Image: Inc. Magazine
In this two-part series of posts, I would like to point you to an excellent post made right here on Projectmanagement.com by Bruce Harpham.
It’s entitled Climate Change: Micro and Macro Opportunities for Project Managers
Climate change has arrived, and it is wreaking havoc across our world. The question now becomes: What can we do about it? There is no single correct answer to this complex question. The first step to coming up with solutions starts with understanding our situation.
Bruce goes on to talk about the disappointment some of us share that although global warming or climate change has been a topic of discussion for a long time, not much has been done about it.
Who are we?
We are project managers*! Get-r-done people. Don’t you find this lack of action reprehensible? I do. I think that we as “Executors” (see Dr. Barbara Trautlein’s wonderful book on Change Intelligence) want to get stuff done. But there is an ironic twist here. We executors like to get things done on time, accomplishing scope, and doing all of this within budget. That often blinds us to thinking about the product of our project in the long-term - see the video at the end of this post for an example. Whatever it is that we build – whether it’s an app or a bridge or a new house-cleaning service, we want it to go live, carry traffic, and clean houses. Once that has started to happen, we do the old “wipe our hands” gesture and say, “now give me my next project!”.
That means we have not thought through to the operation of our project’s outcome. Just that simple mind exercise, perhaps when doing risk identification, would make such a big difference in terms of making project outcomes sustainable.
But there’s a catch!
Many of the changes to the product or service we may want to make, which consider sustainability and impact (social, economic, or ecological) have to please our sponsors and may, on their surface, seem to be too expensive, or may delay the release of the project. The project manager may be hesitant to raise these suggestions, partially due to a culture in an organization that makes it unsafe to speak up. This topic is enough for an entire series of blog posts, and in fact is an entire chapter in an upcoming DeGruyter book, The Handbook of Responsible Project Management. So I won’t follow that thread here; suffice it to say that it will take courage, supported by facts, supported by likely high-level commitments at the corporate level to Corporate Social Responsibility, to make these suggestions and, yes, perhaps delay the project or make the product or service more expensive, but to move the needle a little bit in terms of (for example) climate change.
In Part 2, I will take a look at Bruce’s point-by-point list of things we can do as project leaders and, for what it’s worth, add my opinion and angle on how you can make those a reality in your projects.
*I prefer (and am starting to assert the use of)"Project Leader" instead of project manager. Look up the list of traits and attributes associated with manager, then do the same for leader. You’ll see. Your title should be Project Leader.
Well, at least be aware of them. Read on to understand. One of the pleasures of writing books on different topics (or at least different within the field of project management) is to find unusual connections between them. I recently had the pleasure of collaborating with Loredana Abramo, PMP on the new book, Bridging the PM Competency Gap. One of the things on which we focus in this book is the role that generational differences plays in the way that people gain knowledge. In turn, this required us to dig in and find out what drives Millennials. In one of the tables of the book, we look at Motivating and Enabling Factors, Deterring and Blocking Factors, and Engagement Strategies. One of the Motivating Factors was ‘strong ethical leaders’. And that is the connection from the Bridging the Gap book to the books on sustainability in PM (Green Project Management and Driving Project, Program, and Portfolio Success) and indeed to this blog.
Today’s post is about how Millennials are driving change to the way that wealth is invested, with their propensity to insist that ethics, and along with it, social, economic, and ecological bottom lines are considered and balanced. By the way, let’s not ignore Millennials. Why? Their spending power is estimated at US$170B per year. I highly recommend that you spend a moment looking at this infographic (in small form here, linked to a larger size image for your convenience).
This is why a small story in The Economist’s most recent issue caught my eye. It’s called Generation SRI and the subtitle is “Sustainable Investing Joins the Mainstream”. SRI is “Socially Responsible Investing”.
From the article:
Fans of “socially responsible investment” (SRI) hope that millennials, the generation born in the 1980s and 1990s, will drag these concepts into the investment mainstream. SRI is a broad-brush term, that can be used to cover everything from divestment from companies seen as doing harm, to limiting investment to companies that do measurable good (impact investing). The US Forum for Sustainable and Responsible Investment, a lobby group, estimates that more than a fifth ($8.7trn) of the funds under professional management in America is screened on SRI criteria, broadly defined, up from a ninth in 2012 (see chart).
The numbers are hard to ignore.
From the Green Money Journal:
Sustainable, responsible and impact investing assets now account for $8.72 trillion, or one in five dollars invested under professional management in the United States according to the US SIF Foundation’s biennial Report on US Sustainable, Responsible and Impact Investing Trends 2016 which was released in mid-November 2016. See chart below:
According to a survey in America by Morgan Stanley, 75% (of Millennials) agreed that their investments could influence climate change, compared with 58% of the overall population. They not only believe in the triple bottom line, they have confidence that they can be change agents. They are also twice as likely as investors in general to check product packaging or invest in companies that espouse social or environmental objectives.
The Economist article cautions us that we can’t fool Millennials. They have too much savvy, and their’s too much data available to them (and they know how to use it) to ‘greenwash’ this group. From the article: “money managers who pay only lip-service to SRI are unlikely to get away with it for long: sooner or later the robots and millennials are bound to call them out”. And there is the rationale for the title of this blog post.
Let’s get back to the Morgan Stanley survey.
“As widespread attention to sustainability continues to increase, consumers and investors alike are now more than ever factoring sustainability issues into their investment decisions,” said Audrey Choi, Chief Sustainability Officer and Chief Marketing Officer at Morgan Stanley.
Because it’s important for us as project managers – with an increasing number of Millennial stakeholders – to understand this generation, we provide this extract from the survey. Note the connection to long-term thinking.
• Values Matter. Consciousness around sustainability has leapt from the consumer space to the investment space. According to the latest survey, investor attention to sustainability factors is now growing faster than that of consumers as a whole.
• Environmental impact. Increased interest in sustainable investing occurred despite a heightened sense of market volatility, implying perhaps that in uncertain times, companies and funds with sustainable attributes may be viewed as more stable over the long run. 71% of investors polled agreed that good social, environmental and governance practices can potentially lead to higher profitability and may be better long-term investments.
• Focus on Customization. The poll showed a strong desire for the ability to customize sustainable investments; 80% of individual investors and 89% of Millennials are interested in sustainable investments that can be customized to meet their interests and goals.
• Sustainable Investing in the Workplace. With Millennials projected to make up 75% of the American workforce by 2025, it’s interesting to note that nine out of ten Millennial investors (90%) expressed interest in pursuing sustainable investments as part of their 401(k) portfolios. This implies that offering sustainable investment funds as 401(k) options may be an additional way for companies to attract and retain Millennial talent in competitive job markets.
Millennials continue to fuel growth. Nearly nine in ten Millennials surveyed (86%) are interested in sustainable investing, compared with three-quarters of individual investors overall (75%). This heightened interest is likely tied to Millennials’ strong belief that they can make a positive difference with their own investments. Related findings from the survey include:
• Influence. 75% agree that it is possible for “my investment decisions to influence the amount of climate change caused by human activities," compared with 58% of the total individual investor population.
• Impact. 84% agree that it is possible for “my investment decisions to create economic growth that lifts people out of poverty," compared with 79% of the total individual investor population surveyed.
In summary, you get a feel here for the mindset of these Millennial investors, who are also project sponsors, team members, leaders, and customers.
What does this mean to project managers? Well, if investors, who are (or should be) long-term thinkers are increasingly thinking about long-term impact, and projects are launched by investors, then by the tried and true property of transitivity, project managers should be thinking about long-term impacts as well – thinking through the project’s outcome to the benefits – and other side-effects of the project’s product in the long-term.
In Part 2, I’ll discuss the particular ‘outcome areas’ that are the focus of sustainable investment, and how you can use this information to (A) make better decisions on your own project that serve the longer term, and (B) better understand the thinking behind the investment choices made by Millennials.
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.