Papa Elf, the man behind the man, on stakeholder management

December 20, 2013

The-PenguinDoes Santa use the SRMM® maturity model to enhance his organisations stakeholder management practices?

This interview published in the ‘the penguin’ would suggest Papa Elf, the man behind the man, is at least acquainted with the Stakeholder® Circle  methodology and his grotto organisation has achieved a high level of ‘Stakeholder Relationship Maturity’ – we will know for sure in a few days time……

To read the full interview with Papa Elf see: http://projectpenguindotorg.wordpress.com/2013/12/19/papa-elf-on-stakeholder-management/


Communicating Success

October 22, 2013

As reported by PMI’s 2013 Pulse of the Profession™, an organisation’s ability to meet project timelines, budgets and especially goals significantly impacts its ability to survive. The Pulse study also demonstrated that the most crucial success factor in project management is effective stakeholder communication. PMI’s findings show that high performing organisations are more effective communicators and that organisations assessed as highly-effective communicators are five times more likely to be high performers than minimally-effective communicators. To read more download the report: The High Cost of Low Performance – The Essential Role of Communication.

There are probably several reasons for this strong correlation between effective communication and project success. From the broader stakeholder management perspective, projects and programs are only really successful once their outputs have been adopted by the stakeholders within the end user community and are being used to generate value. This means changing the way the stakeholders and the organisation work, which requires change!  Creating the desire for change within the affected stakeholder community requires highly effective communication and interestingly, if the communication is believed, the way people react and feel changes in response to the messages.

Research in Australia, New Zealand and the USA has consistently demonstrated physical changes in people based on what they have been told. Scientific studies ‘down under’ have shown people who are told wind turbines cause health problems experience health problems. The symptoms of ‘wind farm syndrome’ are only found in English speaking communities that have been exposed to anti-wind farm propaganda.  For more on this see: Wind farm:  https://theconversation.com/how-the-power-of-suggestion-generates-wind-farm-symptoms-12833 and https://theconversation.com/new-study-wind-turbine-syndrome-is-spread-by-scaremongers-12834.

Positive effects can also be communicated, in a 2007 study, Harvard researchers told one group of female hotel attendants that their usual duties met the surgeon-general’s recommendations for an exercise regimen. Four weeks later, the researchers found improvements in blood pressure, body mass index, and other health indices among the informed group, relative to a control group of attendants that had not been so informed.

These effects appear to be real, Hilke Plassmann, Assistant Professor of Marketing at INSEAD reports that a study she co-conducted in 2008 measuring neural responses to drinking wine showed different responses to ‘cheap’ and ‘expensive’ wines. But, the researchers deliberately misled participants about the prices of the wines, claiming one cost US$45 when it actually cost US$5 and presenting another as costing US$10 when it really retailed for US$90.

Participants were instructed to sample various wines through a straw from inside an MRI machine which allowed their brain activity to be observed while they were consuming the wine. What was found were changes in the neural activity in an area called the medial orbitofrontal cortex, which is an area that encodes our experience of pleasure.

The findings highlighted the speed with which humans form lasting impressions that synthesise all types of data. The bias kicks in at a very early stage, and for the wine tasters, it really changed their taste perception.

From sportswear to cars, expectations of a product or service can actually create a resulting experience. Consumers are constantly told that the latest Nike running shoes or Mercedes-Benz can offer higher performance. Consumers believe it, they make a purchase and they experience it. What this implies in the realm of project stakeholder management is the conversations around your project will have a direct effect on how people experience the change!  Negative gossip and scaremongering will cause bad reactions, positive news creates positive experiences.

The expectations created by communication (or lack thereof) will tend to become self fulfilling prophecies – to make this work for you, you need to communicate to your stakeholders the expectation that the change your project is creating will be beneficial and good for the majority of the stakeholders.  If this message is both true and believed (the two elements are not automatically connected), the experience of the stakeholders is more likely to be positive.

Achieving this level of communication requires a combination of strategic thinking backed up by effective implementation, with a clear thread of responsibility running throughout.  The best strategists believe:

  • If I can’t articulate how we’re actually going to make this project work, it probably won’t work. They know that there are a lot of gaps, holes, and challenges in their strategies. They tirelessly keep a critical eye on the viability of their plans and stay curious — continuously asking themselves and others, how will this really work? When they find issues, they team up with others and fix it.
  • While it’s painful to integrate execution planning into strategising, it’s even more painful to watch the strategies fail. Good strategists understand that effective planning leads to effective execution and outcomes.
  • Sounding smart is overrated. Doing smart is where the real value lies. Ideas are just that — ideas. They know that if they’re not executed well, their strategies are nothing more than daydreams.

The best executors believe:

  • They need to be involved in the strategy process early and contribute practical insights to the overall development of the objectives.

  • They need to know the “whys” behind the strategy. They want to know the intent and the thinking behind the strategy.

Communicating for success means making a significant proportion of your stakeholders into ‘executors’ who believe in the benefits of the project/program and use their beliefs to influence others. Authenticity is crucial but so is passion and communication.


Stakeholder Relationship Management a top 20 best seller

September 26, 2013

Stakeholder Relationship Management

The 2nd Edition of my book, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation is one of Gower’s Top 20 selling e-Books in the period Jan – June 2013.  For the other books in the ‘Gower top 20’ download the PDF.

The take-up of the book and our software, the Stakeholder Circle® by universities over the least few months has been really encouraging.  Now all we need is the commercial world to follow.


Prediction is very difficult!

January 9, 2013

“Prediction is very difficult, especially about the future” (Niels Bohr) but project managers, planners and estimators are continually expected to provide management with an ‘accurate prediction’ and suffer the consequences, occasionally even being fired, when their prediction proves to be incorrect.

Forecasting

What is even stranger, most project predictions are reasonably accurate but classed as ‘wrong’ by the ‘managers’ but the same managers are quite happy to believe a whole range of other ‘high priced’ predictions that are consistently far less accurate (perhaps we should change more for our services…).

There seems to be a clear divide in testable outcomes between predictions based on data and predictions based on ‘expertise’, ‘gut feel’ and instinct.

A few examples of ‘expert’ predictions that have gone wrong:

  • Last January the Age Newspaper (our local) assembled its traditional panel of economic experts to forecast the next 12 months. 18 out of 20 predicted the Australian dollar exchange rate would remain below US$1. The actual exchange rate has been above US$1 for most of the last 6 months -10% correct, 90% wrong!
  • The International Monetary Fund (IMF), the European commission, the Economist Intelligence Unit and the Organization for Economic Cooperation and Development all predicted the European economies would contract by $0.50 for every $1.00 reduction in government expenditure and therefore whilst painful, cutting deficit spending would be beneficial. The actual contraction has now been measured by the IMF at $1.50 contraction per dollar, and the reductions in deficit spending are creating more problems that they are solving, particularly in the Euro Zone.
  • Most ‘experts’ predicted a very close race in the last USA Presidential election; the final result was 332 votes for Obama, 206 for Romney.

The surprising fact is that most ‘expert’ predictions are less accurate than a random selection – they are more wrong than pure chance! In his book ‘Expert Political Judgment: How good is it’ Philip Tetlock from Berkeley University tested 284 famous American ‘political pundits’ using verifiable tests (most of their public predictions were very ‘rubbery’). After 82,000 testable forecasts with 3 potential outcomes, he found the expert’s average was worse then if they had just selected a, b, or c in rotation.

The simple fact is most ‘experts’ vote with the crowd. The reward for ‘staying with the pack’ is you keep your job if you are wrong in good company – whereas if you are wrong on your own you carry all of the blame. There are several reasons for this; experts have reputations to protect (agreeing with your peers helps this), they operate within a collegiate group and know what the group believes is ‘common sense’, they are not harmed by their incorrect forecasts, and we are all subject to a range of bias that make us think we know more then we do (for more on bias see: http://www.mosaicprojects.com.au/WhitePapers/WP1069_Bias.pdf).

There are exceptions to this tendency; some forecasters got the USA election right and weather forecasters are usually accurate to a far greater degree than mythology suggests!!

During the 2012 election campaign, whilst the Romney camp was making headlines with ‘experts’ and supportive TV and radio stations predicting a very close contest, Drew Linzer posted a blog in June 2012 forecasting that the result would be 332/206 and never changed it and the New York Times ‘data geek’ Nate Silver also forecast the result correctly.

What differentiates weather forecasters, Linzer and Silver from the traditional ‘experts’ is the fact their predictions are driven by ‘data’, not expert opinion. Basing predictions on data requires good data and good, tested models. Elections are a regular occurrence and the data modelling of voter intentions has been tested over several cycles, forecasting weather is a daily event. For different reasons both sets of models have been the beneficiaries of massive investment to develop and refine their capabilities, the input data is reliable and measureable and the results testable. I suspect over the next year or two, the political pundit espousing their expert opinion on election results will go the same way as using seaweed or the colour of the sky to predict the weather, they will be seen as cute or archaic skills that are no longer relevant.

But how does this translate to predicting project or program outcomes?

  • First cost and schedule predictions based on reliable data are more likely to be accurate than someone’s ‘gut feel’; even if that someone is the CEO! Organisations that want predictable project success need robust PMOs to accumulate data and help build reliable estimates based on realistic models.
  • Second, whilst recognising the point above, it is also important to recognise projects are by definition unique and therefore the carefully modelled projections are always going to lack the rigorous testing that polling and weather forecasting models undergo. There is still a need for contingencies and range estimates.

Both of these capabilities/requirements are readily available to organisations today, all that’s needed is an investment in developing the capability. The challenge is convincing senior managers that their ‘expert opinion’ is likely to be far less accurate than the project schedule and cost models based on realistic data. However, another innate bias is assuming you know better then others, especially if you are senior to them.

Unfortunately, until senior managers wake up to the fact that organisations have to invest in the development of effective time and cost prediction systems and also accept these systems are better then their ‘expert opinion’ project managers, planners and estimators are going to continue to suffer for not achieving unrealistic expectations. Changing this paradigm will require PPPM practitioners to learn how to ‘advise upwards’ effectively, fortunately I’ve edited a book that can help develop this skill (see: Advising Upwards).


The Stakeholder Mutuality Matrix

December 18, 2012

Whilst the stakeholder community for any project or program can be a very diverse group of people and organisations, there is a key sub-set that either require goods, services or other outputs from the project, or have to supply resources, services or support to the project. These ‘logistical’ relationships need careful management as they directly affect the project’s ability to achieve its defined goals.

Altruism and charitable actions are wonderful, but it is dangerous to base the success of your project on the assumption that all of your ‘logistical’ stakeholders are automatically going to be altruistic and generous. The Stakeholder Mutuality Matrix™ described in this post provides a pragmatic framework to help craft communications and build relationships with the stakeholders that matter from a logistics management perspective, within the project’s overall stakeholder management framework.

Understanding your Stakeholder Community

Project communication takes time and effort, both of which are in limited supply. Therefore, most of your communication effort needs to be focused on stakeholders that are important to the success of your project. This requires answering two key questions about each stakeholder:
1.  Who are the most important stakeholders at this point in time?
2.  Why are they important?

Understanding who is important is fairly straightforward, based on an assessment of the stakeholder’s power and involvement in the project. The Stakeholder Circle® uses a combination of power, proximity and urgency to define the most impotent stakeholders. The amount of power held by a stakeholder and their degree of involvement with the work of the project (proximity) are fairly static. Urgency, defined as a combination of the value of the stakeholders ‘stake’ in the project and the degree of effort they are likely to use to protect that ‘stake’ changes significantly and can be influenced by the effectiveness of the project’s communications and the strength of the relationships between the project team and the stakeholder. (See more on prioritising stakeholders).

Whist this process is highly effective at defining who the most important stakeholders are ‘at this point in time’, from a logistics perspective there is a second important group that also needs attention. Care needs to be taken to ensure that lower priority stakeholders who have to provide the support and resources needed for the project’s work are not overlooked in the communication framework. Effective ‘preventative’ communication can keep this group of logistically important stakeholders happy and low on the priority listing, whereas failing to communicate effectively can lead to problems and the person rapidly moving up the prioritisation listing.

Using the Stakeholder Mutuality Matrix

Once you know who is important either from a logistical or prioritisation perspective, you also need to understand why each of these stakeholders is important to define the type of relationship you need to develop and plan your communication accordingly.

The Stakeholder Mutuality Matrix™ provides a useful framework to help in this part of your communication planning. The matrix has two primary dimensions:

  • Each stakeholder will either need something from the project to further their interests or alternatively need nothing from the project.
  • Similarly the project either needs the active support of the important stakeholders, usually in the form of assistance or resources; or alternatively requires nothing from the stakeholder.

Stakeholder Mutuality Matrix

The result is four quadrants that provide a framework for communication and within this framework each stakeholder will also be either supportive or negative towards the project (for more on supportiveness see the SHC Engagement Matrix).

All high priority stakeholders need to be considered plus any low priority stakeholders that have to supply goods, services or support to the project.

  • Project needs nothing / stakeholder needs nothing: Important stakeholders in this quadrant are almost invariably ‘protestors’ or ‘objectors’ attempting to block or change the project. Occasionally very powerful and interested stakeholders have no requirements of the project.
    • Approach for positive stakeholders: Keep informed and engaged.
    • Approach for negative stakeholders: There are two communication options:
      – You may be able to defuse the ‘protests’ by providing better information, but this only works if the protest is based on false assumptions.
      – The alternative is to choose not to communicate with the stakeholder beyond some necessary minimum.
      The only other alternative is to change the project to remove the cause of objection but this is rarely within the authority of the project team.
  • Project needs nothing / stakeholder needs something: These stakeholders are the easiest to manage from a logistical perspective; providing their requirements are part of the projects deliverables. If their requirements are outside of the project’s scope the stakeholder needs to initiate a change request.
    • Approach for positive stakeholders: All that is needed is regular reassurance that their needs will be fulfilled.
    • Approach for negative stakeholders: Provide information to clearly demonstrate your deliverables to them will be beneficial and are aligned with their core interests. These stakeholders are typically an organisational change management challenge.
  • Project needs something / stakeholder needs something: This group needs active management. Project communication needs to clearly link the provision of the required support or resources by the stakeholder to the project being able to fulfil the stakeholder’s requirements. Time needs to be spent developing robust relationships to facilitate an effective partnership that supports both parties interest.
    • Approach for positive stakeholders: A strong relationship is important to ensure a good understanding of both parties’ requirements. Including clearly defined information on what you need from them and when it’s required, linked to reassurance that their needs will be fulfilled.
    • Approach for negative stakeholders: Significant effort is required to change the dynamic of the relationship. You need their support and they need to understand that this is in their best interest if their needs are going to be fulfilled.
    • Approach for low priority stakeholders: All that is usually needed is clearly defined information on what you need from them and when it’s required, linked to reassurance that their needs will be fulfilled.
  • Project needs something / stakeholder needs nothing: This group are your major risk; it typically consists of regulatory authorities and others who have to inspect or approve the project’s work as part of their normal business. Care is needed to build a proper ‘professional’ relationship that respects the integrity of the stakeholder’s position whilst at the same time ensuring your communications are received and acted upon.
    • Approach for positive stakeholders: A good relationship is helpful; however, the key requirement is clearly defined information on what you need from them, when it’s required and why their input is important to the project.
    • Approach for negative stakeholders: Significant effort is required to change the dynamic of the relationship. They are important to you, but you are not important to them and have very little to ‘trade’. To change their attitude, you need to understand the source of the negativity and use any available option to build rapport either directly or through other supportive managers, or by appealing to some greater good.
    • Approach for low priority stakeholders: Ensure clearly defined information on what you need from them, when it’s required and why their input is important to the project is provided in adequate time to allow the stakeholder to do its work.

Once you understand the mutuality matrix, the way you communicate with each of the important stakeholders can be adjusted to ensure both parties in the communication achieve a satisfactory outcome.


Stakeholders and Risk

December 12, 2012

Probably the biggest single challenge in stakeholder communication is dealing with risk – I have touched on this subject a few times recently because it is so important at all levels of communication.

Projects are by definition uncertain – you are trying to predict a future outcome and as the failure of economic forecasts and doomsday prophets routinely demonstrate (and bookmakers have always known), making predictions is easy; getting the prediction correct is very difficult.

Most future outcomes will become a definite fact; only one horse wins a race, the activity will only take one precise duration to complete. What is uncertain is what we know about the ‘winner’ or the duration in advance of the event. The future once it happens will be a precise set of historical facts, until that point there is always a degree of uncertainty, and this is where the communication challenge starts to get interesting……

The major anomaly is the way people deal with uncertainty. As Douglas Hubbard points out in his book the Failure of Risk Management: “He saw no fundamental irony in his position: Because he believed he did not have enough data to estimate a range, he had to estimate a point”. If someone asks you what a meal costs in your favourite restaurant, do you answer precisely $83.56 or do you say something like “usually between $70 and $100 depending on what you select”? An alternative answer would be ‘around $85’ but this is less useful than the range answer because your friend still needs to understand how much cash to take for the meal and this requires an appreciation of the range of uncertainties.

In social conversations most people are happy to provide useful information with range estimates and uncertainty included to make the conversation helpful to the person needing to plan their actions. In business the tendency is to expect the precisely wrong single value. Your estimate of $83.56 has a 1 in 3000 chance of actually occurring (assuming a uniform distribution of outcomes in a $30 range). The problem of precisely wrong data is discussed in Is what you heard what I meant?.

The next problem is in understanding how much you can reasonably expect to know about the future.

  • Some future outcomes such as the roll of a ‘true dice’ have a defined range ( 1 to 6) but previous rolls have absolutely no influence on subsequent rolls, any number can occur on any roll.
  • Some future outcomes can be understood better if you invest in appropriate research, the uncertainty cannot be removed, but the ‘range’ can be refined.

This ‘know-ability’ interacts with the type of uncertainty. Some future events (risks) simply will or won’t happen (eg, when you drop your china coffee mug onto the floor it will either break or not break – if it’s broken you bin the rubbish, if it’s not broken you wash the mug and in both situations you clean up the mess). Other uncertainties have a range of potential outcomes and the range may be capable of being influenced if you take appropriate measures.

The interaction of these two factors is demonstrated in the chart below, although it is important to recognise there are not absolute values most uncertainties tend towards one option or the other but apart from artificial events such as the roll of a dice, most natural uncertainties occur within the overall continuum.

Stakeholders and Risk - Risk Matrix

Putting the two together, to communicate risk effectively to stakeholders (typically clients or senior managers) your first challenge is to allow uncertainty into the discussion – this may require a significant effort if your manager wants the illusion of certainty so he/she can pretend the future is completely controllable and defined. This type of self-delusion is dangerous and it’s you who will be blamed when the illusion unravels so its worth making the effort to open up the discussion around uncertainty.

Then the second challenge is to recognise the type of uncertainty you are dealing with based on the matrix above and focus your efforts to reduce uncertainty on the factors where you can learn more and can have a beneficial effect on future outcomes. The options for managing the four quadrants above are quite different:

  • Aleatoric Incidents have to be avoided (ie, don’t drop the mug!)
  • Epistemic Incidents need allowances in your planning – you cannot control the weather but you can make appropriate allowances – determining what’s appropriate needs research.
  • Aleatoric Variables are best avoided but the cost of avoidance needs to be balanced against the cost of the event, the range of outcomes and your ability to vary the severity. You can avoid a car accident by not driving; most people accept the risk and buy insurance.
  • Epistemic Variables are usually the best options for understanding and improvement. Tools such as Monte Carlo analysis can help focus your efforts on the items within the overall project where you can get the best returns on your investments in improvement.

Based on this framework your communication with management can be used to help focus your efforts to reduce uncertainty within the project appropriately. You do not need to waste time studying the breakability of mugs when dropped; you need to focus on avoiding the accident in the first place. Conversely, understanding the interaction of variability and criticality on schedule activities to proactively managing those with the highest risk is likely to be valuable.

Now all you have to do is convince your senior stakeholders that this is a good idea; always assuming you have any stakeholders after the 21st December!*

____________________

*The current ‘doomsday’ prophecy is based on the Mayan Calendar ending on 21st December 2012 but there may be other reasons for this:

Stakeholders and Risk Myan Prediction


Governance System Outputs

November 24, 2012

In a number of blog posts and White Papers we have argued that:

  1. Governance and Management are separate systems and have separate functions
  2. Governance is the exclusive responsibility of the ‘governing board’ of the organisation
  3. The three functions within any organisation are:
    • the governance functions that establish the objectives for the organisation;
    • the management functions that direct and organise the work needed to achieve the objectives; and
    • the productive functions performed by workers to create the knowledge or products required to fulfil the objectives.
  4. PPP Governance is an integral part of organisational governance (not something separate)

These systems and functions are discussed in depth in WP1084 – Governance Systems & Management Systems and two linked White Papers on Corporate Governance and PPP Governance.

In my last post I looked at the communication challenges faced by the governing board, this post looks at the unique outputs created by the governance system.

As a starting point for the discussion, if governance and management are different systems, they should have different functions creating different outputs. We believe this is the case.

The functions of management were defined by Henri Fayol (1841 – 1925) in his general theory of business administration as:

  • Forecasting.
  • Planning.
  • Organising.
  • Commanding.
  • Coordinating.
  • Controlling.

Inherent in these functions are decision making and the primary output from management can be defined as information and instructions that have to be communicated to others. The communication is firstly to the workers so they understand what has to be produced, where and when; secondly to the governing body to provide assurance that the right decisions have been made and the right things are being produced in the right ways applying the organisation’s policy framework correctly.

The governance system operates at a higher level and is responsible for governing the organisation to create sustainable success for the organisation’s owners. This is of necessity, a multi-faceted process that requires the careful balancing of different, frequently contradictory, objectives from different stakeholder groups.

The governance function has two key aspects; the first is deciding what the organisation should be and how it should function. These governance decisions are communicated to management for implementation and the primary outputs from this part of the governance system are:

  • The strategic objectives of the organisation framed within its mission, values and ethical framework.
  • The policy framework the organisation is expected to operate within.
  • The appointment of key managers to manage the organisation.

These aspects are best developed using a principle-based approach that recognises and encourages entrepreneurial responses from all levels of management.

The second aspect of the governance system is oversight and assurance. The governing body should pro-actively seek assurance from its management that the strategic objectives and policies are being correctly achieved or implemented. The assurance and oversight functions include:

  • Agreeing the organisations current strategic plan (in conjunction with executive management). The strategic plan describes how the strategic objectives will be achieved.
  • Suggesting or approving changes to the strategic plan to respond to changing circumstances.
  • Requiring effective assurance from management that the organisations policy framework is being adhered to.
  • Requiring effective assurance from management that the organisations resources are being used as efficiently as practical in pursuit of its strategic objectives.
  • Communicating the relevant elements of the assurances received from management to appropriate external stakeholders.
    • Assurance to the organisation’s owners the strategy and policies are being adhered to by management and the organisation as a whole.
    • Assurance to a wider stakeholder community (including regulatory authorities) the organisation is operating properly.

As my previous post suggested, the governance communication challenges are significant! However, by clearly defining the different roles of governance and management the functioning of an organisation will be enhanced, and the communication challenges will be reduced.