Harvesting Project Value - Part 2 of 2
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In Part 1 of this post, I raised the issue of, and said that we would come back around to the divergence we see between the 70% failure rate (based on “project success” – looking at the steady-state outcome) and the 25% failure rate (based on “project management success”). You may want to go back and review Part 1 for orientation. To help explain this major divergence in statistics, we need to revert to the very definition of a project. Here’s what Dr. Kerzner is saying about this in his talks on “Project Management 2.0 and 3.0”. I thank Dr. Kerzner for permission to use these images which remain his intellectual property.
Do you catch that rather non-subtle mention of sustainability? Remember: we’re not talking in particular about saving snails or reducing our carbon footprint. Of course, those things are part of the concept of the “triple bottom line”, made up of social, economic, and yes, ecological outcomes, but they aren’t the only part. What Dr. Kerzner is so wisely pointing out is that a project should be concerned with ‘the beyond’ – the sustained view of the project, that is, the way in which its outcome (hopefully) starts to realize business value – in a sustained way. How can we do this? Don’t we have to change our view of the lifecycle of a project, expanding it to look past the end, even past what we normally consider the outcome, handover, and even past what we have come to call “Benefits Realization”? The short and only answer, is: yes. Yes with a capital Y. In the figure below you can see that Dr. Kerzner has mapped out timeline that adds an important new element, “VA” – Value Analysis, paired with Benefits Realization, and calls that portion of the Investment Lifecycle “Value Determination”. Note the name of the figure: Investment Lifecycle. We know from the PMBOK® Guide that prior to the Project Charter, senior management of an organization “owns” the project decisions, the choice to invest at all, and in fact, is using tools like ROI, IRR, NPV, and Payback Period to determine whether or not a project is even worth the investment. So I think it’s actually easier for project managers who have been practicing for a while to “get” these green chevrons (IG and PA in the figure). The tougher part is to switch to a mindset in which the later green chevrons (BR and VA) are considered in project decision making. If you want to test yourself on this, check my recent blog post “Paved With Good Intentions” – there’s a scenario in that post that challenges your PM thinking in this very area of Value Determination.
Dr. Kerzner takes this idea much further, providing even tools and techniques to help perform Value Analysis. I provide an example below in which he proposes a scoring system to assess the project based on its deliverables (which is where most of us as PMs are trained to STOP) and also its business value. It’s no accident that the business value (with thanks to Vilfredo Pareto) is 70% compared to the 30% for deliverables. In our Project Management World, we see that 30% as The Whole Pizza, when, as Dr. Kerzner is coaching us, it’s just a slice. A big slice, granted, and a slice without which there’s really no Pizza at all, but still – just a slice.
Also, notice the symmetry here. The very same measurements we use and acknowledge, and happy integrate without question, into the PMBOK® Guide, namely Benefit/Cost Ratio, ROI, Payback Period, are used again after the project is handed over. In effect, we are seeing if our predictions about the project – those that we made during the selection process – are coming true. We cannot validate this at the ribbon-cutting ceremony, we have to wait, and this is problematic for the mindset of the PM (and I know you, because I am one, and I have the same propensities) - you are saying, "OK, on to the next project, let me have at it!". It's also a problem from a pragmatic perspective, since we have to wait, perhaps years, to know if a project is providing (harvesting) this business value. The 70% failure rate that Dr. Kerzner is quoting uses this long-term view. That’s the difference! The 25% failure rate shown in the Standish studies – well, that’s using the ‘scope, time, cost’ view, with failure being considered if two of the three are not delivered. How do you look at your projects? Are you focusing only on the deliverables, or are you considering what your project delivers in the steady state? Importantly, how are you making decisions in your project? Are you focused on the Triple Constraint, or the Triple Bottom Line? What Dr. Kerzner is telling you (adjusted to reflect the narrative that I use) is that your focus needs to be not only on project management success, but also on project success. And that means you should be making those decisions with harvesting value from your project in mind. Happy Harvesting!
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The Hedgehogs Strike Back
Categories:
triple bottom line,
hedgehogs,
long term,
benefits,
economic,
ecological,
social,
TBL,
Benefits Realization,
Sustainability
Categories: triple bottom line, hedgehogs, long term, benefits, economic, ecological, social, TBL, Benefits Realization, Sustainability
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Although the title of this post might make you think this is some strange cross between Star Wars and the video game series by Sega, instead it’s a different sort of combination, mainly coming from a great NPR podcast called “Hidden Brain” by Shankar Vedantam and a book called Expert Political Judgement by Philip Tetlock. As a matter of fact, the title of this post is literally one of the chapters in Tetlock’s book. The Hidden Brain podcast episode, which turns out to be about transgender surgery, starts off by mentioning a metaphor about the fox and the hedgehog, originated by Greek philosopher Archilochus and popularized by philosopher Isaac Berlin. In the story – and the essay from Berlin, hedgehogs view the world through the lens of a single, powerful, overarching, defining idea – in their case, “DO NOT GET EATEN” – and do so by rolling up into a spine-covered ball, and foxes, who draw on a wide variety of tactics to hunt a variety of prey.
Foxes are flexible and clever and adaptable but often fail to ‘roll things up’ into single idea, and hedgehogs are steadfast and dependable and focused on a single end objective.
In a normal project management blog, we could talk (productively) about how a PM has to be both – a sort of Hedgefox – which, by the way, is a real thing in the book by Tenlock. But no, this is no normal project management blog. It’s about the intersection of PM and long-term thinking, PM and the triple bottom line, PM and sustainability. So although a PM must be a fox in that he or she must be flexible and adaptable, and the PM must be a hedgehog in their focus on the end objective of the project, I am here to humbly and hedgehogly (an adjective I just invented) request that you add an additional dose of hedgehog to your PM genetic makeup. Why? Here’s why. If you focus on the end objectives of the project, you are correctly satisfying the stakeholders’ requirements and that’s great. It’s what we do as PMs no matter what kind of animal we are. But the project’s product (and by this I mean physical product or new service) in its steady state, has characteristics that differ from the product at its ‘ribbon-cutting ceremony’. For example, a new factory may be ‘a success’, but if it produces pollutants into the local water table, it’s not really successful in the long term, is it? As a PM, are you focused only on the ‘ribbon-cutting ceremony’? How foxy of you. But that’s not good enough, not by a longshot and certainly not in the long-term. You need to have a single-minded idea of sustainability in your own PM planning toolbox. Think as a hedgehog – with the big, overarching idea of long-lasting success, not just in social and ecological benefits but also in terms of economic success. Is the ‘product of the project’ going to realize benefits for your organization for a long time? If so, congratulations! You have out-foxed the fox, or perhaps more properly stated, you have out-hedgehogged the fox. There, see? Now I invented a new verb! One way to amp-up your inner hedgehog is to include sustainability-oriented statements in the project’s Charter and to carry that forward on your little spiky back to the Stakeholder and Risk Registers. Have you considered stakeholders who will only come into the picture 3 years down the road? Have you considered threats and opportunities that have to do with the operation of your project’s product, and not just the product itself? These are little hedgehog tricks that can serve you (and your organization … and your planet) well. NOTE: I highly recommend the Hidden Brain podcast for project managers, whether you are interested in sustainability or not. The guests are interesting, the stories are assembled nicely, and most importantly, they make you think about the way you think about the way you think.
References and further reading: If this idea intrigues your fox, hedgehog, or hedgefox brain, here are several other articles that take on the parable of the hedgehog and the fox and apply it to various business and project scenarios: http://longnow.org/seminars/02007/jan/26/why-foxes-are-better-forecasters-than-hedgehogs/ http://thefoxandthehedgehog.com/the-fox-and-the-hedgehog/ http://vestedworld.com/2016/06/a-hedgehog-and-a-fox-walk-into-a-startup/ https://lobelog.com/obama-the-hedgehog-must-now-become-a-fox/ http://smartliving365.com/are-you-a-hedgehog-or-a-fox-and-why-should-you-care/ https://blogs.wsj.com/corporate-intelligence/2014/01/24/mcdonalds-and-wendys/ http://blogs.managementconcepts.com/hedgehogs-foxes-future-federal-workforce-planning/#.WVLxsOmQxPY |
