Governance from the perspective of Systems Theory

A brief overview of Systems Theory

Systems theory is the study of systems in general, with the goal of elucidating principles that can be applied to all types of systems at all nesting levels. The basic concept is that any organised group constitutes a system, which is composed of regularly interacting or interrelating groups of activities or people performing activities. (For more on systems thinking see: WP1044, Systems Thinking)

Any single system consists of sub-systems and is itself part of a higher level system. The system being discussed or examined cannot function without its constituent sub-systems and its behaviours and outputs influence the higher level systems. These concepts are closely aligned with the ideas in Complexity Theory (see: A Simple View of ‘Complexity’ in Project Management)

Organisational Governance from a Systems Theory perspective

Organisational governance or to be more precise but explicit the governance of the organisation (ie, the governance of the corporation), is the explicit and exclusive responsibility of the Board of Directors in commercial organisation and their equivalent in other types of organisation (the Board). Organisational governance does not come in different types; it is a single system, the responsibility of a single entity, the Board. But this system relies on sub-systems to be effective. A framework focused on project management is suggested below, there are of course many other sub-systems:

Taking each system in turn:

• The Governance System is responsible for setting strategy and ensuring resources are used effectively (for more on this see: WP1033 – Corporate Governance). To achieve this, it is heavily reliant on the organisation’s management system and additionally, the Board may have some involvement in the management processes (eg, approving very large projects).
   
• The Management System manages the entire organisation within, and supporting the governance framework. Executive management are responsible for creating an organisation capable of achieving the objectives defined by the governance system and also capable of providing assurances to the governance system that resources of all types are being effectively and ethically used. Middle and front line managers are responsible for implementing the work.
   
• The Project Delivery System is a sub-set of the overall management system, this specialised area of management is responsible for all aspects of the ‘management of project management’ as described in our White Paper: Project Delivery Capability.
   
• And naturally, a core component of the Project Delivery System are the individual Project Management Systems (and Program Management Systems), each system responsible for creating the ‘deliverables’ the project or program was initiated to ‘deliver’, for the organisation’s management to make effective use of, and generate value.
   
• Specialist sub-systems such as a Project Control Board (PCB) operate within this overall structure to fulfil specific purposes.

Our previous post, Management -v- Governance  described the functions of the three key levels of management, The Board, Executive Management and Middle / Front Line Management (or General Management); whilst these three levels of ‘management’ have quite distinctly different roles and responsibilities, in a well governed and well managed organisation each ‘system’ is integral to and supports the objectives of the higher system.

However, in dysfunctional organisations, the different responsibilities become merged or blurred to the detriment of all. Possibly one of the key reasons middle managers working in IT and Project Management feel they are involved in ‘governance’ is the simple fact that the Board responsible for the governance of the organisation has failed in its responsibility to provide effective governance to the IT and Project Management functions, and the middle management level is trying to fill the void? More on this in my next post!

Persilience: A key to success!

Persilience is something that is essential to success of any endeavour you undertake, whether it is achieving project success, business success or virtually anything else.

Definition:

Persilience: an amalgam of resilience and persistence that recognises the importance of both characteristics.
- Resilience is the ability to recover readily from adversity;
- Persistence is about perseverance, resolve and determination.

The two elements are not always combined in equal measure; sometimes you just need to get on with it (this is persistence) but at other times you need the strength of flexibility.

Resilient people bend before excessively strong forces, absorb the energy and then recover, if necessary reframe or modify their approach and move on, their personal integrity intact.

The origins of persilience

The idea of persilience came from a meeting earlier this year with colleagues in Paris where we were discussing the topic of successful implementation of programs in organisations. It was -10 degrees in Paris at that time. Despite (or because of) the extreme cold we met for dinner at a restaurant in the heart of Paris.

We were discussing the central theme – ‘what makes projects work?’ What is the key to success? A Brazilian colleague told me a story about a PM guru of the 80s who said was that you only needed one characteristic to be a successful PM – you had to be ‘tough!’

By ‘tough’ the guru meant being able to maintain faith and support in the project in the face of adversity and carry it through despite all setbacks. The meaning of the word ‘tough’ has changed over the years so we had a discussion about what word would best fit the characteristic – we didn’t disagree with the characteristic but needed a better word to describe it in today’s terms.

We decided that what was needed was a mixture of resilience and persistence in building and maintaining the relationships that mattered for PM success. And thus with the help of some fine wine the new blended word persilience was born.

Used wisely, the concept of persilience recognises Abraham Ribicoff’s concept of ‘the integrity of compromise’ where this is necessary and in the best interests of everyone whilst also allowing for stubborn persistence when ethical standards or other core values are being challenged.

Ethical persilience won’t resolve every problem but it can offer a benchmark characteristic for us all to aspire to achieving.

Making a TV Show

This weekend we went to see the taping of the last ever episode of ‘Good New Week’ (GNW) – a comedy program we’ve enjoyed for years. Unfortunately all did not go according to plan (a topic we have discussed in other posts).

There were two sessions of 2 hours each with an hour’s break; we were booked to attend the second session starting at 5:00pm. Technical problems in the first session meant the second session did not start until after 6:00pm and generated a host of problems with some good learnings……

First, once the problem became apparent, the queue for the 5:00 show were told of the delay and the time to come back – good communication and good decision making (we went for a drink).

Second, the star host of the show, Paul McDermott apologised and explained the cause of the problem before starting the second session – admitting a problem and apologising is a great starting point; see: http://mosaicprojects.wordpress.com/2011/10/01/mistakes/

Then the show had to be taped out of sequence because several of the panellists also had their own shows to give as part of the overall Melbourne International Comedy festival. A lot of the re-organising was done on the fly but again as far as possible the audience were kept informed.

With all of the disruptions, our 7:00 dinner was delayed to 9.00pm (but we kept in communication with our stakeholder’s in the restaurant).

Thinking back on the experience one lesson learned is to extend a quotation often attributed to Otto von Bismarck (the first Chancellor of Germany) to the making of TV shows:

“If you like laws and sausages, you should never watch either one being made*”. This definitely applies to taped TV shows and highlights the skill and luck needed for ‘live-to-air’ shows.

*Note: This quote probably was not by Bismark, there is a quote: “Je weniger die Leute darüber wissen, wie Würste und Gesetze gemacht werden, desto besser schlafen sie nachts”. (The less the people know about how sausages and laws are made, the better they sleep in the night) attributed to him but not referenced, an earlier version “Laws, like sausages, cease to inspire respect in proportion as we know how they are made” was said by American poet John Godfrey Saxe (1816-1877).

Managing risk

One of the most overlooked processes for effectively managing the day-to-day uncertainty that is the reality for every single project, everywhere, all of the time, is an effective performance surveillance process. This involves more than simply reporting progress on a weekly or monthly basis.

An effective surveillance system includes regular in-depth reviews by an independent team focused on supporting and helping the project team identify and resolve emerging problems. Our latest White Paper, Proactive Project Surveillance defines this valuable concept that is central to providing effective assurance to the organisation’s key stakeholders in management, the executive and the governance bodies that the project’s likely outcomes are optimised to the needs of the organisation.

Stakeholder Risk Tolerance

Managing the inherent risk associated with undertaking any project, anywhere, in any industry is a critical organisational capability. Within the organisations overall Project Delivery Capability (PDC) the maturity of its risk management approaches is central to the organisation’s ability to generate value (see more on PDC Maturity).

Only very immature or deluded organisations seek or expect to run ‘risk free’ projects. To quote Suzanne Finnamore: “Delusion detests focus and romance provides the veil.” Any sensible analysis of any business activity will indicate levels of risk; effective organisations understand and manage those risks better then ineffective organisation.

The skills that a mature organisation brings to the art of ‘risk management’ is to focus effort on managing risks that can be managed, providing adequate contingencies for those risks that cannot be controlled and deciding how much residual risk is sensible. The balance that has to be struck is between the cost and time needed to reduce the risk exposure further (the pay-back diminishes rapidly), the impact of the risk if it occurs and the profit to be made or value created as a result of the total expenditure on a project.

The sums are superficially simple; adding another $100,000 to the cost of a project to reduce its risk exposure by $10,000 reduces the value of the project by $90,000. In competitive bids, increase your bid price too much and the value drops to $Zero because the organisation fails to win the work! However, the situation is more complex; the nature of the risk may require the expenditure regardless of the potential saving (particularly in areas of safety and quality) and whilst expenditures are reasonably quantifiable, the actual cost of a risk event and the probability of it occurring are variable and cannot be precisely defined for a unique project. Our paper The Meaning of Risk in an Uncertain World discusses these issues in more depth.

To develop a mature approach to risk management, each layer of management has a role to play:

• The organisation’s governing body (typically a Board of Directors) is responsible for developing an appropriate risk taking policy and defining the organisations ‘risk appetite’.
   
• The Executive are responsible for creating the culture and framework that approached the management of risk within the parameters set by the Board in a capable and effective way.
   
• Senior management are responsible for implementing the risk management system.

The mark of a mature organisation is the recognition at all levels of management that having implemented these systems, the organisation still has to expect failure! Every single project has an associated risk and properly managed, these risks are at an acceptable level for the organisation. But if there is a probability for success, there has to be a corresponding probability of failure!

Assuming the organisation is very conservative and requires budgets to be set with appropriate contingencies to offer a 90% certainty of being achieved, and this setting is applied to all projects consistently, the direct consequence is an expectation that 1 in 10 projects will overrun cost. Certainly 9 out of 10 projects will equal or underrun cost but there is always the remaining 10%. Mature organisations expect the profits and un-spent contingencies on the ‘9 underruns’ to more then offset the ‘1 overrun’. However, these ‘expected failures’ tend to be totally ignored by immature executives who want to pretend there is ‘no risk’ and then blame the PM for the failure.

There are two aspects of dealing with the ‘expected failures’ implicit in any realistic risk assessment. The first is setting the boundaries of accepted risk at an appropriate level of the organisation. Aggressive ‘risk seeking’ organisations will set a lower threshold for acceptability and experience more failures that conservative organisations. But the conservative organisations will achieve far less.

Source: Full Monte Risk Analysis

Looking at the cost aspect of risk for the project above, the most likely cost for this project is $17,500 but this is optimistic with a less then 50% chance of being achieved. The range of sensible options are to set the budget at:

• The Mean (50% probability of being achieved) is $17,770.
   
• Add one standard deviation to the Mean increases the probability of achieving the project to 84%, but the budget is now $18,520.
   
• Add two standard deviations to the Mean and the probability of achieving the budget increases to 97% but the budget is now up to $19,270.

From this point, the pay-back diminishes rapidly, to move from 97% to 99.99% (six sigma), an additional $3,000 would be required in contingencies making a total contingency of $4,770 to effectively guaranteed there will be no cost overruns. Because of this very high cost for a very limited change in the probability of achieving the objective most projects focus on either the 80% or the 90% probabilities.

However, even within these relatively sensible ranges, making a sensible allowance for risk has consequences. Assuming all projects have a similar cost distribution and the organisations total budget for all projects is $10 million the consequences are:

• To achieve a 50%/50% probability of projects achieving budget, approximately 1.6% of the budget will need to be allocated to contingencies: $160,000
   
• To achieve an 84% probability of projects meeting the allocated budget, approximately 5.8% of the budget will need to be allocated to contingencies: $580,000
   
• To achieve a 97% probability of projects meeting the allocated budget, approximately 10.1% of the budget will need to be allocated to contingencies: $1,010,000

Whilst the mathematics used above are highly simplified, the consequences of risk decisions are demonstrated sufficiently for the purpose of this post (for more on probability see: WP1037 - Probability). To be 97% sure there will be no cost overruns, more than 10% of the available budget to undertake projects will be tied up in contingencies that may or may not be needed, the consequence is less than 90% of the possible project work will be undertaken by the organisation in a year. The projects ‘not done’ are opportunities foregone to be ‘safe’.

In a competitive bidding market, adding 10% to your estimate to be 90% sure there will be no cost overruns is likely to have a more dramatic effect and price the organisation out of the market resulting in no work. In either situation a careful balance has to be struck between accepted risk and work accomplished, this is a governance decision that needs input from the executive and a decision by the Board.

The governance challenge is getting the balance ‘right’:

• The higher the safety margin the more likely most projects will underrun and the greater the probability some of the contingent reserves will not be used and therefore opportunities to use the funds elsewhere are foregone.
   
• However, reducing the reserves increases the probability that more projects will overrun (ie, ‘fail’) and this increases the probability that in aggregate the whole project budget will be exceeded.

The challenge for the rest of management is making sure the data being used is as reliable as possible.

The second key feature of mature organisations is the existence of efficient scanning systems to see problems emerging backed up with effective support systems to proactively help the project team achieve the best outcome. The key words here are ‘proactive’ and ‘help’. The future is not set in concrete and timely interventions to help overcome emerging problems can pay dividends. This requires a culture of openness and supportiveness within the organisation so that the root cause of the emerging issue can be quickly defined and appropriate support provided, promptly and effectively. This approach is the antithesis of the approach adopted by immature organisations where the ‘blame game’ is played out and the project team ‘blamed’ for every project failure.

In summary, the organisation’s directors and executive managers need to determine the appropriate risk tolerance levels for their organisation and then set up systems that have the capability of keeping most projects within these accepted boundaries. Understanding and managing risk is a key element of PDC. But having done all of this, mature risk organisations know there are still ‘Black Swans’ lurking in the environment and remain vigilant and responsive to unexpected and unforeseen events.

Management -v- Governance

Some areas of business seem to be confusing the concepts of organisational governance and effective management to the detriment of both processes. One of the important aspects of ‘good governance’ is to create the environment that allows ‘good management’ to be practiced and to require systems that ensure ‘good management’ is practiced at all levels of the organisation’s management, but governance and management are quite different processes undertaken by different groups of people.

As a basic starting point, Governance is the exclusive responsibility of the Board of Directors, or their equivalent, not management – the governing body (typically Directors) directs and governs; managers manage at various levels.

The three primary levels of involvement are:

• Governance. The governing Board sets the organisation’s objectives, agrees the strategy to achieve the objectives, define policies and rules for the organisation, requires effective management systems, and also requires processes to be in place to ensure these are implemented by management and to provide effective oversight to the governing body. This is the exclusive non-transferable responsibility of the Board.
   
• Executive management. The executive’s role is creating the organisation capable of achieving these requirements and providing input and advice to assist the governing body’s decision making processes. Developing an effective culture of openness and accountability is a core executive responsibility.
   
• General management. Senior and operational management’s roles are to develop and maintain the systems and processes needed to make the organisation effective within the parameters set by the executive. This includes supporting middle and lower management so they can effectively manage the work needed to implement the strategy set by the Board.

For some reason, these different roles are being confused in some business domains, including IT and project management to the detriment of the organisation and the respective disciplines. When a group of managers start referring to ‘normal good management’ practices as ‘governance’, they simply create excuses for bad management practice.

A good example is a project steering committee failing to support a project manager by refusing to make a difficult decision.  This lack of support can be defined in two different ways:

• By claiming the committee is a governance body responsible for ‘governing’ the project, usually interpreted as making sure the project does not do ‘wrong things’, the imperative for a timely decision is removed or hidden, the requirement is no wrong doing which translates into not making a wrong decision. If the project fails as a consequence of the lack of decision, it is called a ‘project failure’ not a governance failure.
   
• Change the description of the same steering committee to the management entity responsible for the overall creation of value within the organisation based on the work of the project they are overseeing, the situation changes. As the management group responsible for implementing and managing the overall Project Delivery Capability (PDC) needed by the organisation to achieve a positive ROI on its investment in the project, the same failure to make a decision can be seen to have a direct impact on the ROI the managers in the steering committee are personally responsible for achieving. This is a management failure and the managers in the steering committee are directly accountable for the delays caused to the project.

Similar issues to the project management obfuscation described above also attach to calling pragmatic and effective management of IT processes ‘governance’ – data security, backups and recovery capabilities, other IT functions and managing the projects needed to enhance IT are not IT governance issues, they are IT management responsibilities.

My personal view is that if the project and IT management practices described above are determined to be a ‘governance’ function, almost everything in management is ‘governance’, fortunately:

• No one claims the processes used to make sure the accounts department pay the right people the right amount of money at the right time is a ‘governance’ process – it is seen to be a prudent accounting requirement.
   
• Similarly no one claims the processes used by the stock department to fill orders with the right goods, and ship them to the right customers is ‘governance’; it is simply a customer service process.

IT and project management should be no different!

The art of good governance is for the Directors to ask the right questions of the executive and have sufficient skills to understand the answers. I do not know of a good resource to help in this respect for IT, however, a really useful (and free) guide to help Board’s ask the right questions of their executive about PDC has been published by the Association for Project Management in the UK, it can be downloaded from: http://www.mosaicprojects.com.au/PDF/APM%20GoPM%20booklet.pdf

Once the Board starts asking the ‘right questions’ and sets a strategic framework my feeling is any executive manager worthy of his/her role will start taking appropriate actions and adapting their organisation. If they don’t the Board probably needs to start asking other questions about the suitability of the executive. However, changing the organisation to achieve effective PDC is a major change program in itself and will need time to be effective……

One short term solution that can be used to kick-start the cultural and organisational changes needed to move to an effective PDC is already in the hands of the governing body and executive. If the organisation cannot find a committed senior manager prepared to take personal responsibility for delivering the value promised by a project do not start the work!  We know the lack of effective sponsorship is closely aligned to project failure, so it will be far cheaper and preserve shareholder value if projects without effective sponsors are not started. Conversely, if senior managers are responsible for the delivery of value from the projects they are sponsoring, the key people needed to create effective change in an organisation are already involved and have a vested interest in succeeding.

The important thing to remember is the realisation of value from effective benefits management is very much the end of a process.  The overall capability to realise value from an investment in a project starts with selecting the right project to do for the right strategic reasons, then doing the work of the project effectively and efficiently before the organisation can implement the changes and generate value. The project manager is only responsible for the bit in the middle – the ‘doing the project right’, a steering committee, sponsor or other management entity is responsible for the beginning and end parts of the overall process as well as supporting the project team. Therefore PDC has to be seen as a general management responsibility.

The management concepts and framework needed to develop an effective PDC within an organisation have been discussed in earlier posts:

• The concept of ‘project failure’ -v- ‘management failure’ is discussed in our post ‘Project or Management Failures?’.
• Similarly, PDC and the organisational aspects of change have been discussed in length in a series of earlier posts, see:
  • Organisational Change Management
  • and PDC Value Proposition
• An overview of the management framework needed to achieve effective PDC is in our White Paper: PDC Taxonomy – this White Paper is a conceptual framework not a methodology and is evolving, but should still be helpful in separating ‘governance’ from ‘management’.

These ideas are not new, work by the Boston Group in the 1990s reported in our latest blog, the PDC Value Proposition shows the significant increase in ROI when an effective project delivery capability level is achieved by an organisation.

The governance requirement is to ensure management accepts this responsibility and excel in creating value for the organisation.

PDC Value Proposition

The only reason for undertaking a project or program is to create value through the realisation of benefits. Some projects generate significant intangible benefits such as reduced risk, enhanced prestige or in the case of regulatory requirements, the simple ability to keep trading; others are focused on generating a positive financial return, most generate a combination of financial and intangible returns.

A key element in Project Delivery Capability (PDC) is understanding the value proposition the project or program has been created to generate. Regardless of the way the ‘return’ is measured, no project should destroy value, unfortunately as discussed in Disappearing into the Zone far too many do!

The value proposition for developing an effective PDC (itself a business change program) is compelling. World-wide research undertaken by Jed Simms at the Boston Consulting Group in the 1990s defined five levels of PDC, and found that the return on investment (ROI) from projects increased substantially at each level*. These findings have been developed into a project delivery capability model by TOP – Totally Optimized Projects Pty Ltd. 

• Level 1 capability is represented by executive complacency, project teams doing their own thing, no benefits management, and on average projects typically show a small negative ROI but results are wildly variable with some successes (which are always highlighted).
   
• Level 2 capability sees the imposition of process focused on measuring activity rather than outcomes. The business imposes forms, requirements and check lists; ‘methodology police’ enforce a one-size-fits-all policy. The process of developing ‘approvable’ businesses cases and standardised project reporting creates more uniform outcomes but there’s little understanding of risk -v- reward and virtually no follow through to implementation and benefits realisation. As a consequence there is typically a neutral ROI – the value created eventually covers the costs despite the glowing promises in the business case.
   
• Level 3 capability sees the organisation gaining sufficient experience and confidence to allow measured flexibility into its processes for managing projects. The basic disciplines are retained, but the way they are implemented is adjusted to suit the needs of the project. The executive view moves from imposing ‘controls’ towards an outcome focus using elements of portfolio management. However, project success still tends to be measured in terms of time, cost and scope at the end of the project rather than the benefits gained by the organisation; an output focus rather than an outcome focus. Organisations at this level generate a reasonable ROI measured at the project level but largely miss the potential for substantially enhanced business outcomes.
   
• Level 4 capability introduces a paradigm shift in executive thinking. Rather than focusing on project outputs, the work of the project is seen as a key enabler of valuable business outcomes. This requires an integrated flow from the identification of a need or opportunity within the business, through to implementing the changes required to deliver of the expected business outcomes to meet the need or exploit the opportunity. Ownership of this value chain is vested in the business, the role of projects and project management is to support this overall effort by delivering the outputs best suited to achieving the business objective. The model defined in PDC = Project Delivery Capability represents the PDC framework needed to support this level. Simms’ research suggests there is an increase in ROI to 2 to 3 times that achieved at Level 3 once the focus of organisation’s executives shift to achieving business related outcomes, measuring the benefits actually realised and the value achieved.
   
• Level 5 capability expands on Level 4 with the whole PDC system focused on efficiently supporting the strategic objectives of the business. Effective strategic alignment linked to pragmatic risk management and simple but effective processes generates another significant increase in ROI!

Based on observation rather then measurement, it seems the majority of organisations in both the public and private sectors are currently operating at Level 2, typically with the PMO fulfilling the role of ‘methodology policeman’, a few more mature organisations, mainly private sector, are achieving Level 3 maturity whilst others remain at Level 1.

Very few have taken the step to Level 4 where the executive hold their business managers accountable for achieving the outcomes defined in the business case and invest in the PDC capability required to properly support their business managers.

Doing projects ‘right’ is a Level 2 phenomena, doing the ‘right projects, right’ is Level 3; the optimum is Levels 4 and 5 where the right projects are done for the right strategic reasons. PDC was forecast by Simms as the next competitive battleground in 2005 – I would suggest it is the competitive battleground in 2012!

* Source, Project Delivery Capability – the next competitive battleground, Jed Simms, TOP – Totally Optimized Projects Pty Ltd.

PDC = Project Delivery Capability

My last couple of posts have identified a gap in the overall management of projects and programs that is present in most organisations. This ‘Zone’ covers a range of organisational capabilities from the innovation and assessment of ideas that may develop into projects through to achieving the value the project was created to enable; see: Disappearing into the Zone.

Effective project or program management cannot save a project that has been set up to fail by the organisation. Doing the wrong project ‘right’ or doing the right project as ‘right as possible’ with inadequate funding, resources, skills and management support may reduce the extent of the disaster but cannot prevent failure; see: Cobb’s Paradox is alive and well.

The solution to this perennial problem, first identified by Cobb in 1995, is for the organisation’s leadership to demand that their executive create an effective project delivery capability (PDC). This name is suggested to place focus on the delivery of value to the organisation as a result of doing the ‘right’ projects ‘right’. Managing the selected projects effectively is just one step in this overall value chain.

PDC includes all of the aspects of project delivery discussed in our White paper PPP Taxonomy and outlined above, with a focus on realising value for the organisation.

Implementing an effective and rigorous PDC structure will require a major change effort in many organisations and will challenge existing cultures, particularly the tendency to focus on ‘project failure’ rather than ‘organisational failure’ when the organisation fails to adequately manage the management of its projects. The extent of this challenge is outlined in our White Paper Organisational Change Management.

The three layers of PDC are defined above:

• Governance – the organisations directors / leaders have to set the right strategy, ask the right questions and require the right answers from their executive.
• Executive management (Purple) are responsible for creating the capability and culture of accountability needed to deliver projects successfully and realise the intended benefits. A key element in this is developing a rigorous portfolio management capability to select the best projects to fulfil the organisation’s strategy, based on consideration of each project’s feasibility and viability, within the organisational constraints of capability and capacity.
• Organisational support processes (Orange) including opportunity identification and assessment, plus developing and enhancing the organisation’s project delivery capability including: organisational enablers, support systems, oversight systems, change management systems and value realisation.

Program management can fulfil some of these support functions where several projects are being managed in an integrated way to maximise benefits. However, where programs are used by the organisation, the organisation’s overarching support processes need to be capable of supporting and overseeing the work of the programs as well as other independent projects.

PDC reframes the project delivery/success paradigm. Change is needed, the approaches currently used in many organisations are generating project failure rates in excess of 50% and to keep doing the same thing, expecting different outcomes is, to quote Einstein, ‘the definition of insanity’!

Focusing on developing an effective PDC will enable organisations to improve the way they manage the ‘doing of their projects’ and as a consequence increase the success rate resulting in increased value for their stakeholders. The ROI from improving an organisation’s PDC should be significant!

Organisational Change Management

We have just posted a new White Paper that looks at Organisational Change Management. We have focused on ‘organisational’ for two reasons:

Firstly, any significant change is a change to the organisation – projects and programs cause the change but the organisation has to adapt to the change.

Secondly, the only valid purpose for a change is to create value and the only way to generate value is through sustained improvements (changes) in the way the organisation operates.

This new White Paper, WP1078: Organisational Change Management, consolidates and augments a range of posts over the last couple of years. The full set of original blog posts can be viewed at: http://mosaicprojects.wordpress.com/category/governance/change-management

Disappearing into the Zone

A number of years ago I identified the ‘Zone of Uncertainty’ between the strategic objectives of an organisation, as defined by its Directors and senior executives and the operational levels occupied by projects and programs. The ‘Zone’ can be metaphorically described as a highly complex and dynamic organism requiring agility and understanding to cope with the demands of its chaotic nature (for more on ‘The Zone’ see: The Paradox of Project Control in a Matrix Organisation).

More recently we have been focusing on two quite different aspects of project management, one has been looking at the business process architecture that supports an organisations ability to manage its projects and programs, the other is series of high profile project failures that can largely be attributed to failures in the organisation’s ability to initiate and effectively manage its projects and programs.

Mosaic’s White Paper, PPP Taxonomy describes the architecture and has links to more detailed White Papers focused on the key components.

However, the degree of general agreement and understanding is far from uniform across all of the elements. The three elements with very little appreciation and implementation, to the point where that are not even generally accepted terms for the work involved are:

• At the executive level, the processes to frame an effective culture and oversight the capabilities needed to efficiently manage projects and programs.
• The organisational capability to identify, qualify, quantify and propose future projects and programs that combines innovation with strategic objectives and a rigorous assessment process focused on feasibility, viability and value creation.
• The organisations capability to effectively support and manage all of the projects and programs in its current portfolio of work, including skills development, sponsorship, making effective use of information generated by EPM (Enterprise Project Management) systems, motivation and discipline.
   
  

Connecting the ‘dots’ suggests the root cause of many of the headline failures I’ve commented on in the last year or so can be traced back to failures in the ‘Zone of Uncertainty’ highlighted in red. Some examples of the causes of project failures caused by weaknesses in ‘the Zone’ include:

• If the project is selected for the wrong reason, no amount of skill in the delivery processes controlled by project/program managers will fix the problem.
• If the organisations systems don’t develop the right people, with the right skills, supported by the optimum processes; the challenge faced by project/program managers is far greater then if they are working in a supportive environment. Really skilled people may succeed in bringing in their project, many will fail.
• If the organisation cannot understand and deal with the uncertainty associated with projects and programs and seeks to avoid all risks and uncertainties the probability of failure is magnified because the opportunity to properly resolve the uncertainties is removed.
• If the organisation’s management continually changes the scope and objectives of the project because it lacks discipline or simply did not take the time to understand its requirements the project will fail. It is impossible to fulfil requirements if the stakeholder’s don’t know what they require!

The language of ‘failure’ talks about project and program failures, but if the hypothesis suggested in this post holds true, many of the projects overrunning cost or time, or failing to deliver requirements are a symptom of other more fundamental ‘failures’ in ‘The Zone’. If this is true, the question is how can an organisation develop a mature and effective management structure to increase the success rate of its projects and programs from our current starting point? We don’t even have a generally agreed name for the project/program support capabilities that are failing….

Any comments or thoughts will be appreciated.