Building consensus towards international standardization of program management
This case study is concerned with the challenge of distributed team development and standardization of global best practices in Program Management for a company that has to rationalize and consolidate two newly acquired firms with operations on several continents. Each new division has firm ideas about how the ultimate consolidated enterprise will work. Each division head (a previous company president) has been told they will run the effort. That consolidation, however, ultimately falls into the lap of the author.
When global enterprises serve global customers, the Program Management function takes center stage. Program Management, however, lags behind Project Management in the area of international standardization. While the Project Management Institute's Guide to the Project Management Body of Knowledge (PMBOK®) is an accepted and growing global standard for project management, no such global standard has been adopted for Program Management.
Many “process vendors” (consulting firms in general) have developed Program Management standards and processes to varying degrees of maturity. It is not uncommon to find forward thinking global enterprises who have adopted various Program Management approaches, developed either internally, or purchased from aforementioned process vendors. Each of these incarnations of Program Management reflects the individual and organizational biases of their creators. Each approach is characterized by different philosophies in how Program Management deals with integration with business strategy, other process integration, organization roles/responsibilities, and enabling tools.
This proliferation of approaches, while a normal step in the life cycle towards ultimate standardization of process, presents an array of problems and opportunities when enterprises are merged or acquired. Everything that represents a difference in approaches also represents an opportunity to either improve or degrade the effectiveness of Program Management. In an academic setting, merging multiple approaches would present a non-trivial and interesting exercise. In the business world, however, merging multiple process approaches under hard time constraints works exactly like a merge lane on a speedway. There are only three possible outcomes: merge, collide, or jam on the brakes and come to a full stop. Words like “interesting” and “non-trivial” are first replaced by words like “aggression”, “fear”, and ultimately, “cooperation” and “teamwork”.
In this case study, I present a situation where the outcome of jamming on the brakes is not possible, since the cement truck representing the CEO is coming up right behind at high speed. The CEO is definitely not going to stop, and his team of executives is definitely not going to be run over. I will then explore the remaining two outcomes, both of which happened: collision and ultimate merger. The results and lessons learned are discussed in summary.
The Call to Arms
In an aggressive response to a Request for Proposal (RFP), a global technology consulting organization “GloCon” boldly acquires two competitors “on the come” for the specific purpose of responding to an opportunity which requires the global reach and capabilities afforded by the newly combined organization. GloCon is headquartered in the United States. The acquisition companies are headquartered in Australia and Brazil. (Exhibit 1 – Global Business Unit Distribution). The newly combined GloCon must respond to an RFP from a company that manufactures gaming equipment (“WorldSlot”) in multiple locations across three continents, namely Australia, North America and South America. If the bid is successful, GloCon will be responsible to provide outsourced software and hardware development and support for not only WorldSlot, but all of WorldSlot's customers worldwide.
To win the bid, GloCon must, in one fiscal quarter, implement process integration and standardization across its newly acquired worldwide units, as well as demonstrate plans for how it will do the same to integrate with WorldSlot's technical operations once it wins the bid. GloCon must also show compliance with international standard processes in the program and project management area. The author, as Global Vice-President of Consulting Operations, was accountable for the effort to rationalize the combined company's operations, meet the demands of the RFP, and demonstrate the capabilities of the combined enterprise to WorldSlot's satisfaction. The past presidents of each newly acquired company (now identified as division presidents) and I were summoned to the boardroom to meet with the CEO. The call to arms from the CEO was simple and direct: “Pull this tangle together and make it look and function like one integrated approach. You have three months. And don't bother me with things you should be able to work out between yourselves.”
Exhibit 1 – Global Business Unit Distribution
The many challenges for GloCon (and WorldSlot) resulting from this effort may be categorized in terms of strategy, process, organization and technology. The dimensions of organization and process are most closely examined in this case study. The organizational dimension presented a set of vexing issues which needed a combination of leadership, diplomacy and negotiation skills and techniques to resolve. There were many obstacles. One of the chief issues was the determination of who was accountable for the effort at the highest level. The CEO of the firm had many delicate negotiation issues with the owners of the two acquired consulting firms, complicated by the aggressive acquisition/integration timeline. One of the principal issues was the degree to which the owners of the acquired companies would remain active in the newly combined enterprise. Each owner, while willing to sell their company to GloCon, was not ready to retire, nor was GloCon's CEO desirous of such a result. The GloCon CEO, in order to placate fears of the existing owners of being shoved aside, promised each owner an unprecedented degree of involvement and control in the acquisition/integration effort. In the final analysis, each owner overly aggressively interpreted the CEO‘s commitments as placing them in direct charge of the global effort. The author, however, was directly accountable for the results and had day-to-day responsibility to plan and implement the effort.
The process dimension was also fraught with similar issues. Each consulting company had a process architecture which exhibited varying degrees of maturity and conformance with various global standards. One company had process architecture fairly compliant with ITIL® standards. Another company had a process architecture based on the OSI Integrated Network Management Model. The parent GloCon was in the process of implementing processes in compliance with the PMBOK® from the Project Management Institute. One of the newly acquired organizations had a mature program management “methodology” which it had purchased from a large global database vendor but had not really implemented. One company had a mature service delivery model it had developed in conjunction with a now-defunct major auditing and consulting organization. One company had business with an automotive components supplier and was reeling from an edict to move to QS900 or lose a major piece of business. All organizations had process improvement teams moving forward on various initiatives, using different process improvement methodologies.
Establishing the Charter and Forming the Team
As previously mentioned, each division president had come away from their initial meetings with the CEO under the impression that they would be the leader of the integration effort. The author was also under the same impression, bolstered by a clear memo from the CEO delineating responsibility for leading the response to the RFP from WorldSlot. The first meeting of what would soon be called the “three headed monster” was underway. The PMBOK® describes the second phase of team development as “Storming”. No other description of the first set of meetings would be more appropriate. It immediately became apparent to each executive that there was a classic case of conflicting responsibilities established by the CEO. Each executive was convinced that successful ownership of the initiative would be critical to both their personal success, as well as the success of the company. Each executive was a strong and successful leader with years of global management experience. That was what they had in common. What they did not have in common however, was their approach to handling conflict management. One executive was passive aggressive. One executive was conciliatory, but unyielding. One executive was directly confrontational. Regardless of their styles, however, the team agreed on the first step: establish the charter and form the team.
Each executive had a different approach to approaching this task. Each executive viewed themselves as having both special experience and a specific mandate to lead. Each executive had current project efforts underway with significant similarity to the task at hand that could be put in control. It also became clear that a true leader would have to be established to lead the team and the effort. The first set of meetings became blunt power struggles between the “three headed monster”. As one issue after another came up, the same result ensued: three participants with three different approaches. Following every meeting, each participant would clandestinely retreat to the CEO‘s office in a vain attempt to secure sole power over the consolidation. Each visit ended with the admonition, “I told you not to bother me with issues you should be able to work out for yourselves. If this consolidation doesn't work out, we'll all be looking for new jobs. What got done this week?” Progress was visibly gridlocked and everyone knew it. Two weeks were gone and no progress could be seen.
“What Are We Going to Do Here Anyway?”
The final meeting of the executive team in “Storming Mode” occurred during Monday's weekly leadership team meeting when the CEO made a surprise announcement. He said that the CEO of WorldSlot was coming into town next week and he wanted to meet with the “Three Headed Monster” to get a sense of who he would be dealing with, should the project be awarded to GloCon. This was highly unusual in everyone's experience. GloCon's CEO went on to describe the meeting as “touchy feely” and not to worry about having anything specific to show. The team knew different, however. It was inevitable that some progress needed to be demonstrated. What followed from the Monday meeting was an epiphany of the highest degree – the time for cooperation was nigh. But what would that look like? Initially, not pretty.
The dynamic that then followed could best be illustrated through the game of tennis, particularly the doubles game. Imagine a shot hit split down the middle between two players who both freeze and then yell simultaneously, “You've got it!” In fact, no one got it. That's because abrogation is not the same as cooperation. In the same spirit in which the team originally held on and clutched to power, the game was now to hand off, to pare back, to specialize. In the first true internalization of the scope of the task at hand, a reflex of avoidance washed back over the team. This lasted less then a week when the CEO weighed in again with the pronouncement that if any single player loses, the team itself could not win. There was really no way out by this time. Real teamwork was required and there was no realistic substitute. The first words spoken at the next meeting were, “Well, what are we going to do here anyway?”
The first realization the group had was that the answer would not be found in what could be constructed from scratch or purchased out of the box. Everyone agreed that between them all, all the process and organization components needed to affect the consolidation existed and could be reused or modified with little effort if the right decisions were made. That led to the second major conclusion: only the Portfolio Management sub-function of the higher level Program Management function could provide the team with the appropriate 50,000 foot view necessary to see the entirety of all the efforts across the combined operations.
Portfolio Management concerns itself with the tracking and coordination of all projects in the enterprise program portfolio. The complexities of portfolio management are increased geometrically when spread over several continents and time zones. It turned out that each member of the team had some form of Portfolio management process and tools, but the team was back to the old question: whose should we use? This time, the discussion was functional and to the point. The team selected a Portfolio Management process to drive the analysis which would subsequently select the best in class projects that would implement the consolidation. Oversight of the Portfolio Management process became a full time job in and of itself.
The process called for the establishment of an enterprise level review team comprised of program and project managers from the around the world. Their responsibility was to ensure that every project across the enterprise was identified and analyzed, in order to understand the scope and true value of what each project was to produce.
The effort of producing the consolidated portfolio was an exercise in communication difficulties, semantic and scope confusion. GloCon had not yet rationalized its disparate email and phone systems. There was a freeze on all but the most important travel to conserve cash for merger restructuring costs. Many projects had vague, incomplete or missing statements of work, resulting in confusion about what each project was intending to produce. Slowly at first, but then ever faster, the cream began to rise to the top. In true Darwinian fashion, the best-in-class projects began to rise above the mist and define themselves.
The review team commenced to produce a consolidated inventory of all projects worldwide. The effort was now in its 6th week.
Agreeing to Agree, and Getting the Job Done
The output of the Portfolio Management Process contained the list of all projects across the combined enterprises, along with a summary of each project and a highly detailed inter-project dependency (IPD) analysis (Exhibit 2 – Inter-Project Dependencies). The IPD reports were key to enabling the team to work together in a productive manner; allowing each group to focus objectively on determining on what is most important to fight for and what they need to let go of.
Exhibit 2 – Inter-Project Dependencies
While the results of the portfolio analysis may have been clear at the lower levels, there was not blind acceptance of the recommendations of the executive committee with respect to the proposed elimination/ reassignment of certain projects. In fact, there was significant pushback in several areas. The pushback centered on two areas: acknowledging that some projects had to be terminated or rolled into other superior projects, and issues relating to who would manage specific projects.
Some of the projects which came up on the “kill list” were a surprise to many in the consolidated organization. In fact, some of the candidate “kill projects” were initially identified as having so much promise that they, in part, justified the purchase of the respective acquired company. Those projects had not gone through the same level of intensive analysis during the acquisition due diligence that they did through the portfolio management exercise. Several of these projects had labored on for many years, providing little or no return, justified by what some have called “the seductive appeal of collective belief” (Royer, 2003). The overarching premise was that they would provide significant future returns. The team's analysis showed, in fact, that they would never provide significant returns. There were many wrenching moments as executives took the role of “exit champions” for those projects (Royer, 2003, p9).
The consolidated portfolio inventory additionally made recommendations for many shifts for the responsibilities of project leadership. A recent study (Violino, 2003) showed that 44% of the people who conceive of a project rarely or never lead in its actual implementation. While that means most of the time people don't end up running their own projects, it doesn't mean they are necessarily happy about it. As a result, an additional extended bargaining and negotiation phase ensued which determined who would run specific projects, once all had agreed on which projects should be continued.
As the team labored on, making a continuous stream of very difficult and far-ranging decisions, the members of the team began to trust each other and rely on what other team members said. Initially, this was very difficult, as the team was composed of individuals from many different countries, including Australia, United States, Mexico, Brazil, China and Sweden. The personal styles of managers from such different countries could hardly have been farther apart. Many of the team members were not used to such open, direct and frank communications style. The PMBOK® identifies this approach as the most effective form of conflict management, and our experience validated that.
The bonding of the team was aided significantly by the fact that since each team member spoke so directly about what they liked and didn't like about each project, it became clear to all that the fear of hidden agendas was an empty fear. If someone wanted a project dead, they just came out and said it. You didn't have to wonder if someone was trying to kill or take over your project – you knew directly and openly. A very healthy debate and resolution cycle (done quickly) became the norm, not unlike the “Prime Minister's Questions” from the United Kingdom's House of Lords. “Due Process” is critically important to effective global decision making (Kim & Mauborgne, 1993, p12).
As hoped for, after the dust settled, the vast majority of projects (a total of 120 projects made up the final program of work) selected were the best projects to implement the overall consolidation and standardization approach. The operative question shifted from “What are we going to do?” to “Can we do it in time?” The RFP response was now two months into the three month deadline.
As the program schedule developed, it became clear to everyone that it would not be possible to complete the entire program in the time allotted. Despite various crashing and fast tracking approaches, the schedule was not going to match the customer's timeline by at least a factor of 100%. In some risk scenarios, the “miss” could be far greater. At this point, a general feeling of despair overtook the group. Everyone turned to the executive leadership with a collective “What now?”
The bid response was due, and it was clear that GloCon was not going to be able to hit the major requirements of the RFP. The author directed the team to complete the response with the schedule that GloCon could confidently hit, even though it would not meet the requirements of the RFP. The CEO of GloCon then convened a meeting with the CEO of WorldSlot. It was time to play the final card in GloCon's hand.
During the meeting with the CEO of WorldSlot, an interesting situation unfolded. As some in GloCon's executive team predicted, it turned out that none of the responses to WorldSlot were considered “conforming responses”. The WorldSlot CEO frankly acknowledged that the requests as stated in the RFP were considered unreasonable from the start, and that the real objective of the RFP was to determine who wanted WorldSlot's business bad enough to go to extraordinary lengths to get it. When the final analyses of all responses to the bid were complete, GloCon was selected to go into subsequent contract negotiation and complete the work.
The principal reason GloCon was selected was because of the way GloCon approached the overall integration of its worldwide process and projects - something that was not obvious in the beginning that could be accomplished at all, let alone efficiently. WorldSlot became convinced that based on the way GloCon identified and handled the difficult choices before them, GloCon's culture would be a strong fit with WorldSlot's culture. The WorldSlot CEO said in the meeting that led to the final selection that “I knew we were going to fit when I saw the sign on your war room that said ‘Leave Your Ego At The Door’. Then, after the shouting, I saw you all go out for a beer together. Then I knew we were going to get along just fine.” GloCon successfully entered into agreement with WorldSlot and proceeded to implement the terms of the agreement.
Results and Lessons Learned
One of the first insights from this experience reminds us that while it is common to measure performance against a set of goals, it is equally fair to ask if the goals selected were the appropriate goals, considering the entirety of the objective at hand. The first most obvious question people have asked upon hearing this story has been, “Did you really think you were going to merge three global operations and completely align all processes in just three months? Was that a realistic goal?”
Another question that has been asked repeatedly is, “If you knew the odds were so small that you could meet the overly strict requirements of the RFP, why even try at all, let alone purchase two complimentary operations?” And finally, the most significant question, “What would have happened if you had failed in your quest for WorldSlot's business?” These questions dominated “mahogany row” for several days.
In the final analysis, one prime lesson that the company learned was an improved faith in the vision and leadership of the CEO. When the questions above were presented to the CEO, his logic was paraphrased as follows, “I knew we had to develop improved integrated global Program Management capabilities, because our ultimate success is dependant upon competing in the global arena, not local country operations. Honestly, I knew we would not likely hit our targets, but I knew we'd be significantly better because of the effort. I did not want this effort to be kicked off outside of the context of a real life sales opportunity, because I knew how long these projects had dragged on at all three of our operations prior to this opportunity. The immediate sales opportunity provided the rallying point and motive force to energize our combined operations to a level of performance previously unknown in our joint history. I had secretly hoped that what ultimately happened would happen, because I knew that WorldSlot was facing the same opportunities and obstacles we did. I figured if we could show them how we'd ‘get there’, they'd have faith we could take them along too. And that's exactly what happened. We have numerous other sales opportunities we could have leapfrogged over to if this had not come to fruition, and we certainly would have won several of them”
Another prime lesson was the surprising (to many) importance of the Portfolio Management and Program Management functions to the overall success of the effort. While the integration effort of different program and portfolio management approaches from several countries and process vendors was painful, the leverage supplied to the effort when completed was simply remarkable. The ultimate integrated process provided a “high gear” of performance that enabled prioritization, selection and enablement of work to a degree unprecedented in the experience of almost everyone who participated in the effort. It also turned the cultural dynamic from dysfunction competition to enlightened cooperation.
While this effort ended well for GloCon, it did underline a shortcoming in the maturity of international standardization of process in the area of Program Management. Clearly, Project Management has come a very long way. The Project Management Institute's success in getting international standards recognition for its PMBOK is commendable. But Project Management is not Program Management. The standardization of Program Management could bring an additional order of magnitude of positive leverage for enterprise value creation. I hope this experience will contribute to a meaningful increase of support to focus resources on the ultimate standardization of Program Management.
Kim, W.C., & Mauborgne, R.A., (1993, Spring) Making Global Strategies Work. Sloan Management review: Massachusetts Institute of Technology,34(2), p. 11.
Project Management Institute. (2000) A Guide To the Project Management Body of Knowledge (PMBOK®) (2000 ed.). Newton Square, PA, USA: Project Management Institute
Royer, I. (2003, February) Why bad projects are so hard to kill. Harvard Business Review, 81(2) p.48
Violino, B. (2003, July) Making projects work. Optimize:Business Strategy & Execution for CIOs - an InformationWeek Resource.
Proceedings of PMI® Global Congress 2003 – North America
Baltimore, Maryland, USA ● 20-23 September 2003
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