Meeting time, cost, and money-making goals with Strategic Project Leadership®
Professor of Project and Program Management
Rutgers Business School and Tel-Aviv University
Strategic Project Leadership (SPL)® is the most advanced approach to project management today. It combines the strategic, business-related aspects of projects, the operational needs of getting the job done, and the leadership means of inspiring and motivating the project team. The main objective of SPL is to focus projects on business results by creating value, competitive advantage, and winning in the marketplace. This integrated, research-based, industry-proven approach recognizes that most projects today are uncertain, complex, non-linear, and changing; they must be managed in a dynamic and flexible way, and a “one size does not fit all” approach. More important, it addresses the fact that meeting the “triple constraint” of time, budget, and performance goals is insufficient to guarantee business success. This paper describes the context for building the SPL approach and its major concepts, planning elements, and implementation principles.
One of the most critical elements in the competitiveness and growth of organizations is project management. Clearly, no organization can survive today without projects. Projects are the drivers of innovation and change; they turn ideas and strategy into new products and services and they can make organizations better, stronger, and more competitive. Furthermore, in an increasingly dynamic and competitive world, the investment and effort in projects continue to grow.
However, in spite of their importance, most projects today are still showing poor performance. Most projects don’t meet their time and budget goals, and many do not deliver their expected business returns. Paradoxically, many organizations are still not seeing project management as a strategic competitive competence, and many CEOs are only seeing it as a simple, operational job. The unusual combination of weakness, importance, and neglect, provides a unique business opportunity to make a difference, and benefit from helping organizations to turn their project management into a powerful competitive weapon.
This paper describes the status of conventional project management and the opportunity for change. We will show how the concept of Strategic Project Leadership®, which was developed during years of research, consulting, and teaching, could help organizations and managers make a difference. We will start by analyzing the reasons for the weakness in the profession, present our research process and findings, and provide the framework for turning projects into powerful competitive assets. We conclude by describing a set of principles on how to implement SPL on top of the existing project management organizational practices.
Why is Project Management Weak?
Many organizations today are using a well-established approach and a set of universal techniques to manage their projects; yet, they often find out that the traditional approach to project management is insufficient to deal with today’s dynamic business requirements. In fact, the truth is that even if you do everything by the book and precisely follow all the formal guidelines of project management, your project may still fail! The question is, why? And, what is missing?
There are several reasons why the classical approach is insufficient. First, the conventional approach to project management is based on a predictable, fixed, relatively simple, and certain model. Furthermore, it is often decoupled from the dynamic changes in markets, technology, or business environments. The reality is, that most projects today are unpredictable, changing, and involve a great deal of uncertainty and complexity. Second, the current guidelines treat all projects as the same, and use a “one size fits all” approach. In reality, however, there are significant differences among projects, and “one size cannot not fit all.” To succeed in a project, you must recognize the differences that exist among projects and adapt your style to the specific project characteristics. Finally, although almost all project launches are motivated by a business need or opportunity, the current project management approach is not designed to deal formally with business needs, focusing instead on operational efficiency and on meeting a project’s time, budget, and requirement objectives (commonly called “the triple constraint”). However, achieving the triple constraint is insufficient. It is only one aspect in a project’s success. Research shows that even if projects meet their time and budget goals, they may still end up in disappointing business results (Shenhar and Dvir, 2007); furthermore, often late and costly projects turn out to become tremendous business successes. A famous example of this is Microsoft’s Windows development project, which was delayed numerous times and its cost extensively exceeded estimates, yet it became Microsoft’s highly rich source of income.
The Art and Science of Project Management
The traditional tools of project management provide a universal formal part of the profession—the “mechanics” or the “science.” They are practiced around the world and promoted by professional associations—most prominent of them is Project Management Institute (PMI)—and by dozens of consulting groups offering training and applications based on the classical concepts. The science part includes well-known and important techniques, such as, WBS, PERT, Gantt, CPM, and Earned Value, to name a few.
Project management is also an art. Most of the reasons why projects succeed or fail today are because of the unwritten rules of the profession—the art part. The ratio is perhaps, 20% science and 80% art. The art part includes many of the “weak spots” as mentioned above, such as dealing with change, adapting to a specific context, and the lack of business focus during project execution (see Exhibit 1). It is time to turn some of the critical elements in the “art part” into science. If we could teach project teams how to deal with change, adaptation, complexity, and business focus in a formal and structured way, project and organizational success would see a tremendous improvement.
Exhibit 1: The Art and Science of Project Management
During the last two decades, our research has focused on the non-traditional aspects of project management. We have studied over 600 projects around the world and have looked for the reasons why projects succeed or fail. We have developed numerous frameworks and principles that could help organizations and managers formalize some the art parts and turn them into science, and we have tested these frameworks on dozens of organizations with a great level of success and acceptance. In addition, we have developed tools to apply these principles in real organizations. Based on this experience, we present here the new strategic approach to project management called Strategic Project Leadership (SPL)®. The following sections describe this approach and its principles.
What is Strategic Project Leadership®
Strategic Project Leadership (SPL)® is an integrated approach, which was built on the foundations of traditional project management; it adds several formal components to the conventional approach, with the intention of “turning some of the art into science.” The main objective of Strategic Project Leadership® is to focus projects on business results by creating value, competitive advantage, and winning in the marketplace. SPL combines the strategic, business-related aspects of projects, the operational needs of getting the job done, and the leadership sides of inspiring and motivating the project team.
Strategic Project Leadership® is based on a simple principle: Instead of seeing project managers as responsible for “getting the job done,” (i.e., completing the project on time and budget, and meeting requirements), SPL sees project managers as leaders, or, better stated, mini CEOs. They should be responsible, not only for getting the job done, but also for achieving the business results and for inspiring and motivating the project team. They are also expected to adapt their style to the right context and manage their project in a dynamic and flexible way.
SPL adds two levels on top of (or around) traditional project management: dynamic adaptation and strategic leadership (Exhibit 2). The three levels of SPL are summarized in Exhibit 3, which includes the major ideas, techniques, and focus.
Exhibit 2: The Three Levels of SPL
Exhibit 3: Summaries of the Three SPL Levels
The Dynamic Adaptation studies were supported in part by grants from the DoD in Israel, and NASA; they are described in dozens of research articles and their principles and frameworks are summarized in Shenhar and Dvir (2007).
First, we suggest that organizations adopt a multi-dimensional framework for planning and assessing project success, instead of the traditional “triple constraint.” Such framework will become part of the initial plan; it will first set the expectations in advance and be used later as a benchmark for project execution, to monitor if the project is still going to achieve these expectations. The framework for project success includes at least five dimensions (Shenhar et al., 2001, Shenhar and Dvir, 2007)):
- Impact on the Customer
- Impact on the Team
- Business Results
- Preparing for the Future
Second, managers and executives of projects must learn to expect change and even embrace it. They must accept the reality that almost all their projects will undergo changes and treat this as the normal way, rather than as an exception. Planning should be seen as an on-going process, and re-planning should become common, not exceptional. Teams should use a flexible style of decision-making and employ a “rolling wave of planning” (Shenhar and Dvir, 2007), or an “agile project management style,” understanding that not everything can be planned in advance. Changes and adjustments should be added as more information is collected and as the project moves on, and teams should also see this as an opportunity to redirect the project toward maximizing end results revenues.
Finally, organizations should understand that “one size does not fit all projects” (Shenhar, 2001). They should use frameworks that will help them distinguish between different project types and adapt project management style to the right project. For example, projects should adapt to different levels of market, technology, and environmental uncertainties; different levels of complexity; or different constraints and limitations. They must also adjust the project to the unique business environment and industry. Shenhar and Dvir’s Diamond Model (1996; 2007) offers a framework for analyzing a project’s specific context and selecting the right style; it includes the following four dimensions, where each dimension is divided into four different project types:
- Novelty – How new is the product to your market and users
- Derivative, Platform, New-to-the-Market, New-to-the-World
- Technology – How much new technology is used
- Low-tech, Medium-tech, High-tech, Super High-tech
- Complexity – How complex is the product or the project organization
- Material/Component, Assembly/Subsystem, System, Array/System of Systems
- Pace – How critical is your time frame
- Regular, Fast/Competitive, Time-Critical, Blitz
A unique project diamond describes each project context, and the specific project diamond determines what the appropriate style is for this particular project. The project diamond can also help analyze project difficulties and put a troubled project back on track.
A famous example of how to use the diamond model is Boeing’s current development project of its new 787 Dreamliner commercial aircraft. The program has suffered extensive delays, because the company did not predict upfront the difficulties it encountered later. The first problem was the unexpected level of uncertainty introduced in the new technology of building the aircraft’s body of composite materials, instead of using the old technology of an aluminum body. The second was the complexity of its wide network of suppliers to which the company delegated an unprecedented amount of design and development work. Using a diamond analysis for this program can show that the program was initially managed as a medium-tech system project, whereas the preferred approach would require a high-tech, array style (see Exhibit 4).
Exhibit 4 – The Diamond Analysis of Boeing’s 787 Dreamliner
The strategic leadership part came out of our strategic management studies, which were supported by grants from National Science Foundation (NSF), Project Management Institute (PMI), and NASA. They are summarized in several articles and in a PMI research monogram (Shenhar, Dvir, Milosevic and Thamhain, 2007). This level includes two new steps in the planning and execution of projects— strategy and spirit.
Project Strategy – Adding the Missing Link
Typically, project execution starts after a project plan is created (PMI, 2008). The plan normally includes the project scope, deliveries, milestones, resources, and activities for execution. Yet, most projects are initiated as part of the company’s business strategy and they need to support this strategy. Most traditional books and training are not guiding teams on how to do it. As we have found, in order to translate the company’s strategy to what needs to be done on the project to support this strategy, we recommend adding a formal project strategy document between the top-level business strategy and the project plan—the missing link today. But, what exactly is project strategy and what does it involve?
In today’s environment, any project outcome—a product, a process, or service—is likely to face competition. Thus, for each product or service, one should ask, how can it stand out? How can it succeed in the face of competition, and what will be its competitive advantage? Project management, therefore, cannot just be about meeting time and budget goals. In addition, it should be about creating competitive advantage and value. A good project strategy document must define how to create the best competitive advantage for winning in the marketplace; hence, the project strategy is the project’s unique way of making it happen. This way should involve the project’s approach, direction, and a path that is planned in order to win over the competition (Mintzberg et. al, 1998).
We define a project strategy as: the project perspective, position, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best value from the project outcome (Shenhar et al., 2005; Shenhar and Patanakul, 2011). A typical project strategy document will include the following components:
- Business Background
- Business Objective
- Strategic Concept
- Product Definition
- Competitive Advantage/Value
- Success/Failure Criteria
- Project Definition
- Strategic Focus
Project Spirit – Inspiring the Project Team
The second component that strategic project leaders must address formally is project spirit. Great leaders know how to define and nurture a vision that energizes and brings out the best in people. Visionary leaders are often transforming and inspiring their people to achieve outstanding results and to overcome enormous difficulties. Great leaders could be found everywhere and, in particular, in projects. Project managers should train themselves to become inspiring leaders and see this as part of their normal job. By building a formal project spirit, project managers should be able to translate company and business visions into great and exciting products, and build an environment that is based on energy, excitement, and enthusiasm, which will lead to successfully achieving the project’s goal and creating the right competitive advantage and value. We define the project spirit as: “The collective attitudes, emotions, and behavioral norms that are focused on the project’s expected outcome and achievements” (Aronson, Shenhar, and Reilly, 2010).
The first step in creating spirit is articulating an appropriate and exciting vision. Visions can often be summarized by a short motto or slogan, which will be derived from the strategy and articulate the state of affairs after the project is completed. Well-defined project visions will excite the team, create meaning, and unleash the energy in people, but they will also excite top management, and eventually influence the customer. All and all, the following four elements could help build a successful project spirit:
- Vision – Building inspiration, excitement, and motivation
- Values – Directing and guiding the right behavior
- Symbols - Distinguishing the project’s uniqueness
- Social Activity – Taking care of the fun and creating the team’s bond
Summary - Implementing Strategic Project Leadership®
Implementing SPL requires a new integrated approach concept, a new framework for planning, and a collection of implementing principles as summarized below:
The Integrated Approach Concept – The Four Aspects
Strategic Project Leadership® involves moving out of the current “getting the job done” approach. Although operational excellence is important, it must be accompanied by additional understanding. We suggest that project managers and teams should learn to integrate four aspects during their work (Exhibit 5):
- Operational Excellence – Meeting the project’s efficiency goals of time and budget.
- Dynamic Adaptation – Adjusting the project to changes and context
- Strategic Focus – Focusing the project on business results and competitive advantage/value.
- Inspired Leadership – Inspiration and motivating the project’s team.
Exhibit 5: The SPL Integrated Approach
The Planning Framework – The Five Hierarchical Plans
To guide the project’s planning, SPL defines a hierarchy of five parts of a strategic project plan: Strategy, Spirit, Organization, Processes, and Tools (Exhibit 6). A project plan is designed to support the company’s business strategy, but is unique to the project’s specific business goals. Some of these plans will clearly include traditional components such as scope, WBS, CPM, and so forth, but they would be parts of a larger framework of planning that starts with strategy and moves down to the rest of the plans:
- Strategy – Building a unique project strategy to support the company’s strategy and creating competitive advantage.
- Spirit – Creating a unique vision and a normative behavior environment that focus on the creation of competitive advantage.
- Organization – Adopting the organization to the unique goals and strategy of the project.
- Processes – Building the project’s traditional and strategic processes of planning and monitoring.
- Tools – Using traditional tools together with new tools and documents that support the business-focused strategy.
Exhibit 6: The Five Levels of SPL Planning
The Twelve Strategic Project Leadership® Principles for Implementation
The following twelve principles summarize the rules that will help organizations and project managers implement the SPL approach and follow it through project execution. Although we did not discuss all principles in detail in this paper, the list provides a complete picture of what SPL implementation requires:
1. Focus project management on business results; turn project managers into leaders, and make them responsible for the business results
2. Select your project (and program) portfolio based on different types of business objectives
3. Define a strategic charter for your project; obtain top management support upfront and throughout
4. Define why, (for) what, and how you are going to do the project
5. Set the expectations in advance, including the business results; define multiple success dimensions for different stakeholders
6. Define your project strategy, including the planned competitive advantage/value and strategic focus
7. Define your project’s vision, and create the right spirit that will excite the team and support the creation of competitive advantage
8. Define your project organization and processes, and build a plan for project execution and monitoring, to ensure operational excellence, strategic focus, and inspiring leadership
9. Expect change—build hierarchical and dynamic plans; be ready to revise your plans as you move forward, obtain more information and remove uncertainty
10. Identify your project uniqueness and adapt your project management style, based on the “diamond” dimensions and other project characteristics
11. Conduct strategic project reviews, in which you reexamine the needs, the strategy, and the expectations, in addition to reviewing execution status and progress
12. Create an on-going learning organization within your project.
Moving toward a more strategic project management world is both timely and necessary. It is also possible. As we have described, Strategic Project Leadership® provides an integrated framework to project management, with a clear goal of achieving business results by creating competitive advantage and value with the project. Implementing SPL in organizations may require changing the current perspective of project management in the organization, and the most effective way of doing it is from top management. Executives, who will adopt these realities earlier, will be tomorrow’s winners. The change will require cooperation between top management and project managers and teams, where executives entrust project leaders with higher autonomy and more power. However, even today’s project leaders (formerly managers) can realize that they could do more by adopting some of these ideas in their projects and understanding, than just meeting time and budget goals, which is not enough.
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© 2011, Aaron Shenhar
Published as part of 2011 PMI Global Congress Proceedings – Dallas, TX