A paradoxism for project-based organizations

Michel Thiry

Introduction

Project-based organizations (PBO) refer to a variety of organizational forms that involve the creation of temporary systems for the performance of project tasks (DeFillippi, 2002; Hobday, 2000; Sydow, Lindkvist, & DeFillippi, 2004). In recent years, PBOs have received increased consideration as an emerging organizational form (DeFillippi & Arthur 1998; Gann & Salter 2000; Hobday, 2000; Keegan & Turner 2002). As shown by two recent empirical studies (Bresnen, Goussevskaia, & Swan, 2004; Lindkvist, 2004), many organizations that have adopted a project management approach since the 1990’s have had to deal with the dichotomy between the flexibility and dynamism of the project approach and the desire of firms’ financial and strategic stakeholders to exercise control at corporate level.

When set in traditional structures, project-based organizations (PBO) also display certain weaknesses, such as: the difficulty in coordinating organizational learning and development (Bresnen et al., 2004; Hobday, 2000); the linking of projects to the organizational business processes (Gann & Salter, 2000; Lindkvist, 2004), and the difficult grouping of a number of stakeholders from different “thought worlds” (Dougherty, 1992). Few, if any, papers in the project community of research and practice discuss or investigate these issues by challenging the PBO’s impact on the organizational context.

In turbulent environments, the relative autonomy of project teams, constantly changing project conditions, and the ambiguity of the organizational context will often result in emergent working practices that influence the organizational environment (Lindkvist, 2004; Thiry & Deguire, 2004; Tsoukas & Chia, 2002). This enactment process will result in two basic praxeological implications:

  • The recognition that project management practice can and will influence organizational practices and, in so doing;
  • An alternate position may open a door for a redefinition of organizations through projects by supporting the adoption of some of the new and challenging organizational theories in project-based organizations.

Methodologically, De Wit and Meyer (2004) have suggested the use of theory paradoxes to avoid “jumping to solutions” and encouraged the use of creativity to find ways of benefiting from both sides of a tension at the same time in a process called “paradoxism”: a fusion of uncertain, conflicting sources of evidence (Smarandache, 1992). Using Burns and Stalker’s (1961) concept linking mechanistic organizations to stable environments and organic organizations to turbulent environments, the paper will focus on the main theories that find themselves at the two ends of this continuum. In doing so, it will define paradoxes and theoretical tensions in five areas of the organizational context of project-based organizations that are worth exploring, hoping to encourage debate within project research, and enable the simultaneous presentation of diverse or even opposing perspectives in areas currently dominated by one single paradigm.

Theoretical Context

There has been more and more interest generated in project management research by topics that cover the relationship of projects with the wider organizational issues. Proof: recent research conference and grant topics include: “The Management of Projects: Reconciling Uncertainty and Responsibility,” within a wider conference theme of: “Responsible Management in an Uncertain World” (Euram, 2005); “Enterprise Project management”: “The need for PM to be aligned with strategic management” (IRNOP, 2006) or “Successful models for organizational project management,” “The impact of allied disciplines on PM,” and “The impact of complexity theory on PM” (PMI, 2005). Most of this interest is directed at the influence that the organizational environment can have on projects. Investigations in practice and theory of projects and organizations have identified another side to the coin that has not yet been given enough consideration by research; that is, the influence that projects have on organizations.

There are also few references on how the extensive use of unique and temporary endeavors like projects and programs can influence the strategy and the design of organizations (Jamieson & Morris, 2004). The literature review presented in this paper covers diverse, but linked, subjects such as corporate governance approaches and the environment of organizations, as well as fundamentals of the strategy process such as sensemaking and enactment, change, learning, and decision-making. In all of them, the objective was to identify the pressures that advocate for a shift from a top-down, control-focused frame described hereafter to a bottom-up, learning-focused frame. Key assumptions of the paper are:

  • The dominant research paradigm in management, and specifically on issues of Organizational Design and Governance, still takes a top-down—that is, hierarchical, labor division, and control-based—perspective (Clarke, 2004);
  • Most Strategy textbooks have portrayed the strategy process as a rational linear progression of a number of distinct steps (De Wit & Meyer, 2004);
  • Research literature produced in Project Management is typically cross-sectional, grounded in a bottom-up—that is, product-oriented, performance-based, engineering and systems analysis— perspective (Cooke Davies, 2004; Thomas, Delisle, & Jugdev, 2002);
  • Practice-oriented literature is mostly based on processes, tools and techniques, data management and control.

Projects’ Theoretical Context

The traditional scope of project management—as defined, for example, in A Guide to the Project Management Body of Knowledge (PMI, 2004)—Is focused on system/engineering-based approaches that emphasize the development of a baseline and its control as key concepts (Cooke-Davies, 2004; Jafaari, 2004; Winch, 2004). It can also be observed that, when dealing with complex environments, practitioners—of “agile and iterative development,” for example—talk about the need for projects to be flexible and reject a number of the traditional project tools and techniques (Larman, 2004). These accounts bring us to the need to identify different project types.

Many project management authors (Crawford, Hobbs, & Turner, 2004; Shenhar, Dvir, Lechler, & Ploi, 2002; Turner, 2000) have looked into project classification. Although all these classification are slightly different, there is consistency at the two ends of the spectrum; on one end, we find what are called well-defined projects and, at the other end, we find complex projects or programs (Ohara, 2004). This categorization is consistent with APM (2000), NASA (2004), and others. In Crawford et al. (2004), nature of work, complexity and strategic importance are all ranked high on the scale of categorization attributes. Several researchers (Cooke-Davies, 2002; Lycett, Rassau, & Danson, 2004; Winch, 2004) have all identified predictability as a key issue that distinguishes well-defined projects from complex projects.

More recently, some project researchers (Cooke-Davies, 2004; Jafaari, 2004; Winch, 2004) have directly reacted to the “complexification” of projects and advocated for a new theory of project management, based on social sciences rather than engineering or systems analysis. But nearly all the reviewed project and program literature takes a standpoint that looks at business from the project perspective. It is worrisome that recent studies (Thomas et al, 2002) have identified a gap in project management and executive communication, as this seems to be reflected in the interaction between the management view of project-based organizations and the project view of strategy and management.

Organizational Context

In the last 20 years, the essence of the firm has changed with important consequences. Human capital (industry or firm-specific skills and knowledge— the “know-how”) has become more and more important compared to physical assets (the “know-what”—generic, transferable and mobile). This has initiated a breakup of traditional, vertically integrated firms and created new boundaries for legal, economic and technical areas (Bolman & Deal, 2003; Dallago, 2002; O‘Sullivan, 2000). This means that the organization’s boundaries are becoming more fluid, more and more defined by complementarity rather than by imposed structures, and that strategies are harder to implement if they are structured from the top (Bresnen et al., 2004; Lindkvist, 2004; Weick, 2001).

This shift towards more complex organizations has triggered a need to refocus on the stakeholders and to accept the need for constant realignment. To address this issue, Bolman and Deal (2003) suggest that leaders, strategists, and managers should switch frames to help the organization shift perspectives when needed; they argue, as do others (Hatch, 1997), that effectiveness of multiple frames has been demonstrated by research. In contrast, traditional rational-technical approaches confine managers to a technician’s role, emphasizing control, reframing encourages flexibility, and creativity. This is a view shared by organizational researchers such as Mintzberg (1979) and Isenberg (1984), as well as by project-management writers such as Grundy (2001) and Duggal (2001), who consider management in complex environments as art or craft. Weick (2001) and Weick, Sutcliffe, & Obstfeld (2005) argue that these situations trigger sensemaking as a preamble to enactment.

Complexity and particularly enactment give us a different perspective on organizational change, one that leads to the assumption that, once managers recognize their impact on the organization’s environment, they could directly influence it through their behavior by constructing a new organizational reality. Whereas modernists see uncertainty as a threat, which is also the view shared by the traditional project management community, others view uncertainty as an opportunity to change, as a learning experience (Hatch, 1997; Mintzberg, Ahlstrand, & Lampel, 1998).

Implications for A Project Management Theory

In strategy management and organizational behavior, a number of authors (Hatch, 1997; Porter, 1985; Waring, 1989) have identified the need to use different management methods and processes to manage stable and turbulent environments; they have identified frames of mind that are specific to each area; they have advocated that turbulent and faster moving (unpredictable) environments require different approaches to strategic management. In doing so, they have identified a number of paradoxes: “Deliberate-Emergent” strategies (Mintzberg & Waters, 1985); “Traditional-Learning” organizations (Senge, 1994); “Known-Complex” domains (Kurtz & Snowden, 2003); or “Mechanic-Organic” organizations (Burns & Stalker, 1961).

PBOs also create challenges for managerial practice. These challenges have consequences for both the theory and practice of project organizations. One area of tension that has been identified by many authors (Bresnen at al., 2004; Lindkvist, 2004; Orton & Weick, 1990; Sydow, Lindkvist, & DeFillippi, 2004) is the autonomy requirements of project teams and the decentralized, distributed knowledge and structure of projects versus the organizational constraint to embed and integrate project activities within their planning and control processes, and to coordinate strategies and resources at organizational level. This tension is even greater and more obvious in organizations that have adopted the dominant, mechanistic, control-based organizational paradigm.

Because traditional approaches to organizational change and design have been dominated by stability, routine, and order (Tsoukas & Chia, 2002), there is a risk in trying to fit projects into an organizational iron cage and to lose project management’s identity. In doing so, its main characteristics of flexibility and dynamism will be lost and its contribution to the management world much reduced. PBOs feature a number of potentially interesting characteristics, among which are: decentralization, short-term emphasis, and distributed work practices (Bresnen et al., 2004); structural characteristics—strongly decentralized, but quite loosely coupled (Orton & Weick, 1990); enacted strategies (Bredillet, Thiry, & Deguire, 2005); distributed knowledge (Tsoukas, 1996); and emergent working practices and behaviors (Lindkvist, 2004; Thiry & Deguire, 2004; Tsoukas & Chia 2002).

Using Burns and Stalker’s (1961) model linking mechanistic organizations to stable environments and organic organizations to turbulent environments, one could say that current project theory is aimed at stable environments whereas praxeology—the study of human actions—in PBOs points to turbulent environments. Therefore, there is a real need to define theoretical concepts that support the real world because, as Kurt Lewin, the well-known sociologist wrote: “There is nothing so practical as a good theory.”

Paradoxical Areas in PBOs

Important theoretical concepts have stimulated debate in the Project and the Strategic Management literature for the past 10 years. Although the number of concepts generating controversy demonstrates the richness of the debate among practitioners and academics, it seems important to focus on a few issues that concern the topic of this paper. Methodologically, De Wit and Meyer (2004) advocate the paradox approach— a situation in which two seemingly contradictory, or even mutually exclusive, factors appear to be true at the same time—to identify tensions, encourage debate, and enable the simultaneous presentation of diverse or even opposing perspectives in areas currently dominated by one single paradigm.

Based on recent organizational and project management literature, the author has identified five areas of tension in the organizational context of project-based organizations, where there is a relatively consistent and voluminous body of literature and a clear paradox. For each area, the paper identifies the main theories that find themselves at the two ends of the continuum that goes from a mechanistic, control-based environment to organic, complex systems. The underlying assumption is that there are a number of paradoxes in the project management and strategic management practice and literature that need to be brought out in the open and discussed in order to enable the integration of organizations and projects as well as a research paradigm shift. Figure 1 is a graphical representation of these five areas.

Paradoxical areas in Project-Based Organizations

Figure 1: Paradoxical areas in Project-Based Organizations

The first two areas of interest are pervasive of the whole organization in which projects and their derivates (programs, portfolios, and project/program management offices) evolve; they are generally the concern of social research. The first, organizational context, concerns the “ordering” of the organization, which includes structures, tangible and intangible assets, core competencies, and culture. The second, process behavior, in the context of this paper, concerns “collective behavior” and the way that organizational actors approach change processes. Process behavior is strongly linked to the organizational context.

The other areas of investigation can be considered as actual levels of organizational management or strategy. First, organizational purpose, which is often associated with corporate governance; it drives all strategies in the organization by defining what the organization is intent to achieve and without which a consistent overall strategy would be impossible to achieve. Second, strategy formation, which includes the formulation of a deliberate strategy and its reformulation in regards of realized strategy (De Wit & Meyer, 2004). Finally, the strategy implementation level: the level at which programs and projects are undertaken with the ultimate goal of achieving business benefits and supporting strategies.

Paradoxes and Paradoxism

The word and concept of “paradoxism” come from the mathematical theory and literary school of thought developed by the Romanian editor, writer and mathematician, Florentin Smarandache, in the 1980’s (Smarandache, 1992). In mathematics, paradoxism is concerned with the fusion of uncertain, conflicting, and imprecise sources of evidence; in literature, it is the school that promotes the use of paradoxes in literary and artistic creation. Paradoxism is also representative of real-life situations as described in much of the recent social research literature (Alvesson, 1996; Denzin & Lincoln, 2000).

Many management authors have acknowledged that the PBO, with its focus on cross-functional business expertise and customer-focused innovation, is ideally suited for managing complex products, subjected to technological uncertainty and rapidly evolving markets (De Fillippi & Arthur, 1998; Dougherty, 1992; Gann & Salter, 2000; Hobday, 2000). On the other hand, there has been little research on the practice and diffusion rate of PBOs (Hobday, 2000). As explained earlier, it is crucial to open the research field to theories that sustain creativity, flexibility, and innovation.

Table 1 shows the main theories that represent both ends of the spectrum in the five areas of tension identified in the previous section. This section will describe each of them and how they can contribute to shift the project management research paradigm towards a more praxeological approach, hopefully leading to paradoxism.

Environment Stable / Predictable img Turbulent / Unpredictable
Area of Interest Tension opposites
Organizational Context: Mechanistic/Structuralist img Organic/Interactionist
Process Behaviors: Performing img Sensemaking/Learning
Organizational Purpose: Shareholder Focus img Stakeholder Focus
Strategic Formation: Deliberate Strategy img Emergent/Enacted Strategy
Strategy Implementation: Well-Defined img Complex

Table 1: Paradoxes in Project-Based Organizations

Organizational Context

As explained above, organizational context concerns the ordering of the organization. Order relies on the fact that actors willingly comply to the requirements of society on the ground that they are “socially meaningful” or ‘morally right’ (Parsons, 1951; Weber, 1904). Social order is conceived as the product of the activity itself (Cuff, Sharrocl, & Francis, 1990); as such, order has different meanings in different organizational paradigms, which are developed through collective experience. These paradigms can be traced back to different sociological perspectives, each of which “tends to give a different emphasis and attention to those aspects of social life it considers contribute the most to social order” (Cuff et al., 1990, p.27).

Probably because, until recently, its environment has been relatively stable, the organizational management world has been consistently dominated by the concepts developed by Taylor: a mechanistic—top-down, hierarchical, labor division, and control-based—perspective (Clarke, 2004; Hatch, 1997). This is the perspective that sociologists have identified as structuralist (Cuff et al, 1990). For the structuralist, society and organizations can be seen as empirical-rational structures, which influence individual behavior.

More recently, a number of authors from both the organizational management and project management fields (Mintzberg, 1990; Pinto & Rouhiainen, 2001; Weick et al., 2005) have insisted on a view of the organization that is flexible, dynamic, and integrated both horizontally and vertically, a view compatible with both the concepts of reframing and enactment. This is the perspective that sociologists (Cuff et al, 1990) have identified as “interactionist.”

For the interactionist organization, structure is a reality created by a process which relies on networks of people; therefore, the direction and the re-ordering do not concern the organization itself, but the components of the process: its actors. In the interactionist perspective, decisions are made, using a “radical model” (Mintzberg, 1990), without the need to fully understand their consequences and, therefore, strategy is an iterative process where knowledge and understanding are gained in retrospect—an enactment process. The sustainability of the organization is secondary to the learning process of its people, which is very much aligned with the temporary aspect of projects identified by a number of authors as a characteristic of PBOs (Hobday, 2000; Lindkvist, 2004).

The interactionist’s meaning and action perspective views society, not as an objective entity which influences individuals and their behavior, but rather as a subjective construct stemming from the actions of its members and their interpretation of other people’s reaction to those actions. Interactionism is not concerned with the interpretation of an objective reality that controls people’s behavior, but rather with identifying the processes which creates each individual’s subjective reality (Cuff et al, 1990). It is an active, process-oriented perspective.

The structuralist-interactionist social paradox is consistent with the mechanistic-organic system paradox identified by Burns and Stalker (1961), but goes beyond the simple system view, to embrace human dynamics. When traditional mechanistic, or “structuralist,” organizations collide with organic, or “interactionist,” project-based organizations, order is challenged, and creates social ambiguities that should be recognized (Alvesson, 1996). This paper acknowledges that the ambiguities which constitute the social construct of contemporary organizations and the different concepts of order associated with each of these constructs are present in the project-based organizations and have to be recognized and addressed by future project management research. But, as Cuff et al. (1990) point out, none of these perspectives “is necessarily more correct than the other. They simply represent different ways of seeing the world sociologically” (p. 20). Depending on the sociological perspective that organizations abide by, both their strategic framework and their meaning of order will differ, and it is important to diagnose them before aspiring to any kind of successful research process.

Process Behavior

For the structuralist, behavior is greatly influenced by the organization and the structure of the society we live in; the individual serves this system. In a structural perspective, strategies are viewed as part of “a deliberate, systematic process of development and implementation” (Johnson & Scholes, 1997, p.44). This mechanistic approach often promotes a strategic vision associated with competition rather than collaboration. In this mindset, performance consists of achieving the best possible results—in line with the intended strategy—with the least possible resources. Behavior is therefore based on a concept of performance: the setting of a baseline against which achievement is evaluated.

Behavior is closely linked with evaluation, as satisfaction with a process will be evaluated according to the perception of the difference between the desired outcome and the actual outcome, and behavior will be adjusted accordingly (Carver & Scheier, 1990). According to Guba and Lincoln (1989), evaluation can be either

  • Summative: assessing a situation against pre-set standards at pre-agreed stages, or
  • Formative: assessing a situation on a continuous basis, in order to improve it.

Several authors (Guba & Lincoln, 1989; Quinn, 1996) feel that stakeholders have a relatively secondary role in the application of summative evaluation, which is rather mechanistic, because it implies a cognitive position where the relationship between means and ends is clearly defined, sometimes by only one of the actors. In the traditional project management literature (PMI, 2004; Stevens, 2003), the word control describes a summative evaluation process, based on a baseline plan, followed by corrective action to achieve the plan: a performing behavior.

Daft and Lengel (1986), Quinn (1996), and Weick (2001) argue that, when the relationship between means and ends is not well defined, it will trigger the need for meaningful interaction. Such situations require formative evaluation, based on results, rather than summative evaluation, based on preset objectives (Guba & Lincoln, 1989). This paradoxical view is sustained by the concept of sensemaking, which has been described as an individual process grounded in social interaction (Thomas, Clark & Gioia, 1993; Weick, 2001). In a group situation, sensemaking enables individuals to determine the extent of agreement of the group with their own view and vice versa. Within a sensemaking perspective, both summative and formative evaluation will take place to formulate the desired outcome. In the case of formative evaluation, decision-making and action are continually negotiated, and all the stakeholders require exposure to the new information (Guba & Lincoln, 1989): it is a learning process.

In the early and mid-nineties, developments within the systems theory have been using concepts of double-loop learning (Argyris & Schon, 1978) and self-assessment to shape the concept of the learning organization (Senge, 1994). Nevis, Di Bella, and Gould (1997) have defined organizational learning as “the capacity or processes within an organization to maintain or improve performance based on experience” (p.2), which suggests that organizations generate their own internal dynamics of learning as a behavioral process to achieve strategic objectives in less predictable environments. This behavior has been confirmed for project-based organizations by Bresnen et al. (2004); Lindkvist (2004), and Thiry and Deguire, (2004).

Other researchers—including Bredillet, Thiry, and Deguire (2004), Hatch (1997), and Pellegrinelli and Bowman, (1994)—have argued that strategy cannot be implemented successfully if goals and strategy are not continually readjusted to fit emergent inputs as the implementation progresses. Within the context of emergence and multiple stakeholders, implementation processes must combine a range of interventions taking into account, not only predetermined rationalized responses, but a range of responsive interactions (Kurtz & Snowden, 2003; Neal, 1995; Nevis, Di Bella, & Gould, 1997; Thomas et al., 1993) associated with organizational learning. In this perspective, the emphasis is placed on the existence of a learning behavior feeding back into the strategic intent to enable improvement and sustainability (Argyris & Schon, 1978; Nevis et al., 1997; Senge, 1994). This learning behavior is fed through formative evaluation.

Learning can therefore go from a simple acquisition of knowledge to a fully integrated social process of sustained development through acquisition of knowledge, testing, feedback, and self-assessment, and, “whereas [structuralist] authors see ambiguities as empirical phenomena […] worth investigating” (Alvesson, 1996, p.30)—a performing behavior—, for the interactionist, “the everyday social world is an interpretive reality” (Cuff et al., 1990, p.168), a sensemaking and learning behavior.

Organizational Purpose (Governance)

Organizational purpose is basically what defines the long-term mission and objectives of the organization; it is influenced by legal issues and ethics, organizational context and culture, and stakeholders. The most obvious manifestation of the organizational purpose is governance, which is the way significant components of the firm are organized to achieve the mission, and the way that they are coordinated to deliver strategies (Dallago, 2002). In the organizational literature, the current debate about governance theories is centered around two main perspectives: some authors argue that it is the business of business to make money and therefore to pursue shareholders’ interests; others believe that companies exist to serve the interests of multiple stakeholders (Jensen, 2001; Clarke, 2004). More recently, a small group of authors has advocated the idea of governance for “value creation” through innovation and intangible assets (Blair, 2005; Dallago, 2002; Lazonick, 2000; O‘Sullivan, 2000).

Under the influence of the Chicago School of Law and Economics, shareholders have been considered the rightful “owners” of the company throughout the Anglo-Saxon world for most of the 20th century (Clarke, 2004). The shareholder theory states that the assets of the corporation are the property of the shareholders and both managers and boards of directors are viewed as agents of the shareholders. There are no legal obligations to any of the other stakeholders, except those defined by contract (Blair, 1995; Clarke, 2004). This theory promotes financial measures of shareholder value, control over the agents, and pursuit of the profit motive, and the bottom line constitutes the main focus for managers. This approach has promoted a rational, top-down model of corporate strategy, based on control, where success is evaluated in terms of financial return (Hatch, 1997). Although, in recent years, there is an admission of responsibility to other stakeholders, the maximization of shareholder value is still the key measure of a manager’s success. Margaret Blair (1995) argues that the financial shareholder model has so dominated the corporate governance debate in recent years that its opponents have not dared openly oppose it.

Led by the Stanford Research Institute, where Ansoff and Stewart used stakeholder analysis in corporate planning in the early 1960’s, and a 1977 project undertaken by the Wharton School (Philadelphia, PA, USA) to explore the implications of the stakeholder concept as a management theory (Freeman & Reed, 1983), another school of theorists has put forth a move towards stakeholder management approaches. But it is in 1995, with a special edition of the Academy of Management Review, that stakeholder theory started to gain momentum (Clarke, 2004). Many definitions of stakeholder exist and there is still debate about it. But both the corporate view and the project view identify stakeholders as actors that are significant for the successful realization of objectives; Guba and Lincoln (1989) also talk about stakeholders as being “groups at risk” from the outcome.

Organizations have been slow to embrace the stakeholder theory, probably due to the fact that this perspective is less powerful and clear in terms of power and returns sharing, and that, although it is probably closer to reality, it is more difficult to operationalise (Dallago, 2002). The stakeholder perspective could also lead to reduced accountability of managers, and the necessity to release control and develop new, softer mechanisms because of the spread of the decision-making process (Clarke, 2004). But, more and more companies are now using a wider range of performance indicators that take into account a broad stakeholder perspective. The emergence of the “Balanced Scorecard” (Kaplan & Norton, 1992) worldwide, the EFQM Business Excellence Model (EFQM, 2000) in Europe, and the Baldridge Awards in the US as measures of corporate success are proof of this recent movement. Empirical data is also starting to demonstrate the value of a wider stakeholder approach (Kotter & Heskett, 1992).

Very recently, a few authors (Dallago, 2002; O‘Sullivan, 2000) have argued that both shareholder and stakeholder perspective focus too much on facilitating the optimal utilization of existing productive resources and sharing of residual wealth, but do not take into account processes by which resources are increased or transformed. This argument is supported by the recent publication of the “Blue Ocean Strategy” and “Value Innovation” concepts developed from research done at INSEAD by Kim and Mauborgne (2004a, 2004b).

In regard of the two previous sections, stakeholder governance could be associated with interactionism and learning/sensemaking, whereas shareholder governance could be associated with structuralism and performing. Projects and programs have for a long time advocated a stakeholder perspective, but they continue to practice in a shareholder paradigm. Traditional project evaluation or prioritization techniques are based almost solely on accounting and financial measures (Dyson & Berry, 1998). In a shareholder perspective, Amram and Kulatilaka (1999) argue that strategic project decisions are made based on strategic considerations that often have often little to do with tangible benefits. The recent movement towards a more strategic approach to project management provides an opportunity to take into account these emerging theories of corporate governance and organizational purpose. An integrated vision of projects would directly link projects and programs to governance and strategy, whereas the continued promotion of single project management practices reinforces the top-down mechanistic shareholder approach and denies any value creation mission for project management.

Strategy Formation

Strategy formation in itself contains a paradox: the formulation of a deliberate strategy and its reformulation in regards of realized strategy. Alvesson (1996) describes strategies as “modes of ordering” which, therefore, are representative of a social order. “Some organization theorists define organizational strategy as the direction an organization takes, regardless of whether or not that direction was intentional” (Hatch, 1997, p.113). Johnson and Scholes (1997); Pearson (1990); Quinn (1978); and Mintzberg et al. (1998) identify a number of strategy “types.” Mintzberg and Waters (1985) have defined two types of strategies: the intended strategy, —leadership plans and intentions, —and the realized strategy, —what the organization actually did, which Weick (2001) has associated with the concept of enactment. They further define “deliberate” strategies, —realized as intended, —and “emergent” strategies, —realized in the absence of intentions. The first is typically based on precise intentions, shared by all stakeholders; the second is largely responsive, developing patterns of action in response to environmental pressures. Obviously, the deliberate strategy is more prevalent in stable environments that are the domain of mechanistic/structuralist organizational approaches, and emergent strategies will be expected to occur more often in turbulent environments in which the organic/interactionist organizational perspective is adapted.

In the dominant structuralist paradigm, strategies are viewed as a deliberate, systematic process of development and implementation that is realized as intended (Johnson & Scholes, 1997). Strategies are selected on the basis of a (usually short-term) financial analysis, planned according to a clear strategic direction, and resources are allocated according to a predefined structure and plan, and are expected to be implemented as planned to deliver the expected financial results. For a number of years now, researchers have demonstrated that this is not the case, except in very stable environments (Hatch, 1997; Johnson & Scholes, 1997; Mintzberg & Waters, 1985).

The enactment argument developed by Weick (2001) argues that individuals construct their environment and then respond to their constructions through retrospective sensemaking. Enactment is a characteristic of turbulent environments in which frequent and continuous interactions continually change the environment. In this frame of reference, emergent strategy evolves from activities taking place throughout the organization (Hatch, 1997); a process Quinn (1978) has described as “logical incrementalism.” Other authors, in the same vein, see strategy as a powerful sensemaking process that allows people to act retrospectively and thereby produce order out of the chaos of their experiences (Goia & Chittipeddi, 1991; Huff, 1982). This is typically the process described for interactionist organizational situations for which a number of stakeholders construct shared goals through sensemaking.

Business Strategy can be seen from two perspectives: an environment-responsive strategy, based on competitive advantage (Porter, 1985), or a capability-based strategy, focused on available resources (Prahalad & Hamel, 1990). The basic principle of the business strategy is that managers are constantly looking for the best ways to balance strengths and weaknesses of the organization with opportunities and threats in the environment. The business strategy, because of its dynamic nature, is enacted and emergent, and charts the course of a firm’s activities in individual industries or domains; it is an adaptive, bottom-up process (Bredillet, Thiry & Deguire, 2004; Hatch, 1997).

There are two ways to develop business strategies: a) each unit competes with each other for the same resources, which, alas, is the case in most organizations because of a dominant structuralist paradigm; or b) strong and meaningful interrelationships are created among units, which would be the case in an organization that privileges horizontality and organic interactions. Business units, because they are close to the action, will best be able to deal with turbulent environments by developing emergent strategies. In PBOs, the phrase “business unit” could easily be replaced with “projects” and show the advantage of an integrated project management approach versus a single project management approach. One may even suggest a link between the focus on single projects and the desire of management to encourage competition and focalize control.

Projects, as strategic processes, modify the conditions of the firm in its environment because, through them, resources and competencies are mobilized to create competitive advantages and other sources of value. Emergent and enacted strategies must be considered as strong project management capabilities.

Strategy Implementation (Projects and Programs)

Studies in strategy implementation have demonstrated that strategies are seldom implemented as planned (De Wit & Meyer, 2004; Mintzberg & Waters, 1985; Quinn, 1978;). The sequence of strategy analysis, formulation, and implementation is not a linear process; the three activities go on concurrently all the time, and strategies are therefore formed incrementally (De Wit & Meyer, 2004). If projects are used to implement strategies in relatively unstable environments, then we must ask ourselves the question: What is the right type of project to implement emergent strategies?

Project classification has been addressed by many authors (Crawford et al., 2004; Shenhar, 2002; Turner, 2000) and, although using different concepts of classification and different rhetoric, has shown consistency at the two ends of the spectrum, as outlined in the Projects’ Theoretical Context section. One has to recognize, however, there is only anecdotal empirical research to support project categorization and strategy implementation through projects and that, for this area, one cannot really talk of a theory. But, at the same 10 time, there is no strong empirical evidence concerning strategy implementation in the strategic management academic community either.

Probably the most consistent work in this area is outlined in the Japanese “Guidebook of Project & Program Management for Enterprise Innovation” (P2M) (Ohara, 2004). The concept outlined in the guidebook has both a strong historical perspective and directly addresses the issues highlighted in this paper. It classifies project management into three “generations”:

  • A first generation focused on scope management and the management of the quality-time-costs triangle. It defines it as “an effective management method for achieving objectives of given time, quality and costs with planned results” (p. 30), the features of which could be “classified as hard processes […] rich in planning and control processes” (p.8)
  • A second generation, which, in addition to the features of the first generation, “also focuses on soft processes such as organization and communications management” (p.8). In doing so, it has widened the applicability of project management to “a variety of business solution projects, work process innovation projects for building an agile organizational structure” (p.30) “using the […] faster-better-cheaper […] concept (p.8).
  • Finally, a third generation: program management, which has evolved from “traditionally been applied to large-scale management programs” to deal with “rapid and discontinuous social changes, perceptive approaches to complicated events, speed and uncertain factors” (p.30).

In this section, the paradox will oppose first and second generation project management to third generation project, or program, management (Ohara, 2004). This last view is fully consistent with what a number of authors have recently advocated for program management (Lycett et al., 2004; Thiry, 2004) or project management (Cooke-Davies, 2004; Jafaari, 2004; Winch, 2004). It points to the fact that the project management community has to move beyond single project management to embrace multiple project management in harmony with the overall organizational strategy and mission, while respecting its context and culture or, as stated in P2M: “total management of projects […] from program conception for value creation” (Ohara, 2004, p.8). On the assumption that the value of a project is evaluated according to stakeholders’ satisfaction (Ohara, 2004; PMI, 2004), first and even second generation project management can only be used when the relationship between means and ends is clear, and the product will effectively increase satisfaction; when output and outcome are matched. If this is not the case, project management must adopt a program, or third-generation stance, which will ensure management of changes and ambiguity in stakeholders’ needs and expectations, and focus on the outcome, which can be achieved through many alternative outputs.

Theories of corporate governance and strategy formation are important in the paradox of project versus program—or 1st-2nd generation versus 3rd generation projects—because the review of project and program literature identifies two points that directly link programs to governance and strategy: a) the strategic alignment of programs versus the tactical or operational alignment of projects, and b) the market focus of programs versus the deliverable focus of projects. A focus on definition and control of scope severely restricts the flexibility of strategies, thus negating the value of the PBO; furthermore, insistence on a rigid form of program life cycle intrinsically limits the ability of the program to adapt in response to evolving business strategy (Lycett et al., 2004).

Conclusions

This paper is not meant to reject the world of well-defined single project management, as it is essential to strategy implementation in stable organizational environments, or when a turbulent environment is stabilized; rather, it is meant to open new paths for the development of project management by promoting its positive characteristics, such as flexibility, innovativeness, and dynamism. It is also meant to address the project management community’s current trend to force project management to adapt to dominant forms of 11 organizations that are not fit for project-based organizations or complex projects and programs. Although there have already been a number of papers on the need to move towards a more complex paradigm for project management (Cooke-Davies, 2004; Jafaari, 2004; Winch, 2004), most of these papers have defined a broad vision of complexity.

Empirical data (Bresnen et al., 2004; Hobday, 2000; Lindkvist, 2004) has demonstrated that there are specific problems with PBOs in innovative and complex environments when they are managing multiple projects through traditional organizational structures. Structuralist-mechanistic approaches to management are appropriate to stable environments (Burns & Stalker, 1961; Cuff et al., 1990; Quinn, 1996) when the relationship between means and ends is clearly defined. The dominant organizational mechanistic paradigm combined with single project management approach is well-suited when deliberate strategies are realized as intended, and projects have well-defined objectives: a low-ambiguity environment. In turbulent or complex environments, where ambiguity is high, PM research needs to explore new, more adapted forms of organizational management.

Using a paradoxical approach, this paper has outlined organizational and project theories in five areas of interest for PBOs, which could eventually lead to a PBO organizational framework. It has identified both a structuralist and an interactionist organizational context paradigm, and supported each of them with theories on process behavior, organizational purpose, strategy formation, and strategy implementation. In each area, these theories are underlining a paradox that needs to be resolved. The interactionist paradigm, supported by organic structures, a stakeholder-value creation governance stance, emergent and enacted strategies and a 3rd generation project mind-set, founded in a sensemaking-learning behavior, is in line with the situation observed in PBOs. It directly addresses the critique of multiple-project approaches and structures the response to complex environments.

In doing so, the author hopes to open up the field to a possible paradoxism where both the structuralist and interactionist approaches can find common ground and complete each other instead of competing. Project management research must address the bigger picture of organizations, and see how it can support some of the innovative management theories with the positive attributes of project management while addressing its critics; not by changing the essence of project management, but by finding the way project approaches can positively influence their organizational context.

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