Can-do Thinking Makes Risk Management Impossible

“Can-do thinking makes risk management impossible. Since acknowledging real risk is defeatism, the risk management function in a can-do organization is restricted to dealing with those smallish risks that can be mitigated by quick action. That means you confront all the risks except the ones that really matter.” (Tom DeMarco, Why Does Software Cost So Much? Dorset House 1995)

Of the many, many quotes from Tom DeMarco that I’ve used over the years, this one is near the top of my favorite list. I’m reminded of a major airline that launched into a comprehensive—hotel, car rental, etc.—reservation system long ago. After a $100 million expenditure, the project was cancelled and a half-dozen project managers were fired, for “lying” about progress. I have always wondered whether or not the company “culture” forced the project managers into an untenable situation in which “shading” the truth became the only escape.

“We’re going to be over budget by about 10% and will need an additional 4 months to get this project finished,” states the project manager in a status meeting. “Unacceptable, fix it, make the numbers work out!” the executive in charge shouts. “Or I’ll get someone who can,” he rages as he stalks out of the room. Now, as a project manager, even the most dedicated and ethical one, how many times will you be willing to endure this kind of tirade? Who is at fault here, the project manager who begins to shade the truth of a project’s progress, or the executive who refuses to listen to reality? I can imagine a similar conversation going on in the halls of Enron.

In working on a project plan at a major software developer, a young, gung-ho project manager responded to a suggestion to develop a risk management plan, “We don’t need a risk management plan,” he emphatically stated, “because this project can’t be allowed to fail.”

Project teams and project managers are loath to admit to uncertainty and not knowing, because the prevailing culture in many organizations doesn’t allow for it. Voicing concerns is tantamount to negativism, concerns are seen as a failure of willpower, as if will alone could overcome all obstacles. Again, it seems that Enron’s executives suffered from the hubris of thinking that they could make anything happen by sheer force of determination and will.

Risk management is a critical part of good project management, as experts like Tom DeMarco vividly explain. But effective risk management begins with a culture in which reality isn’t overwhelmed by hubris. No project manager can be a good risk manager in a political environment where executives are so gung ho that it blinds them from the reality. Effective risk management requires that executives and project managers make hard trade off decisions as the speculative hypotheses we call plans are smashed against the reality of the rough and tumble real world. If the seventh largest company in the country (well, maybe even this rating was the result of accounting tricks) can’t “control” events, it’s unlikely that your project team will be able to either. When actual performance doesn’t conform to the plan, when unforeseen (or foreseen for that matter) risks attack your project, the ability and will to acknowledge reality and make good trade off decisions will ultimately determine success.

Risk management and politics go hand and hand. Trying to implement sophisticated risk management practices in organizations that refuse to accept reality are an exercise in futility.