WHAT DO MAIN STREET and Wall Street have in common? If you consider our management and our employees as Main Street and our shareholders as Wall Street(as I do in this article), both measure success relative to speed, teamwork, and customer focus. These three critical success factors ultimately equal earnings per share. A manufacturing company in Ohio is pushing forward an entire initiative to sensitize its management to this premise with the expectation that productivity will increase. Roll-up companies are gambling their futures and those of their acquired companies on earnings per share. A technology corporation in Silicon Valley has reduced cycle time by more than 50 percent, thus being able to increase its customer base while simultaneously increasing its revenue picture.
Project management has become a tool for improving shareholder value for our companies while differentiating ourselves from our competitors. In other words, our corporations have latched onto a discipline that will help them to reach the earnings per share goal that is expected by both Main Street and Wall Street.
Growing behemoths and smaller emerging concerns are touting project management as a vehicle to success. They will use project management to plan and manage the strategic initiatives that will generate revenue and facilitate the containment of expenses, assuring the desired earnings per share. In addition, the project management discipline will aid those of us who compete to sell our products or our services by positively differentiating ourselves from our competitors. Project management is the most important management technique that can be used to ensure the fiscal success of your company and mine.
Let's look at where project management has been and where, I believe, it is going.
Joan Knutson is president of PMSI-Project Mentors (a part of the Provant solution), a San Francisco and Atlanta-based project management training, services, and product firm. She can be reached at +888-PROJ-888 or [email protected]. Send comments on this column to [email protected].
Where We Have Been. We have been through an era of recognition and exponential growth. It is time to celebrate an era of recognition. Project management is now firmly recognized as an essential discipline within corporate businesses and governmental agencies in America and around the globe. The discipline of project management owes a thank-you to initiatives such as Quality Improvement and Reengineering. Through the development and implementation of these large-scale initiatives came the gradual realization of a need for the development of the discipline of project management. Quality improvement and reengineering initiatives were so visible that they caught the eye of entire organizations. After data gathering, analysis, and problem solving were completed, each of these initiatives culminated in a series of efforts that needed to be implemented. These efforts had discrete beginnings, discrete endings, and discrete deliverables. In other words, they were projects. There was, however, nowhere for managers to turn for direction in how to implement and track such large-scale projects. By necessity, they learned by trial and error. Through these experiences grew the desire for and development of the discipline of project management.
As we all know, the work being performed by functional areas such as Information Systems and Research & Development has become more and more crucial. And how do these functional areas conduct work? By projects! The political images of these groups are tied to on-time and on-budget deliveries. Again, the discipline of project management gives us the techniques and the tools we need to attain success.
I suggest that the planning, organizing, and tracking of projects is now recognized as a core competency within small and large organizations, both profit and nonprofit. A 1994 Fortune magazine article [“End of the Job,” 19 September] contained these pronouncements: “… jobs as we know them will disappear.” Instead of being a jobholder, a person will become “a package of capabilities, drawn upon variously in different project-based situations.” As the Fortune article discussed, such individuals will coalesce into teams around an emerging issue, deal with the issue, and then regroup into other team configurations around other issues.
Consider the paradigm shift in the ’90s. The momentum of cultural change increased within our companies. “Project-driven” and “project-oriented”—terms that have become commonplace—are applied to organizations in business literature that discusses topics unrelated to project management.
How has the culture of business changed while accommodating the project management discipline? Consider these examples: Organizations that had been very hierarchical and thus bureaucratic have realized that their organizational success needs to be based on networking both internally and externally. Functional departments are no longer self-sufficient; they are now compelled to be interdependent. Individuals performed work; now teams from various functional areas of the business perform it. Individuals are coalescing into teams around different project-based situations, deal with the issue, and then regroup around other issues. The advantage for organizations has been in minimizing cost while letting time-to-market or time-to-money become the driving force.
Where We Are Going. We are now applying project management to revenue-generating and cost-containment initiatives. Most of us now conduct business by projects. Each project's existence is justified either because it creates a product or a service that can be sold, or because it reduces or contains costs. Each project must be individually evaluated and justified. This evaluation and justification process becomes more rigorous as more and more potentially enticing projects enter the portfolio mix of projects to be considered by top management.
Our organizations cannot afford, literally, to fund the resources needed to accomplish every “good idea.” Therefore, top management will be demanding the justification and selection of projects based on solid business premises. Is the project compatible with our organization's short- and long-term strategies? Is the project feasible with the resources and the knowledge base that we possess? Are the risks associated with this project worth taking? But most important, will this project generate large enough revenues and/or contain significant enough costs to financially justify the expenditure to fund the project? And how does the justification of this project compare to the multitude of other projects that are in the queue for consideration. Management is not only going to be concerned that we are implementing projects the right way, but also that we are choosing to implement the right projects.
In addition to this greater emphasis on the Initiation phase of project life cycles, I suggest that there must also be a stronger focus at the end of projects. Management and our customers will both want to go back and be sure that projected revenues were actually attained and/or that costs were actually reduced. In addition, projects must be audited to determine how well they meet their budget projections. For every project, the management of the project budget and the completion date of the effort will influence how soon the endeavor will reach a breakeven point after which profit is generated. A well-managed project budget, on-time completion date and well-managed production or maintenance budget translates into the earning per share that the company is seeking. Therefore, management, or the customer for whom the project was conducted, will insist that the job be well project-managed.
We are positioning project management as a sales differentiator. Using project management as a sales differentiator is a newer concept than applying project management to revenue-generating and cost-containment initiatives. Imagine a scenario in which you are assigned to choose a vendor between two competing companies. Both vendors appear to have similar features and fun tionalities within the products they are offering. Both say that they provide the best implementation/installation support possible. What will convince you to pick one vendor over the other? I suggest that it will be the way in which the winning vendor proposes to define, plan, execu and control the work effort. In other words, which project management processes, reports, and tools are they going to use when interacting with you organization? I would also bet that the vendor who appears to be better organ ized and better in control of the effort would be the one you'd pick.
Our prospective clients, whether they are internal or external, are the ones who will be asking what our project management approach will be. They will have within their Requests for Proposal specific clauses concerning the kinds of project management resources and capabilities that will and will not be offered. If not explicitly stated, they will be expecting us to plan, organize, and manage assignments using project management techniques. They will expect that projects will be done on time, within budget, and be of the quality expected, with as little upheaval within the organization as possible. They will want to see the project management discipline used during the sales process, during project launch, and during the entire evolution of the job. I suggest, too, that prospective clients will be willing to pay for this project management capability.
BEING PROFITABLE IS an expectation of both our management and our employees (Main Street)) and of our shareholders (Wall Street). Through a gradual but observable paradigm shift, project management has been recognized as one of the management disciplines that will drive higher profitability. Organizations are applying project management to endeavors that generate revenue and/or contain or save costs. In addition, project management is being presented to potential clients and customers to differentiate us from our competition.
The bottom line is that project management is a tool for improving shareholder value for our organizations while differentiating ourselves from our competitors. ■
September 2000 PM Network