As we note the movement towards a project-based economy (ProjectManagement.com’s theme for July), I can’t help but recognize much of the scenery coming through the windows of our 1983 DeLorean. Is it just a fit of déjà vu, or has some serious scholarship already gone into such a trend, and would therefore be available to PMs now that the trend is accelerating?
Of course, it’s the latter.
David Cleland was the first writer I was aware of that tackled the difficult subject of organizational and macroeconomic changes inherent in shifting the business model towards producing goods and services in a way that satisfied the customers’ parameters of scope, cost and schedule – the very heart of Project Management. Indeed, Cleland has been called “the father of Project Management,” being, as he was, one of PMI®’s founding members. PMI® actually has an award named after him, the David I. Cleland Project Management Literature Award. I referenced him extensively in my own Master’s Degree thesis, based on his seminal work in (what was then called) Matrix Management. Dr. Cleland pointed out something we PM-types tend to take for granted now, but was actually rather novel in the 1980s, that organizations tend to focus on either their project portfolios at the expense of their resources (including personnel), or vice-versa, with the standard being to focus on the resources. This duality was called Matrix Management, owing to the recognition that PMs would pursue their customers’ objectives, whereas resource (or “line”) managers would focus on keeping their people paid, trained, and capable, and that these two goals were not entirely compatible. The former organizations were referred to as having a “strong” Matrix, with the latter categorized as a “weak” matrix.
So, what changes did occur in organizations that qualified as Project Management’s early adapters? One of Hatfield’s Incontrovertible Rules Of Management (I’ve lost track of the actual number) is a derivative of the Pareto Principal, and it goes like this:
The 80% best managers who have access to 20% of the information needed to obviate a given decision will be consistently out-performed by the 20% worst managers who have access to 80% of the information so needed.
This being the case, early PM theory adapters, by generating valid Work Breakdown Structures (WBSs), and using them to create Earned Value and Critical Path Management Systems would become the beneficiaries of critical information streams, vastly increasing the odds of their bringing in their projects on-time, on-budget. As “strong matrix” organizations began to out-perform their more traditionally-structured competitors, they could point to an ever-lengthening list of happy customers and successful outcomes, always helpful at bid evaluation time. Once the strong matrixed organizations won more project work, they had to get their resources from somewhere – usually, the most talented members of the losing weak-matrixed organizations.
There was, however, a dark side to this cycle (cue the sound of challenging bellows from Biff Tannen in the background), and it was this: a key component to being cost-competitive was to minimize overhead rates, meaning that an almost maniacal emphasis would be placed on employees being able to charge their time directly to a project. At one extremely strong-matrixed company where I worked, those workers who were 100% direct billable would command significantly higher salaries than those belonging to indirect-funded groups, while, paradoxically, the latter category were expected to put in far more than 40 hours per week, without charging for it. This kind of widespread but never articulated hierarchy brought with it some rather bizarre business model pathologies, such as the poor engineer who nevertheless had a knack for writing winning proposals being considered far more valuable to this organization then the more technically advanced engineer who failed to attract more work.
The company’s org chart was pretty useless. Very little or no effort would be made to smoothly transition personnel away from ramping-down projects, or any other employment-confirming action. If the new PM knew of available resources needed, he would hire them away directly, saving their targets from the oh-so-casual receipt of a pink slip. The only training that occurred was either offered in-house (unpaid overtime for both instructors and students), or else paid for directly by the external customer. Their view that the project portfolio was all-important came with a very dark corollary: despite the “our employees are our greatest asset” proclamations, the project teams were golden, while the line organizations were held in virtual contempt.
Granted, this strong-matrix organization was, in all probability, a badly-managed anomaly. They were, however, one of the top ten employers in my State at the time, so they were doing the PM-stuff effectively, if ruthlessly. I’m not saying that these trends will automatically afflict the management world as we move towards a project economy, but I do think it would be a good idea to keep an eye out for them, lest we find ourselves returning to a future where whole landscapes have been altered for the worse, and our DeLorean in critical need of repair.