy+Business Article:

“The thing that astonishes me when I talk to businesspeople in the context of decision analysis is that you have an organization that’s making lots of decisions and they’re not keeping track. They’re not trying to learn from their own mistakes; they’re not investing the smallest amount in trying to actually figure out what they’ve done wrong. And that’s not an accident: They don’t want to know.

So there is a lot of curiosity, and I get invited to give lots of talks. But the idea that you might want to appoint somebody to keep statistics on the decisions that you made and a few years later evaluate the biases, the errors, the forecasts that were wrong, the factors that were misjudged, in order to make the process more rational — they won’t want to do it.”

I have noticed that many businesses employ processes and methods in Project Portfolio Management that are so subjective and qualitative that they couldn’t figure out what they’d done wrong, even if they wanted to.

Why?

Because they fail to accurately forecast the key performance indicators such as costs, risks, and rewards at the beginning of their project selection processes and then track the actual performance against them. Instead, they use “systems” to prioritize projects and select portfolios such as putting them in and pulling them out of “buckets” or trying to create some mythical “balance,” or somehow magically aligning them to “strategy” or “business outcome.” These types of systems can have great “feel good” emotional appeal, but they can’t give measurably “wrong” or “right” results because they can’t be benchmarked or tested against actual portfolio results.

Then managers still wonder why so many portfolios have huge cost overruns, fail to meet timelines, over-stretch their resources, or simply fail to meet expectations.

Yet there are all kinds of excuses as to why not to use a robust quantitative modeling system such as:

  • Our organization isn’t mature enough.
  • Good computer models aren’t perfect.
  • Key performance indicators can’t be estimated precisely.
  • Quantitative models are complex.
  • There are things we can’t know about our projects.

Each one of these is true. And each one can be solved rather easily, but, like learning any valuable and important new skill, it can take training, time, and the willingness to try and be wrong in order to improve.

I think Kahneman may be right. Maybe business people don’t want to do it because they don’t want to know what they are doing wrong.



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