The organizational cube
designing sustainability into a PMO
Principal, Innovation and Thought Leadership, METHOD Corp.
The “Organizational Cube” is a model that assists the process of designing and setting up a sustainable project management office (PMO). The model is custom tailored to encompass key “Organizational Elements” that make an organization unique. It also considers the interactions and interrelationships among these elements when setting up a PMO.
The Organizational Cube Model (OCM) is meant as a hands-on practical tool based on twenty-five years of field experience setting up, operating, and assessing PMOs.
It is necessary to start by stating the challenges that organizations are facing in setting up project management offices (PMOs), and the main cause of these challenges. We also take a look at how practitioners use organizational models to help deal with the complexities affecting the PMO setup.
The next part introduces the Organizational Cube Model (OCM) and explains it in detail with the rationale behind its construction and its elements. This is followed with high level examples that use the OCM to ensure good PMO design.
In the conclusion, there is a brief mention of future improvements and possible extensions using the OCM with other organizational models like the Organization Project Management Maturity Model (OPM3®).
The PMO Challenge
Many organizations are either setting up new project management offices, or improving existing ones. Three- quarters of large organizations have or plan to have a PMO according to a study for PMI® (Lazar, 2012). The Standard for Portfolio Management – Third Edition, published by the Project Management Institute (PMI), states that the PMO: “is generally assigned various responsibilities related to the projects, programs, and portfolios that fall within its assigned functions" (2013a, p. 17). In a rapidly changing business environment, PMOs are becoming necessary to ensure projects' alignment with strategy, meeting objectives, and providing value.
Setting up a PMO can be a challenging task, as many organizations have found. One-third of PMOs are considered as being in jeopardy (Lazar, 2012). Many PMOs fail during setup or cannot be sustained, as 75% of PMOs fail within three years of startup (Furfari, 2012). Many of the remaining ones fail to meet stakeholders' expectations and accordingly close, or become dwarfed into handling a fraction of their original charter.
Unlike more conventional organizational units (HR, Finance, Procurement, etc.), the value of PMOs is still debated. A survey shows that 60% of respondents reported that the value of their PMO had been questioned (PMI, 2012). While no one would consider shutting down their Finance department, many executives find it easy to shut down a PMO. According to an ESI study, 37% of respondents stated that their PMO is challenged (2013). This shows that the PMO is still a relatively new element in the organization hierarchy and accordingly needs to prove its value.
There are many ways a PMO can fail. Here are four general examples:
Example (a): The PMO that stops at Strategy
Some PMOs are initiated due to a strategic direction, which is a good place to start. However, many fail to move beyond strategy into real execution. If the PMO focuses on strategic themes and initiatives, without governance, methodology, technology, and resources, it is more likely to stay on paper and never be realized.
Example (b): Technology Driven PMO
Some organizations assume that PMO setup is mainly about selecting the right PMO software, customizing it, and implementing it into their new unit. Yet, when software becomes the sole focus, other important aspects end up being ignored. For example, process-related issues might not be addressed: What are the PMO processes? Who owns them? How will they be implemented? Another aspect that might be left out is the stakeholders. Software alone cannot affect change without the stakeholders' commitment. These are not only PMO staff, but also department managers, executives, team members, and sometimes customers, suppliers, and the public. For the PMO to succeed, we need to address the change required to take place across the organizational structure. This includes addressing expectations, perceptions, and attitudes towards the new PMO. All of these are key organizational elements, interrelated, and key to PMO success.
Ironically, even though we mention the processes and methodology elements as key to PMO success, the sole focus on them can be seen as detrimental. When the sole focus is methodology, the PMO will also suffer; paying less attention to technology and resources will result in methodology manuals that cannot be used.
Example (c): The PMO that lacks Governance
Another example of elements usually ignored during PMO setup is the “governance “ element. Organizational Governance, as defined in The Standard for Portfolio Management – Third Edition, is “the process by which an organization directs and controls its operational and strategic activities, and by which the organization responds to the legitimate rights, expectations, and desires of its stakeholders” (PMI, 2013a, p. 178). Even if methodology, tools and change are addressed, there is a need for governance. Many organizations fail to have clear governance for the PMO. This leads to high and unrealistic expectations, lack of focus, and a PMO that tries to do too much but fails to impress most stakeholders.
Example (d): The Borrowed PMO
Another reason for failure is trying to implement a “generic “ PMO. Generic PMOs usually apply international standards without customizing for the specific needs and environment of the organization. Similarly, many try to mimic the setup of existing PMOs from other organizations. Whether the PMO is “copied” from a standard or another organization, it is likely to be out of place. Every organization has its own culture, level of maturity, and different attitudes towards change. Copying a PMO that does not fit the organization will result in an unsustainable PMO.
There are other examples of PMO setup problems that result from ignoring important organizational elements. The PMO challenges can also arise from ignoring sponsorship, customer needs, functional departments' needs, organizational maturity, market situation, and many others.
On the surface, the reason for failure might seem different for each of the above examples. However, looking at the bigger picture, we can derive a common cause: Failure to address internal and or external Organizational Elements that affect the PMO.
“Organizational Elements” Affecting PMO Success
The Organizational Elements that were mentioned in the earlier examples included: Strategy, Technology, Resources, Methodology, and Governance. Additionally, there are other key Organizational Elements that can affect the PMO such as: Leadership, Executive Sponsorship, Culture, Maturity, Portfolios, Programs, Projects, and key Stakeholders.
The interrelationships among these elements can vary and affect the PMO in different ways. For example, the interrelationship between Projects, Methodology, and Department Managers is different from one organization to another. For some, the Department Manager might have minimal interaction with Projects, while for others the interaction might be considerable. This variation in the interrelationship between managerial and project elements results in changes to the project methodology.
The combinations and interrelations of these elements are part of what makes an organization unique. Although some organizations might have similar elements, it is rare or even impossible to have all identical elements between two different organizations. Accordingly, the differences in Organizational Elements and their interrelationships must be addressed carefully when custom tailoring the PMO to the specific needs of an organization.
The need for customizing is an opportunity to build a more sustainable PMO for the organization. According to A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fifth Edition, ‘The specific form, function, and structure of a PMO are dependent upon the needs of the organization that it supports “ (PMI, 2013b, p. 11). Addressing these elements properly will lead to a PMO that is more fit to the organization and stands a better chance of providing sought value. Likewise, to ignore the unique nature of these elements per organization can and often does result in PMO failure.
There are many reasons that PMO setups do not take these unique interrelationships into consideration. One of them is complexity: accounting for all organizational elements might be too cumbersome. To solve this problem, a relevant model can be used to “sort and label” those elements and ensure they are addressed during PMO setup.
How an Organizational Model Can Help
Organizations are complex systems (Frank & Fahrbach, 1999), due to the multitude of elements affecting them internally and externally. These elements interact with each other in different ways, making it impossible to guarantee outcomes: “Organizations and firms [are] collections of strategies and structures. The structure is complex; in that they are dynamic networks of interactions, and their relationships are not aggregations of the individual static entities" (Complexity Theory and Organizations, 2014).
Models simplify an organization and help design more effective change initiatives. For example, the Organization Structure Diagram is one of the simpler models in use. In its basic form, it shows organizational departments or managerial titles, functions, teams, etc. The organization structure model can be used for improvements related to the structuring of the organization, like restructuring, downsizing, mergers, etc.
Organizational improvements are designed and implemented using organizational models that attempt to simplify reality by focusing on certain Organizational Elements and their interaction, while ignoring others. As an example, the Organization Structure model focuses on hierarchy and ignores other information about the organization, because the goal is to cut down on complexity by focusing on the assessment and improvement of the organization structure. Professionals have been using other models to help them identify, assess, and improve organizational performance. This is why there are many organizational models in use today. But even the most complex models cannot encompass every aspect of the organization. It is too cumbersome and defeats the purpose of a model, which is to simplify reality by focusing on the most relevant elements to the improvement sought (Cummings & Worley, 2009).
Using the right model in affecting improvements is key to the success of any change initiative. Setting up a PMO is a change initiative and accordingly requires the use of the right model or models to help improve its chances of success. The model can help account for key Organizational Elements that need to be taken into consideration when setting up a PMO.
The Organizational Cube Model (OCM)
The Organizational Cube Model provides a bird's-eye view of the organization and some of its key elements that are most relevant for PMO set up. The goal of the model is to address the effect of Organizational Elements on a PMO. This results in a better PMO design, custom tailored to the needs of the target organization. The model can also be used in improving existing PMOs.
As shown in Exhibit 1, the cube form helps better visualize elements and their interactions. The cube has three dimensions: Alignment, System, and Stakeholders. There is a fourth dimension surrounding the cube, which is the Environment dimension. A description of each of the dimensions will follow.
Users of the model can look at it from the perspective of the PMO customer. The word “customer” is used in its broader definition of being a key stakeholder of the PMO. This is similar to the Six Sigma concept “Voice of the Customer": “Voice of the Customer studies are generally conducted at the start of any new product, process, or service design initiative in order to better understand the customer's wants and needs, … , and the setting of detailed design specifications “ (Voice of the Customer, 2014).
Exhibit 1 – OCM overview.
Each of the OCM cube dimensions contains four Organizational Elements (Exhibit 2). Organizational Elements are tangible and intangible assets, characteristics, and enterprise environmental factors that affect performance. It should be noted that these Organizational Elements are related to the PMO function as defined by PMI.
Exhibit 2 – OCM the three cube dimensions.
Below is a brief definition of each dimension, its elements, and its importance.
The Alignment Dimension
The Alignment dimension consists of Strategy, Portfolio, Projects, and Operations (Exhibit 2). Strategy is “a high level plan to achieve one or more goals under conditions of uncertainty" (Strategy, 2014). A portfolio is defined as,“projects, programs, sub-portfolios, and operations managed as a group to achieve strategic objectives ” (PMI, 2013b, p. 551). A project is defined as, “a temporary endeavor undertaken to create a unique product, service, or result” (PMI, 2013b, p. 553), and operations are “ongoing endeavors that produce repetitive outputs, with resources assigned to do basically the same set of tasks according to the standards institutionalized in a product life cycle” (PMI, 2013b, p. 13).
Alignment separates ad hoc project management from organizational project management. Alignment is a focus of most PMI standards, including Portfolio Management and the PMBOK® Guide. For example, Alignment, as defined by PMI from a program perspective, is: “identifying opportunities and benefits to achieve the organization's strategic objectives through program implementation “(PMI, 2013c, p. 18). Alignment means that all of the elements contribute directly or indirectly to the fulfillment of the strategic goals, and are accordingly selected, prioritized, managed, and evaluated.
The System Dimension
The System dimension consists of the following elements: Governance, Methodology, Resources, and Technology (Exhibit 2). System is the means by which work is performed. The PMBOK® Guide defines a System, from a project perspective, as “the aggregation of the processes, tools, techniques, methodologies, resources, and procedures to manage a project” (PMI, 2013b, p. 555). Governance is added to this dimension as it is the framework in which the system interacts and performs. PMO functions are created to oversee work and ensure its alignment. Without a system, the PMO cannot perform.
The Stakeholders Dimension
This dimension varies by organization, but there are similarities. Customers, Executives, Department Managers, Project Managers, Suppliers, and Team Members are common types of Stakeholders for most organizations. For the OCM, the key hierarchical elements of the Organization Structure were used in the Stakeholders dimension (i.e. Executives, Department Managers, Project Managers, and Team Members) as shown in Exhibit 2. Elements can be replaced or new ones added to the dimension as needed. Stakeholders' influence in an organization is increasingly being recognized and addressed, which is evident in the addition of a new Knowledge Area in the PMBOK® Guide titled “Stakeholder Management” (PMI, 2013b).
A Stakeholder is “an individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project, program, or portfolio ” (PMI, 2013a, p. 181). Many change initiatives fail because they do not properly handle the Stakeholders' needs and expectations.
The Environment Dimension
This is the external dimension in which the “cube” exists (Exhibit 3). It is what “surrounds” the organization and consists of four elements: Organizational Maturity, Sponsorship, Organizational Culture, and External Factors (i.e. market conditions, work locations and cultures, regulations, etc.).
Exhibit 3 – OCM the Environment dimension.
To demonstrate the importance of the Environment dimension, we can refer back to “The Borrowed PMO” (Example (d) above); which shows that many organizations are building their Project Management Methodology based on international standards. These companies should consider the environment that influences their projects and organization, and should build their methodology according to this understanding, and not around generic processes. This is a true measure of Organizational Project Management Maturity.
Interaction and Interrelationships among Dimensions and Elements
The four dimensions of the OCM are not separate, but rather interrelated. For example, an Executive (from the Stakeholders Dimension) interacts with the Technology and Resources (from the System Dimension) and works on the Strategy, and maybe some of the Projects and Operations (from the Alignment Dimension). The Executive is affected by Market Conditions, the Maturity of the Organization, and the Organizational Culture (from the Environment Dimension). So to properly address the Project element we must view it in relation to the other elements in its dimension along with the other three dimensions.
Addressing each element is not a definite yes or no answer; it is more of a consideration of the element and its interactions. This means that it requires a narrative description that answers the Who? What? When? and How? questions. For example, it is not enough to say: “Yes, we addressed the processes element,” the answer needs to address more of “who” will perform “what” parts of the methodology, involving “which” Stakeholders to work on “which” Project or Operation, and “when”.
Using the OCM to Highlight Shortcomings in PMO Design
Going back to the examples mentioned earlier of PMO failure, we can now easily detect and predict the failure using the OCM. In Exhibit 4 each diagram shows how the OCM effectively pinpoints the problems with each case.
Exhibit 4 – PMO Shortcomings displayed on the cube.
Using OCM to Ensure Good PMO Design
There are many ways the OCM can be used, depending on the needs of the users. Below are several scenarios:
Scenario 1 – A Simple Application:
A quick way to use the model is to consider its elements and how they are addressed by the PMO. One can look at the model, and start identifying how its Organizational Elements and their interactions might affect the PMO. Then, determine what needs to be done during setup and operation to deal with these effects.
Scenario 2 – PMO Outputs Review:
The OCM can be used in more elaboration. It can be used to review important PMO outputs. These can be outputs of PMO design or operation. A good PMO design usually requires development of the following outputs: PMO Business Case, PMO Phased Implementation Plan, PMO Methodology, PM Methodology, PMO Governance, and PMO Tools. Each of these outputs can be reviewed against the OCM and its Organizational Elements.
We can use one of the PMO design outputs, the PMO Methodology, as an example. This output must address all Organizational Elements to effectively serve its purpose. The bullets below show how the Organizational Elements need to be addressed when developing the PMO Methodology:
- Train Stakeholders on their roles in the PM Methodology.
- Take the Organizational Culture into consideration when building the PM Methodology.
- Customize Technology to fit the PM Methodology.
- Ensure PMO Methodology interfaces and is compatible with Operations.
Addressing all Organizational Elements from the OCM in the same manner will make the outputs more customized for the organization and thus provide better value, leading to a successful PMO.
Let us use another example from the PMO design outputs: the PMO Business Case. The user can use the cube to generate questions, instead of a list of actions, as we did in the previous example. When developing a business case, there is an important question that the document must answer: “Why are we building a PMO?” The cube can be used to pose this question for each Organizational Element. Then, the answers become an integral part of the business case. The answers make the business case more tailored for the organization, and show significant and relevant value to the organization and its Stakeholders. For example, for the Alignment dimension, we ask: “Why are we building a PMO from a Strategy perspective? Portfolio perspective? Project perspective? Operation perspective?” Same questions are applied again to the System dimension: Governance, Technology, Methodology, and Resources. Same applies for the Stakeholders dimension: “What is the value sought from the perspective of the Stakeholder?” This is asked per key Stakeholder. The same thing has to be done for the fourth (Environment) dimension.
Scenario 3 – Component Level Breakdown:
Another way to use the cube is to break it down into its smaller components. The cube consists of 64 components. Each carries one element from each of the three dimensions (Exhibit 5). For example, there is a component that carries the following elements: Projects from the Alignment dimension, Methodology from the System dimension, and Executives from the Stakeholders dimension. This Projects-Methodology-Executives component can be approached from any of its three elements. For example, we can look at it from the Methodology element and ask: “Has the Methodology addressed the Executive role when it comes to Projects?” Remember to also consider the component in the context of the Environment dimension.
Exhibit 5 – OCM Component example.
The results from this analysis can be put in a document that highlights each component, and then details how it is being addressed. The conclusion of this document should describe how the results of the analysis will affect different outputs of the PMO design (i.e. business case, PMO plan, etc.), and how the PMO operation will be improved based on this review. This results in action items and themes for improvements.
Scenario 4 – Brainstorming:
In addition to helping users address all Organizational Elements, the OCM can help stimulate discussion among stakeholders. Teams can brainstorm on what additional interrelationships need to be considered by the PMO. While this is best done in a group setting, it can also be done by individuals.
All scenarios above should result in at least a list of action items based on the OCM-based review of the PMO.
The Organizational Cube Model (OCM) is meant as a subjective, hands-on practical tool, not an analytical model. There is a lot in project management that goes beyond what an analytical model can describe. Things like value, interactions, leadership, etc.
A sustainable PMO is one that fits the organizational needs, and evolves with the organization. The model allows Stakeholders to build a PMO that is custom tailored for their organization, improving its ability to deliver value. It ensures that Stakeholders are addressing all the elements in a simple yet effective manner. The model is also useful beyond the initial PMO design and helps in continually assessing and refining the PMO while in operation.
There is room for improvements, especially in the way the model can be used. The OCM can be expanded upon to include preset questions and checklists to help users with applying the OCM. Additionally, multiple choice answers can be added to each question. The multiple choice answers might result in scores per element, per dimension, and for the complete cube. The score can be an indicator of the adaptability of the PMO to the organization.
There is also room for integration with other existing models. An example is the integration of the Cube with OPM3® to assess PMO performance.
The model can be used for change initiatives other than PMO setup, as most of the elements are relevant to most organizational change initiatives.
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© 2014, Ammar W Mango
Originally published as a part of the 2014 PMI Global Congress Proceedings – Dubai, UAE