In last week’s blog, I started with a quote from Eric Hoffer, specifically “Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.” I went on to discuss how this quote could be paraphrased into something more management-science-y, as in all great businesses start with a grand idea, or discovery, or insight into making a superior business model, etc., then moves into a phase where our friends, the Asset Managers, monetize everything, and then on to a phase where much of the original fire has left the macro organization, and instead it performs like it’s just there to keep existing. Working from that foundation, I want to bring in some Project Management theory, specifically in regards to the question: what’s happening to our subject organization’s business model this whole time? Does its evolution have anything to do with that long-time nemesis of the PMO, the organization’s reluctance to change in general, or accept basic PM precepts in particular?
First, consider how informed decisions are made in medium-to-large organizations. Sometimes you’ll see utter geniuses (or those who think of themselves that way) making virtually all of their choices based on their reflexes, gut feelings, prior experiences, or some combination thereof. Mostly, though, upper-level management will depend on information, whether from direct observation, members of the staff preparing and presenting it, or computer-based information streams. Of that last category, it’s likely that the main component of the diverse Management Information stream is the General Ledger – after all, the point of “all” management is to “maximize shareholder wealth,” right? So, even if the organization’s founder(s) is still passionately pursuing the original vision, by the time the movement turns into a business, and everything’s getting monetized, then the General Ledger, almost definitionally, must be the main source of management information. This being the case, the Chief Financial Officer (CFO) is likely to attain near Oracle-at-Delphi status, being the source and residence of most of the relevant data needed to make informed decisions.
Now, imagine the poor person who’s been assigned the PMO Director position. Reduced to its very core, what is this person’s message? Isn’t it that, if given just a bit of budget and organizational leverage, she can deliver an information stream, outside of the General Ledger, that nevertheless informs decisions on the optimal use of resources in pursuit of accomplishing scope? Just to be clear, this is in stark contrast to the Asset Managers’ message, which can be reduced to “this is how we can make money in the performance of scope realization.” In other words, the central question driving the development of the business model is either “How do we optimize resource allocation to make our customers happy?” or else “How do we squeeze maximum profits from customers, happy or otherwise?”
It's not a trivial distinction. It is, in fact, the determiner of how the business model changes as the organization matures, either consciously or accidentally. For if the pursuit of scope becomes the priority, then those who had been previously approaching Oracle-at-Delphi status when it comes to delivering actionable management information will experience a reduction in their utility and, therefore, prestige and organizational standing. From the Asset Managers’ point of view, those PM-types delivering the occasional insight that helps make a better decision now and again is okay, but the primary basis of the really key choices involving actual currency should be predicated on Generally Accepted Accounting Principles (GAAP). To believe otherwise is to directly challenge their most basic precept, that the point of all management is to “maximize shareholder wealth.” It’s in the very nature of the changing business model to resist significant incursions from newly-established PMOs, particularly in portfolio-level cost and schedule performance analysis – probably the most valuable contribution that a PMO has to offer.
Keep in mind all of this pertains to the organization that’s moving from the “movement” phase into the “business” phase. In the management world, organizations only stay alive as long as they make a profit. By the time the organization is moving from “business” to “racket,” the monetize-everything approach has so dominated the business model that it’s becoming more and more unlikely that any attempt at returning to a customer-focused approach – the very essence of PM – will succeed. The business model has become so ossified as to approach near-granite density. The frustrated PMO Director may come away believing that his efforts have been thwarted by a widespread reluctance to change, but it may easily have been due to a hardened business model, made so by a predictable process, entirely consistent with theories being taught in business schools across the land to this day.
So, to the newly-hired PMO Director, I would say this: Does it feel like bringing changes to your organization is like drilling through granite? There’s a reason for that.
