A book called “The Smartest Guys in the Room” chronicled the Enron crisis and how it crashed a substantial portion of the American economy. The story is about people who actually believed that they were smarter than everyone else around them.
One of the best lines from the book is, “They actually smoked their own dope.” This merely added to the hubris of the moment.
Project management: What’s really smart?
From a project management standpoint, I’ve seen lots of “smartest people in the room” myself. They know all the key words but use them in the wrong way. The smartest person in the room can unwittingly bring the company to its knees.
That person may hold an MBA, and may in fact have worked for a large consulting firm whose goal in life was to absorb every billable hour from every corner of the room—not necessarily to ensure a smooth project roll-out. It’s the ultimate Ponzi scheme, with the smart person at the head of the pyramid.
Common management mistakes
During my 25 years of project management, I’ve seen some self-proclaimed smart people apply two tactics that disrupt the business.
- Disruptive tactic #1: One is that they eliminate complainers… assuming that stakeholder management means sucking up to the people who sign the check. They secure the loyalty of check-signers, and then move on to the “complainers.”
They may regard questions as dissent. They may trivialize complaints as rants from disgruntled workers. Then they’ll explain that change is hard. Opposition will be forced to leave.
The exodus is basically all previous leadership types. This is the way for a flawed manager to take over. The main point is control.
- Disruptive tactic #2: Another disruptive tactic is new math. One plus one equals 11! The fuzzy math used by the disruptive manager will wrangle your brain. WARNING: if you challenge the math, no matter how obvious the errors, then you become the enemy who spews dissent (see #1 above).
This manager realizes that profit will not equal value in the current environment. So he or she will raise prices to unheard-of margins in order to forecast larger revenue figures. These numbers may promise double or triple anything in the company’s history. The kicker to the deal is that typically this person’s bonus is paid based on projected numbers (not hard cash). So, this person will get paid long before the company can ever come close to hitting projections.
“How does this work?” you may ask. The company has a product that sells for $100. First, you double the price to $200. You’ve now increased gross profit. Next, just increase production to 200 units instead of the previous 100 units. Now you’re doubling the sales, for double the money, at over double the gross profit.
The problem is that those expectations can never be met. The fact of the matter is there is rarely is a plan in place to get you to that point.
The “smartest people in the room” can look good and succeed… for a while. Then they disrupt the business. What’s for real? Real smart people make plans, and make projects succeed.
Which kind of smart is at work in your business?