Guiding projects through massive change
Enterprises are built around the expected. While they don't ignore change, they are content to view it as constant, evolutionary, and incremental. But change is no longer a constant; today, even change is changing. The acceleration of change in increasing, and the confluence of multiple streams of change are yielding outcomes that are impossible to predict. Leaders who follow the traditional responses to change—such as looking to the next version of a product to regain market advantage, or waiting until the next planning cycle to develop a new strategic approach—will find themselves hopelessly behind with little hope of catching up. Anticipating and responding to this new kind change means leaders need to be ready to travel an uncharted (and often uncomfortable) path, preparing and inspiring their teams to swiftly move beyond the routine and familiar.
Traditional organizations don't handle things well that they don't do often. Their “organizational knowledge” is really the direct experience of a few of its most senior leaders. A traditional (evolutionary) response to massive (revolutionary) change is akin to the horse that runs back into the burning barn, seeking the familiar safety of its stall. Yet many traditional approaches to developing Risk Management plans are built on techniques that are essentially or explicitly backward looking. While this is not entirely inappropriate, it is seductively reassuring and can cause the project leaders to overlook two simple and irrefutable facts: The project will not take place in the past; it will take place in the future. And the future will be different.
The revolutionary response is to focus the experience, intuition and intellect of the entire team on the problem. As Peter Senge describes in The Fifth Discipline, or as Jack Welch illustrated by encouraging GE's “boundarylessness,” acting as individuals, we are not as capable as we can be working together. The Project Manager is not a seer, and can't be expected to anticipate and develop specific response plans for the unforeseen risks presented by Massive Change (they are, after all, unforeseen). Successfully guiding projects through Massive Change requires Project Managers to endlessly and creatively prepare not just themselves but the entire project team for an uncertain future, for it will come. It requires them to see the reality of the change for what it is. Finally, it requires them to act, to analyze, to adjust and then be prepared to act again in response to the change.
To succeed in the future, we must know the past well enough to comfortably ignore it. This seems paradoxical and that is exactly the point. Today's business environment demonstrates that common sense is under revision; simple truths and the conventional wisdom don't adequately define our present or our future. Axioms and absolutes just don't feel right anymore. Business plans that are built on intuition, paradox and ambiguity are encouraged. Taking advantage of the opportunities presented by Massive Change requires as much forethought as avoiding its snags. A change capable project team is one that responds to change eagerly, understands its implications clearly and responds to it quickly. A change capable project team looks for change in its earliest stages and uses it to position the project to succeed in new and previously impossible ways. The most successful managers (or projects, or enterprises) will be the ones who can spot the changes first, understand them the best and react to them the fastest.
Sources of Massive Change
Massive Change is any change that, by its scale or significance, can cause all or virtually all of the project's goals or planning assumptions to become invalid. It is consistent with other new concepts of change in the broader, organizational context, such as “breakpoint change” (Land & Jarman, 1992), which holds that changes in human organizations tend to follow an almost biological pattern. Breakpoint events alter the fundamental rules of survival for a species (or success for an enterprise). How well the members of the affected populations adapt to the new environment determines the nature of their existence in the post-change world.
The sources of Massive Change are limitless. They may be caused by random, external events such as natural disasters or may be the result of carefully planned actions by the organization's leaders. Here are some sources of Massive Change that are particularly likely to affect projects in business organizations.
Force Majeure is a term used to refer to unexpected or uncontrollable events. Classic examples include natural disasters, changes in weather or climate, acts of war or civil unrest, or simple random chance. The actions of other firms may result in unexpected events that impact other firms or projects, as well. For instance, the revelations about Enron Corporation's use of “off balance sheet financing” has caused financial problems for unrelated firms using the same accounting techniques (or auditors). Consequently, they have been forced to change or reconsider the projects they pursue. (Williams, 2002) Compared to the other sources of massive change, only force majeure events have the realistic potential to cause the destruction of property and the loss of human life. Therefore, the use of risk deflection techniques, such as insurance, should be considered in the risk management plan.
Corporate executives are under constant pressure by shareholders to increase the value of the corporation in the short term. This pressure flows down to their subordinates, and theirs, and so on. Frequently, lacking the knowledge, resources or authority to address the fundamental problems they face, executives rearrange the lines and boxes on the organization chart as a “rational” response to the challenges of the day. Reorganization can be a Massive Change for a project because it can remove the project sponsor and change the goals and assumptions that form the foundation of the project charter. Reorganization can make promised resources unavailable and the projects goals irrelevant or even undesirable. The impact of reorganization will be strong in a project team whose members are part of the group being reorganized; quite possibly they have been assigned to the project temporarily and can become demoralized by their perception that when they are returned to their original group they will be in an undesirable position. Where the reorganization affects the project's customer, Project Managers should be prepared to reevaluate the risk ratings of the tasks that depend on the customer's action. They may be distracted or unfocused due to the organizational change, which could impact timely task completion.
Merger and Acquisition
Two organizations typically join together so that one or both will benefit. At one end of the post-merger spectrum, the two will continue to operate as separate and distinct enterprises, sharing only a small corporate staff. At the other end of the spectrum, the two will completely integrate their operations. They may quickly move to divest certain assets or otherwise “simplify” the newly combined organization. Like reorganization, the new state of the enterprise may not support the needs or commitments baked into the project charter. Merger is an extreme form or reorganization and similar impacts can be expected. However, the magnitude may be greater or the duration longer. For instance, it can be months between the date a merger is announced and when it becomes effective. Even more months may pass before it is anything other than “business as usual” for a particular organization unit. However, from the moment of its announcement, the merger affects the productivity of every employee in the organization, as employee's minds turn to the question of “What does this mean to me?” In the early stages of merger activity, the lack of reassuring answers to this question causes fear, uncertainty and doubt, which are corrosive to morale and anathema to the selflessness required for high performance teams.
Another widely used tool to manage short-term corporate financial results is downsizing. Reducing the number of employees, facilities, product lines, and so on is considered to be a decisive step in controlling costs. On the surface, the project and by extension, the Project Manager, will feel a very binary affect of downsizing. If his or her work or resources are related to what is being eliminated, the project may be cancelled entirely. Otherwise, he or she may continue unchanged (or be given additional resources if the project goal supports the cost reductions targeted by downsizing). At a deeper level, however, the Project Manager should be aware of the profound implications downsizing can have on an organization. Some have compared the language and social implications of downsizing to the Holocaust (Stein, 1996). Implications for Project Managers include the potential they may be both an agent of downsizing as well as its victim; they may be forced to execute orders from above that require staff reductions even as they worry that they may be the next to go. Because of the long recovery periods following downsizing actions, often lasting years, Project Managers should also evaluate (as part of their risk management planning) the lasting impact of past downsizing events, paying particular attention to the forward-looking question of how the people in the organization would react if a new round of job cuts takes place.
Outsourcing is a cousin to downsizing; jobs are eliminated from an organization, except that an outside vendor is hired to perform work that was previously done by employees. Sometimes, organizations “sell” entire functions (people and capital assets) to these third parties, who then “lease” the resources back to the firm. This removes or lessens some of the more dire consequences of downsizing since the affected employees remain part of the enterprise, albeit working for a new employer. Outsourcing can be a nightmare for Project Managers, whose team may be comprised of members “on loan” from groups who are no longer part of the firm (and now with significant animosity toward it).
Downsizing and outsourcing are techniques used by nearly every large corporation and are becoming increasingly common among public sector employers, as well. There has been a sea change, a revision in the social contract between employer and employee that changes both parties. Capelli (1999) suggests that, “The forces behind the restructuring of employment are so powerful that they overwhelm much of the discretion that employers have.” As noted, Project Managers feel this change not only as managers in the enterprise but also as employees and individuals. These techniques are dehumanizing (Cappelli; Jones & Pollard; Stein). They push employees away from the view that the firm is a kind of family, (concerned for their professional well-being, nurturing their professional growth) as they push employees away from the firm. Individuals, who formerly found this support at work and, in return, gave their loyalty to the firm, have relocated their support and loyalty into their profession. Just as employees can no longer expect lifetime employment, employers can no longer expect lifetime employees. This changes worker willingness to participate in “temporary” endeavors such as projects. Workers or managers previously willing to temporarily set aside pursuit of their personal goals in support of longer term corporate goals may be less interested in doing so if they feel it threatens the short term accomplishments they can list on their resumes or performance appraisals. Conversely, they may be quite eager to participate in projects that give them the potential for “resume building,” a practice becoming as necessary for retaining a job as it has traditionally been for finding a new one.
How to Include MC in Risk Management—Response Development
Accepted practice suggests that not every conceivable project risk needs to be included in the project's Risk Management Plan. Typically, those risks with a high likelihood of occurrence and high impact to the project are included, and potential response plans are made. By definition, the sources of Massive Risk are external or environmental factors that can cause all or virtually all of the project goals and underlying assumptions to become invalid. Therefore, by the measure of accepted practices, planning for Massive Change should be included in all project plans, because of the tremendous impact it can have.
In terms of probability of occurrence, some factors can be evaluated. Short duration projects are less likely to be surprised by Massive Change than longer ones. Firms in consolidating industries may be more likely candidates for merger or acquisition. A company in a changing competitive environment or marketplace may be more prone to corporate reorganizations. Poor financial performance, or even the hint that a future period may be weak, can quickly lead to downsizing. Even well established firms in stable industries may turn to outsourcing for Balance Sheet improvements. Project Managers should avoid tunnel vision and maintain an awareness of the entire environment, not just the things that touch the project. The simple reality is that change is inevitable and Massive Change is highly likely. Include an assessment of the sources, probability and impact of Massive Change in the Risk Management planning process, which should be updated throughout the project.
Initial responses to Massive Change events may be nothing more than a well-worded version of “We'll figure out what to do when the time comes.” This is actually quite appropriate given the uncertain nature of specific future events. Jack Welch reminds us that “Business success if less a function of grandiose predictions than it is a result of being able to respond rapidly to real changes as they occur. That is why strategy has to be dynamic and anticipatory” (Welch & Byrne, 2001). To help Project Managers rapidly develop dynamic responses when a Massive Change event occurs, the following section contains some rules of thumb. These are “frontline” responses, focusing on issues likely to impact the project itself (the Project Charter), the individuals who comprise the project team, the project's customers and the unifying topic of communication, which touches all areas.
The first and most important rule of thumb is: don't put much faith in rules of thumb. Each situation, each team member, each Project Manager is unique. Rules of Thumb provide generalized approaches that should be used to inspire thought and creativity. They are useless without the Project Manager's thorough understanding the reality of the situation, the psychology of change and the real needs of the project and its stakeholders. The Project Manager should not hesitate to form intuitive, natural responses to individual situations rather than searching for precedents that don't exist or don't apply. Don't be afraid to be guided by instinct—it's often the best rule of them all.
Strategies for Developing Risk Responses
• Get a fast start. The project environment is heavily time-constrained, so do not “wait until the dust settles.” Use all available resources, inside and outside the project team, to find the best ways to make the changed organization work most effectively (Jones & Pollard).
• Look around. The profession of Project Management does not have a monopoly on good ideas for dealing with change. For example, from the field of counseling comes a technique called Positive Uncertainty (Gelatt, 1992). It is “an approach for making decisions about the future when you don't know what it will be. It is a paradoxical, ambiguous process for managing change using both your rational and intuitive mind.”
• Be ready for aftershocks. Recognize that the first wave of Massive Change may not be the last. For instance, two thirds of Business Process Reengineering projects fail completely or fall significantly short of their hoped-for outcomes (Jones & Pollard). The needs that led to Massive Change may not be satisfied, and further (perhaps even more massive) changes may be in store.
• Be optimistic, but be real. Massive Change can present both threats and opportunities, however, some authors (Jones & Pollard) feel that “most large scale change is likely to generate disruptive effects” and point out that mergers (a source of Massive Change) fail more often than they succeed.
Responses for Project Charter/Project Goal Risks
• Back to the beginning. The automatic first-step in responding to Massive Change is a reaffirmation of the project's strategic vision. Thoroughly review the Project Charter, engaging those who created and approved it (or their organizational replacements). Review the detailed objectives of the project; in light of the change, are they still worth the resources being spent to obtain them? If not, an orderly project shutdown should be scheduled. This seems very obvious but is much easier to suggest than to do. Even as the environment changes drastically, some managers are unwilling to cancel projects even if they are no longer needed or valuable. There are many reasons: management may not realize the impact of the change obviates the goals of the project, the manager may not want to upset a superior or second-guess a predecessor who originally initiated the project, or the manager may still be in denial, unwilling or unable to see the new reality created by the Massive Change event. In all of these cases, requalifying the Project Charter helps all parties face the facts and use them to make good decisions.
• Don't assume anything. Not everyone sees the Massive Change when it happens, or sees it the same way. Reality is something humans can only accept in small doses (Armstrong, 1993) and it's very likely that project stakeholders hold differing perceptions of “reality.” The Project Manager should strive for a clear view of the situation, but not assume it is the only view, or, indeed, that it is even an accurate or comprehensive view. Seeking others' views, and reconciling different responses to “what just happened?” may cause action-oriented manager and Project Managers to become impatient, but is an essential precursor to the good decisions that must follow.
Responses for Staff Risks
• Don't manage; lead. Be a source of leadership to the Project Team and others in the customer organization during MC to control stress and maintain focus. Model best practices. Members of a group tend to assume the style of its leader. Urging receptiveness to new ideas is one thing, being receptive is another.
• Out with the old, in with the new. When the old organization disappeared, its style and personality went along with it. Build a positive, new organizational culture that reflects the values of the new organization and its people. Celebrate the birth of the new and mourn the loss of the old. Formal team-building activities, workshops, etc., are useful to help team members talk and think in positive directions, focusing on the challenges and successes that lie ahead. (Team building can be a positive spin-off of change, a group may be brought closer together when it acts to protect its common interests in times of crisis.) A second project kick-off meeting may be in order, to help all stakeholders walk the path to understanding of the new rules of the new game.
• Build skills and enthusiasm. Often, the first casualty of change is confidence. Perhaps Massive Change events may only affect project team members by adding stress about job security, reduced faith in ever-changing management and so on. The loss of morale is real even if the actual change event is of little direct consequence. Often, the loss of morale comes from the “dead times” associated with Massive Change, time spent waiting for the merger to complete or the new divisional structure to be announced. Participation in a professional seminar or training class, particularly if held offsite, can help the individual “reset” and restore morale. The investment in their personal development can also underscore the commitment of the employer to the employee.
• Manage through the noise. Massive Change disrupts the project team's environment. Individuals on the team lose focus, pondering the changes within the organization, including possible future changes, and debating their impact on the business, the team and the individuals. This discussion can generate a lot of heat and noise, but little direct impact on the project. Don't try and stop it; it can't be stopped, it's how individuals and teams cope with change. Provide an appropriate time and place for this kind of discussion to minimize the distraction of issues beyond the team's immediate objectives. Run interference for the project team, and help them focus on the issues that affect them directly.
Responses for Customer Risks
• Requalify the goals. The project's goals are its purpose, and the project's customer is the final judge of success. Periodically in any project, the goals should be reviewed with the customer to ensure they remain appropriate solutions to their needs. This is particularly true when a Massive Change event occurs and requalification should be part of all response plans. On time, on budget delivery of project results is still a failure if the results don't solve the customer's needs. The ultimate goal is the success of the organization, not success of the project.
• Stakeholder analysis. Identify the people or groups who have a vested interest in the project's success. Use techniques such as interviews and structured workshops to learn the opinions and attitudes of the leaders of the new (changed) organization. (An external facilitator may be needed to get candid opinions that might not be shared directly with the Project Manager.)
• Fog lights. Military strategists talk of “the fog of war.” This refers to the unimaginable noise, confusion and disequilibrium that occur in battle. While managing a project in no way resembles war fighting, there can be times when the chaos of Massive Change clouds the Project Manager's perception, obscuring important facts amid the swirling emotions of all involved. It is critical that the Project Manager obtain clear and reliable information. This need may warrant the development of an “emergency briefing package” plan early in the project, where key players are assigned specific topics to track and report in time of crisis. The sum of these reports provide a comprehensive snapshot of the project that can be assembled quickly, even in the Project Manager's absence.
• Be scientific. The tools of change management are built around communication. Understand and be prepared to use proven techniques such as Active Listening, Skillful Dialogue, Structured Problem Solving and so on to listen to team members, executives, customers and anyone involved in the project as aggressively as possible. Don't rely exclusively on informal or “ordinary” listening. Using a facilitator from outside the project organization creates a formality that encourages more profound communication. Take advantage of the considerable body of work that has been done in this area, perhaps going so far as to preselect techniques that can be used if the risk event of Massive Change occurs.
• Face it. Experts suggest that in time of great change, effective communication is more likely to happen at the local, personal level. Face-to-face communication is emphasized over all other forms (Canterucci, 2000). For large project teams, or teams that are geographically dispersed, this may require the use of “messengers” who can carry the word to the masses. Again, advance planning costs little and may be priceless: identify who the messengers will be, and how they will get their (face-to-face) briefings to carry outward. Just as importantly, plan how they will communicate the feedback they are given.
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Proceedings of the Project Management Institute Annual Seminars & Symposium
October 3–10, 2002 • San Antonio, Texas, USA