Mexican Dams and the Art of Portfolio Selection

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7-8 dam
Why creative thinking is essential in choosing the right projects.

I was recently reminded of an interesting story that I read a few years back in a book by Russell Ackoff (former Anheuser-Busch Professor Emeritus of Management Science at the Wharton School of Business) titled “The Art of Problem Solving: accompanied by Ackoff’s Fables”. It’s always stuck out in my mind as a strong example of how skipping out on creative thinking can lead an organization astray.

Ackoff describes a government agency in Mexico that had planned to build a dam to enhance the irrigation of a wide area of farmland. The agency had expected the dam to double the productivity of the land in question but only cost a fraction of that gain, thus deeming the project a very good investment.

To ensure that the productivity estimates were correct, the agency sent representatives to interview the farmers. The representatives explained the value of the dam and asked the farmers if they believed it to be a good idea. The answer was a unanimous ‘Yes’.

After much time and effort, the dam and the irrigation system were built. The agency now patiently waited to witness great results, yet no change in productivity was registered. The output from the land had not budged. Again, experts were sent out – this time to figure out what had gone wrong. Their findings were nothing they had anticipated. Yes, the farmers loved the dam; they were using the irrigation system exactly as expected. But the amount of work needed to cultivate all of the land no longer justified the marginal increase in income they could get by doing so. So, instead they only farmed part of it. The improved irrigation allowed them to reduce the amount of land needed to cultivate for their livelihood. In the extra time gained, they went out to make more money by working in nearby towns, or just did nothing and relaxed.

What had been missing in the planning and decision-making process from the get-go was creative thinking.

Creative thinking helps us consider not only the expected results of our projects, but also how stakeholders think and how behaviors and priorities might potentially change once project outputs are delivered to the client. It pushes us past the conventional examination of circumstances, which cannot be easily predicted, and allows us to ultimately assess projects more accurately and to ensure their support of organizational strategy goals.

So don’t forget to put your creative caps on the next time you’re planning your portfolio.