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Article Reprint No. B1201D

Managing Projects in
Turbulent Times
By Ed Barrows and Andy Neely
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j a n u a r y – f e b r u a r y 2012 : vol 14 no 1

Managing Projects in management practices, we’ve found


that organizations can significantly tip

Turbulent Times the odds in their favor. We’ll talk about


each of these after we review the factors
By Ed Barrows and Andy Neely for project success.

Strategic initiatives are major drivers of organizational progress Seven Factors for Project Success
and are designed to transform enterprise processes or knowledge To set the foundation for improved
project management, it’s important
assets. Unfortunately, many initiatives suffer from poor project
to understand what contributes to a
management—they are launched without clear business cases,
project’s success. According to research-
paid too little attention from senior leaders, and managed without ers Richard Discenza of the University of
strong project governance. The costs of these and other mistakes Colorado and James Forman of Microsoft
are significant. In this article—an excerpt from their new book in a paper presented at the proceedings
Managing Performance in Turbulent Times: Insight and Analytics— of the Project Management Institute,
seven factors need to be present for
performance management experts Ed Barrows and Andy Neely
project success.2 They are as follows:
describe four practices organizations can implement right away to
1. Focus on business value, not
improve their project management and, in so doing, improve their
technical detail.
overall strategy execution.
2. Establish clear accountability for
Utter the words “project management” State of the Practice—In Need of measured results.
to senior managers and thoughts of an Overhaul
3. Have a consistent process for manag-
detailed project plans, excruciating Every year, organizations spend tens
ing unambiguous checkpoints.
milestone reviews, and painful budget of billions of dollars on initiatives—
overruns are brought to mind. Although high-level projects intended to trans- 4. Have a consistent methodology for
project management is essential to or- form their enterprises. Some are classic planning and executing projects.
ganizational effectiveness, many execu- operational improvement initiatives,
5. Include customers at the beginning of
tives shudder at the thought of digging such as Lean Six Sigma applied in manu-
the project and involve them as things
into the particulars of how they manage facturing. Others are truly transforma-
change.
vital projects. Top managers feel that tional, like redesigning the new-product
project management—and certainly development process. Regardless of the 6. Manage and motivate people so that
the details thereof—are better left to particular type, many of these initiatives project efforts will experience a zone
the rank and file far from the influences are victims of poor project management. of optimal performance.
of the boardroom. But it is this attitude These projects are poorly designed, mis-
7. Provide the project team members
aligned from important organizational
that prevents many organizations from the tools and techniques they need
objectives, and badly managed by senior
becoming the effective project execu- to produce constantly successful
executives—to name just a few of the
tors they need to be. In today’s environ- projects.
challenges that major initiatives suffer
ment, where conditions are changing
from in organizations. In fact, in a study Source: Richard Discenza and James
rapidly and in some cases unpredict-
of more than 10,000 projects within 200 Forman, “Seven Causes of Project
ably, managers need to be attuned to
companies and across 30 industries, Failure: How to Recognize Them and
their organizations’ major projects so
consultants for PricewaterhouseCoo- How to Initiate Project Recovery.”
projects can not only be completed but
pers (PwC) found that only 2.5% were
also dynamically managed to deliver Discenza and Forman note that the
completed on time, within scope, and
the results needed across the entire seven factors can be grouped into three
with the intended business benefit.
business. In this article, we discuss broad categories: people, process, and
Further, PwC found that 60% of orga-
how organizations can improve project communication. We will keep these
nizations said they wanted to improve
management activities and in so doing categories in mind as we present the
their project management maturity.1
yield improved business results. best practices we see in project manage-
Clearly, this isn’t great news. But with
ment used today.
as few as four basic changes to project

1 A. Nieto-Rodriguez, D. Evrard, “Boosting Business Performance Through Programme and Project Management,” PricewaterhouseCoopers. Belgium, 2004.

2R
 . Discenza, J. Forman, “Seven Causes of Project Failure: How to Recognize Them and How to Initiate Project Recovery,” PMI Global Conference Proceedings,
Project Management Institute, New York.
1. Show Me the Business Case
It is not uncommon for organizations to
launch projects without a clear busi-
ness case. When we say business case,
we mean more than just the rationale
that explains why the project is being
started. Almost every project launched
in an organization has some rationale—
to improve the order fulfillment process,
to build employee business acumen, or
to improve internal communications
are examples. But what projects often
lack are particulars like a clear purpose,
the direct linkage to critical objectives,
the explicit documentation of intended
benefits, and a host of other information
types essential to the project’s ultimate
success.

Business cases are not developed


because, in a word, they are difficult.
For many managers, it seems easier to
FIGURE 1: SAMPLE BUSINESS CASE FORMAT
launch a project and worry about the
It is always helpful to create a business case for every strategic initiative or
benefits later than take the time up project. Identify the relevant strategic objective and financial benefits that the
front to construct the business case. effort will produce. Milestones help determine whether the project is on track or
And, although projects consume large whether it needs to be modified to achieve its intended impact.
amounts of time and energy, developing
a business case to justify the project over the project period along with a projects, is a possible explanation for
does not. We have never run across an high-level project plan. Risks can be dis- why project failure rates in organiza-
organization that has complained it is cussed along with assumptions and key tions are so high.
spending too much time on business constraints in the project description.
One way organizations improve project
cases. Recall the survey cited earlier that Depending on the needs of the organiza-
effectiveness, especially in the case of
found only 2.5% of the projects sampled tion, other fields can be added as well.
strategic projects, is by aligning projects
delivered the full benefits intended. Business cases are not new. But many to strategic performance objectives.
Business cases are the best tools avail- organizations lack the discipline to This involves collecting projects and
able to tip the scale in favor of project use them effectively. We find they are matching or mapping them to high-level
success. essential to structuring for success in objectives. In their book, The Execution
A good business case contains a set of the world of fast-paced performance Premium, Balanced Scorecard creators
critical information. An example of a management. Robert Kaplan and David Norton present
one-page business case format is shown what they call an initiative alignment
2. Use Project Alignment Tools matrix. An example is shown in Figure 2.
in Figure 1.
Because it is commonplace for managers
As shown in the graphic, a business to launch projects without the use What this simple matrix enables orga-
case contains a section that provides of business cases or other project struc- nizations to do is see where alignment
the project’s basic information. It also turing tools, the result is a proliferation exists between major projects and criti-
contains strategic information about the of projects throughout organizations. cal objectives. Where there is overage,
project as well as basic financial infor- From the PwC study cited earlier, 42% of an opportunity exists to rationalize
mation such as cost, revenue increase, the 200 respondents ran more than 50 projects. When gaps are present, this
and NPV. The business impact should be projects per year and 26% ran a may indicate a need to add projects.
identified as well in both qualitative and whopping 100 per year or more. Only Although the tool won’t make the deci-
quantitative terms. If several different 10% of organizations in the sample sion, what it does do is force managers
options are under consideration, each managed fewer than five. This “peanut to consider where projects align to their
should be summarized and evaluated buttering,” or the spreading of finite key objectives. Other tools similar to this
at a high level. Actual costs in terms of resources across a large number of matrix exist, but this is one of the more
time and money should be described useful ones available.

2 B ala n ced S corecard R eport


current initiatives

Customer complaint tracking pro


Quality proc for root cause elim

SV commercialization/facilities
Res sec and W&L and hurricane

Rewards development/implem
IT enhancement in value chain

Scarp rework process improv


Yield improvement program
Quality needs identification
Emerging markets strategy

ISO 90002 NA resin mfg. cer


Asia reformation facilities
Partner with the winners

Sidelam VP/partnerships

Global communications
Training strategic skills
Procurement redesign

SCOP implementation

Develop/cascade BSC

IT strategy alignment
Communicate vision

Facilities upgrade

Expert systems
Reformulation

Abm
perspective objectives
Economic value added
No initiatives
financial Be the lowest cost producer for the Financial
Some perspective
Pick winners globally
initiatives serving
Create new market demand no objectives
customer Price performance
Partnering
Integrate and align resources
Sales and customer development
internal
Focused technology development
9 initiatives
Perfect manufacturing serving 1
objective
People and change management
Strategic competencies
learning & growth
Individual and team performance
No initiatives
Customer-sensitive culture for this
objective
Source: Robert S. Kaplan and David P. Norton, The Execution Premium: Linking Strategy to Operations for Competitive Advantage.

FIGURE 2: INITIATIVE ALIGNMENT MATRIX


Strategic initiatives should be rationalized by examining how they align with the full set of strategic objectives. In this
example there are initiatives that don’t align with any strategic objectives and there are objectives that are not supported by
any strategic initiatives. Financial objectives typically do not have initiatives assigned to them.

3. Form Executive Project Teams product, or deepening the bench behind items, typically. Senior executive moni-
In a 2006 survey of almost 800 ex- the top team can represent the most toring and management of these vital
ecutives, consultants McKinsey and important projects in the enterprise. projects are important components of
Company found that only 56% of Projects of this magnitude and impor- overall project management success.
respondents track execution of their tance must be managed by top leaders;
otherwise, it sends the message to
4. Create Project Portfolios
strategic initiatives. This is unfortu-
employees that they aren’t very The final observation we have found
nate, given that the primary drivers
important. Where senior leaders are not effective in practice is the organization
of progress in an organization are the
involved, midlevel managers and rank- of projects into discrete portfolios
vital projects we’re discussing here.
and-file employees will quickly lose of projects with specific purposes.
One of the best ways to improve project
interest, dooming the most important Although this technique itself is not
execution is through the development
projects of the organization to substan- new, its effective use is.
of project teams staffed with key execu-
tives. Executives at the top especially dard execution—if they end up being In June 2002, Lowell Bryan, director
need to maintain responsibility for the executed at all. of McKinsey and Company, wrote an
critical work of the organization, and We have found that creating high-level article titled “Just-in-time Strategy for
that critical work is many times in the project teams for each major project a Turbulent World.” In the article, Bryan
form of projects. is a key driver of success. Usually the points out that in the past, manag-
team is championed by an executive ers could analytically determine a
The vital projects we’re referring to
who maintains cognizance and overall company’s strategy and then chart a
are most often projects tied to the
accountability for the project. But other course of action to get there. But in the
organization’s strategy. Projects like
senior leaders can be accountable on turbulent world of today, he asserts
entering a new market, accelerating
the project as well—for specific action that this approach is untenable. There
development of a second-generation
are too many variables, and the world

ja n uar y – februar y 2 0 1 2 : volume 1 4 n umber 1 3


is far too complex to accommodate a This quote provides a valuable summary
static strategy. point in the area of project manage-
ment: The odds are against most
“Strategy today has to align
organizations when it comes to
itself to the fluid nature of this
effective project execution; the data
external environment. It must be
we’ve presented bears this out. That
flexible enough to change con-
said, managers need to take deliberate
stantly and to adapt to outside
action to tip the scales in their favor. The
and internal conditions even as
four practices presented in this article
the aspiration to deliver favor-
provide a major step toward gaining
able outcomes for shareholders
the improved project focus that many
remains constant.” 3
organizations desperately need.
Bryan highlights what he calls a port-
folio of initiatives approach—putting
Ed Barrows is an authority
projects into groups where they can and consultant on business
be managed dynamically depending performance. He holds
adjunct teaching posts at
on the time frame the organization is
Boston College, teaching
operating in as well as the level of risk Strategic Management and
it is facing. International Consulting,
and at Babson College, where
At the simplest level, projects can he teaches Operations and
be separated into two categories— Strategic Management as well
as executive education. Previ-
those that are strategic and those that
ously he held advisory posi-
are operational. Further, they can be tions at Deloitte, GE Capital,
subdivided into categories such as and The Palladium Group.

high and low risk or rapid or long-term


Andy Neely is an authority on
payback. In reality, portfolios of projects organizational performance
can be created using a host of different measurement and manage-
ment. He is Deputy Director
criteria. The most important consid-
of the Advanced Instituted of
eration isn’t the specific factors used, Management Research, the
but that projects are grouped using UK’s management research
logical criteria that facilitate better initiative. He also holds teach-
ing posts at the University
management. In cases where projects of Cambridge and Cranfield
don’t align with the results desired by School of Management, where
leaders, priorities should be changed, he teaches both full-time and
executive-education courses.
and the portfolio of projects should be
managed accordingly.
To learn more
A Final Note on Project Manage- Ed Barrows and Andy Neely have just
published a new book, Managing Performance
ment: The Odds Are Against You in Turbulent Times: Insight and Analytics
Despair.com is the purveyor of de- (published by Wiley), from which this article
was excerpted.
motivating posters (offering an antidote
to platitudinous success posters Also, see:

found in many organizations). One of “Rebalance Your Initiative Portfolio to


its posters is titled “Overconfidence.” Manage Risk and Maximize Performance,” BSR
September–October 2008 (Reprint B0809D).
The poster shows two skiers ahead
“Leading in an Uncertain World: Make Better
of what appears to be an avalanche
Decisions (and Make Decisions Better),” BSR
rushing toward them from behind. The May–June 2009 (Reprint B0905C).
caption reads: “Maximize Your ‘Return on Initiatives’ with
the Initiative Portfolio Review Process,” BSR
Before you attempt to beat the May–June 2008 (Reprint B0805C).
odds, be sure you can survive the
odds beating you. Reprint #B1201D

3 L. Bryan, “Just-in-Time Strategy for a Turbulent World,” McKinsey Quarterly (2002).

4 B ala n ced S corecard R eport

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