From good to great with organizational project management maturity
It has long been claimed that increasing levels of organizational project management maturity (OPMM) leads to organizational performance. In essence, organizational project management (OPM) is the application of factors that lead to organizational success through a web of projects.
We say that an organization is mature when it is in a perfect condition for achieving its goals and objectives. Using this interpretation of maturity, OPMM must be a measure of the extent to which an organization is applying the factors that lead to organizational success. At its core this leads to the self-fulfilling prophecy that increasing levels of OPMM lead to organizational success if:
- We are able to identify all success factors,
- We are capable of measuring the extent to which these factors have been applied, and
- We are capable of measuring the degree of organizational performance achieved when applying these factors.
Hence, the “only” questions that need to be answered are:
- What are the factors that lead to organizational success if the goals are achieved through a web of projects?
- What would a reference model against which existing OPMM models could be assessed look like?
- What gaps and discrepancies could be identified when comparing a selection of OPMM models to the reference model?
In an attempt to answer these questions and develop concepts and indicators of success and performance we look at the following:
- The learning points that can be drawn from major well-known improvement models, and
- The major organizational performance initiatives like total quality management (TQM) and learning organization
We will further look into organizational project success factors and measures found in contemporary project management literature and relate these findings to the general and business management literature. Recognizing that without success at the project level the whole venture will collapse like a house of cards, we will look briefly look factors and criteria for successful project management and projects. The whole synthesis translates into a conceptual model against which existing project management maturity models can potentially be evaluated.
Exploring the Literature
Performance and Factors According to Four Major Improvement Models
Some of the widely known and popular improvement models—the EFQM Excellence Model (EFQM, 1996), the balanced scorecard (Kaplan & Norton, 1992), the Baldridge Award (BNQP, 2007) and the less known service-profit chain (Heskett, Jones, Loveman, Sasser, Jr., & Schlesinger, 1994), which seems to be developed over similar concepts—reveal insight into what performance is and how it can be achieved and measured. They are all very similar in their definitions of performance enablers and outcomes (Porskrog, 2007).
In the excellence model, the achieved performance is measured in terms of people satisfaction, customer satisfaction, impact on society, and business results, which are all regarded as being results of the five enabling factors: leadership, policy and strategy, people management, resources, and processes.
While its American counterpart, the Baldridge Award, is slightly different from the EFQM model, the seven performance categories are very similar.
In the balanced scorecard (BSC) model (Kaplan & Norton, 1992), the achieved past performance is measured through the financial perspective, whereas the drivers of future performance are measured in non-financial terms in the three perspectives: customer, internal processes, and learning and growth.
The service-profit chain (Heskett et al., 1994) captured some important points on how success is generated and measured in service companies. Here employee and customer satisfaction are outcomes of the internal operating system.
Organizational Performance Initiatives—Learning Organization and TQM
Together with TQM, the Learning Organization is probably among the performance initiatives that have attracted the most interest.
Although several approaches to describing the characteristics of learning organizations exist (Pedler, Boydell, Burgoyne, 1991; Senge, 1990; Garratt, 1990), there seems to be the same common focus on the importance of leadership and learning culture.
Senge (1990) recognized that without the appropriate leadership, the organization will not become a learning one. He specifically mentioned the need for engaging the employees in the creation of the vision, the core purpose, and the values and is here fully consistent with organizational behavior and change theorists like Kotter (1995), Heskett, Sasser, Earl, and Schelesinger (1997), Balogun and Hailey (2004), Collins (2001) and Collins and Porras (2000), and with the views of Grant (1991, 2008) and Barney (1991). One example of this is that Collins and Porras identified the sources of aligning people to be a sense making core ideology consisting of “a fundamental reason for being… and …intrinsic values” and an envisioned future that can be brought to life through strong leadership and selection and retention of the right people.
The other grand performance initiative, TQM, originally focused on the hard statistical quality and process control approach (Torrington, Hall, & Taylor, 2002). However, here too a change has been identified towards a more balanced approach where soft factors like people empowerment, teamwork, open communication, involvement generating commitment, skill development, and participation (Lee & Lazarus, 1993) are considered. Honeycutt (1993) highlighted the importance of organizational culture for the successful implementation of long-term strategic initiatives like TQM.
Although authors and models express the foundational success factors slightly differently, in terms of whether the alignment should be directive, top-led or participative and involving, they all agree that the alignment of people has its roots in strong leadership. Furthermore, they agree that this enhances the ability to adapt to a constantly changing future and thereby adds to the long-term performance. In addition, authors focusing on the learning organization, organizational behavior, and the resource-based view seem to agree that a sense making core ideology and an envisioned future are the foundation of success. This also signifies that culture, HR systems and practices, and alignment of strategy, structure, culture (shared values), and leadership (style) play a pivotal role in organisational performance.
Organizational Project Success—Factors and Measures
Over the years, different authors have investigated the factors of project success. An overview of our evolving understanding of project success can be found in Jugdev and Müller (2005). They showed how the understanding of what constitutes the real factors of project management success has been broadening since the 1960s.
There is no reason to believe that the foundational factors found in the former section should not be foundational in every organizational setting. For that reason, it is highly likely that the current understanding as outlined in Jugdev and Müller’s (2005) paper is still too narrow to uncover what factors lies behind organizational performance when the goals are achieved through a web of projects.
Dinsmore and Cooke-Davies (2006) identified 12 success factors. What they have not explicitly stated is that their framework invites us to divide factors into layers of first, second and their order as shown in the following.
Exhibit 1: Criteria and factors for organisational project success
Dinsmore and Cooke-Davies (2006) argued that the purpose of the project organization is to contribute to value generation through continuously enhancing the effective and efficient implementation of the organizational strategy. This argument is fully in line with the performance discussion. It is, therefore, worth having a closer view of what factors they have identified as critical for being able to do that. They argued the following:
1. Alignment of the whole organization behind the right projects and programs is the key to success in every organizational setting as do Mintzberg and Waters (1985) and Peters and Waterman (1983).
Second, having ensured that people walk in the same direction, Dinsmore and Cooke-Davies (2006) argued that people have to be aligned behind the portfolio of projects. The challenges here, they said, are that this requires coordinated alignment of:
- The portfolio with the business strategy,
- The portfolio with available resources, and
- The projects with each other and with the organizational structure
Starting from the top, the effective implementation of the strategic intent is accomplished through alignment of the portfolio with the business strategy to deliver the right combination of projects. This alignment is best achieved through a dynamic decision process where project lists are continually updated and revised, and new projects are evaluated, selected, and prioritized against existing projects (Cooper, Edgett, &Kleinschmidt, 2001). This process is the portfolio management process. Crucial to a successful outcome of the prioritization process seems to be a deep understanding of what the organization is passionate about, what it is best at, and what drives its economic engine. These are the core values and purpose of the organisation.
At the next level, aligning the portfolio with available resources requires capacity and resource management (Project Management Institute [PMI], 2006b) from top to bottom of the organization. This means that resource availability is taken into account at all levels—from the strategizing level where the strategies are developed, over the portfolio level where allocation and prioritization of resources and projects are made, and down to the project level. It is required that leaders across the organization work together and support the decisions made in the portfolio process and provide committed adequate resources during the process (Turner, Grude, & Thurloway, 1996). Aligning projects with each other and with the organizational structure requires the structure to be aligned with the strategy as well.
The alignment of all elements is the foundation for organizational project success, and it sounds very reasonable, as this has been found to be the basis of excellent companies (Peters & Waterman, 1983). It further conforms to Collins and Porras’ (2000) and later Collins’ (2001) good to great findings.
2. Continuous improvement of practices and processes that builds on the theory of continuous process improvement and learning from experience is important to success. The challenges here are to create an environment for substantive, systemic change and to apply a learning approach where continuous improvement is a result of lessons learned from prior experiences.
The first issue here is that research shows that lessons are either not collected or not used in most project organizations (Pfeffer & Sutton, 2000; Cooke-Davies, 2001). The second issue is that the process control praised in traditional project management regard uncertainty as a threat, although uncertainty is an opportunity to change and learn, and thereby to continuously improve practices and processes (Mintzberg, Ahlstrand, & Lampel, 1998; Collins & Porras, 2000). Seeing uncertainty as a threat does not allow people to experiment, to make mistakes, or ultimately to learn.
Experimenting requires the implementation of catalytic mechanisms, which give people the right incentives (Collins & Porras, 2000; Pfeffer & Sutton, 2000) and a shared purposeful vision that guides creativity and allows people to make mistakes (Senge, 1990). In essence, continuous improvement hinges on the organization and its individuals’ capabilities to continually expand their capacity to create their own future—to learn and to change. For that reason alone, the willingness to change is pivotal to achieving organisational success.
3. The existance of a suite of comprehensive and reliable metrics based on clear and attainable goals is the last of the three key success factors. This is fully in line with the view of management by objectives (Drucker, 1955), the BSC, and value-based management (Copeland, Koller, & Murrin, 1994). To support the continuous improvement and alignment, the metrics must provide information on both results and process. Dinsmore and Cooke-Davies (2006) recommended four key performance indicators (KPIs) for monitoring organizational success:
- Effectiveness of implementing corporate strategy which seems rather problematic. The reason is that to measure the strategic intentions, they must be precisely articulated at a concrete level of detail (Mintzberg & Waters, 1985). This means that the following three things must be known about the strategies:
- Realized as intended (i.e., deliberate),
- Unrealized but intended, and
- Realized yet unintended (i.e., emergent).
- Productivity improvements of key corporate resources (efficiency), which also seems to be rather tricky, as it must be assumed to depend on both industry and organisational and business strategy.
- Overall level of project success achieved by the organization to measure whether the right projects have been done (i.e., results/effectiveness) ultimately means that all benefits have been realized and that the stakeholders are satisfied with the realization.
- Overall level of project management success achieved by the organization to measure whether the projects are done right (i.e., process efficiency) means that time, cost, quality, scope, technical performance, and safety have been managed appropriately.
Implemented appropriately, these indicators recognize the need for down-stream cascading and upstream consolidation of the metrics to support alignment and continuous improvement.
To be able to continuously improve performance, it should be clear that appropriateness means that for all activities a performance baseline and information on goals must be maintained, including who is accountable for meeting the goals. This requires that systems to provide the information are in place and a defined process for setting goals and metrics is established.
The BSC offers the potential to align business goals throughout the organization (Mills, Print & Rowbotham, 2005). However, no scorecard will work without leaders providing clear communication of the business measures and how these relate to the individual measures. Recognizing Schneider’s (1994) findings that specific leadership behaviors reinforce specific cultures which underpin specific strategic themes and the importance of alignment leads to the conclusion that the measurement of the business must be consistent with the way people are measured. Furthermore, it must be clearly linked to the strategy. The last two of the metrics (i.e., level of project success achieved and level of project managment success achieved) require a closer look at what are the success criteria and factors of both.
Project Success Criteria and Factors
Dinsmore and Cooke-Davies (2006) put it very simply by stating that the ultimate success criteria are that all benefits have been realized to the stakeholders’ satisfaction. In reality, they say the same as Turner (1999, 2005) and Wateridge (1995) before them.
The success factors of benefit realization seem to be:
- Systems that provide benefit realization data and information for projects and programs are in place,
- Information is readily available for the measurement of project and program implementation effectiveness (benefit realization), and
- The existence of an effective benefit delivery and management process that involves the cooperation of project management and line management functions (Cooke-Davies, 2001, PMI, 2006a).
Whereas the factors needed to achieve stakeholder satisfaction are:
- To gain commitment from involved parties (Andersen & Jessen, 2003; Turner, 1999, 2007),
- No bureaucracy (Baker, Murphy, & Fisher, 1988),
- Client consultation, client acceptance and communication (Pinto & Slevin, 1988), and
- The ability to handle conflicts and information (Lechler, 1998).
The factors of successful benefit realization and stakeholder satisfaction can be summarized as the smooth commissioning of projects to operations seems very important as it shows the role the interface between projects and operations plays for both stakeholder satisfaction and benefit realization.
PM Success Criteria and Factors
To distinguish project success from project managment success may seem somewhat artificial. However, stakeholder satisfaction and benefits realized reach beyond the bounds of the project life cycle, whereas the time, cost, quality, scope, technical performance, safety, and project team satisfaction (Turner, 1995; Wateridge, 1995; Dinsmore & Cooke-Davies, 2006; PMI, 2004) are all success criteria that are tightly linked to the efficiency of the “pure” project management processes. The success factors can be grouped into two major groups:
- Factors tightly linked to the factors already identified: This group consists of factors like capable project leader and team, participation and cooperation, adequate resources and funding and top-management support (Cooke-Davies, 2001; Andersen et al., 2003; Turner, 1999; Baker et al., 1988; Pinto & Slevin, 1988 and Lechler, 1998). All of these factors are linked to the identified leadership, culture, and HR practices.
- Factors linked to the traditional technical project management processes: This group can be summarized as projects that are managed by a well-established process that is supported by sound fundamentals of project management, and the IS tracks project progress and provides the information project managers need to make real-time decisions.
Conseptual Model and Conclusion
The explorative literature analysis can be summarized into the following revisited IPSolutions and Stanford University model:
Exhibit 2: IPSolutions and Stanford University revisited
This model seems to cover all the factors needed to achieve organizational success and performance, when this is achieved through a web of projects. We found support for three paradigms when it comes to the generation of organizational performance in project-based environments:
- The first is based on organizational development, change management, and behavioral theorists like Senge (1990), Pedler et al. (1991), Kotter (1995), Balogun and Hailey (2004), Collins (2001) and Collins and Porras (2000), and on the resource-based views of Grant (1991, 2008) and Barney (1991). This paradigm focuses on the importance of interactionism, team learning, cooperation, sense making, and socialization. It is people-centric.
- The second paradigm builds on Shewhart’s (1931) and Deming’s (1982) thoughts about statistical process control. This worldview is more deterministic, causal, and structuralistic, as the focus is on standardization, measurement, and control of processes. It is mechanistic process-centric. This is the view on which the main PMM models are built.
- The third paradigm, represented by Peters and Waterman (1983) and heavily supported by Dinsmore and Cooke-Davies (2006), focuses on the alignment of the organization.
Exhibit 2 encompasses all three views. The circles in the model represent the areas within which mature capabilities are needed. The arrows represent the alignment needed. Together they can all be viewed as organizational performance factors and the basis for the development of organizational capabilities. The main contributions to the revisited model from the three paradigms are outlined in the Exhibit 3:
Exhibit 3: Factors of Organizational Performance when the Goals are Achieved through a Web of Projects
This model is fully consistent with the findings from the major organizational improvement models. According to Porskrog (2007), the gaps and discrepancies between the model and a selection of contemporary PMM models can be summarized as follows:
- The OPMM models (Kerzner’s (2005) PMMM, Gareis’ (2001) model, OPM3 and P3M3) all have to be revised in order to fulfill their purpose as effective tools for organizational performance. They all claim to encompass the factors that lead to organizational success. However, the reference model shows that two paradigms have been left out of the main models, i.e., the organizational development (OD) paradigm and the alignment paradigm.
- There seems to be huge disagreement between the OD paradigm and the process maturity paradigm upon which the OPMM models have been developed in terms of the path towards superior organizational performance. Their disagreements take two forms:
- Project management theorists argue that maturity should grow from below (from project management and upwards) whereas OD theorists take the opposite stand.
- The main OPMM models all theorize that the end state is “continuous improvement” whereas the OD paradigm theorizes that “continuous improvement” is the means to an end.
Then which one of the three paradigms identified is the right one?
They all are. Only, we argue that the OD and the alignment paradigm is the foundation of success with the soft factors as more important than the hard ones. Thereby, we also argue that the mechanistic process paradigm, although important, must be tertiary. In essence, what we have argued is that the path to superior performance— from good to great in project-based organizations goes through what we call:
1. Good-to-Great environment which encapsulates:
- Committed leadership by example,
- Clear purpose and long term vision,
- Passionately-held core values, and
- The willingness to change.
2. People development encapsulating:
- Selecting the right people,
- Catalytical mechanisms enabling people to contribute instead of strict control and bureaucracy, and
- Team culture focused on learning by doing and people development.
3. Goals and metrics including:
- That the culture of discipline is goal oriented,
- That the systems in place provide information on goals and who is accountable for meeting them, and
- That the measurements of the business are consistent with the way people are measured and are clearly connected to the strategy.
4. Portfolio and program management including:
- Alignment of strategy and portfolio and projects within the portfolio, and
- Processes for benefit management and realization together with information systems to measure and support the alignment process.
5. Project management including:
- The maturity of the custom-fit and detailed project managment process,
- Short and staged projects to minimize risk, and
- A holistic view encompassing project management processes as well as support processes.
6. Operations integration including:
- That the operations segment plays an integral role in the selection, oversight and implementation of projects, and
- That the transition of project output and outcome to operations is executed in a predictable, repeatable, and orderly process.
At a high level, the path from good to great in project-based organizations follows the path in Exhibit 4.
Exhibit 4: The path to superior performance in project-based organizations
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© 2008, Søren Porskrog and Valerie Van der Klis
Originally published as a part of 2008 PMI Global Congress Proceedings – Denver, Colorado, USA