Project Management Institute

Project management and leadership--agent for organizational transformation

Abstract

The discipline of project management has evolved over the years, but its actual practice tends to vary dramatically between Project Accounting and Control (PA&C) on one end of the spectrum to Project Management and Leadership (PM&L) on the other. As indicated below, this difference in orientation is a natural outcome of the growth of the overall project management function as it and its parent organization mature over time.

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These are significantly different orientations, where PA&C has traditionally been concerned with the inward scope of activity provided by constraints and measurement as part of the initial drive to establish the concept and discipline of project management in the organizational milieu. In contrast, PM&L is characterized more by outward growth and direction in its role as an organizational leader. As such, it has become one of an organization’s core competencies and must be recognized as one of the keystones of organizational transformation.

Introduction

There can be no argument that an initial focus on Project Control and Accounting (PA&C) is a necessary and valuable core of project management operations within an organization. It is the premise of this paper, though, that Project Management and Leadership (PM&L) is the future of project and business stewardship, representing a mature organizational outlook to the evaluation, planning, and execution of projects and their value to an organization. However, there are distinct differences between leadership and management that need to be explored and understood to establish a full appreciation of the appropriate use of each in a project environment that leads to business value and real organizational transformation.

However, as will be discussed, having a PM&L orientation is not sufficient in and of itself. An awareness of the external and internal organizational environments in which the practice of project management, whether viewed as a science or art, will be conducted is also required. This knowledge is fundamental in determining how organizational transformation and the leadership of same will be conducted. Last, the contributions of value and service cannot be underestimated as the outcomes of project management and leadership.

Traditional Development and Role of the Project Management Discipline

Much has been written and discussed on the topic of project management in the last 50 years, but, in reality, it is not a new discipline. The seven wonders of the ancient world did not materialize from the ether—someone had to have the vision, plan, and execution skills to design and build them. In those days, however, the dual forces of resource and time constraints were not as critical as they are today, so emphasis was placed on the actual accomplishment of the task at hand, regardless of its cost. In turn, this required a great deal of attention to the organization of resources for the effective completion of the project, laying the basis for project control. Subsequent major events in history followed this arc of concern, but also became tempered with the new forces of time and money. For example, the completion of the first rail link across America was a de facto race against time, but a race tempered by a need to control costs, leading to a clear recognition of the importance of project accounting. Since then, during successive periods of boom and bust, the practice of project management has emphasized the “science” of accounting and control. Specifically, concern over these dual factors has been the bedrock of the project management discipline.

This focus has proven to be a very effective vehicle for the rise and development of the consistent organizational approach we now call a Project Management Office (PMO). In turn, the institution of PMOs has given rise to the wide acceptance and use of many of the tools of the trade we now take for granted. Those tools range from cost accounting to activity based costing to earned value to Gantt charts and networking. All of these tools, and others like them, have a common theme—they are concerned primarily with the internal aspects of a project, centered on the classic elements of scope, schedule, cost, and, most recently, quality. These are the areas that have become the basis of Project Accounting and Control (PA&C). They are now well-known and robust, having matured into an established set of processes and best practices that have served, and will serve, to identify and form the discipline of project management very, very well.

But, the business environment has changed, and the overall focus of project management and PMOs must change as well if they wish to continue to be relevant and contribute to organizational achievement on a grander scale. The field of project management must move beyond its traditional reliance on internal project processes and procedures, based on accounting and control, and recognize its capability to meaningfully contribute to organizational value and success. The opportunity for the emergence of the PMO role as a key element of the organizational structure has arrived and is virtually there for the taking.

Emerging Role of the Project Management Discipline

It has become axiomatic that the business world of today is characterized by and based on the dual parameters of change and speed. These have become two of the key variables in all business activity. To remain a central factor in organizational life, project management must reflect these factors that have grown to be the core values of any organization that wants to grow and thrive. Stated baldly, PMOs must effectively manage these potential strengths to become the glue of disparate organizational forces comprising speed and change, reconciling the identification of needs with the achievement of value.

This is not an insignificant challenge. There is often a huge gulf between a vision, leading to a business need, and the actual attainment of organizational worth from a resulting project. Drawing upon the well-known tools of PA&C, such as project charters and plans and estimates of cost and schedule, we often have the foundation for success … but require guidance and wisdom to actually achieve it. This is where the more advanced roles of PM&L as an “art” enter into the picture. PM&L are not new to an organization, of course, but they take on a unique flavor when applied to the successful completion of the effort to convert a vision to a project to a successful outcome. More to the point, PM&L in the form of an advanced PMO should move beyond mere mechanistic change to obtain organic transformation.

Before we delve into the topic of management and leadership, though, it is useful to distinguish between “change” and “transformation.” Change is the most common product of a project, where completion of the planned effort may lead to specific and tailored alterations in organizational processes and procedures, but not necessarily a modification in the fundamental structure or underlying and motivating behavior of the organization and its workforce. That is, the change is limited to the immediate scope of the project and mechanistic in that it has a relatively emotionless impact on the organization and its products, methods, and courses of action. In contrast, transformation reflects a deeper revision in the form and scope of the adjustment caused by a project outcome. Transformation is much more fundamental in its range and effect, leading to extensive alterations in organizational behavior beyond the immediate range of project effort. There is a ripple effect of seismic and organic changes that extend beyond the limited and focused goals and objectives of a project.

Viewed from a different perspective, limited, mechanistic change is normally a function of transitional management, while organic modifications are a result of transformational leadership. In turn, it is important to note the fundamental and crucial distinctions between management and leadership. The most common observation in this regard is that leaders focus on “doing the right things” while managers emphasize “doing things right.” But, there is a deeper distinction that should be acknowledged—management skills create the order necessary for the successful change created by projects—leadership skills create the chaos needed for organizational transformation.

To provide a recap so far, the shifting organizational environment with its emphasis on change and speed requires that the body of knowledge comprising project management and PMOs shift its orientation from an emphasis on project accounting and control to that of management and leadership. In turn, the differences between transactional management and transformational leadership need to be recognized and used effectively for the generation of value to the overall organization. But … nothing is ever as easy as it first seems.

The Mystery of Organizational Transformation

Drawing from Malcolm Gladwell’s (2009) book, What the Dog Saw, it is important to identify the challenges and forces behind organizational transformation. Gladwell notes that puzzles are commonly associated with the scrutiny of facts and the finding of a clear solution, while mysteries require the application of judgment and analysis of uncertainties. In other words, puzzles may be challenging, but they can be solved and brought to a recognized conclusion. Mysteries on the other hand are frequently characterized by questionable sources of data, misleading information, and may never be “solved” in a satisfactory manner.

More often than not, organizational transformation falls on the mystery side of the ledger. Contrary to what consultants of all stripes may promise, bringing a marked devotion of energy and persistence to the challenge of organizational transformation does not offer a high probability of success—that is how puzzles are solved. It is the additional application of experience and insight that is far more likely to yield the understanding that will lead to a successful approach to the mystery of organizational transformation. Project accounting and control mirror the methodology behind the solution to a puzzle by its relentless gathering, analysis, and reporting of data. Project management and leadership, though, reflects the required addition of the knowledge, perception, and awareness that is needed to successfully address a mystery, especially the complex mystery presented by organizational transformation.

But, why is organizational transformation required in the first place? Looking beyond the immediately available reasons of changes in technical, business, regulatory, and competitive environments, it can be plausibly stated that organizations change on either a proactive or reactive basis. The former is characterized by opportunity; the latter is driven by need. Either situation may generate a project. The question arises, though, as to whether the new behavior required by organizational transformation is generated through training and explicit learning or by the acquisition of implicit knowledge. Again, project accounting and control tends to be based on the mechanics of the former, while project management and leadership draws upon its strength of presence of the latter to develop organic, lasting change throughout an organization.

Either way, mechanical or organic change must be realized as being of value by the participants for it to be accepted and, more importantly, adopted on a sustained basis. In addition, the key attributes of change must be accessibility, tangibility, and replication—they must have “presence” in addition to perceived value. If not, there is really no motivation for individuals or organizations to accept a change in their behavior. And, motivation is critical as real and lasting change is often of a disruptive nature. In turn, disruptive changes are far more likely to be accepted if the participants view them as being not only of value, but also capable of being accepted, at least partially, on their own conditions in terms of both breadth and depth. In other words, it is not the process of change, but the final outcome, that is critical. In turn, the basis of an outcome originates with a vision, and the development and acquisition of that vision is the foundation of project management.

Project Management and Leadership

In his discerning book, Linchpin, Seth Godin (2010) asks the fundamental question of “Are you indispensable?” He then proceeds to make the case that this is a personal decision. Specifically, he argues that we have been trained to be average, a replaceable cog in the organizational machinery. What is needed, instead, are original thinkers, risk takers, passionate change makers. The challenge is to overcome our natural resistance to risk and dare to be great.

Godin was writing about individuals, but the same points pertain to the discipline and practice of project management and its current crucible of MOs. PMOs can continue to “play it safe” by focusing on the traditional roles of PA&C, or they can become indispensable through an emphasis on PM&L. The former gets the job done; the latter adds meaningful value to the organization. As identified by Toastmasters International (2008), a PM&L orientation creates an indispensable organizational role of service. Gone are the days when the simple tenets of command and control (a version of PA&C) are sufficient. Contemporary social values and individuals in the workplace expect leadership that helps them focus their energies so they can do their best work and surpass their own expectations. Today’s organizations and workers demand leadership that provides them with a sense of satisfaction in what they have done.

Service leadership in the PM&L arena requires the capacity to lead with a focus on real outcomes to those benefitting from the end result and to those who do the work in achieving the objectives. This type of critical leadership requires working with a spirit and set of values that emphasize worthwhile contributions, or value. Service leaders, or PMOs oriented to PM&L, see their role as enabling and empowering others to accomplish a worthy objective. They are willing to place empowerment above personal power, contribution above ego, and the needs of the team above their own needs for credit and acclaim. They are enablers, providing service and value to both the organization and the project team members.

As further discussed by Jim Collins (2009) in his book, How the Mighty Fall, the type of leadership exhibited in an organization (such as a PMO) is crucial to organizational success. Because project teams are integral to the project management discipline, his observations on team development (see Exhibit 1) are right on target. A strong argument can be made that “Teams on the Way Down” can be associated with an emphasis on PA&C. Conversely, the prominence of a PM&L approach is far more likely to reflect the characteristics of “Teams on the Way Up.”

The Dynamics of Leadership-Team Behavior

Exhibit 1. The Dynamics of Leadership-Team Behavior

The Organizational Environment

All of the foregoing observations are often viewed as being fatally flawed if the overall organizational environment does not support them, but this is fundamentally a defeatist attitude and denies the role that a PM&L course of action can play in the development of a learning organization. As identified by Senge (1990), a learning organization was one that facilitated the learning of all its members and continuously transformed itself. Pedler, Burgogyne, and Boydell (1997) later redefined this as an organization that facilitates the learning of all its members and consciously transforms itself and its context, emphasizing that change should not happen just for the sake of change, but should be well considered. Some definitions are broader, encompassing all kinds of organizational change, not just change through learning, whereas others include specifics about how a learning organization works. Senge, though, provides the most succinct description by noting that learning organizations are organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually working to learn together.

However, organizations do not automatically develop into learning entities; there are significant factors prompting their change. As organizations grow, they lose their capacity to learn as company structures and individual thinking becomes rigid. When problems arise, the proposed solutions often turn out to be only short term (single loop, project- oriented learning) and re-emerge in the future. To remain competitive, many organizations have restructured, with fewer people in the company. This means those who remain need to work more effectively. To create a competitive advantage, companies need to learn faster than their competitors and to develop a customer responsive culture. Organizations need to gain knowledge about new products and processes, understand what is happening in the outside environment and produce creative solutions using the knowledge and skills of all within the organization. This is another way of saying organizational transformation occurs, requiring cooperation between individuals and groups, free and reliable communication, and a culture of trust. All of these features and attributes can be found in any management textbook in general and in A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (PMI, 2009) in particular.

Boiled down to a single concept, the organizational environment needs to be mature, but flexible, for change and transformation to occur. Maturity may come with age, but flexibility normally requires a change agent. This is where the role of project management and a PMO enter the picture as both are, virtually by definition, all about being the vehicle for change. The challenge, though, is not to be satisfied with the change created by a project and its focused outcomes, but the previously discussed general transformation generated by value and service. Viewed from this perspective, a PMO should not be a Program Management Office, but a Progressive Management Office. It should not follow the organization’s lead, but establish the purpose and direction of that lead.

This overall scenario is shown in Exhibit 2, which depicts the approximate pyramid of underlying relationships within an organization. Clearly, organizations strive to move from right to left for a myriad of reasons, ranging from the speed and accuracy of decision-making to inherent competence and effectiveness to competitiveness. In many instances, a leftward flow is as much about survivability as it is growth. The real question is whether the flow extends from the base upward or from the top downward. Regardless of the perspective, though, the spectrum of the project management discipline and PMO development lies in the middle, offering every opportunity to play a leading role based on value and service not only to individual projects but also the overall organization.

Organizational Relationships

Exhibit 2. Organizational Relationships

The Role of Project Management

This entire discussion has focused on the idea that the discipline of project management should be the leader in organizational development and transformation. That leads to the final question of this analysis—why the project management discipline and its embodiment in a PMO? Very simply, this is the role and placement of the entity that is involved with the establishment and execution of efforts to change an organization. They are, or at least they should be, in position to take an unbiased perspective, as opposed to a narrow functional view, of organizational needs and the resources required to meet those needs. The function of project management, built upon a PA&C foundation and moving to a PM&L outlook and practice, has become a de facto core competency of any organization that wishes to progress in its industry.

What is not always immediately recognized in this regard is that the advent of modern modes of communication and transportation has made every industry “smaller” and more transparent. There is immediacy to virtually every action, demanding that organizations not only be effective in their operations but also responsive to changes in their environments, both internal and external. It is the latter requirement that gives rise to the changes central to an organization’s core that are called transformation. Stated differently, as an organization’s world becomes smaller through technology and innovation, the project management discipline and PMO must recognize that their perspectives and roles must expand. Acting as an honest broker, the role of project management and the charter of a PMO have become not only that of developing and executing projects, but also taking the lead in the establishment of the measures of success and value to the organization. As discussed, the former is the bailiwick of a PA&C, while PM&L is the guiding force behind the latter.

This is, of course, easier said than done, but the following objectives are basic to the emerging PM&L role of the project management discipline and PMO:

  • Direct contributions to the establishment of organizational direction and leadership in its execution
  • Express involvement in the formation of organizational policies and procedures
  • Participation in the establishment and tracking of baselines for organizational effort
  • Enhancement of analytical tools and capabilities in support of an effective decision making process
  • Determination of organizational (not just project) measures of performance and success
  • Influence in the development and recognition of project, business unit, and organizational value.

These are admittedly broad objectives, more along the line of goals than actual procedural steps. They require a lower level of detail for actual implementation and achievement, but their purpose is to establish the direction, not the actual steps along the path to accomplishment. To paraphrase an old saying, if you do not have a map and course of action, there is no way of knowing your destination, nor how to get there.

Summary and Conclusions

The foregoing analysis has covered a wide variety of concepts, but the central points that tie those concepts into a cohesive whole can be summarized as follows:

  • It is essential to recognize the development of the project management discipline in its movement from the mechanistic functions of PA&C to that of the more organic role PM&L. While the former is indisputably necessary, the latter is more reflective of contributions to organizational development and effectiveness.
  • The expanding and critical role of project management and PMOs has placed them as an organizational core competency and a crucial means of augmenting organizational capabilities for growth and development. Organizations can no longer rely on products alone for market presence—they must learn to develop the processes and insights offered by project management to identify and develop the strategies and tactics necessary for the effective identification and fielding of those products.
  • The future role of project management must be recognized as an agent for organizational transformation beyond that of mere project implementation to the development of portfolios and decision-making for organizational development and effectiveness. Projects are, by themselves, change agents by their very nature, but the overall functions of project management (should) provide the underlying basis for organizational development.

Clearly, there is no single approach that is best for all organizational situations, but, just as clearly, the role and place of project management is changing, and the opportunity for its advancement is there for the taking. It is a matter of moving forward, leading the organization in the recognition and adoption of transformational accomplishments.

Collins, J. (May 25, 2009). Bloomberg Business Week, Retrieved on July 9, 2010 from http://www.businessweek.com/magazine/content/09_21/b4132026793275.htm

Gladwell, M. (2009). What the dog saw. London, England: Penguin Books, Ltd.

Godin, S. (2010). Linchpin: Are you indispensable? New York: Penguin Group

Pedler, M., Burgogyne, J., & Boydell, T. (1997). The learning company: A strategy for sustainable development. London, England; McGraw-Hill.

Project Management Institute. (2009). A guide to the project management body of knowledge (PMBOK® Guide). Newtown Square, PA: Project Management Institute.

Senge, P. M. (1990). The fifth discipline. London, England: Century Business.

Toastmasters International. (2008). High performance leadership. Mission Viejo, CA: Toastmasters International, Inc.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

©2010 Michael Thorn
Originally published as part of Proceedings PMI Global Congress 2010 – Washington D.C.

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