The Fifth Risk and what it means for Australia

By Darryl Carlton

Monday November 19, 2018

What is happening in the US public service right now makes an interesting laboratory study from which we could draw lessons for the Thodey Review.

In his latest book, The Fifth Risk, Michael Lewis paints a dystopian picture of a US public service being subjected to a White House administration devoid of competence but full of ambition and over-confidence. Could this happen in Australia?

Our political system is substantially different. The political masters do not routinely make public service appointments to reward those that donated to their campaigns, and by and large the senior management of the Australian public sector is drawn from the professional ranks of the service.

The example being played out in Washington DC right now could be seen as an interesting laboratory study from which we could draw some lessons as the Thodey Review progresses its recommendations on public sector reform.

Project management: the most subtle risk

The fifth risk, the title of the book, is drawn from a conversation the author had with an outgoing executive of the previous Obama administration. Lewis asked John MacWilliams, the chief risk officer of the US Department of Energy, what were the top five things he worried about most: “a nuclear weapons-related accident; a potential conflict with North Korea; stoked tensions with Iran; an attack on the US electrical grid; and finally, the fifth and most subtle risk — project management”.[1]

It’s the fifth risk, project management, where the Australian public sector can take heed. It is in this area that the Thodey Review has already identified “the changing nature of leadership and functional expertise required in the APS.”[2]

“Where an executive lacks training or experience in information technology, they are placing the project at serious risk of failure.”

Setting aside political discussions of the Trump administration, ignoring (for a moment at least) the Twitter wars which characterise Trump’s personal style, what is evidenced by Lewis’ new book is the extraordinary levels of incompetence and disinterest demonstrated by incoming executives and department heads.

Competence in the workplace has been studied extensively by leading academics and researchers around the world. We know that competence and experience produces superior results.

Dr Amanda Goodall[3] has undertaken longitudinal studies on the performance of professional basketball teams, hospitals, universities and many other organisations. This research has determined that “organisations on average perform better when they are led by individuals with core business talent”.

My own research into the failures of large-scale IT projects in the public sector identified that where an executive lacks training or experience in information technology, they are placing the project at serious risk of failure.

This research considered the work of Justin Kruger and David Dunning (Dunning-Kruger effect 1999) and how that translated into IT project performance. What I observed was that where an executive is placed in charge of an IT project, but lacks experience that was gained from an actual working knowledge of IT, they are compromised in several critical ways.

Inappropriate advice on critical matters

“Critical to the success of public sector projects is competent leadership with knowledge, skills and experience of IT projects.”

First of all, these executives who are usually highly skilled and knowledgeable in their own fields, do not have the cognitive framework to understand the advice that is being given to them.

Other research[4] has shown that executives that lack basic competence in IT tend to take advice and guidance from the wrong sources, and frequently rely upon inappropriate advice on critical matters.

What explains this inability to follow good advice comes from Kruger and Dunning, who have observed that the skill needed to identify competence in others is the same skill needed to do the job. Without some basic understanding of the task at hand, the executive that is accountable for its execution, will be seriously compromised

On a grand scale, this scenario is playing out in the corridors of Washington. But it is just as important in Australia to recognise that the policies and programs that we have elected our politicians to deliver require projects to make them happen.

Increasingly, these projects rely upon digital transformation for which the track-record of success is very poor. The Standish Group CHAOS reports have reported some improvement over the decades, with significant gains for small projects (less than $1 million) utilising agile techniques. But very large and very complex projects still have success rates in the single digits.

Critical to the success of public sector projects is competent leadership with knowledge, skills and experience of IT projects.

[1] https://www.news.com.au/world/north-america/how-the-american-government-is-being-compromised-by-its-own-leaders/news-story/403fd3e24aecad6668c4d778a2a78a0c

[2] https://www.apsreview.gov.au/news/early-reflections-david-thodey

[3] http://www.amandagoodall.com

[4] Engelbrecht J, Johnston KA, Hooper V., 2017 “The influence of business managers’ IT competence on IT project success”, International Journal of Project Management 35: p994-1005.

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