By Lynda Bourne
The fundamental reason any organization chooses to undertake projects and programs is to realize or create value for some or all of its stakeholders.
Project managers are key people in this overall value chain; they create the outputs that enable the organization to change. If the project’s deliverables are used, the intended outcomes should be achieved and benefits realized. Finally, if the benefits support the organization’s strategy, value is created.
But what is value, and how can it be assessed and measured?
For instance, if a charity successfully completes a fundraising project to upgrade its mobile soup kitchen, it is able to deliver more meals to more homeless people. But this increases weekly operating costs (there is a negative cash flow), and the value proposition of more disadvantaged people getting a hot meal in the evening is nearly impossible to quantify in financial terms.
In other words, value has been created, but it is not measurable in terms of financial returns. Therefore, the concept of benefits should be expanded to include both financial benefits and other stakeholder requirements.
Benefits, Costs and Value
A useful definition of value is the ratio between the satisfaction of needs (benefits, expectations and requirements), which may be tangible or intangible, and the use of resources (money, people, time, energy and materials), which will normally be definable in terms of cost.
V (value) ∝B (benefits) / $(cost)
However, the units of measure are often unrelated, so the equation is shown as a proportionality rather than equality—it’s difficult to directly align the cost of the mobile kitchen and its supplies against full stomachs and potentially the increased status of the charity.
Managing the overall concept of value creation to maximize value for the organization’s stakeholders requires a coordinated approach by the whole organization. The key elements of such an approach are:
· A value-oriented strategy
· Portfolio management to select the most valuable projects and programs for the organization to undertake. Even in commercial businesses, this requires ways of assessing total value, not just financial returns.
· Project managers need to keep in mind maximizing benefits realization and value creation when making project decisions.
· The organization’s change management needs to be effective and aligned to ensure the intended benefits are actually realized.
· The organization’s governance systems need to require management to report on the final outcomes in terms of the total value realized from the original decision to invest in a project or program.
This framework is relatively easy to describe; the difficult issue is creating a language that describes value from the perspective of the organization and its stakeholders.
For the charity, value may be defined as serving more meals cost-effectively, or reaching more people in need or being seen as the leading soup kitchen in the area (i.e., achieving elevated prestige). Different concepts of what is valuable can shift the focus of both the project and the way the project’s deliverables are used.
In commercial situations, the challenge is deciding how much value is attached to options such as:
· A mining project spending additional resources on environmental protection in excess of the minimum required by law to achieve a better outcome
· A project expending resources to enhance stakeholder engagement efforts
· A project manager spending budget on clerical support to help implement project management processes more effectively
Which options are chosen will always be based on the specific context of the organization, its ethics and culture. What matters is making sure the understanding of value is consistent and agreed to by the organization’s governors and key stakeholders, and incorporated into portfolio, project and change management practices.
Are you discussing real value with your stakeholders?
Project managers work hard to keep stakeholders informed. Nonetheless, sometimes when a stakeholder asks about the status of a project, he or she gets the impression that a project manager is hiding something or being less than honest.
Here are three circumstances where stakeholders may get this feeling, and how you as the project manager can handle them to ensure you’re viewed as trustworthy.
1. You can’t disclose certain information or documents. On our projects, we become the caretaker of all information and documents, including some that can be extremely sensitive. Stakeholders might request the home phone number of a team member, the contingency target of a budget or other confidential information. In some cases, your organization may require a security clearance or other confidentiality measures.
In this sort of scenario, it’s appropriate for a project manager to say, “Let me check on disclosure agreements and provide allowable information."
2. You’re the bearer of bad news. Project managers sometimes must communicate negative issues, risks or unforeseen events to stakeholders. The risk here is that a stakeholder might believe the project manager had prior knowledge of the problem, or even allowed the problem to fester as a way of extracting additional funds for the project.
To avoid a “shoot the messenger” scenario, it’s a good idea to not blame someone for a problem. A better tactic here may be to arrange a discussion on the topic with key decision-makers. This could lead to a satisfactory acceptance or a suitable compromise.
3. You made an error. You may have inadvertently distributed a report with wrong information. Mistakes happen. As soon as possible, apologize and acknowledge that the wrong information was given.
Our reputations as project managers depend on us being creditable and trustworthy. We must always be honest and remain professional and polite, no matter what the concerns of a stakeholder are.
How do you handle stakeholders who question the truthfulness of a project’s status?
One of the most valuable project management lessons I ever learned in my professional life is: Key words at key moments are the key to success. Despite the foundational importance of social and emotional awareness, this “underlying competency” remains unknown to a lot of managers and leaders.
Without this awareness, how can they succeed?
The truth is that most of them don’t thrive. I’ve worked with professionals at all organizational levels, from the operational floors to the boards of directors. They are usually equipped with more knowledge than they need to effectively engage and involve stakeholders.
Nevertheless, I witness stakeholder management disasters every day. Unfortunately, weak sponsorship, untruthful partnership, empty leadership and irresponsible citizenship are the norm, not the exception.
Allay Stakeholders’ Fears
I’ve been researching stakeholder management and related topics for years to cope with my daily struggles as a project management practitioner and consultant. (I recently delivered a webinar on the subject that you can watch here.)
While compiling tools and techniques, developing frameworks and applying theoretical knowledge in pragmatic ways, I keep coming back to what has become my stakeholder management mantra: Key words at key moments are the key to success.
Technical and managerial knowledge are must-haves for project success, but so are underlying competencies—what are known as soft skills.
Here’s an illustration. Suppose you are in a hospital waiting to undergo surgery. The doctor enters the room, does his job successfully, and then leaves you by yourself without saying a word. How would you feel? Even if the doctor were highly skilled, you would feel disappointed, right?
Caregivers and medical professionals know the importance of a warm reception and voice-guided gestures. Showing that you care is even more important than caring about your patients.
So here’s a better course of action: First, announce what you are going to do and explain why. Then, do what you have to do, explaining details during the action as much as possible. Finally, announce that you are done and explain the results.
Stakeholders are afraid of change. Anxiety boosted by a lack of the right kind of communication creates huge misunderstandings. That is why—yes, let’s say it again—key words at key moments are the key to success.
How about your projects? Do you plan the type and timing of communications to facilitate change management initiatives?
By Dave Wakeman
You don’t have to be a great philosopher to understand that our business environment has changed tremendously over the last few years. One result of all this change is that organizations now rely more heavily on projects to deliver on their strategic efforts.
Instead of considering this a problem, project managers should look at it as a huge opportunity to act more strategically and add value to their roles. We should work with executive leadership to help deliver successful projects aligned with the overall organizational strategy.
Many organizations have just begun to incorporate project management into their strategic delivery. Here are three ways you can align yourself with your organization’s strategy to take advantage of the shifting dynamics in the business environment.
1. Always jump to “why?”
I tell my clients that everything we do in an organization is driven by the answer to one simple question: Why?
As a project manager looking to jump into the strategic deployment of projects, you must move from implementer to strategic partner.
As a strategic partner, you want to get out in front of projects that you suspect won’t be successful from the start. To do so, always ask yourself, “Why this is important?” or “Why isn’t this important?” By being driven by the “why,” you can take control of wayward or poorly aligned projects.
Onecautionary note: When you explain that the project isn’t in alignment with the organizational strategy, you need to offer some alternatives.
2. Pay close attention to the business environment surrounding your organization and project.
As someone close to the implementation of the strategy, you will have a great vantage point to recognize and diagnose any challenges that might impede your team’s progress. You are also likely to be much closer to changes that present opportunities, technologies that will expedite delivery or unresolved issues that may derail the project.
The key is to stop thinking about just your individual project, and begin to think about how your project plays in the overall strategy. Then, when the opportunity presents itself, you should step into the conversation about how the project is working or not working with the organization’s strategy. But be prepared to explain how you got there and how you can get things back in order.
3. Think in terms of outcomes.
As a project manager in a project-driven organization, you’ll need to think and manage based on outcomes. This is in part because the demographics of our workforces are changing from on-site, lifelong employees to remote teams, project-driven workforces and employees who are looking for higher degrees of balance in their lives.
This makes outcome-based objectives a key component of delivering on the strategic promise of the organization. And it means you need to give up the idea that you can or should try to control every activity in your project.
It also means you are likely going to have to focus more on opening clear communication lines with your team and key stakeholders so you can communicate the importance of these outcomes in the context of the organization’s strategy.
How is your role becoming more strategic, and how do you drive strategic thinking in your projects? Let me know what I missed.
By the way, I've started a brand new weekly newsletter that focuses on strategy, value, and performance. Send me an email at firstname.lastname@example.org
By Cyndee Miller
I’m not exactly into rugby. Okay, reality check: I’ve never watched a rugby game in my life. Never even been tempted.
But author and congress closing speaker James Kerr made me think I’ve been missing out all these years. Sure, I’d heard of New Zealand’s legendary All Blacks national rugby team. And their pre-match ritual haka is truly a sight to behold. (Note to project managers: Now, that’s how you start a project.)
But what I hadn’t realized is that the All Blacks are a true case study in exceptional team performance. The team has won about 75 percent of all the games it played for more than 100 years. And it’s been ranked number 1 in world rugby rankings longer than all other teams combined.
That’s world-class success. It’s what every organization and project leader dreams of but few achieve.
And yes, part of it comes down to raw talent. You have to be very good to join the All Blacks.
But that’s not enough. Ultimately, victory isn’t about specific skills or an inspiring team leader. It’s about building a mission-driven culture that inspires every player to carry the winning legacy of the team further by constantly pushing themselves.
“It’s the soft stuff that delivers the hard stuff.” said Kerr, author of Legacy: What the All Blacks Can Teach Us About the Business of Life.
To write his book, Kerr was granted unprecedented access to the team. The lessons he walked away with are simple and powerful — and give practitioners a recipe for building killer teams.
It starts with a purpose-driven culture based on humility, pursuit of excellence and respect, Kerr said.
“No one is entitled to their place in the team. They have to earn it every day,” he said. “That’s important to a high-performing team. Earn your badge.”
The team culture also blows up the idea of having only one leader. Dependency can breed complacency, which leads to defeat. So the All Blacks coaches rely on one captain, but 15 leaders.
The idea is to “take people from dependence, the idea that someone else will take care of it, to independence—the idea that I will take care of it,” Kerr said.
All Blacks players don’t just take orders. “People don’t follow leaders, they follow a vision that is in their own minds. People will rise to a challenge as long as it’s their challenge.”
Beyond the immediate goals of winning a game or a championship, the team’s culture of responsibility and accountability cultivates long-term resiliency. “Leaders are creating leaders,” Kerr said.
And all team members are trained to embrace expectations: “Aim for the highest cloud, because even if you come up short, you’ll hit a lofty mountain.”
That’s fine advice for any team. I just never knew it would come from a bunch of rugby players.
That’s it for this year’s coverage of PMI Global Congress — EMEA. I’m headed off to check out another great London project, the Alexander McQueen exhibit at the V&A museum. But worry not, there’ll be more blogging, including from next year’s EMEA event slated for 9-11 May in Barcelona, Spain. Hasta la vista.