Abstract
As project management is becoming more strategic and business-oriented, new and formal approaches are needed to address the changes in the profession. The next generation of project management will transform project managers into leaders who must deal with the strategic and business aspects of their projects, articulate a vision to inspire and motivate their teams, and learn how to adapt their management style to the right project and environmental context. We present Strategic Project Leadership® (SPL), which is a comprehensive, research-based approach to project management. It combines the strategic, business-related aspects of projects, the operational needs of getting the job done, and the leadership perspective of inspiring and motivating the project team. This integrated, practical, and industry-proven approach addresses the reality that most projects today are uncertain, complex, non-linear, and changing; and they must be managed in a dynamic and flexible way, while “one size does not fit all.” More important, it acknowledges the fact that meeting the “triple constraint” of time, budget, and performance goals is insufficient to guarantee business success. Successful projects today require, in addition, the strategic and leadership perspectives. This paper starts by describing the context for building the SPL approach; it then outlines its major concepts, planning components, and implementation principles.
Introduction
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 engines that drive innovation and change; they turn ideas and strategy into new products and services, and they make organizations better, stronger, and more competitive. Furthermore, in an increasingly dynamic and competitive world, the investment and effort in projects continues 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, organizations are often not seeing project management as a strategic competitive competence, and many CEOs perceive project management as simple, and just operational. The rare combination of importance, weakness, and neglect provides a unique opportunity for companies and executives to make a difference, and benefit from turning project management into a powerful competitive weapon.
In this paper we describe 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 making this 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 Still Weak?
Many organizations today are using a well-established approach and a set of universal techniques to manage their projects; yet they often find 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?
The traditional approach to project management is based on concepts that were established about 50 years ago. These concepts suggest that a project consists of a collection of activities that need to be planned and executed according to a predetermined plan, while the goal of the project is essentially to deliver time, cost, and scope goals—what has become known as the “triple constraint” of project management. Following these concepts, the discipline of project management has developed standard tools and applications—such as work breakdown structures (WBS), network diagramming techniques, critical path, Gantt charts, earned value, critical chain, and so forth—mostly built for planning and managing the project in the most efficient way, namely to help meet the triple constraint.
In spite of dramatic improvements and exponentially accelerated change in science and technology, the project management discipline has not changed much. The same basic concepts are still dominating the profession today. We believe it is time to face the new realities of business and organizations, and advance project management to the next level, which will address these realities.
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 dynamic changes in markets, technology, or business environments. The reality is that most projects today are unpredictable, changing, and involving a great deal of uncertainty and complexity. In addition, the current guidelines essentially treat all projects in the same way, and use a “one size fits all” approach. In reality, however, there are significant differences among projects and “one size does 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 and context. Please note that the agile approach to project management (which was developed mostly for software projects) is dealing with ongoing changes and adjustments during development, but it does not address differences among projects and does not show how to adapt project management to a specific project environment.
Second, traditional project management is looking at the operational part of planning and execution. But teams, not plans, make projects, and managing a team requires more than just planning and controlling. To do their best work, team members need to be motivated and inspired. This requires the project manager to act as a leader, who knows how to define a vision for the project and understand how to inspire and motivate his or her team. The traditional approach essentially ignored the role of leadership, assuming that top executives are those that need to deal with vision and inspiration. Yet, according to research, the best teams often report that what made the difference was the vision and team's spirit, not rewards or level of pay.
Finally, while 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, as we mentioned, just on operational efficiency. The reality is that 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 with disappointing business results (Shenhar & Dvir, 2007); and often, even late and costly projects turn out to become a tremendous business success. The real success of a project rests on meeting the business objectives that were determined when the project was conceived. So if projects are started for business needs and results, why should they be managed just to meet time and budget goals? While many practitioners understand this paradox, it is not addressed by the traditional formal project management discipline. A more strategic and business-focused approach is needed.
The Art and Science of Project Management
The conventional tools of project management provide a universal formal part of the profession—the “mechanics” or the “science.” Like in any profession, the science part is practiced around the world in a universal way and shared by professional associations (such as PMI), as well as dozens of consulting groups offering training and applications based on the classical concepts. But project management is also an art. That is the part that is not outlined in books or formal applications and includes many aspects driven by personal experience or style. As we have seen in our research on over 600 projects, most of the reasons why projects succeed or fail today belong to 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” that were mentioned above, such as dealing with change, adapting to a specific context, and the lack of business focus during project execution (see Exhibit 1).
Exhibit 1. The Art and Science of Project Management
We believe it is time to turn some of the critical elements in the “art part” into science and make them more accessible to project teams in a formal way. If we could teach project teams how to deal in a formal, structured way with change, adaptation, complexity, and business focus, project and organizational results will see substantial improvement.
Strategic Project Leadership (SPL) was therefore developed during years of research on the non-traditional aspects of project management. The goal was to add the missing formal components to the traditional world, thus turning some of the art into science. It is important to note that the new science of project management is not discarding or eliminating any of the traditional building blocks. Rather, it builds on the same foundations and is using the fundamental tools and frameworks of the project management profession, such as WBS and schedules. SPL is adding, however, three important components, as described below.
The Concept and Structure of Strategic Project Leadership
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 transforms project managers into leaders—or better said, mini CEOs—who are 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. 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 therefore 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.
Exhibit 2 illustrates the aspects offered by SPL in addition to the traditional approach. The first addition is called Dynamic Adaptation. This part addresses the need to adapt project management to the specific project context and characteristics and to see change as a normal way of life in the modern project management world. The second level deals with Visionary Leadership. This level deals with the soft sides of project leadership, which needs to develop a unique project vision and spirit of excitement and motivation. And the third component is the Business-Focus level, which addresses the strategic and business-related plans and activities needed to achieve the business results of the project.
Exhibit 2. SPL – The New Science of Project Management
In the next sections we describe these components in more detail and briefly discuss project planning and implementation according to SPL.
Business Focus
A New Model for Planning and Assessing Project Success
The first step in describing the business focus strategic approach is to address the issue of project success. 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 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, Dvir, Levy, & Maltz, 2001; Shenhar & Dvir, 2007):
- Efficiency
- Impact on the customer
- Impact on the team
- Business results
- Preparing for the future
When the Sydney Opera House was built, no one could imagine that the project would take 16 years instead of seven, and cost $100M instead of $7M. From a traditional success perspective, this was a failed project. Today, however, the Opera House stands out as one of the greatest tourist attractions in the world, and is considered an ongoing success story for the city of Sydney. No company would agree today to have a similar project experience, but the story suggests that project success should be seen as a multidimensional, time-dependent concept, and must often be considered with a longer-term perspective in mind. Project efficiency is not always the only or even the best criteria for success.
The U.S. Space Shuttle program is an example where short-term savings resulted in long-term unexpected and unprecedented costs (Shenhar, 2011). In an effort to save cost, NASA was restrained in the 1970s into a development contract of $5B instead of a required budget of $8–10B, forcing the agency to compromise on development efforts. It had to eliminate its plans for extended technology tests and a later design freeze than those actually performed under the restrained budget. The Shuttle's original goal was to enable the U.S. affordable space flights on a reusable vehicle. The compromised short-term efficiency gains resulted, however, in an enormous lifecycle operational cost of $175B during four decades of Shuttle flights, (not to mention two terrible accidents, which claimed the lives of 14 astronauts). The cost of each flight was $1.5B, and maintaining the Shuttle program added $3.5B each year to NASA's budget. These extended costs led eventually to the retirement of the Shuttle, leaving the U.S. without an ability to reach space on its own. Had the program been seen with a longer-term success perspective, it may well be that the result would have been different and much more positive.
The Shuttle experience may exemplify similar situations today when complex programs are being forced into short-term savings and constraints, while facing tremendous uncertainty and challenges, which are often impossible to be assessed upfront. The typical, financial model of efficiency and accounting requests for precise estimates may not fit the new world of rapid change and high uncertainty. A better approach is to plan such programs with enough contingency funds based on initial levels of program uncertainty, combined with incentives to developers for not using all such funds. Our later discussion on adaptation will address this point from another perspective.
Project Strategy – 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. Traditional books and training are often not guiding teams on how to do it, leaving them to come up with their own ways. As we found, in order to translate the company's strategy to what needs to be done on the project in support this strategy, we recommend adding a formal project strategy document between the top-level business strategy and the project plan—we call it “the missing link.” 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 would it stand out? How would it succeed in the face of competition, and what would be its competitive advantage? Project management therefore should not 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 this happen. This way should involve the project's approach, direction, and a path that is planned in order to win over the competition (Mintzberg, Ahlstrand, & Lampel, 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; Patanakul & Shenhar, 2012). A typical project strategy document will include the following components:
- Business background and opportunity
- Business objective
- Strategic concept
- Product definition
- Competitive advantage/value
- Success/failure criteria
- Project definition
- Strategic focus
A famous example to illustrate the concept of project strategy is Apple's project of building the iPod product line and iTunes store in the early 2000s. Apple was not the first company to introduce MP3 players. At that time, earlier generations of players were already in the market. Apple, however, saw this as an opportunity to establish leadership in a new sector, integrating the concept of outstanding platform design with an online store. Using its competitive advantage of easy-to-use, cool products, with easy and immediate access to online downloads of music, Apple established itself as an undisputed market leader in this territory. Its strategic focus has always been on uncompromised customer experience and meticulous attention to detail, without worrying too much about cost. The assumption was that great, uncompromised products would later create higher profits and market value.
Visionary Leadership
The second component that strategic project leaders must address formally is visionary leadership. Great leaders are known for their ability to define and nurture a vision that energizes and brings out the best in people. Visionary leaders often transform and inspire their people to achieve outstanding results and to overcome enormous difficulties. Great leaders do not just exist at the national or chief executive levels. In fact, they could be found everywhere, including in great projects (Dvir & Shenhar, 2011). However, how could we train project managers (who are often technical people) to become great and inspiring leaders? We therefore introduce the concept of project spirit, which would become a formal component developed by managers in project planning and execution for the purpose of inspiration and motivation.
Project Spirit – How to Inspire the Team
Project managers could train themselves to become inspiring leaders and to see this as part of their normal job. By building a deliberate and formal project spirit, they 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 project spirit as “the collective attitudes, emotions, and behavioral norms that are focused on the project's expected outcome and achievements” (Aronson, Shenhar, & 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 form the strategy and articulate the state of affairs after the project is completed. Well-defined 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 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
An older but excellent example of building a great project spirit was Digital Computer's Alpha Chip development in the 1980s (Katz, 2004). The project created the world's fastest chip at that time, running three times quicker than its closest competitor. The team established a vision of “we can beat the world,” and with enormous dedication and team unity, was able to make the impossible. A more recent case is NASA's Kepler project, which was devoted to building and launching a spacecraft into the Milky Way in search for Earth-size terrestrial planets where other intelligent life may exist (Shenhar et al., 2005). The project's visionary question of “are there others like us in the universe” has excited everyone on the team and beyond. The program's values were focused on science, empowerment, and the trust team members have in each other; it has built its own logos and slogans, and its activity integrated formal processes, combined with informal, inspirational, and energized meetings, celebrations, and picnics.
Dynamic Adaptation
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 an exception. Planning should be seen as an ongoing 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 & 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.
The Diamond Model for Project Adaptation
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 (2007) offers a framework for analyzing a project's specific context and selecting the right style. The model includes the four dimensions of Novelty, Technology, Complexity, and Pace. Each dimension is divided into four different project types, and has a different impact on project management:
- Novelty – How new the product is to your market and users. Novelty represents the level of market uncertainty and it impacts the effort and time it takes to clearly define the product's requirements. Novelty is divided into the following types:
- Derivative, Platform, New-to-the-Market, New-to-the-World
- Technology - How much new technology is used. Technology represents the level of technological uncertainty and it impacts the number of design cycles needed and the time it takes before design freeze. Technology has the following levels:
- Low-tech, Medium-tech, High-tech, Super High-tech
- Complexity – How complex the product or the project organization is. Complexity depends on the size and complexity of the product and the organization required to complete it. Complexity impacts the degree of formality and coordination needed to effectively manage the project. It has the following levels:
- Material/Component, Assembly/Subsystem, System, Array/System of Systems
- Pace – How critical your time frame is. Pace represents the urgency to complete the project. It impacts the time management and autonomy of the project management team. It has the following levels:
- Regular, Fast/Competitive, Time-Critical, Blitz
A unique Project Diamond describes each project context, and the specific Project Diamond levels determines what is the appropriate style for this particular project. The Project Diamond can also help analyze project difficulties and put a troubled project back on track.
Exhibit 3. The Project Diamond
The Space Shuttle program mentioned earlier demonstrates how a wrong style may impact the success of a project. Due to budget limitations, the Shuttle was bound to freeze its design, configuration, and technology selection too early to what the program's uncertainty required. The result was a non-optimal selection of technologies and a costly program to operate. Specifically, looking at the Diamond's technology dimension, the Shuttle was managed as a High- or even Medium-Tech program (assuming it would use off-the-shelf technologies), while it really required a Super-High-Tech style.
A more recent example of how to use the Diamond is Boeing's development project of its new 787 Dreamliner commercial aircraft. The program has suffered extensive delays and cost overruns because the company did not assess correctly the difficulties it encountered later. One problem was the unexpected level of uncertainty introduced in the new technology of building the aircraft's body of composite materials. A 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 demonstrate that the program was initially managed as a Medium-Tech System project, while the preferred approach would require a High-Tech, Array style, and that the complexity was actually at the Array level, while the program has used a System level (see Exhibit 4).
Exhibit 4. The Diamond Analysis of Boeing's 787 Dreamliner
Summary – Planning and Implementing Strategic Project Leadership
An Integrated Approach Concept – The Four Aspects
Strategic Project Leadership involves moving out of the current “get the job done” approach. While operational excellence is important, it must be accompanied by additional understanding. According to SPL, 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 part 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 – Adapting the organization to the unique goals and strategy of the project
- Processes – Building the project's traditional and strategic processes of planning and monitoring, and adapting them to the unique project characteristics
- Tools – Using traditional tools together with new tools and documents that support the business-focused strategy, the visionary leadership, and the adaptive project management approach
Exhibit 6. The Five Levels of SPL Planning
The Twelve Strategic Project Leadership Principles for Implementation
The following 12 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 does SPL implementation requires:
- Focus project management on business results; turn project managers into leaders, and make them responsible for the business results.
- Select your project (and program) portfolio based on different types of business objectives.
- Define a strategic charter for your project; obtain top management support upfront and throughout.
- Define why, (for) what, and how are you going to do the project.
- Set the expectations in advance, including the business results; define multiple success dimensions for different stakeholders.
- Define your project strategy, including the planned competitive advantage/value and strategic focus.
- Define your project's vision, and create the right spirit that will excite the team and support the creation of competitive advantage.
- Define your project organization and processes, and build a plan for project execution and monitoring, to ensure operational excellence, strategic focus, and inspiring leadership.
- Expect change: build hierarchical and dynamic plans; be ready to revise your plans as you move forward, obtain more information, and remove uncertainty.
- Identify your project uniqueness and adapt your project management style based on the Diamond dimensions and other project characteristics.
- Conduct strategic project reviews, in which you reexamine the needs, the strategy, and the expectations, in addition to reviewing execution status and progress.
- Create an ongoing learning organization within your project.
Conclusion
Moving toward a more strategic project management world is both timely and necessary. It is also possible. As we 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 to do it should come from the top. 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) could realize that they could do more by adopting some of these ideas in their current projects and understanding that just meeting time and budget goals is not enough.
Acknowledgment
The Dynamic Adaptation studies were supported in part by grants from the DoD in Israel, and NASA. The Strategic Project Leadership research was supported by grants from National Science Foundation (NSF Grant # DMI 9812730), PMI, and NASA. I greatly appreciate their support.
