Effective Stakeholder Engagement is Multifaceted

November 3, 2017

An organisation’s success, reputation and long term sustainability depends on its stakeholders and how they perceive the organisation.  The way the organisation interacts (or is perceived to interact) with its stakeholders builds its reputation and its customer base.  But customers belong to communities and it’s the broader community that grants the ‘social licence’ needed for the organisation to operate long-term. And, because no one and nothing is ever perfect, things will go wrong from time to time requiring action to protect the organisation’s reputation and its social licence.

The objective of this post is to:

  • Put all (or most) of the different mechanisms used by organisations to engage with stakeholders into perspective; and
  • Emphasise the message that authentic and effective stakeholder/community engagement needs an organisation-wide coordinated approach that is governed from the very top levels of management.

The Stakeholder Engagement Spectrum

The Organisational Core

The characteristics of the organisation are always at the centre of every stakeholder relationship[1]. The way your organisation is structured, its ethics, characteristics, systems, and services, underpin how its stakeholder community will ultimately perceive the business. The key to successful stakeholder engagement is in part the way the organisation is structured and operated, and in part being authentic and realistic in the way various aspects of stakeholder communication and engagement are used. If your business is a low-cost, low service, bulk supplier don’t pretend to be an upmarket high service organisation. Many people are more than happy to shop at retail outlets such as Walmart and Aldi, attracted by price and simplicity; others prefer the higher levels of service and higher prices from more upmarket department stores. The art of stakeholder engagement is to maximise the appeal and perceptions of the organisation as it is – not to mask reality with a pretence of being something else.

However, poorly governed unethical organisations will always ultimately fail regardless of their stakeholder engagement effort; you can’t build an effective long-term relationship on unsound foundations.

 

The 8 Aspects of the Stakeholder Engagement Spectrum

The eight aspects of stakeholder engagement highlighted above are all well defined in various publications; the way they are used in this post is briefly set out below:

PR: Public Relations – The actions taken by an organisation to develop and maintain a favourable public image. PR is a strategic communication process that builds mutually beneficial relationships between the organisation and its stakeholders. The core element of PR is push communication; it is a proactive process controlled by the organisation, broadcasting information to a wide community to influence attitudes.

Advertising – The activity production and placing of advertisements for products or services. The purpose of each advertisement is to announce or praise a product (goods, service, concept, etc.) in some public medium of communication in order to induce people to buy, use it, or take some other action desired by the advertiser. The difference between PR and Advertising is that PR largely focuses on creating or influencing attitudes and perceptions whereas advertising focuses on some form of ‘call to action’.

CRM: Customer Relationship Management – Refers to the practices, strategies, and technologies that organisations use to manage and analyse customer interactions and customer data throughout the customer lifecycle. The goal of CSR is to improve the organisation’s relationship with each customer, assisting in customer retention, and driving sales growth. Good CRM systems make it easy for people to do business with you.

Issues Management[2] – The process of identifying and resolving issues. Effective issues management needs a pre-planned process for dealing with unexpected occurrences that will negatively impact the organisation if they are not resolved. The scope of this concept ranges from ‘crisis management’ where the magnitude of the issue could destroy the organisation (and the most senior management take an active role) through to empowering staff to deal with relatively minor customer complaints. The key to effective issue management is resolving the issue to the satisfaction of the affected stakeholders. This requires effective systems and preplanning – you don’t know what the next issue will be, but you can be sure there will be one.

Stakeholder Management Initiatives[3] – this is the area where most of my work is focused; managing the expectations of, and relationships with, the stakeholder community surrounding an organisational activity, initiative, or project. Most business initiatives and projects have a high potential to affect a range of stakeholders both positively and negatively (and frequently both at different times). How these relationships are managed affects not only the ability of the organisation to deliver its initiative or project successfully, but also the overall perception of the organisation in the minds of the wider stakeholder community.

Business Intelligence & Environment Scanning – BI and other forms of environmental scanning looking at attitudes, trends, behaviours, and other factors in the wider stakeholder community. They are a key emerging element in the overall approach to stakeholder engagement used by proactive organisations. This is very much the space of ‘big data’ and data mining. Much of the collection of data can be automated and ‘hidden’ from view. The challenge is making sure the information collected is legal (privacy legislation is an important consideration), accurate, relevant, and complete; then asking the ‘right questions’ using various data mining tools. As with any intelligence gathering process, obtaining the data is the easy part of the equation; the real skill lies in developing, validating and interpreting the data to create information that can be used to produce valuable insights.

Social Networks – The ubiquitous, widespread, and diverse nature of social networks ranging from Facebook to personal interaction down the pub can easily outweigh all of the organisation’s efforts to create a positive image using PR, advertising and the other ‘controlled’ functions discussed above.  The organisation’s staff and its immediate stakeholders literally have millions of connections and interconnections to other stakeholders. Most of these connections are unseen, and the environment cannot be controlled. The best any organisation can hope to achieve in this relatively new communication environment is to plant seeds and seek to have some influence. Seeding ideas and concepts into the ‘Twittersphere’ may result in a concept being taken up and ‘going viral’, more commonly the seed simply fails to germinate. Conversely identifying negative trends and issues early, particularly if they are false, is critically important and where possible these negative influences should be countered but given the nature of the environment this is a very difficult feat to achieve.  Smart organisations recognise that their staff, customers, contractors, and suppliers all engage in this space and through other effective communication channels can influence how these people respond to opportunities and issues affecting the organisation.

CSR: Corporate Social Responsibility[4] – CSR completes the circle and brings it back towards the concept of PR.  CSR contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. ISO 26000  Guidance Standard on Social Responsibility, defines social responsibility (ie, CSR) as follows:

Social responsibility is the responsibility of an organisation for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that:
–  Contributes to sustainable development, including the health and the welfare of society
–  Takes into account the expectations of stakeholders
–  Is in compliance with applicable law and consistent with international norms of behaviour, and
–  Is integrated throughout the organization and practised in its relationships.

The key difference between CSR and PR is that CSR actually involves doing things both within the organisation and within the wider community, whereas PR focuses on telling people things.

 

Applying the Stakeholder Engagement Spectrum

The various aspects of stakeholder engagement spectrum combined together to create the organisation’s reputation, engage communities, build customers, and when necessary protect the organisation’s reputation. The key combinations are set out below:

Reputation Creation: The key components needed to create and maintain a desirable reputation start with CSR and work clockwise through the spectrum to CRM.

Community Engagement: The key components needed to effectively engage the wider community are focused on CSR but includes the elements moving anti-clockwise from CSR through to Issues Management.

Building Customers: The elements needed to build and retain customers start with PR and work clockwise through the spectrum to Issues Management.

Protecting Your Reputation: Finally protecting the organisation’s reputation is focused around Issues Management, but includes elements of CRM and continues clockwise through to Environment Scanning. In addition, many of the ‘push’ elements in the spectrum may be used as tools to help manage issues and protect the reputation of the organisation including PR and advertising.

 

Conclusion

The ‘stakeholder engagement spectrum’ above is deliberately drawn in a circle surrounding the organisational core, because all of the different aspects interrelate, many overlap, and they all build on each other.  The governance challenge facing many organisations is breaking down the traditional barriers between functional areas such as advertising, PR and CRM/sales, so that the entire organisation’s approach to its stakeholders is coordinated, authentic and effective.

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[1] See more on Ed Freeman’ stakeholder theory at: https://mosaicprojects.wordpress.com/2014/07/11/understanding-stakeholder-theory/

[2] For more on issues management see: https://mosaicprojects.com.au/WhitePapers/WP1089_Issues_Management.pdf

[3] For more on stakeholder management see: https://mosaicprojects.com.au/Stakeholder_Circle.html

[4] For more on CSR see: https://mosaicprojects.wordpress.com/tag/corporate-social-responsibility/

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The Evolution of Project Management

September 25, 2017

The publication of the PMBOK® Guide sixth edition at the beginning of September, and the decision last week by ISO committee TC258 to revise ISO standard 21500 should mark the end of an era in the development of project management. For most of the last 50 years the dominant view of project management associations has been that project management is a generally transferable skill. This has resulted in the view that ‘project management’ can be represented by a single ‘BoK’ (Body of Knowledge), a single ‘competency baseline’ and capability can be demonstrated by passing a single credential or certification. However, whilst the PM professional associations have advocated this view, the job market has always retained a focus on different industry experience – you don’t get an IT project manager’s job without IT experience.

As outlined above, from the emergence of ‘modern project management’ in the 1960s[1] the predominant view of the professional associations and most academics and practitioners has been that ‘project management’ is a single discipline with transferrable skills. A single qualification framework is appropriate and the skills and techniques are generally applicable across all industries.  However, in the years between the 1960s and the 2000s, as different industries and disciplines progressively adopted the concept of ‘project management’ this holistic view has become increasingly stressed.

The future suggested in this post still sees project management as a single discipline focused around some high-level objectives; but rather than having a single set of generally accepted good practices applicable to most projects most time, the emerging discipline needs to be capable of embracing a range of different approaches to project management and a diverse toolbox of techniques that can be mixed and matched to optimise the creation of the project’s deliverables.

Project management literature has identified at least three key dimensions to project management:

  1. An ‘adaptive/agile’ approach -v- a disciplined structured approach.
  2. The size, scale, and difficulty associated with the work of the project.
  3. Simple relatively predictable projects -v- complex projects with emergent properties.

In addition to these parameters (mapped in the diagram above), there is also the degree of certainty associated with the work, the technical complexity of the product, and the attitude of the stakeholder community[2].

It’s time for a change.

The project management techniques needed to manage different types of project vary enormously; for example:

  • The optimum approach to managing a relatively small, simple project to upgrade a website may benefit from an adaptive/Agile approach to managing the work and should only require a ‘light touch’ to control the work;
  • Contrast this to the disciplined approach needed to design and build a new chemical plant where not only do complicated parts need to be manufactured to precise dimensions months in advance and shipped halfway around the world, but the work has to be carefully managed and the parts assembled in a precise sequence to allow all bits to be fitted together properly in a safe working environment.

Both these endeavours are projects, but the project management techniques needed for success are dramatically different. Even within the one project, some elements may benefit from an ‘agile’ approach to the work (eg, systems integration), while other elements of the work will require a very disciplined approach to achieve success – building space rockets does require ‘rocket science’.

The challenge facing the project management profession and project management academics is firstly defining the common core of project management, and then adapting the approach to developing and documenting the overall project management body of knowledge in a way that recognises the core commonality of being ‘a project’ whilst allowing different approaches to the management of the work. And once these foundations are in place, flowing these concepts through into documented standards, knowledge frameworks and certifications. In the 21st century a ‘one size fits all’ approach to the management of projects is no longer appropriate.

PMI has started down this path, they have agile certifications and have included both tailorability and agile concepts into the 6th edition of the PMBOK® Guide. Developments in the ISO space are also moving towards this integrated but separated approach to managing different types of projects. ISO 21500 Guidance on Project Management, is being updated and transformed into a higher level ‘management standard’, if this development is successful, in the future a series of implementation guides can be foreseen focused on different types, sizes and phases of project development and delivery.

What’s missing at the moment is a holistic and agreed understanding precisely what a project actually is[3] (this will segregate project management from other forms of management), and then a framework distinguishing the different types of project that exist within the overall frame of a project but requiring different styles of project management. Some of the multitude of factors that need to be considered include:

  • The inherent size of the project usually measured in terms of value;
  • The degree of technical difficulty in creating the output (complication) caused by the characteristics of the project’s work and its deliverables, or the time-frame the deliverables are required within;
  • The degree of uncertainty involved in the project;
  • The degree of complexity associated with the work and the stakeholder relationships;
  • The difference between client project management and contractor project management;
  • The various methodologies and strategic approaches to managing the project and developing the product (Agile, PRINCE2, etc);
  • The maturity of the environment in which the project is being delivered (developing economies/organisations -v- mature economies/organisations); and
  • The difference between project, program and portfolio management.

The common core

The core element of all projects is the intentional ‘temporariness’ of the team (organisation) set up to deliver the project. The ‘temporary organisation’ is given an objective to create a deliverable for a client and then to shut down efficiently; in addition, there is an intention on the part of most key stakeholders to treat the work as a ‘project’. This means the project has to be started (initiated), the work planned, then undertaken, and on completion the temporary organisation has to be closed – and of course, all of these activities need monitoring and controlling.

Where 21st century project management needs to diverge from the doctrines of the last century is in the way these overarching objectives are achieved – defining 44 or 49 processes as ‘generally accepted best practices’ is no longer appropriate.  The concept of ‘project management’ needs to be able to adapt to very different approaches, allow the project team to select from a toolbox of ‘useful techniques and methodologies’ and then encourage the teams to craft the processes they actually use to optimise the delivery of the project’s outputs to its clients.

Achieving this will require a different approach to developing standards, a different approach to training and qualifying practitioners and the creation of very different communities within the profession that encourages cohesion whilst embracing diversity of practice.

It will be interesting to see if our profession is up to the challenges.

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[1] For more on the origins of ‘modern project management’ see: http://www.mosaicprojects.com.au/PDF_Papers/P050_Origins_of_Modern_PM.pdf

[2] For more on the dimensions of project management see: http://www.mosaicprojects.com.au/WhitePapers/WP1072_Project_Size.pdf

[3] For more on defining a project see: https://mosaicprojects.wordpress.com/2016/08/11/seeking-a-definition-of-a-project/


Levels of Stakeholder Engagement

August 21, 2017

How engaged should your stakeholders be? Or how engaged do you want them to be? In an ideal world the answer to both questions should be the same, but to even deliver a meaningful answer to these questions needs a frame of measurement.  This post uses ideas from 1969 to propose this framework!

In July 1969, Sherry R. Arnstein published ‘A Ladder of Citizen Participation’ in the A.I.P Journal[1] looking at citizen participation and the consequential citizen power over a range of USA government initiatives designed to enhance the lives of disadvantaged people in US cities. The typology of participation proposed by Arnstein can be transposed to the modern era to offer a framework for discussing how engaged in your project, or program, your stakeholders should be in actively contributing to the management and governance of the work they are supposed to benefit from.

Modern paradigms such as ‘the wisdom of crowds’, ‘user participation in Agile teams’ and ‘stakeholder theory’ all lean strongly towards stakeholder ownership of the initiative designed to benefit them. These views are contrasted by concepts such as technical competence, intellectual property rights, confidentiality and the ‘iron triangle’ of commercial reality (often backed up by contractual constraints).

The debate about how much control your stakeholders should have over the work, and how engaged they should be in the work, is for another place and time – there is probably no ‘universally correct’ answer to these questions. But it is difficult to even start discussing these questions if you don’t have a meaningful measure to compare options against.

Arnstein’s paper is founded on the proposition that meaningful ‘citizen participation’ is ‘citizen power’ but also recognises there is a critical difference between going through empty rituals of participation and having real power to affect the outcome of a process. This poster was from the May 1968 student uprising in Paris, for those of us who can’t remember French verbs, translated it says:  I participate; you participate; he participates; we participate; you (plural) participate; …… they profit.   The difference between citizen participation in matters of community improvement and stakeholder participation in a project is that whilst civil participation probably should mean civil control,  this same clear delineation does not apply  to stakeholder engagement in projects.  The decision to involve stakeholders in a project or program is very much open to interpretation as to the best level of involvement or engagement.  However, the ladder of engagement proposed by Arnstein can easily be adapted to the requirement of providing a framework to use when discussing what is an appropriate degree of involvement for stakeholders in your project or program.

There are eight rungs in Arnstein’s ladder; starting from the bottom:

  1. Manipulation: stakeholders are placed on rubberstamp advisory committees or invited to participate in surveys, provide feedback, or are given other activities to perform which create an illusion of engagement but nobody takes very much notice of the information provided.   The purpose of this type of engagement is primarily focused on making the stakeholders feel engaged rather than using the engagement to influence decisions and outcomes. The benefits can be reduced stakeholder opposition, at least in the short-term, but there is very little real value created to enhance the overall outcomes of the project.
  2. Therapy: this level of stakeholder engagement involves engaging stakeholders in extensive activities related to the project but with a view to changing the stakeholder’s view of the work whilst minimising their actual ability to create change. Helping the stakeholders adjust to the values of the project may not be the best solution in the longer term but every organisational change management guideline (including our White Paper) advocates this type of engagement to sell the benefits the project or program has been created to deliver.
  3. Informing: informing stakeholders of their rights, responsibilities, and/or options, can be the first step towards effective stakeholder participation in the project and its outcomes. However too frequently the emphasis is placed on a one-way flow of information from the project to the stakeholders. Particularly when this information is provided at a late stage, stakeholders have little opportunity to contribute to the project that is supposed to be delivering benefits for them. Distributing information is a key stakeholder engagement activity (see the Three Types of Stakeholder Communication) but there have to be mechanisms for effective feedback for this process to maximise its potential value.
  4. Consultation: inviting stakeholder’s opinions, like informing them, can be a legitimate step towards their full participation. But if the consultation is not combined with other modes of participation this rung of the ladder is still a sham, it offers no assurance that the stakeholder concerns and ideas will be taken into account. Effective participation includes providing stakeholders with a degree of control over the consultation processes as well as full insight as to how their inputs are considered and used. In the long run window dressing participation helps no one.
  5. Placation: at this level stakeholders have some degree of influence although tokenism is still potentially involved. Simply including stakeholders in processes such as focus groups or oversight committees where they do not have power, or are trained not to exercise power, gives the appearance of stakeholder engagement without any of the benefits.
  6. Partnership: at this level power is genuinely redistributed and the stakeholders work with the project team to achieve an outcome that is beneficial to all. Power-sharing may seem risky all but if the right stakeholders with a genuine interest in the outcome are encouraged to work with the technical delivery team to constructively enhance the project’s outcomes (which is implicit in a partnership) everyone potentially benefits.
  7. Delegated power: In many aspects of projects and programs, particularly those associated with implementation, rollout, and/or organisational change, delegating management authority to key stakeholder groups has the potential to significantly improve outcomes. These groups do need support, training, and governance, but concepts such as self-managed work teams demonstrate the value of the model.
  8. Stakeholder control: In one respect stakeholders do control projects and programs but this group tends to be a small management elite fulfilling roles such as sponsors, steering committees, etc. Genuine stakeholder control expands this narrow group to include many more affected stakeholders. Particularly social projects, where the purpose of the project is to benefit stakeholders, can demonstratively be improved by involving the people project disposed to help. But even technical projects can benefit from the wisdom of crowds[2].

In summary, the framework looks like this:

The biggest difference between the scenario discussed in the original paper and stakeholder engagement around projects and programs is the fact that different stakeholders very often need quite different engagement approaches to optimise project outcomes. Arnstein’s 1969 paper argued in favour of citizen participation as a single entity and the benefits progressing up the ladder towards its control. In a project situation it is probably more sensible to look at different groups of stakeholders and then assess where on the ladder you would like to see that group functioning. Some groups may only need relatively low levels of information to be adequately managed. Others may well contribute best in positions of control or at least where their advice is actively sought and used.

Do you think this framework is helpful in advancing conversations around stakeholder engagement in your project?

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[1] Arnstein, S.R.  AIP Journal July 1969 pp:216 – 223.  A Ladder of Citizen Participation.

[2] The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, published in 2004, is a book written by James Surowiecki about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group.


Defining Project Success using Project Success Criteria

July 4, 2017

Everyone likes a successful project but the big question is what makes a project successful??  A good example is the Sydney Opera House; was the Sydney Opera House successful or not?

Was the Sydney Opera House a success

The project ran significantly over budget finished very late and was technically less than perfect; $millions are currently being spent rectifying many of the technical deficiencies in the building. But can anyone say Sydney Opera House is not one of the most recognised and therefore successful buildings in the world?[1]

Success is an ephemeral concept! Different people will have different perspectives and judge the success or failure project differently. Neither a project nor a program manager can control many of the factors that have made the Sydney Opera House worldwide icon but they can address the concept of success with their stakeholders and then work to deliver a successful outcome based on these discussions.

So what is success? There are probably three key elements, but these frequently create a paradox that requires a balanced approach to success. The three fundamental elements are:

  • The Iron Triangle (Scope + Cost + Time)
  • Benefits realised (or maximised)
  • Satisfied stakeholders (but, when??)

One of the key paradox is a myopic focus on the Iron Triangle particularly time and cost can frequently destroy benefits and leave the stakeholders unhappy, but focusing on keeping stakeholders happy can frequently have detrimental effects on the Iron Triangle. There are no easy solutions to this problem[2].

In my view, the successful delivery of a project or program requires:

  • Achieving the overall goal for the project;
  • Delivering its objectives; and
  • Meeting its success criteria.

But, to achieve success you need to define and agree the project goal, the project objectives, and the project success criteria with your key stakeholders with a view to achieving a combination of stakeholder satisfaction and value created. The goal and objectives frame the project’s work and direction. The success criteria frame how the objectives are achieved.

 

The Project Goal

Goals are high-level statements that provide the overall context defining what the project is trying to achieve. One project should have one goal (if there are multiple goals you are most likely looking at a program of work[3])!  For example:  Within 180 days, reduce the pollution in the rainwater runoff from a council tip by 98%.

The goal is a key statement in the Project Charter[4] and if the project is to be successful, all key stakeholders need to agree the goal.  The goal needs to be specific and should define the project in a way that focuses attention on the key outcomes required for overall success from a technical and strategic business perspective[5].

 

Project Objectives

The objectives are lower level statements that describe the specific, tangible products and deliverables that the project will create; each objective (and the overall goal) should be SMART[6]. For the runoff project the objectives may include:

  • Develop wetlands to trap 99.8% of sediment
  • Install channels to collect and direct the runoff
  • Install screens remove floating debris
  • Etc….. There will be a number of objectives……

Each objective requires defining and specifying with clear performance criteria so you know when it has been achieved. This may be done by the client or by the project team during the scope definition process. The performance criteria may be defined by a set of precise specifications that are specific and measurable or may be defined as a performance requirement with either:

  • The external contractor to provide the specific details of how the objective will be achieved, or
  • The internal project team to develop the details in consultation with the client

The defined objectives are the building blocks that facilitate the achievement of the goal and the creation of the benefits the organisation is expecting from the project[7]. The benefits need to be realised to create value.

 

Success criteria

Success criteria are different they measure what’s important to your stakeholders. Consequently, they are the standards by which the project will be judged at the end to decide whether or not it has been successful in the eyes of its stakeholders. As far as possible the stakeholders need to be satisfied; this includes having their expectations fulfilled and in general terms being pleased with both the journey and the outcome (in this respect scope, cost and/or time may be important).

Success criteria can be expressed in many different ways some examples include:

  • Zero accidents / no environmental issues;
  • No ‘bad press’ / good publicity received;
  • Finalist in the project achievement awards;
  • Plus the goal and all of the objectives achieved (yes – you still need to do the work).

For any project, the success criteria should be split between project management success criteria which of related to the professional aspects of running the project; plus project deliverable success criteria which are related to the performance and function of the deliverable.

Documenting the success criteria is important, it means you can get project stakeholders to sign up to them, and having them clearly recorded removes ambiguity about what you are setting out to do. The four basic steps to create useful success criteria are

  1. Document and agree the criteria; each criteria should include:
    1. The name of success criteria,
    2. How it is going to be measured,
    3. How often it is going to be measured, and
    4. Who is responsible for the measurement.
  2. Use continuous measurements where possible. For example, rather than ‘finish the project on time’ measure progress continually ‘no activity completes more than 5 days after its late finish date’.
  3. Baseline today’s performance.
  4. Track and report on your progress.

As with any performance indicators, the art is to select a few key measures that represent the wider picture if there are too many success criteria defined the impact will be severely reduced. For example, the effectiveness of meetings, communication, and stakeholder attitude could be measured scientifically using the ‘Index Value’ in the Stakeholder Circle[8] or pragmatically by measuring the number of open issues against a target (eg, no more than 5 high priority open issues).

 

Summary

Goals and objectives are the building blocks required to allow the realisation value from the project’s outputs; they are essential ingredients in a successful project but are insufficient on their own.  The role of success criteria is to direct the way work at the project is accomplished so as to meet stakeholder expectations, and to craft a perception of success in the stakeholder’s minds.

Project success is an amalgam of value created for the organisation and your stakeholders being satisfied with the journey and the outcome.  This concept of success may seem subjective, but it does not have to be. Successful organisations work to take the guesswork out of this process by defining what success looks like and agreeing these definitions with the key stakeholders, so they all know when the project has achieved it.

This means the key to stakeholders perceiving your project as successful lays in understanding the criteria they will measure success by, incorporating those measures into your project success criteria, and then working to achieve the criteria. But even this is not enough, to engage your stakeholders you need to communicate the criteria, communicate your progress and communicate your success at the end. For more on effective communication see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html#PPM07

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[1] For more on the success or failure of the Sydney Opera House see Avoiding the Successful Failure!:  http://www.mosaicprojects.com.au/Resources_Papers_046.html

[2] For more on paradox see: https://www.projectmanagement.com/blog-post/30669/The-Problem-With-Paradox

[3] For more on differentiating projects and programs see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf

[4] For more on the project charter see: http://www.mosaicprojects.com.au/WhitePapers/WP1019_Charter.pdf

[5] For more on project success see: http://www.mosaicprojects.com.au/Mag_Articles/N001_Achieving_Real_Project_Success.pdf

[6] SMART = Specific, Measurable, Attainable, Relevant and Time-framed.

[7] For more on linking objectives and benefits see: http://www.mosaicprojects.com.au/WhitePapers/WP1042_Outputs_Outcomes_Benefits.pdf

[8] The Stakeholder Circle® index value see: http://202.146.213.160/help-files/stakeholder-engagement-profile/#engagement-index


Governance and stakeholders

June 7, 2015

CrisisBoth stakeholder theory and the modern concept of organisational governance place importance on the organisation fulfilling the needs of all of its stakeholders. The older, generally discredited ‘stockholder’ theory suggested the primary purpose of an organisation was to maximise value for its owners – generally interpreted by those in power as looking after the short-term interests of ‘those in power’ or the few with a direct investment in the organisation.

Three on-going sagas demonstrate the fallacy of taking a short term ‘stockholder’ approach to creating value.

1. The FIFA Crisis: Ignoring the alleged criminality of many of the key actors, my view is the biggest ‘governance failure’ in FIFA for the last decade or more has been the perceived method of allocating development funds to national soccer authorities.  The perception is that most of these funds were distributed at the behest of Sepp Blatter, and therefore if the associations wanted to keep on receiving their development funding they needed to vote for Blatter.

There is nothing wrong with funding the development of the game – it is one of FIFA’s primary objectives.  The governance breakdown was in the lack of a robust and transparent process for allocating the money to soccer associations that could make the most beneficial use of the funds and requiring accountability for the expenditure. The $billions in largely unaccounted largess distributed on a less than transparent basis is I suspect the root cause of much of the evil besetting FIFA at the present time.

Its too early to determine the damage to both FIFA and the game of soccer (football) from the breakdown in governance but one thing is already very clear, the big loser over the last decade has been the game, its players and its supporters – ultimately the stakeholders who really matter.

2. The on-going Banking Crisis: The focus of banks on employing and rewarding greedy people focused on maximising their bonuses at the expense of the Banks customers and shareholders lead to the financial crisis and a series of other failures, reviews and prosecutions in the USA, UK and Australia at least.

In Australia, the governance failure was senior managers and the Board’s Directors putting short-term profits ahead of the long term development of the bank. Front line sales people were paid to sell inappropriate products to clients – they do not get bonuses for not selling product even if it is in the best interest of the client.  Middle managers were paid to ignore potential problems – their KPIs and bonuses were driven by the sales volumes of their staff, etc.

The banks and their stockholders did very well for a while, now many of the problems created by this governance and cultural failure are starting to emerge, the short term stock speculators are taking their profits and dumping bank stocks.  Trust in the banking system is at an all time low (financial advisers are deemed less trustworthy then politicians). Very few of the stakeholders in the baking industry, including employees, long term investors,  clients or governments are on the ‘winning side’.  I’m waiting to see what game changing ‘disruptive innovation’ emerges – anyone offering a viable alternative to the banks has a once-in-a-lifetime window of opportunity to start up in a market looking for a viable alternative to ‘big banks’.

3. The on-going Child Abuse Crisis: The Australian Government’s Royal Commission into child abuse continues to uncover major breakdowns in governance in a vast range of organisations. The thing I find most upsetting is the abject failure of the leadership in most of these organisations to uphold the values of the organisation.  Abuse was ignored, covered up, secret payments made to ‘settle complaints’, etc.  The focus of the various churches, school and other institutional leaders was always a short term attempt to protect the institution from ‘bad publicity’. Hide the perpetrators of the evil and diminish the claims of the abused children (causing even more distress and harm).

The long term damage this short-sighted policy of ‘cover-up’ and ‘look-the-other-way’ will cause to the churches in particular has yet to emerge but I suspect there will be massive consequences that damage both the institution and the people the institutions serve, their congregations.

Summary

In each of these cases, the governance failure started at the very top of the organisation, the Executive Committee, Directors, and Bishops failed to develop a culture focused on achieving good outcomes for all of the respective organisation’s stakeholders and allowed corrupt cultures to develop focused on advantaging a very select group of ‘stockholders’.  The resulting crises will be causing damage to the organisations and their stakeholders for decades to come. Unfortunately in the vast majority of cases the people responsible for the breakdown of governance in their organisation are still hanging on to their jobs and pretending the failures are the fault of people lower down the organisational hierarchy.

Avoiding this type of problem is not easy but it starts with the governing bodies recognising that they, and they alone, can set the cultural and ethical tone for an organisation. The functions of governance outlined in our White Paper may seem soft and fuzzy concepts but if they are not implemented effectively and rigorously the next crisis will only be a matter of time. Long term success can only be assured by governing for all stakeholders, which in turn requires an ethical framework and a culture that demands transparency and accountability (as well as technical excellence) from everyone working in the organisations hierarchy.


Designing effective KPIs

August 5, 2014

KPI1In a couple of posts I highlighted the damage that poorly considered KPIs and incentive payments can cause either to the organisation or its customers:

This post fills the missing link and discusses the practical challenges of creating effective KPIs.

Key Performance Indicators (KPIs) exist to influence decisions and actions; effective KPIs motivate people towards taking valuable, and useful, actions and decisions.  Each KPI is a measure of how well a fundamental part of the project (or organisation) is progressing towards achieving its goals. The elements of a KPI are:

  • Key = something that is important, essential, fundamental.
  • Performance = the execution or accomplishment of work
  • Indicator = a measure, and record of variations

The specific purpose for each KPI is to communicate a relevant summary of the current situation to a particular person, or group; giving an indication of how effectively a particular element of the project (or work) is achieving its objectives. Because the KPI is an ‘indicator’ it does not have to be all encompassing, or provide all of the information about the activity. The purpose of a KPI is to highlight if and when more investigation is needed; they do not replace everyday ‘project controls data’ and other management information.

The challenge with KPIs is to set measures that provide indicators of potential problems in sufficient time to allow investigating and action.  The purpose of most projects is to create value through the realisation of benefits; unfortunately this ‘real measure’ only happens after the project is finished. So whilst tracking benefits realised is important, the information lags behind the actions that affect the outcome. Other leading indicators are needed that focus on the probability of generating value during the course of the work (which is more complex than simply measuring time and cost performance).

kpi3

 

The way to design effective KPIs involves six simple steps:

  1. Understand your audience and tailor specific KPIs for different levels and groups within the project and the project’s stakeholder community. Detail should decrease as you move up that structure, what’s useful to a team leader is information overload for a sponsor.
  2. Be clear and concise. Each KPI should be designed to deliver a message that will instigate one of two decisions; either ‘do nothing’ or ‘investigate’! The KPI’s job is to tell you one of these three things (any more information and it is not an ‘indecator’):
    1. Things are looking bad – investigate and fix
    2. Things are looking good – investigate and learn
    3. Things are OK – do nothing.
  3. Make the KPI understandable. The KPI is an indicator of how well specific work is being done, or accomplished; being clear about precisely what work and what goals is critical. This means the KPI has to:
    1. Be well written;
    2. Contain one clear measure;
    3. Set realistic targets;
    4. Be time framed;
    5. Define how the data will be tracked.
  4. Balance the KPIs across the performance window:
    1. Input KPIs – measure the quantity and sometimes quality of inputs to the project.
    2. Process KPIs – measure the quantity and sometimes quality of the work required to produce certain expected outputs.
    3. Output KPIs – measure the quantity and sometimes quality of the goods or services created.
    4. Value KPIs – measure the quantity and sometimes quality of the results achieved through the delivery of the goods and services eg, benefits realised.
  5. Use both types of KPI:
    1. Target KPIs focus on achieving a specific measure (pass / fail), usually within a time frame, eg, units delivered per week.
    2. Directional KPIs measure tends. With many KPIs the precise number is less important than the trend. For example, “Number of days lost to staff sickness” [per month]. Here the exact number of days is not that useful as we can’t control this, however if the trend is rising we can investigate and take action accordingly.
  6. Test and fine tune the KPIs, make sure you are getting the results you want. As both of the referenced posts have demonstrated, it can lead to disaster if you simply design, then implement, a KPI as a way to allocate bonuses without fully understanding if and how it can be ‘gamed’ or how it will affect morale, or any other unforeseen outcomes. Therefore:
    1. Allow some lead time to check that everyone understands the KPIs, if the outcomes being measured are reasonable and the data is easy to collects and accurate.
    2. Trial the KPI to make sure it is driving the behaviours you desire.

Finally, the characteristics of good KPIs are:

  • Simplicity. The metric name should be less than 5 words and the calculation is easily described in under 10 words.
  • Comparability. The measure is comparable to other time periods, sites, or segments.
  • Incremental. A rate or ratio is better than an absolute or cumulative value.

Some good KPIs include:

  • The accident (and ‘near miss’) rate on engineering and other ‘hard hat’ projects, a low rate indicates a safe environment which means a clean, well managed and well planned workplace.
  • Performance measures such as the number of activities completed within 5% of the estimated time (the workers cannot control the start but can control the flow of work once started).
  • The number of open issues (and the trend), or the number of issues that remain open after a ‘reasonable’ period (say 2 weeks).
  • Quality measures.

A final thing is to remember setting two or three effective KPIs and using them effectively across all projects is better than a scattergun approach. You know you have too many KPIs when you hear people saying things such as the “top KPIs” or “most important KPIs”.  Keep them simple, consistent and rigorous for the maximum benefit.


The strategic management of projects

June 20, 2014

WP1074_PPP_ArchitectureOne of the clearest messages emerging from a range of sources is that ‘project management’ as defined by the PMBOK® Guide and other similar documents is simply not enough!  As Professor Peter Morris has been advocating for more then a decade, organisations need to be able to effectively manage projects.

The concept of strategically managing projects describes the organisation’s ability to select, nurture and deliver the right projects and programs effectively. This includes an emphasis on the ‘front end’ of the overall process to ensure the right projects and programs are selected and initiated for the right strategic reasons and the ‘back end’ to make sure the outputs from a project are used effectively by the organisation to realise the intended benefits.  Traditional ‘project (or program) management’ deals with the messy bit in the middle – delivering the required scope efficiently.

Project management skills are well defined as are some aspects of the strategic management of projects such as portfolio management and benefits management. What has still to emerge in the executive management and governance layer of an organisation’s hierarchy is an understanding of the integrated nature of the strategic management of projects. At the moment in many organisations the executives and ‘governors’ who allow their organisations to create failure after failure seem to be able to emerge unscathed by blaming the failures on lower level managers within the organisations they have created.  Some of the reasons projects are ‘set up to fail’ are discussed in this post by Patrick Weaver.

From my perspective, this is a systemic failure of governance and the governing bodies should be held accountable for the destruction of stakeholder value associated with systemic project and program failures. The governing body should not be directly accountable for any specific project failure, rather for failing to develop their organisation in a way that enables the effective development of a realistic and achievable strategy, and then strategically managing the right projects and programs needed to implement the strategy. An overall framework for this type of strategic management of projects is outlined in our White Paper.

Implementing the organisational change needed to create the broad range of capabilities needed to implement the strategic management of projects requires sustained senior executive support and a group of determined, enthusiastic and resilient practitioners to develop the organisations ‘project delivery capabilities’.  The biggest challenge is very few practitioners can explain what they are recommending in a language that is meaningful to executives or really understand the type of information executives need to make the best decisions.

Unfortunately complex detailed reports with dozens of RAG traffic lights and a focus on ‘time and budget’ won’t do the job. A different reporting paradigm is needed that looks at strategic alignment and the delivery of benefits to the organisation and its stakeholders.  Some ideas on the best ways to effectively communicate with executives are discussed in my book Advising Upwards.

It is definitely time to move the strategic management of projects to the next level and that is firmly into the ‘C-Suites’ and board rooms of organisations. Once this is accomplished, professional project managers will be better positioned to deliver their part of the value chain effectively.