by Jen L. Skrabak, PMP, PfMP
Successfully implementing strategic initiatives is a high priority for most organizations; however, few organizations are doing it well, if at all. In fact, only 10 percent are aligning portfolio management with strategy implementation.
Based on my experience, there are seven critical success factors to align portfolio management with strategy:
1. Agility: This is a broad umbrella for organizational culture and processes that are nimble and versatile. Being nimble suggests speed in reacting and being versatile suggests flexibility and adaptability. It’s crucial to build a nimble and flexible organization and portfolio management processes to take advantage of internal or external changes. Portfolio management must be seen as the enabler of strategic change and anticipate iterative, incremental and frequent adjustments to the portfolio.
2. The 3 C’s: Culture, Change Management and Communications: The “triple threat” of portfolio management is having all three components work in harmony to enable the strategy. Culture can be thought of as the personality and habits that an organization embodies, and although it may be difficult to describe, it can be seen and felt when walking around an organization. It’s been commonly cited that up to 97 percent of the employees in an organization don’t understand the strategy, and over 90 percent of mergers and acquisitions fail due to culture clashes.
Rather than letting culture just happen by accident, organizations should consciously build and shape the culture of the organization. And, of course, the culture must be socialized through communications and change management to not only convey the right messages and keep employees engaged, but also recognize and reward the right behaviors.
3. Governance: Good portfolio management processes ensure these core governance functions are implemented:
· Oversight: Leadership, guidance and direction. The key is being involved (through visible engagement and support in problem solving and removing barriers), not just informed (receiving status reports).
· Control: Monitoring and reporting of key performance indicators, including leading (not lagging) indicators. Too often, portfolio managers report on scope, time and budget status, however, those are all retroactive events. Although course corrections can be made, it is too late to be proactive and, as we all know, it’s easier to stop a project’s problems earlier rather than later. Leading indicators, including risk exposure, incremental value delivered and requirements volatility, are predictive.
· Integration: Alignment to strategy, as well as organizational ownership of the changes that the portfolio is implementing, should be driven by portfolio governance.
· Decision Making: While empowering teams to make day-to-day decisions, broad decisions also need executive and management support to ensure buy-in across the organization.
4. Value: The value to the organization depends on performance of the portfolio holistically, not individual components. It starts with ensuring the right programs and projects are selected. Sometimes, the focus is on an individual project’s ROI instead of the fact that although a project may have a positive return, it should be compared against competing projects’ risk, return, and alignment to strategy.
5. Risk Management: There should be a balance of the negative and positive. Mitigate threats and take advantage of opportunities. Value is ultimately the result of performance x risk/opportunity.
6. PPPM Maturity: Portfolio, program and project management (PPPM) maturity ensures the process and talent exist to deliver the programs and projects reliably. Maturity is not measured by a single dimension such as the success rate of the “triple constraint.” Instead that measure includes speed to market, customer satisfaction and strategy enablement.
7. Organizational Structure: When building an organization to enable a strategic initiative (a type of portfolio), an organization should be defined by verticals of end-to-end processes and horizontal enablers. Horizontal enablers are common support elements that span across the verticals organized by the work instead of the functional area—such as change management, reporting, training.
How do you align portfolio management with strategy? I look forward to your thoughts!
By Jen L. Skrabak, PMP, PfMP
Seven in 10 organizations have a PMO, according to PMI’s 2016 Pulse of the Profession. That’s roughly the same as what other PMI surveys have shown in recent years. Why has the prevalence of PMOs plateaued? It could be that many people still perceive PMOs as providing low value but high administrative costs while doing little to improve project delivery.
Worse, the general state of project management isn’t improving in spite of this increase in PMOs. Organizations waste US$122 million for every US$1 billion invested in projects, according to the 2016 Pulse report. That’s a 12 percent increase over the previous year.
Why the disparity between project success rates and the prevalence of PMOs? There’s a gap between the vision and reality of PMOs. Here are four reasons why people may hate PMOs—and what PMO leaders can do about it.
1. Redundancy Over Efficiency
I’ve worked in multiple Fortune 100 organizations where there were not just one, but multiple PMOs, that a critical portfolio may have to report into.
There may be functional PMOs (i.e. IT PMOs and/or business division PMOs), capital-planning PMOs, product PMOs, or enterprise PMOs, just to name a few. These multiple layers can cost the portfolio manager tremendous time and energy in trying to manage multiple PMO demands and requests.
There is value in centralizing and standardizing portfolio information and providing visibility to executives to enable decision-making. However, the next time we just start up a new PMO or implement portfolio management processes, we should ask ourselves if there are existing areas that already provide the same type of oversight and control.
2. Bureaucracy Over Execution
In many organizations, it takes a village just to get a new program or project approved. The focus is on the administrative side of things—filling out the right forms and attending the right meetings—and rarely on improving project delivery or execution. If a PMO’s primary focus is on gathering status reports for a dashboard, it loses touch with day-to-day execution.
There is a lot of complexity in organizations that portfolio managers must navigate, and the key is not to add more.
Ask yourself: Is your PMO’s focus on adherence to process and methodology, gates and deliverables? Are you generating voluminous portfolio data without succinct actionable plans that will increase project success?
3. Templates Over Talent
PMOs often focus on generating templates rather than having trained and skilled project managers that can assist in all aspects of delivery, especially enabling organizational change management. Portfolio management processes need to be sustainable and repeatable, demonstrate measurable impact and contribute to project success.
Too often, PMOs focus on the templates to try to enforce the process instead of having the right talent in place to help programs and projects be successful.
4. Tactics Over Strategy
For some organizations, there’s not as much value in tracking schedule and budget adherence as there is in developing the next innovation that will greatly advance strategy.
By definition, strategy changes in response to environment conditions, competitors, or the need to innovate. Is there agility (speed and flexibility) in your PMO processes that allow you to react rapidly? How can you inspire innovation in your portfolio rather than stifle it? Is your PMO positioned to identify the next innovation, and rapidly move it forward? Why not?
Why do people that you have worked with dislike PMOs? How can they be improved? Please share your thoughts below!
By Marian Haus, PMP
There is obviously a high interest in the project management community and literature about what drives project success. For example, searching online for “why projects succeed” will return you five times more web pages than “why projects fail.” Similarly, there are four times more pages about “project success factors” than “project failure factors.”
This is no coincidence! The overwhelming interest in project success insights is driven by the struggle of many organizations and project managers to understand what drives success.
But before answering the question of why projects succeed, let’s first try to define project success.
The most common definition of success is delivering the project on time, on budget and in scope. PMI’s PMBOK Guide® says a project is successful if the following parameters are met: product and project quality, timeliness, budget compliance and customer satisfaction.
Others define project success by measuring the project ROI (or business case) over a certain period of time. If the ROI is positive, the project is declared successful, regardless of its deviations along the way.
I have my own definition: A project is successful if it meets its given goals, within acceptable variance boundaries (e.g., in terms of scope, time or budget). This is a relative definition and relies on the fact that the world is not perfect. Hence even a successful project will rarely be a 100 percent success.
A civil construction project might be declared successful if it meets its scope and quality. Acceptable time or budget deviations might not be seen as failure. Similarly, an IT project might be declared successful if it meets its scope on time, with acceptable deviations from quality or budget.
A project’s success is relative: it depends on how the success criteria and metrics are defined from the very beginnings of the project, along with who will measure them.
OK, there are clearly many definitions of project success. Similarly, there are also many views and studies on why projects succeed.
Let’s take a look at a few studies and try to find a common denominator.
According to PMI’s 2015 Pulse of the Profession®: Capturing the Value of Project Management, over the last three years the number of projects meeting their goals—hence being successful—has remained steady at about two-thirds of projects. This success is the result of organizations supporting project excellence by focusing on fundamental aspects of culture, talent and process.
But size matters, too. A Gartner study from 2012 shows that small IT projects (below US$350,000) are more likely to succeed than big projects (budgets over US$1 million).
Other studies reveal that project success is tightly linked to clear project objectives and requirements that are fully understood and supported by actively engaged stakeholders.
My view on the common denominator that leads to project success is simple: the main drivers of project success are rarely of a technical nature. Instead, the drivers are the basics of the project management culture and discipline within the project organization.
In other words, fix the project management basics, and your chances of reaching project success will increase.
By Jen Skrabak, PMP, PfMP
I am amazed that so many projects and programs (and by extension, portfolios) are still so challenged. Forty-four percent of projects are unsuccessful, and we waste $109 million for each $1 billion in project expenditures, according to the 2015 edition of PMI’s Pulse of the Profession.
One solution that the report identifies is mature portfolio management processes. With that in mind, I’ve come up with a list of five things that unsuccessful portfolio managers do—and what they should focus on doing instead.
1. Worry about things they can’t change.
Unsuccessful portfolio managers worry about the past or dwell on problems outside their immediate influence. Successful portfolio managers learn from the past and move on. Sometimes, failures turn into lessons that create the foundation for future growth and opportunity.
Portfolio managers should stay focused on what can we influence, negotiate and communicate, as well as what we can start, stop and sustain. Every month or quarter, assess the processes, programs and projects in your span of control. Decide which to start, stop and sustain, and develop action plans around those decisions (including dates, resources required and collaborators).
2. Give up when things get too hard.
It may be easy to throw in the towel when conditions become challenging. But the hallmark of a good portfolio manager is the ability to find solutions.
Sometimes, our immediate reaction to a proposal is to think the timeframes or goals are not possible. However, when we get the team together to focus on what can be done, we come up with creative solutions. It’s necessary to gather the facts and do the analysis instead of jumping to conclusions.
3. Set unattainable goals.
There’s a difference between a stretch goal and an impossible one. Sometimes, projects or programs don’t start off as unattainable (see #2 above) or undoable, but they become so.
Although we may be good at starting projects or programs, there’s not enough emphasis on stopping them. The environment (internal or external) may have changed, key resources may no longer be available, organizational priorities may have shifted, or the business buy-in might take too long. Rather than calling attention to the situation and recommending a “no go,” unsuccessful portfolio managers tend to press on with blinders. This wastes time and resources.
Once I was managing a $500 million portfolio of international expansion programs and projects. The portfolio sponsor told me, “I want to know if we’re falling off the cliff.” Although we hope our programs or projects never get to that point, his words did clearly specify the role I was supposed to play.
4. Stay in your comfort zone.
It’s easy to create a portfolio in which the potential for risk and failure is low. But that means we may be missing out on opportunities for innovation or great returns. Advocating change in your portfolio requires taking calculated risks that you can learn from or will pay off in the longer term. The successful portfolio manager will advocate taking good risks (aka opportunities) instead of blindly going forward with bad risks.
Taking advantage of opportunities is the key to transformation and reinvention. It’s essential to any organization that wants to survive long-term. For example, who could’ve predicted just a few years ago that Amazon, Netflix and even YouTube would become rivals to TV and movie studios in providing original entertainment? This required calculated risk taking.
5. Forget about balance.
Balance is important, whether it’s balancing your portfolio or balancing your work and your life. If you’re not performing your best because you’re not taking care of yourself, it’s going to affect your portfolio. Especially with technology blending our work and personal time, it’s sometimes hard to think about balance. One survey showed that we’re checking our phones up to 150 times per day. But remember the basics: eat well, exercise, take time to de-stress, and set aside time for yourself, family and friends.
What do you notice unsuccessful portfolio managers do, and what would you recommend instead? Please share your thoughts in the comments.
By Conrado Morlan
All organizations want to achieve and maintain competitive advantage. But when it comes to project management practices, not all organizations are doing what’s necessary to stand apart from competitors. Why? Some are stuck in a traditional mindset.
To elaborate: For years, organizations have looked for competitive advantage through a traditional project management approach that is operational in nature and includes strict controls focused on schedules, budgets and resources. The problem with this approach is that sometimes even when projects meet controls—i.e., they’re completed on time and within budget—organizations don’t achieve competitive advantage through the expected benefits.
On the other hand, some innovative organizations are opting to evolve from an operational to an organizational project management (OPM) approach. This approach conceives of projects strictly as a means to achieve business objectives defined through the organization’s strategy. These organizations have a project and program management mindset at their core. Because of that commitment, their projects meet original goals more often than the average organization.
The payoff is huge, according to PMI's 2015 Pulse of the Profession® report, which was released last month. High-performing organizations—those who view project management as strategy implementation, and support it— waste 13 times less money than their competitors.
Taking It to the Next Level
The results suggest that to successfully take the OPM route, organizations must be committed to creating a culture that views project management as a tool for attaining business objectives stemming from strategy.
They must aim for a project execution approach that is both controlled and agile, in order to adapt to potential strategy changes. To ensure successful project outcomes, organizations taking the OPM approach must also focus on talent management. They should look for project managers who not only have the requisite technical skills, but also can step into more strategic and leadership roles.
Organizations adopting OPM will use standardized project management practices. This process will be supported by an improved project governance process that will ensure projects are highly aligned to the strategy of the organization.
As organizations transition into OPM, they should implement a benefit realization training program that showcases examples of strong, focused project management practices that achieved intended strategic benefits. It helps to share these examples across the organization to reveal the effectiveness of strategic project alignment.
Is your organization in the process of taking its project management approach to the next level through OPM? If so, what changes have you experienced in terms of management and project expectations?