Strategy is a heavily used and misused word. It is regularly confused with tactics and often conveys some level on importance. Due to our culture, people work it into their project titles and resumes trying to increase their perceived importance. It works, as most people see the word and think elite, long-range, and far-thinking. To some degree, it is; however, it may not be the most critical aspects to a company. Are strategic projects really the highest priority?
What is Strategy?
Let us start by understanding strategies definition. In the mid-1990s, Michael Porter published probably the most accepted business definition of the word in a whitepaper titled, oddly enough, What is Strategy? It may be the most referenced white paper on the subject. Per Porter:
“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”[i]
Two words should stand out—difference and value. He effectively argues that operational effectiveness is not strategy because it does not make an organization unique. Companies cannot survive without continually improving operational effectiveness, but operational effectiveness does not make them different from their competitors and, hence, is not strategy.
Types of Business Activities
Using either strategic or operational as classification implicitly prioritizes initiatives and projects. But operational can be subclassified into operational efficiency, compliance, and maintenance. This expands Porter's binary classification from—strategic and operational—to the four major types of projects—strategic, operational efficiency, compliance, and maintenance.
Strategic Projects: These projects focus on increasing the number of customers or revenue in areas that have the best long-term advantage over competitors. Examples are projects that implement new capabilities that competitors do not have, such as new innovative products or creating direct purchasing options when all your competitors use distributors. Strategic projects can affect the top and bottom line for the company.
Operational Projects: Operational efficiency projects enable organizations to save either time or money in operations or new product creation. Examples include, lean initiatives, manufacturing or purchasing process improvements, and the like. Operational projects tend to affect the bottom line quickly.
Compliance Projects: Without successfully completing compliance projects, organizations will have to abandon some aspect of their business. Not meeting new regulations, whether governmental, standards groups, or those from partner companies, will completely isolate the organization from specific customer sectors, if not risking running afoul of the legal system. Examples of compliance projects are Sarbanes-Oxley compliance (legal), electronic data interchange required from clients or suppliers (standards), or software licensing audits (contractual). Compliance projects tend to affect the company’s top line revenues capabilities.
Maintenance Projects: Maintenance projects include restriping parking lots, upgrading to the latest version of operating systems, training employees, and replacing roofs. They rarely contribute much if any to the bottom line directly and function to preserve assets—whether those are making people happy to prolonging the useful life of an asset. The effects are long-range and when neglected will negatively affect the company’s top and bottom line.
The Value Factor
The second component in Porters definition is value. Competitive difference seems easy to quantify relative to the term value. Value, like beauty, is in the eye of the beholder. However, value is the actual measure of a project’s success. If a project delivers value, executives will forgive being over budget or late relatively quickly—depending on the circumstances.
For instance, if a project is supposed to provide a component of Sarbanes-Oxley compliance, is 40% over budget, but provides more value than originally anticipated by reducing the expected bureaucracy, the overage may be forgotten. However, if the project is building a new semiconductor technology (an industry with high competition and low margins) and is either over budget or late, the window of opportunity may close before there is a satisfactory return on investment—even if the technology was improved in the process.
Why it Matters
These distinctions are not academic. These classifications of type and value drive the priority and the level of dedication and attention projects will get from executives (see Figure 1). When companies are flush with money or have few crises, project priorities are set rather idealistically. When revenue slumps or an urgent and unexpected issue arrises requiring executive attention, priorities change. The problem is that the reprioritization usually comes with little notice and no fanfare. Suddenly, executive sponsors do not attend meetings or return emails and phone calls. Teams, and even middle managers, are left bewildered at the sudden silence. Executive sponsors seemingly disengage from projects as they refocus attention on the new objective. Taking a quick review of the inherent priorities might lead to a better understanding of why executives disappear. It could be that the strategic or maintenance project is no longer as important as other operational or compliance projects.
What it Means to You
For you it is simple. If you want job security, then focus on compliance projects. They may sound mundane and boring. However, they rarely are cancelled. If you can specialize even more and develop an expertise on compliance with operational efficiency (being able to deploy a compliance project without the inefficiencies of bureaucracy), you have combined both high priority and value. This is the foundation for a very lucrative career.
If you are insistent on a flashy title that focuses on strategy, then prepare yourself for a life of high risk, ups and downs of the economy, and a more whimsical interpretation of value.
Michael Porter’s work What is Strategy? was published in 1996 by Harvard Business Review and is both revered and reviled. Twenty years later people quote to support or refute his thesis. Some think it is too rigid, while others see it as the definitive work. The truth is in the middle depending on the situation. In my latest book,In Filling Execution Gaps: How Executives and Project Managers Turn Strategy into Successful Projects, I use this definition to show how companies can use his concepts to establish a common understanding of the company, maintain alignment, and help govern projects. The absence of common understanding, misalignment with goals, and ineffective governance are just three of the six gaps that plague organizations. The other three gaps are disengaged executive sponsors, poor change management, and lackluster leadership. In Filling Execution Gaps, I explain these gaps and identify solutions to fill them. Available at Amazon or your favorite bookseller.
Ranking challenges on a project, culture has to be in the top five root causes for failure. An ally in that is Kristine Briežkalne who contacted me a few weeks ago to get my thoughts. After all having worked in Taiwan, Singapore, Korea, Japan, Israel, United States, and Canada, I wear many scars of both blatant and subtle cultural violations. I also know that within a culture one person's success is often another person's failure. Kristine, a masters candidate studying at Riga International School of Economics and Business Administration, is writing her thesis on culture and project success. So, after dispelling concerns about clicking on some random email link, I completed her survey (please feel free to take it yourself). She has some interesting views and presented me with a Venn diagram showing four aspects of a project (business, client, project management, and growth perspectives) and how they intersected. As the diagram is part of her Master's thesis, I will let you ponder the how to label the overlapping areas (an eye-opening exercise).
Ignoring Culture Begets Failure
Anyone running an international project will be in for a nasty surprise if they ignore culture and expect their project to succeed. Will a US-based delivery team actually be able to claim success in an Israeli delivery if they do not forfeit scope on a regular basis? Will they succeed in Asia if the client loses face at any point? It is doubtful. Understanding success criteria has to be done very early on, long before the project starts. You can deliver your definition of value (much different then scope, schedule, and budget) to all parties and never get asked back to do another project. Or, maybe your culture does not care about repeat customers.
It Is All About Value
We need to get back to the basics of describing success. Too many companies define it in terms of scope, schedule, and budget. Yet most customers, regardless of culture, say that if a project delivers something they will not use, it is a failure (regardless of whether it met the scope, schedule, and budget). Granted, some cultures need to save-face and say the project was a success whether or not they like it. Hence, the challenge is determining the value in the eyes of those who have the most clout.
I am steadfast in the belief that value is the measure of success. That, however, just creates one more definition to resolve—value. I am not arguing semantics. Focusing on value, rather than success, creates a different mindset. People include intangibles when they describe value. They realize the value for the delivery organization is different than value for the customer. Cost is a huge component of customer value and margin for the delivery group. So is usability and referenciblity, respectively. Some cultures value low cost, others saving face, some argue in more scope, others look to efficiency for value. It depends on the frame you view it through (see Table 1).
The Wood Stove
Recently my wife and I bought a thermocouple-driven fan for our wood burning stove. It was expensive as fans go at about $110 (USD). (Walmart sells personal fans, which are close to the same size, for about 10% of that cost.) I would not trade it for boxes of Wally World other fans. It sits atop of the stove silently recirculating hot air. Would others see the value? A few people would. Would people question me paying that much for a fan? Yes… but a little less after they sat in front of the stove on a cold winter night. I am way over budget on the fan, but I am happy because I see value.
Culture has a huge impact on success. They questions are:
I suggest you take Kristine's survey, help her out, and see what her results are. Or, you can add a comment below.
As we are well into the last half of this decade, it is time to reflect on our past and contemplate the future. With the New Year we think about our families, our friends, our successes and failures; we think about our jobs, our professions, and the world of possibilities. We must reaffirm our true north and stay the course, make corrections, or find a new destination. As project managers, we must look at the changes in the discipline and translate those into a plan for our professional development—a plan that meets our needs and the needs of the discipline.
Tomorrow's Project Manager
As project managers, we have seen significant change. Over the last couple decades, the project management field has grown to be recognized as a professional discipline and many have benefited from the changing views of how projects are run. We have witnessed or implemented processes and procedures and have seen project management offices spring up to help prioritize enterprise portfolios and manage resource loading. It has been an exciting time.
In the last half dozen years, many have seen project management become a commodity. Various organizations push their certificates as the end all of employment requirements and companies have created checklists to qualify good project managers just as one might look at the functions required from a personal accounting program. Employment firms relying on high-volume placements capitalize on this attitude, realizing how cost effective the screening process can be. Meanwhile, thousands of people clamor for their project management certification so they can jump into the resource pool.
It takes more than a certification, however, to make a good project manager. The most valuable experience is coordinating all the stakeholders to achieve a common goal. These traits are difficult, if not impossible, to acquire in a class, let alone grade on a test. Process is a vital component; however, project managers must step beyond the role of processes and aspire to be leaders. This will manifest itself in three grades of project managers.
Tier One: The Coordinator
Today's certifications equip project managers to be coordinators. The expectation is that they herd cats. They work reactively at the rear and the flanks keeping the cats all going the same general direction.
This is a comfortable non-confrontational roll where a majority of project managers feel comfortable and nearly every company requires the trait. The coordinator implements processes and procedures, monitors timelines, reacts to problems, and escalates out-of-control issues. This is the area where project management has become a commodity—if you can get projects to be proceduralized anyone can manage them.
Tier Two: The Negotiator
The negotiator has a different set of skills—they run with the cats and apply reason getting them to head the correct direction. This requires that the project manager understand the stakeholder's needs and values and can mediate a compromise.
Once the portfolio develops past the point of repeatable projects, there is no longer a single possible goal a project. The project manager has to coax people to compromise and develop a mutual endpoint that provides value to all stakeholders. This is the first level of leadership.
All negotiators understand there is a process to follow—planning how to approach the negotiation, exploring options, proposing and bartering a solution, and executing the plan. However, few question that the majority of negotiation is art. The way people support their viewpoint, handle their demeanor, show confidence in their beliefs, and deal with rebuttals make or break a successful negotiation.
By managing a team in this manner, they begin to self-correct and adjust their course realizing the power of the team and ineffectiveness of running off on a tangent.
Tier Three: The Leader
The project manager that walks in front of the herd, the cats following, is at the highest level of aspiration. Leaders understand their mission, mold and maintain a vision aligned with the strategic goals of the organization, communicate the direction to the team, and inspire people to achieve that vision. The team becomes self-directing.
Leadership can be learned, but not from a book or class. It is acquired from understanding the tools and applying them. It requires experience and an open mind.
The opportunity to enter into a leadership role presents itself to nearly everyone. We need to recognize that situation and know how to step in and lead the team to success. Our biggest obstacle is the courage and confidence to move in that direction—to know when the cats will follow. The first few attempts often lack the polish and finesse of the accomplished leader, but experience brings it rewards.
How to Get There
The key to the future is acquiring the soft skills to aspire to new levels of management. Minimally this requires education in organization development, sociology, business management, and leadership. However, the cornerstone is real-world experience. As with any discipline, education pales in the shadow of experience. Moving from a reactive to a proactive approach where identifying and addressing problems prior to them becoming issues is critical. This requires a calm, methodical approach and open communication channels with all stakeholders. The result is a high-performance, self-directing team that drives any project to its appropriate goal.
What Are Your Thoughts?
How do you see project management changing over the next five years? Please let us know.
"I just want to be a project manager. I don't want all that responsibility." The room was silent, save a few exasperated sighs. Everyone looked around the room trying to figure out how we would handle the comment. No one addressed it. In fact though, there are many levels of project management maturity and only the highest levels require leadership and there is nothing wrong with this person's desire to wanting to stay out of the fray. In fact, the prominent US certification process—PMI's PMP®—has historically little to do with leadership. PMI is only recently catching up with the rest of us who have been preaching leadership and business for the last couple decades. So where do we learn about leadership and how can we improve our leadership skills?
Tips and Techniques
Leadership cannot be taught nor can you test for it. It is a set of traits we develop that are reflected in our core values and how we relate to others. Studying, learning, and mimicking various techniques are a start, but until they become part of our values and persona and are as natural as breathing, they are only superficial and we fall woefully short of being a leader.
Being a leader is a great aspiration, but requires more effort than that required to attain a simple certification. To understand what necessitates being a leader we can turn to the corporate world. In a Fast Company article by Heath Row, FedEx® specifically calls out nine traits to identify a person's leadership potential—charisma, individual consideration, intellectual stimulation, courage, dependability, flexibility, integrity, judgment, and respect for others. Here, they are paraphrased and grouped into three main categories.
A leader is a role model for others in everything he or she does. They have charisma to instill faith, respect, and trust. They respect others opinions. Instead of berating, they carefully listen and excel as a coach and advisor. Using these skills, they have developed the ability to get others to think in new ways, identifying and questioning unsupported opinion and, in its place, use evidence and reasoning. This brings a fresh new approach to problem solving in the organization.
Leaders do not give in to popular views or demands and have the courage to withstand resistance against looking at ideas that are out of the mainstream—regardless of the personal cost. They are adaptive and effective in rapidly changing environments, with an ability to discern issues, simultaneously handling a variety of problems, and making course corrections as required.
Based on a strong sense of mission, leaders are dependable, keeping their commitments and taking responsibility for their actions and their mistakes. A foundation of internal integrity guides them through what is morally and ethically correct. Superior judgment allows a leader to evaluate multiple action plans objectively using logic, analysis, and comparison. They are pragmatic decision makers.
Leadership and Project Management
With all that is entailed in being a leader, it is easy to understand why someone would make the distinction that all they wanted to be was a project manager. Minding the scope, schedule, and budget sounds quiet and peaceful, even mundane. Taking a subordinate, individual contributor role managing team members to someone else's direction, is tranquil in comparison to a leader's responsibilities. One must remember, though, there are two paths in project management—successfully managing the most difficult of projects as a leader, or following a cookbook project management style as a coordinator. The demand will increase for the former, while the latter will be commoditized and relegated to any resource, remote or local. To advance the project management discipline, leadership qualities are essential.
Leadership is more than leading the people who report to you. As a project manager, you need to lead a team which you rarely have any authority over. The absence of hierarchical advantage adds a challenge, but is ideal training on how to deal with managers, customers, and difficult people. The key is making them feel that they chose the direction. One of the best methods of doing this is storytelling.
To start, you need to listen non-judgmentally. Too often, we jump to conclusions, share observations, blurt out solutions, and fail to give others time to assimilate information from our point of view.
A few years ago, I was talking with a potential client that had a very successful data analysis company. The problem they were having was with a custom piece of proprietary hardware they had designed and built to collect the data. The business development manager, who loved hardware design, was managing the product development and was relaying the current situation. I asked for the history on how they got to their current disheveled state. He sighed and told me his tale of woe.
The first release was a success, but after short time a key supplier of one of the core components, a small company, went out of business. This made him look for a new supplier. Adding to the frustration was that all the other suppliers charged significantly amount. We talked about the functionality and a few other particulars on that version. He continued by saying that about a year later they created a new revision and changed that same component's functionality to use firmware so reprogramming would be easier. They contracted with an individual, who was desperate for work, to design the part. As a result, they got a great deal. Unfortunately, the protocol used was nonstandard and no other suppliers used it. When the contractor found full-time employment, they were again without support. Version 3, the version currently use, had another component losing support and they needed to find a new vendor.
The present problem was on a contract with a new company, started by a recent college graduate, to supply a subset of components. He was running into multiple problems, various vendors were arguing that he had designed the interfaces incorrectly, and now he had taken another job out of state. The business development manager was left with money invested in an unusable product. He insisted the problems were unavoidable and the company's strategy was prudent and fiscally conservative.
Building The Story
I returned to my office to determine how to approach telling them that they needed to focus on gathering and analyzing data, not building hardware, and the business development manager's pet project should be given to a company that specializes in developing custom hardware. I sent them an email asking about their growth plans for each business unit and clarifying a few other points from our conversation. From this information, I outlined the following agenda:
As I replayed what I had been told, they started filling in the answers, arriving at the conclusion that they should focus on their core business of collecting and analyzing data, rather than building hardware. I never had to mention bullet 4, they came to that conclusion on their own. Investing time in building a trusting relationship with a reputable product development group, whose responsibilities would include architectural design, building, and supplier management, would free up time of the business development manager to... well... develop new business. It would also insulate the company from problem in the hardware supply chain.
I could have told them in the first meeting that product development was not their forte, and that the business development manager's pet project of managing all the vendors was costing them dearly, but I would have not been invited back. As obvious as some answers seem, when situations have evolved over time the people in the middle are unable to see some of the most obvious answers. Playing back words in a different context is the key to shedding light on the proper direction and draws them to the conclusion using their own words. Your job is to simply facilitate the process.