Chaos Theory: The Uncontrollable Factor in the Development of Management Systems

Failures in project management systems can be superficially explained by anything from a lack of project detail to managerial conflicts. However, this failure often has deeper roots. Until we begin to recognize this uncontrollable factor it will be difficult to master the implementation of any management system. This factor is known as the "Chaos Theory" or simply "chaos". Chaos Theory could be considered a core management theory for the 21st century. According to Wheatley (1992) when management tries to control chaos by "shoehorning" it into a specific structure, an organization is bound to fail. Controlling chaos this rigidly is actually limiting information gathering (Stuart, 1995) and creating the illusion of management. According to McNamara (1999), Chaos Theory recognizes that events are rarely controlled. As systems such as those in management grow in complexity, the more they become volatile or susceptible to cataclysmic events.

One way to plan for such chaos is through "contingency management". Contingency management is having an alternative plan to fall back on when chaos strikes, allowing for critical internal processes to continue and meet the desired outcome. Most managers do not see contingency management as a necessary step, because it takes time. In a world where efficiency and timeliness is key, this step is often the first to be overlooked. Until management recognizes the importance of contingency management and allows it to be fully implemented, chaos will continue to hinder the progress and efficiency of management systems.

DEFINING AND ESTIMATING CHAOS

The more general name for the field is complexity theory, where chaos is a particular mode of behavior (Rosenhead, 1998). Chaos theory explains that the behavior in turbulent systems quickly becomes disordered (Wikipedia, 2005). Chaos theory acknowledges that management systems break down. It recognizes that decisions need to be made even in the absence of all intended information (Herz, 2001). Complete order, while the ideal, will always be the one unaccounted for variable--part of our human nature. Similar to accidents, chaos is like a release of energy in an uncontrolled way (Blockley, 1998).

Project management systems are considered dynamic systems, similar to those in nature, which means they change over time and are hard to predict. Even though they are changing, there is usually an underlying predictability that can be identified. This is where chaotic behavior comes into play. Behavior in systems can be placed into two zones, one, the stable zone, where the system, if disturbed, returns to its initial state and two, the zone of instability where some small activity leads to further divergence (Rosenhead, 1998).

CALCULATING CHAOS

Chaos is immeasurable because of its level of randomness and unpredictability. Gabriel (1996) states that looking for sufficient equations to enable one to 'manage' such chaos is part of a futile and wish-fulfilling quest. However there are some researchers that believe calculating chaos is possible. While chaos in the business world mimics that in nature, unlike chaos in nature, there are measurable ways for project managers to try and calculate the degree to which chaos will affect their project. The following formula can help to calculate project constraints:

Dynamics = D + a*P + b*R + c*D*P + d*P*R + e*R*D + f*D*P*R

Where D=directives, P=prerequisites, R=resources and a & f are constraints.

However Bertelsen and Koskela (2003) postulate that aside from estimating the size of the chaos (small to extra large), a system is too complicated to predict its function and response to a given problem.

WHY IS BUSINESS SO CHAOTIC?

The pace of today's businesses and technological innovations have quickened to an impossible pace. Sometimes project timelines need to be written before all tasks and resources have been completely identified, which puts a project behind schedule before it has begun. This increasingly fast-paced system is "a breeding ground" for a chaotic management system (Yoke, 2003).

This breeding ground is creating a complexity explosion, which is affecting the way project managers need to manage. Undertaking a management system project is more than a weeklong project--many last for years or longer. As conditions are constantly changing, goals and objectives need to also be flexible to change. Goals and objectives are necessary, however, flexibility is key in order to ensure positive long-term results of a project.

HOW TO MANAGE CHAOS

The first line of defense in order to manage chaos is a good management team and an even better project manager. According to Bertelsen & Koskela (2003) an organization can manage its chaos by seeking out the factors that are easiest to change. An organization should then handle a projects dynamics and stress in the face of uncertainties. Finally, a manager should both always have a contingency plan and be able to keep track of critical factors and issue warnings. By turning an organization into a "learning organization" successful management of chaos is more likely (Bertelsen & Koskela, 2003).

Systems are so dynamically complex and highly sensitive to conditions that any link between cause and effect can set off a ripple effect rendering its future deliverable unpredictable. Technologies, timelines, scope, costs, personnel, are constantly changing within an organization and management must be adaptable. The same holds true for project managers. If they are not given the flexibility to adapt to chaos then management systems will fail. Project managers need to be seen as venture capitalists: always searching for new ideas.

Most management systems set forth a detailed plan and than proceed to follow it. According to McNamara the best way to do this is to work backwards through the system of an organization. This will help to show which processes will produce the right output and what inputs are required to conduct those processes (McNamara, 1999). A good project manager is one who realizes that plans often need to change in order to accommodate a changing situation. By following contingency plans, good managers can avoid such mishaps as scope creep and cost overruns.
There are different tools that project managers can use to help manage the chaos and successfully manage complicated systems. According to the Numbers Group some such tools are:

1. Work Breakdown Structure (WBS) - breaks the product to be developed or produced by hardware, software, support, or service element and relates the scope to each.
Example of WBS

2. Program Evaluation and Review (PERT) - a model, which helps the project manager define the critical path using, randomized tasks
Example of Pert Chart

3. Implementation Schedule (GANTT) - graphical representation of the duration of tasks against the progression of time.

Example of Gantt Chart

4. Enneagram - originally a tool for personality mapping, can find order in chaos by identifying underlying patterns in an organization. The map allows project managers to predict certain outcomes, which results in more reliable management systems. The Enneagram provides a structured view with which to see the order in between chaos (Fowlke & Fowlke, 1997).
Example of an Enneagram

CONCLUSION

A good project manager is one who can adapt to a changing environment as well as allow individuals to manage their own areas of expertise. This business trend is seen in forward thinking companies in the 21st century, and is also known as "managing by objectives" or "empowering knowledge workers". Unfortunately, in most companies this value paradigm is missed because management is focused on the financials rather than on renewing and developing knowledge (Stuart, 1995).

The project manager's main function is to recognize employees' strengths and to empower his group to work individually, both in a team and as individuals. The new project manager needs to be forward thinking and to have the ability to be flexible, creative, and able to respond to events quickly (Yolk 2003). Organizations need to embrace disorder and look to the edge of chaos (Stuart, 1995). Perhaps this empowerment of both individuals and teams as a whole, in conjunction with managements' ability to stay nimble in the face of a dramatically changing environment, will allow organizations to better manage the challenge of chaos in the 21st century.

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Retail Operations - Effective Branch Manager Support and Guidance

Performance and behaviour management is by far the most difficult aspect of any manager's job and the reluctance to 'grasp the nettle' when performance or behaviour issues emerge is certainly a concern in many organisations. But at the end of the day that is what managers are paid to do and not doing so will certainly affect service, team morale, sales and ultimately the bottom line.

Why does this reluctance exist, why do so many mangers back away from confrontation? The problems and challenges that need to be overcome are many and the common reasons and 'excuses' for not doing so are as follows:

It is Risky - There is a worry in the back of the manager's mind that discussions could turn into heated arguments and that they may open themselves up for harassment or bullying accusations. There is also a concern that team moral and motivation may be damaged by tackling an under-performer and that the team may even turn against the manager.

It is Complicated and Difficult- Performance and behaviour management is not straight forward, it is very seldom clear cut or black and white. It is 'grey area' stuff and often involves opinions, perceptions and subjectivity. As managers feel they cannot quantify and then justify their concerns clearly enough they do not attempt to do so.

It is Hard Work and Time Consuming - Many managers feel they do not have the time to sort out under-performers and that it is low on the priority list. "It is not worth the hassle" is a common comment to be heard.

Denial - Many managers are either blind to the fact that a person is under-performing or behaving unacceptably or they do not see it is a serious enough issue to address. There are even managers who believe that it is not their job to tackle performance and behaviour issues and that some day, someone will come along and do it for them.

Many of the aforementioned points tend to be excuses rather than reasons but there are a number of more important points that need to be taken into consideration:

Lack of Training - No new manager has any previous experience of performance and behaviour issues when they move into a manager role for the first time. New managers often inherit performance or behaviour issues from the previous manager and yet are not given relevant training for tackling these issues from the onset. Giving managers basic employment law training and the company procedures to read is not the 'practical' training they need and is certainly insufficient on its own. All managers need a thorough grounding in the use of the performance management tools and practice in their use. Job specs, probationary periods, reviews, counselling sessions, appraisals and the disciplinary procedures are all useful performance and behaviour tools when used correctly and at the right time. Yet this vital training is not made on someone's appointment, often it is made later in their careers when much damage has been done.

Courage and Confidence - Doing something risky, difficult and complicated requires both courage and confidence. Unfortunately many branch managers lack both. Even if managers are given the knowledge and skill to tackle performance or behaviour issues, they will not do so without these essential qualities.

The problems and challenges are undoubtedly great and many may see the issue as un-resolvable however there is someone available to branch managers who can help them overcome many of the problems and challenges and that someone is their boss the Area Manager.

Guidance, Coaching and Support
The area manger is the only person who can guide, coach and support branch managers in the addressing of performance or behaviour issues. They can un-complicate the issues and help managers build a strong case for presenting to an employee. The area manager can also help the manager minimise the risk of harassment or bullying claims by ensuring the correct procedures are being used and that the managers say the right things in the correct way.

More importantly a good area manager will 'encourage' and give the manager much needed confidence. The area manager is the only one who can do this but unfortunately in many instances this is not happening and by not doing so area managers are unconsciously (or consciously) influencing a reluctance to tackle performance or behaviour issues within their branches.

Why is this happening?

Asking for support and guidance - Many branch managers are certainly reluctant to approach their area manager when they experience performance or behaviour issues within the team. If the matter falls into the gross misconduct category then managers will contact the area manager (and HR function) in the first instance. But for 'grey area' performance or behaviour matters they tend to keep the issues to themselves.
The reasons for this are as follows:

Many branch managers feel:

* The area manager may see it as a trivial matter and not important enough to bring to their attention.

* That seeking advice and guidance will be seen in a negative way by the area manager.

* The area manager will go into fault finding mode rather than helping find solutions.

* The area manager may start questioning the branch manager's ability to do the job.

Many managers have in the past gone to their area mangers for advice and support on team performance issues but received such a negative, unhelpful reply that many were put off from ever doing so again, even when they changed to a different area manager.

There is also a feeling that area managers themselves do not know what to do either. "Bring me solutions not problems" is a common comment heard by branch managers when they have taken a 'people' issue to their area manager.

Offering support and guidance

It is a fact that very few area managers actively encourage branch managers to talk about their 'people' issues or are prepared to probe below the surface to identify possible performance or behaviour problems that may be affecting the business. There are many examples where area managers have placed managers in 'problem' branches without preparing them for the issues they will face or helped or supported them once they have taken up the position. Basically they throw them to the wolves and then leave them to get on with it.

Another common issue is when the assistant manager of the branch is turned down for the manager position. Very few area managers are competent in explaining why an individual was not appointed and give excuses rather than valid reasons. This results in the new manager having to experience considerable hostility and resentment from not only their deputy but from many of the team also.

Why do many area managers not offer support or guidance or dig below the surface looking for performance issues? There are a number of reasons for this.

Unconscious Competence

There is a saying that "Good Management will result in good people staying and not-so-good people either improving or leaving. Where as Bad Management will result in good people leaving and not-so-good people staying and possibly getting even worse".

During their time as branch managers, many area managers did not experience risky, difficult or complicated people issues. If they did, they often resolved them unconsciously. They just acted as good managers should, which resulted in the issues being resolved quickly. Ask any manager who is competent in performance or behaviour management "how do you do it or what do you do?" and you will probably receive a shrug of the shoulders and a comment like "I don't know specifically, I just do it" (Unconscious Competence)

Unconscious competence is not acceptable at area management level as a key requirement of the job is to coach and train branch managers in performance management. Area managers can only fulfil this critical function if they know exactly what is to be done and how to do it. (Conscious competence)

Conscious Incompetence

Unfortunately there are area managers in existence who 'know' they are not personally competent in dealing with performance and behaviour issues and will go to great lengths not to expose this weakness to others. (Conscious incompetence) These area managers tend to encourage branch managers to not make waves, maintaining the status quo and to tolerate rather than develop. They certainly do not dig below the surface in a branch seeking 'people' issues that may be affecting the business.

One of the most disappointing comments I heard from a seasoned area manager when asked why he was not supporting his managers was "I am not allowed to get involved as I am the next step of the appeal process".

A good measure of an area manager's competence is to look at the performance and behaviour of the area manager's branch manager team. It is pretty certain that if they cannot coach and encourage branch mangers in the tackling of performance and behaviour issues then you can be sure they themselves are not tackling branch manager performance or behaviour issues.

Possible Solutions

If a retail organisation needs to tackle performance or behaviour issues at branch levels, I believe they need to develop the skills and competence of performance management at area management level first as area managers alone have the authority and are the biggest influence on branch manager effectiveness.

Unconscious competent area managers need to become consciously competent so they can not only develop others but also develop themselves further. Conscious incompetent area managers need to admit that they are not effective in performance or behaviour management and be prepared to learn and develop the necessary skills. If they are not prepared to do so then they themselves need to be performance managed by the company. After all, Executives cannot demand that branch managers tackle performance and behaviour issues one moment and then not do so themselves when they need to. That isn't leading by example

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The Importance of Project Closeout and Review in Project Management.

The well known English phrase "last but not least" could not better describe how important the project closeout phase is. Being the very last part of the project life-cycle it is often ignored even by large organizations, especially when they operate in multi-project environments. They tend to jump from one project to another and rush into finishing each project because time is pressing and resources are costly. Then projects keep failing and organizations take no corrective actions, simply because they do not have the time to think about what went wrong and what should be fixed next time. Lessons learned can be discussed at project reviews as part of the closeout phase. Closure also deals with the final details of the project and provides a normal ending for all procedures, including the delivery of the final product. This paper identifies the reasons that closeout is neglected, analyzes the best practices that could enhance its position within the business environment and suggest additional steps for a complete project closeout through continuous improvement.

Project managers often know when to finish a projects but they forget how to do it. They are so eager to complete a project that they hardly miss the completion indicators. "Ideally, the project ends when the project goal has been achieved and is ready to hand over to customer" (Wellace et. al, 2004, p156). In times of big booms and bubbles, senior management could order the immediate termination of costly projects. A characteristic example of that is Bangkok's over investment in construction of sky-scrapers, where most of them left abandoned without finishing the last floors due to enormous costs (Tvede, 2001, p267). Projects heavily attached to time can be terminated before normal finishing point if they miss a critical deadline, such as an invitation to tender. Kerzner (2001, p594) adds some behavioural reasons for early termination such as "poor morale, human relations or labour productivity". The violent nature of early termination is also known as 'killing a project' because it "involves serious career and economic consequences" (Futrel, Shafer D & Shafer L, 2002, 1078). Killing a project can be a difficult decision since emotional issues create pride within an organization and a fear of being viewed as quitters blurs managerial decisions (Heerkens, 2002, p229).

Recognition

The most direct reason that Project Closeout phase is neglected is lack of resources, time and budget. Even though most of project-based organizations have a review process formally planned, most of the times "given the pressure of work, project team member found themselves being assigned to new projects as soon as a current project is completed" (Newell, 2004). Moreover, the senior management often considers the cost of project closeout unnecessary. Sowards (2005) implies this added cost as an effort "in planning, holding and documenting effective post project reviews". He draws a parallel between reviews and investments because both require a start-up expenditure but they can also pay dividends in the future.

Human nature avoids accountability for serious defects. Therefore, members of project teams and especially the project manager who has the overall responsibility, will unsurprisingly avoid such a critique of their work if they can. As Kerzner (2001, p110) observe, "documenting successes is easy. Documenting mistakes is more troublesome because people do not want their names attached to mistakes for fear of retribution". Thomset (2002, p260) compares project reviews with the 'witch hunts' saying that they can be "one of the most political and cynical of all organizational practices where the victims (the project manager and the team) are blamed by senior management". While he identifies top management as the main responsible party for a failure, Murray (2001) suggest that the project manager "must accept ultimate responsibility, regardless of the factors involved". A fair-minded stance on these different viewpoints would evoke that the purpose of the project review is not to find a scapegoat but to learn from the mistakes. After all, "the only true project failures are those from which nothing is learned" (Kerzner, 2004, p303).

Analysis

When the project is finished, the closeout phase must be implemented as planned. "A general rule is that project closing should take no more than 2% of the total effort required for the project" (Crawford, 2002, p163). The project management literature has many different sets of actions for the last phase of the project life cycle. Maylor (2005, p345) groups the necessary activities into a six step procedure, which can differ depending on the size and the scope of the project:

1. Completion

First of all, the project manager must ensure the project is 100% complete. Young (2003, p256) noticed that in the closeout phase "it is quite common to find a number of outstanding minor tasks from early key stages still unfinished. They are not critical and have not impeded progress, yet they must be completed". Furthermore, some projects need continuing service and support even after they are finished, such as IT projects. While it is helpful when this demand is part of the original statement of requirements, it is often part of the contract closeout. Rosenau and Githens (2005, p300) suggest that "the contractor should view continuing service and support as an opportunity and not merely as an obligation" since they can both learn from each other by exchanging ideas.

2. Documentation
Mooz et. al (2003, p160) defines documentation as "any text or pictorial information that describe project deliverables". The importance of documentation is emphasized by Pinkerton (2003, p329) who notes that "it is imperative that everything learned during the project, from conception through initial operations, should be captured and become an asset". A detailed documentation will allow future changes to be made without extraordinary effort since all the aspects of the project are written down. Documentation is the key for well-organized change of the project owner, i.e. for a new investor that takes over the project after it is finished. Lecky-Thompson (2005, p26) makes a distinction between the documentation requirements of the internal and the external clients since the external party usually needs the documents for audit purposes only. Despite the uninteresting nature of documenting historical data, the person responsible for this task must engage actively with his assignment.

3. Project Systems Closure
All project systems must close down at the closeout phase. This includes the financial systems, i.e. all payments must be completed to external suppliers or providers and all work orders must terminate (Department of Veterans Affairs, 2004, p13). "In closing project files, the project manager should bring records up to date and make sure all original documents are in the project files and at one location" (Arora, 1995). Maylor (2005, 347) suggest that "a formal notice of closure should be issued to inform other staff and support systems that there are no further activities to be carried out or charges to be made". As a result, unnecessary charges can be avoided by unauthorized expenditure and clients will understand that they can not receive additional services at no cost.

4. Project Reviews
The project review comes usually comes after all the project systems are closed. It is a bridge that connects two projects that come one after another. Project reviews transfer not only tangible knowledge such as numerical data of cost and time but also the tacit knowledge which is hard to document. 'Know-how' and more important 'know-why' are passed on to future projects in order to eliminate the need for project managers to 'invent the wheel' from scratch every time they start a new project. The reuse of existing tools and experience can be expanded to different project teams of the same organization in order to enhance project results (Bucero, 2005). Reviews have a holistic nature which investigate the impact of the project on the environment as a whole. Audits can also be helpful but they are focused on the internal of the organization. Planning the reviews should include the appropriate time and place for the workshops and most important the people that will be invited. Choosing the right people for the review will enhance the value of the meeting and help the learning process while having an objective critique not only by the team members but also from a neutral external auditor. The outcome of this review should be a final report which will be presented to the senior management and the project sponsor. Whitten (2003) also notices that "often just preparing a review presentation forces a project team to think through and solve many of the problems publicly exposing the state of their work".

5. Disband the project team

Before reallocating the staff amongst other resources, closeout phase provides an excellent opportunity to assess the effort, the commitment and the results of each team member individually. Extra-ordinary performance should be complemented in public and symbolic rewards could be granted for innovation and creativity (Gannon, 1994). This process can be vital for team satisfaction and can improve commitment for future projects (Reed, 2001). Reviewing a project can be in the form of a reflective process, as illustrated in the next figure, where project managers "record and critically reflect upon their own work with the aim of improving their management skills and performance" (Loo, 2002). It can also be applied in problematic project teams in order to identify the roots of possible conflicts and bring them into an open discussion.

Ignoring the established point of view of disbanding the project team as soon as possible to avoid unnecessary overheads, Meredith and Mandel (2003, p660) imply that it's best to wait as much as you can for two main reasons. First it helps to minimize the frustration that might generate a team member's reassignment with unfavourable prospects. Second it keeps the interest and the professionalism of the team members high as it is common ground that during the closing stages, some slacking is likely to appear.

6. Stakeholder satisfaction

PMI's PMBoK (2004, p102) defines that "actions and activities are necessary to confirm that the project has met all the sponsor, customer and other stakeholders' requirements". Such actions can be a final presentation of the project review which includes all the important information that should be published to the stakeholders. This information can include a timeline showing the progress of the project from the beginning until the end, the milestones that were met or missed, the problems encountered and a brief financial presentation. A well prepared presentation which is focused on the strong aspects of the projects can cover some flaws from the stakeholders and make a failure look like an unexpected success.

Next Steps

Even when the client accepts the delivery of the final product or service with a formal sign-off (Dvir, 2005), the closeout phase should not be seen as an effort to get rid of a project. Instead, the key issue in this phase is "finding follow-up business development potential from the project deliverable" (Barkley & Saylor, 2001, p214). Thus, the project can produce valuable customer partnerships that will expand the business opportunities of the organization. Being the last phase, the project closeout plays a crucial role in sponsor satisfaction since it is a common ground that the last impression is the one that eventually stays in people's mind.

Continuous improvement is a notion that we often hear the last decade and review workshops should be involved in it. The idea behind this theory is that companies have to find new ways to sustain their competitive advantage in order to be amongst the market leaders. To do so, they must have a well-structured approach to organizational learning which in project-based corporations is materialized in the project review. Garratt (1987 in Kempster, 2005) highlighted the significance of organizational learning saying that "it is not a luxury, it is how organizations discover their future". Linking organizational learning with Kerzner's (2001, p111) five factors for continuous improvement we can a define a structured approach for understanding projects.

This approach can be implemented in the closeout phase, with systematic reviews for each of the above factors. Doing so, project closure could receive the attention it deserves and be a truly powerful method for continuous improvement within an organization. Finally, project closeout phase should be linked with PMI's Organizational Project Management Maturity (OPM3) model where the lessons learned from one project are extremely valuable to other projects of the same program in order to achieve the highest project management maturity height.

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