The Stakeholder’s Dilemma
Jim Harris in Data Quality tagged Best of 2011, Collaboration, Data Governance, Master Data Management Tuesday, July 12, 2011 at 3:00AM Game theory models a strategic situation as a game in which an individual player’s success depends on the choices made by the other players involved in the game. One excellent example is the game known as The Prisoner’s Dilemma, which is deliberately designed to demonstrate why two people might not cooperate—even if it is in both of their best interests to do so.
Here is the classic scenario. Two criminal suspects are arrested, but the police have insufficient evidence for a conviction. So they separate the prisoners and offer each the same deal. If one testifies for the prosecution against the other (i.e., defects) and the other remains silent (i.e., cooperates), the defector goes free and the silent accomplice receives the full one-year sentence. If both remain silent, both prisoners are sentenced to only one month in jail for a minor charge. If each betrays the other, each receives a three-month sentence. Each prisoner must choose to betray the other or to remain silent.
If you have ever regularly watched a police procedural television series, such as Law & Order, then you have seen many dramatizations of the prisoner’s dilemma, including several sample outcomes of when the prisoners make different choices.
The Iterated Prisoner’s Dilemma
In iterated versions of the prisoner’s dilemma, players remember the previous actions of their opponent and change their strategy accordingly. In many fields of study, these variations are considered fundamental to understanding cooperation and trust.
Here is an economics scenario with two players and a banker. Each player holds a set of two cards, one printed with the word Cooperate (as in, with each other), the other printed with the word Defect. Each player puts one card face-down in front of the banker. By laying them face down, the possibility of a player knowing the other player’s selection in advance is eliminated. At the end of each turn, the banker turns over both cards and gives out the payments, which can vary, but one example is as follows.
If both players cooperate, they are each awarded $5. If both players defect, they are each penalized $1. But if one player defects while the other player cooperates, the defector is awarded $10, while the cooperator neither wins nor loses any money.
Therefore, the safest play is to always cooperate, since you would never lose any money—and if your opponent always cooperates, then you can both win on every turn. However, although defecting creates the possibility of losing a small amount of money, it also creates the possibility of winning twice as much money.
It is the iterated nature of this version of the prisoner’s dilemma that makes it so interesting for those studying human behavior.
For example, if you were playing against me, and I defected on the first two turns while you cooperated, I would have won $20 while you would have won nothing. So what would you do on the third turn? Let’s say that you choose to defect.
But if I defected yet again, although we would both lose $1, overall I would still be +$19 while you would be -$1. And what if I continued defecting? This would actually be an understandable strategy for me—if I was only playing for money, since you would have to defect 19 more times in a row before I broke even, but by which time you would have also lost $20. And if instead, you start cooperating again in order to stop your losses, I could win a lot of money—at the expense of losing your trust.
Although the iterated prisoner’s dilemma is designed so that, over the long-term, cooperating players generally do better than non-cooperating players, in the short-term, the best result for an individual player is to defect while their opponent cooperates.
The Stakeholder’s Dilemma
Organizations embarking on an enterprise-wide initiative, such as data quality, master data management, and data governance, play a version of the iterated prisoner’s dilemma, which I refer to as The Stakeholder’s Dilemma.
These initiatives often bring together key stakeholders from all around the organization, representing each business unit or business function, and perhaps stakeholders representing data and technology as well. These stakeholders usually form a committee or council, which is responsible for certain top-down aspects of the initiative, such as funding and strategic planning.
Of course, it is unrealistic to expect every stakeholder to cooperate equally at all times. The realities of the fiscal calendar effect, conflicting interests, and changing business priorities, will mean that during any particular turn in the game (i.e., the current phase of the initiative), the amount of resources (money, time, people) allocated to the effort by a particular stakeholder will vary.
There will be times when sacrifices for the long-term greater good of the initiative will require that cooperating stakeholders either contribute more resources during the current phase, or receive fewer benefits from its deliverables, than defecting stakeholders.
As with the iterated prisoner’s dilemma, the challenge is what happens during the next turn (i.e., the next phase of the initiative).
If the same stakeholders repeatedly defect, then will the other stakeholders continue to cooperate? Or will the spirit of trust, cooperation, and collaboration necessary for the continuing success of the ongoing initiative be irreparably damaged?
There are many, and often complex, reasons for why enterprise-wide initiatives fail, but failing to play the stakeholder’s dilemma well is one very common reason—and it is also a reason why many future enterprise-wide initiatives will fail to garner support.
How well does your organization play The Stakeholder’s Dilemma?
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Reader Comments (5)
This is one great posting that makes me think about our situation and how to solve it.
I must admit that we are not playing well.
Thanks and regards,
Rayk
From the LinkedIn Group for TDWI, Amit Agarwal commented:
“Jim, great article. Nash equilibrium is quite commonly followed in economic circles as a way for companies not colluding, although how widely it is practical may be a question (e.g., OPEC).
How would you associate IT Dilemma, two thoughts come to mind:
(1) IT is being bombarded by multiple stakeholder groups for getting their requests NOW, prioritizing becomes a political issue, besides data quality - fitness for use, because business users don't see what they want now.
(2) Closely related issue to (1) data quality as conflicting answers within business groups to the same data point.”
And I responded:
Thanks for your great comment, Amit.
Especially for bringing up the Nash equilibrium solution, which would be a great way to balance my proposed stakeholder’s dilemma. Of course, the harsh reality is that not all stakeholders would be interested in maintaining the Nash equilibrium, or at least not at all times during the initiative.
The IT Dilemma you raised is another excellent example of game theory playing out on a daily basis in most organizations. Let me think about that game scenario, and perhaps I will write a follow-up blog post about it.
Best Regards,
Jim
Great post, Jim - makes my head hurt, in a good way...
I submit that most people either do not appreciate the Stakeholder's Dilemma or do not play it well. I further submit that the people that do not play it well base all of their decisions on their own welfare and not on the greater good.
I think this is why the Star Trek universe is so appealing to people, and also is in such contrast to our own - because we have lost the idea (if we ever had it): “The needs of the many outweigh the needs of the few, or the one.”
Cynical, yes, but informed by experience...
- SP
Thanks for your excellent (and Star Trek inspired) comment, Steve.
I agree with your viewpoint, especially since it accurately describes my own experiences as well.
Although we would both we called Cynics in the negative, modern use of the term, I have always found it interesting that the ancient Greek philosophy of Cynicism actually rejected the notions of greed, money, and power, which undermine the trust, cooperation, and collaboration necessary for the continuing success of enterprise-wide initiatives.
Therefore, we are also Cynics in the positive, ancient use of the term, which is a philosophy that could help organizations and their enterprise-wide initiatives (you had to know that this was coming): “Live Long and Prosper.”
Best Regards,
Jim
From the LinkedIn Group for the Data Governance Professionals Organization, Gwen Thomas commented:
“Recently got to listen in to a "cooperate or not" discussion. (Not my clients.) What struck me was that the people advocating cooperation were big-picture people (from architecture and process) while those who just wanted what they wanted were more concerned about their own short-term gains than about system health. No surprise, right? But what was interesting was that they were clearly looking after their own careers, and not their silos' interests. I think we who help focus and frame Stakeholder Dilemma situations need to be better prepared to address the individual people involved, and not just the organizational roles they represent.”
And I responded:
Thanks for your great comment, Gwen.
Navigating the path to successful data governance has many perils, but I refer to this challenge as Silos and Solos, which are the Scylla and Charybdis of Data Governance (Note to self: that would make a great blog post title).
Best Regards,
Jim
And Gwen Thomas responded:
“How about Systems, Silos, and Solos?
Solos are looking out for themselves.
Silos are looking out for their groups' needs.
Systems are looking out for the needs of the greater system.”
And Scott Delaney commented:
“Nice piece Jim. I actually wonder if there isn't another slight twist to this one, a different sort of defecting stakeholder if you will. These folks are those who fail to buy into the initiative in the first place and are only at the table because they have been told to be there as a proxy for a busy executive or senior management, or those for whom the whole thing has become stale (maybe as a by product of a calendar effect). They've almost opted out of the co-operation angle in advance, but yet can't always be "relied" on to defect. These are what I think of as the "swinging voters" of the stakeholder bodies, the people who can be lobbied to vote the desired way not just by convincing them of the merits of the proposal at hand but also by negotiating their support by offering something else unrelated to the initiative in return - perhaps of an example of Gwen's career self interest point at play. They are unpredictable and can make navigating funding bodies and the like an interesting experience for anyone who is unaware of the side note politics in play.
But I guess that just highlights something that many of us will have unconsciously known for quite some time - our roles are politics first, business second and technology a distant third!”