3 Important Concepts for Managers

This year I’ve had the opportunity to attend a few trainings on leadership and management through a leadership development program at work. I’ve also been able to reinforce these learnings with many business books I’ve been reading, seen in my previous blog article. This has given me exposure to some theories or principles in management which are surprising at first but fairly intuitive when you give it more thought. Here are three of my favorite such concepts:

Peter Principle:

The Peter Principle is an observation that the tendency in most organizational hierarchies, such as that of a corporation, is for every employee to rise in the hierarchy through promotion until they reach a level of respective incompetence.

This principle laid out by Dr. Laurence J. Peter in his 1968 book titled "The Peter Principle", bluntly says that employees are constantly promoted based solely on their performance at lower levels. This results in employees finally ending up at a level where they are underperforming and no longer promoted.

One reason is that companies promote employees without taking into account their competence in skills required for that new role. For example, a stellar Software Engineer with a few years of experience could get the position of a Senior Technical Lead without validating their potential of succeeding in such a role. They might have been in their current role for long enough that they warrant this promotion, but this isn’t the right approach. It is a double whammy as they underperform in the new role and the company loses a stellar performer from the previous role.

Potential solutions to this phenomenon:

• Promotions should require a high performance in current role but also heavily weigh the skills required in the new role. If we shape company policies so that people still feel valued and compensated without needing to be forced into a position that doesn’t suit them, it will lead to more satisfaction for the employee and a better outcome for the company.

• Training should be provided for future levels at the current level. The employee can then be evaluated on their understanding and preparedness for the role in advance of the promotion decision.

Companies should be accounting for this principle as there’s another humorous take from the Dilbert comic strip on the Peter Principle called the Dilbert Principle. This states that employees who were never competent are promoted to management to limit the damage they can do. Companies need to make sure this joke isn’t funny because it’s true!

Brook’s Law:

Brooks's law is an observation about software project management according to which "adding manpower to a late software project makes it later".

This law, proposed by Fred Brooks in his 1975 book The Mythical Man-Month, is fairly intuitive for the software world. While there is often a push from management to add resources when deadlines are getting closer and work is delayed, throwing more resources at the problem ends up compounding it. The reason is that ramping up new developers will take up valuable time from your existing developers thus slowing down progress further. The new resources would have a net positive impact after a few weeks but by then the damage to the timeline is done. MIT has a great System Thinking module that displays this tendency in their Project Management simulation. In the simulation, adding resources depending on their timing, will derail the project before it gets the anticipated acceleration.

Potential solutions to this problem:

• Teams need to anticipate their resource needs in advance and should be ramped up with enough time leeway to when you expect to see the team's full throughput. The plan should also account for a lower throughput from existing resources during this period.

• If the team is slipping their deadline, management needs to stick to their plan and look for other ways to address the situation like pushing the deadline or reigning in scope. The instinct to add resources should be avoided at all costs.

A good plan that takes these factors into account will have a better chance of meeting the team’s goals. Talking about planning…

Planning Fallacy:

The planning fallacy is a phenomenon in which predictions about how much time will be needed to complete a future task display an optimism bias and underestimate the time needed.

This fallacy proposed by Daniel Kahneman and Amos Tversky in 1979, is based on teams only taking into account the factors they know and discounting external factors. This can be seen when teams tend to underestimate the time needed while outside observers tend to overestimate the time.

The examples of planning fallacy are numerous in the real-world. The Sydney Opera House, initially estimated at $7 million with a four-year timeframe, ended up with a bill of $102 million and took fourteen years for completion. The Berlin Braudenberg Airport, initially planned as a five-year construction with opening in 2011, is still delayed with current opening scheduled for later in 2020 at 3.5x the originally planned cost.

Potential solutions to this problem:

• Initial estimates should be heavily relying on data as a starting point. Benchmarking with comparable projects to get the time and cost estimates is a better approach than listing the anticipated phases or tasks and associating a cost to them.

• Premortems is another good way recommended in Daniel Kahneman’s brilliant book, Thinking Fast and Slow. Premortems is an exercise where all team members individually take some time to write down scenarios that could have panned out for the project to miserably fail over the next one or two years. It is important to write this down individually to avoid a few members monopolizing the conversation and ideas. The team might not anticipate all possibilities, but they can better handle some of the challenges and plan appropriate buffers for unexpected obstacles and bureaucracy.

Planning is an important part of every industry, so all project managers and executives need to keep this in mind when they pitch any new idea or project.

I hope you found these concepts informative like I did. Are there any other concepts that you find interesting? Leave them in the comments and I’ll be sure to look them up!