SPECIAL SECTION Organizational Agility
BY SARAH FISTER GALE
ILLUSTRATIONS BY JAMES STEINBERG
Faced with a tumultuous marketplace, organizations have to act fast. But a solid foundation of project management practices still applies—even if it is implemented in a quick and iterative manner. Recklessness is no substitute for organizational agility.
Yet the increased volatility and complexity of the project landscape makes reacting to—and planning for—changing market conditions more difficult than ever before. Whether due to anemic economic growth or the continuing digital revolution, three-quarters of executives said their business environment was changing, according to a 2010 report by the Institute for Corporate Productivity.
To thrive in such an uncertain business world, organizations—and their project management offices (PMOs)—must identify risks sooner, adapt to change quickly and deliver value incrementally across the project life cycle.
PMI's Pulse of the Profession Organizational Agility report found that of projects at organizations with high agility:
- 73% finish on time
- 75% finish on budget
- 83% meet goals and business objectives
- 71% meet or exceed ROI
All those numbers are well above the survey average.
“It's a paradox,” says Niel Nickolaisen, CIO of Western Governors University (WGU), an online university based in Salt Lake City, Utah, USA. “In this age of declining budgets, organizations have to deliver more results at a faster pace than ever before.”
Business and project leaders are discovering one of the best ways to do that is by aggressively reshaping their culture and business practices on a three-pronged front:
- More collaborative and robust risk management
- Rigorous change management to better adapt to changing market conditions
- Increased use of iterative practices, based on a solid foundation of project management standards, that enable teams to follow new lines of thought
All three practices are gaining favor as organizations worldwide scramble for an elusive edge on the competition, according to PMI's 2012 Pulse of the Profession report.
Project Managers on Twitter (#pmot) Talk About the Components of Organizational Agility
“Organizations across sectors are trying to increase their agility so that they can get innovative products to market faster,” says Kshitiz Verma, head of cloud operations at NEC, an IT firm in Mumbai, India.
By stripping away the layers of procedures that can slow projects and replacing them with more collaborative decision-making processes, organizations can deliver projects faster and more efficiently than their rivals.
“You can't achieve agility if everyone works in isolation,” Mr. Verma says. “You've got to operate as a team where everyone has a chance to contribute.”
Such partnerships enable organizational leaders to build the strongest portfolio and ensure that project goals align with business strategy, says Mr. Nickolaisen. This, in turn, liberates organizations to take calculated risks and turn all the volatility and chaos to their advantage. “That's when you get organizational agility.”
THE RIGHT RISKS
When organizations are forced to make rapid-fire decisions, projects can careen out of control. Proactive risk management that begins during project selection and planning enables executives and project leaders to identify the factors that could secure—or sabotage—success. Whether it's tracking a shifting regulatory environment or recognizing a lack of adequate internal resources, early and consistent risk management allows organizations to be more flexible and manage obstacles more fluidly.
That can only happen when executives, business units and project teams work together throughout the project life cycle. Only then can they make changes to projects before problems arise, says Pete Nathan, PMP, senior manager of the PMO at Gulfstream Aerospace Corporation in Savannah, Georgia, USA.
“The next step in managing project risks is preventing the risks that derail projects, not dealing with them after they happen,” he says.
A June study by Deloitte and Forbes Insight found that 91 percent of U.S. executives say they plan to reorganize their approach to risk management over the next three years. Strategies include:
- Elevating the profile of risk management throughout the organization (52 percent)
- Reorganizing risk-management processes (39 percent)
- Providing additional training for staff (37 percent)
- Incorporating new technologies (31 percent)
To make the most of their risk-management efforts, executives need to leverage the firsthand knowledge and expertise of project leaders, particularly those within the PMO.
“Executives choose projects for business reasons, but they may not fully understand the technological or resource limitations related to those choices,” Mr. Verma says.
By joining forces, executives and PMOs each get a more diverse perspective on risks and opportunities. Mr. Nickolaisen says that at WGU, every project plan is evaluated based on whether it will increase graduation rates, improve operational excellence and serve WGU employees.
“You have to define your competitive advantage, then focus your innovation efforts on projects to support that advantage,” he says.
Establishing stringent selection criteria lets organizations identify where to take risks—and where to scale back. At WGU, for example, network reliability projects may be mission-critical, but they don't drive competitive advantage, so Mr. Nickolaisen opts for off-the-shelf solutions that require fewer resources for implementation. That lets the school focus on a more cutting-edge student analytics project that could help the university improve graduation rates.
“Because we choose standardized solutions for those projects, we have the capacity and resources to support innovations that push our competitive advantage,” he says.
“You can't achieve agility if everyone works in isolation. You've got to operate as a team where everyone has a chance to contribute.”
—Kshitiz Verma, NEC, Mumbai, India
To lessen the possibility of failure on these high-value projects, WGU's delivery team breaks them into smaller chunks, delivering iterations in phases. “By breaking the project into bite-sized, value-driven pieces, we lower our risks dramatically,” he says.
That's one big reason more organizations are adding iterative and agile approaches. PwC's Insights and Trends survey of global project management practices released in August found that 34 percent of respondents use an agile project management approach within their organization. And the Pulse of the Profession report has seen a steady rise in the use of agile approaches.
When a project is divided into smaller pieces delivered more frequently and with a regular stream of stakeholder feedback, organizations can deliver prototypes on a rapid basis. Not only can project owners get immediate value from those deliverables, they can gain better control over what comes next.
“It's a business enabler,” says Bart Jutte, managing director of Concilio, a project and risk management consultancy in Delft, Netherlands. “It's a low-risk, low-cost way to deliver big benefits.”
But adding such iterative approaches won't deliver benefits without standards as a foundation. Then the outcome can be chaos. To achieve true buy-in, everyone, from the executive office to the PMO to the delivery team, has to be on board with the basics and the processes. Alas, it's the top tier—the one that can compel the rest to follow—that's often hardest to convince.
“The programmers are usually in favor of iterative methods. The hurdles come when you try to get operations and management to accept the approach,” Mr. Jutte says. “But you must have support from the top if you want to achieve this kind of change on an organizational level.”
That's where the PMO comes in. PMO leaders can act as a vital link between senior leaders and project teams, communicating the business value of iterative practices in terms executives understand. The PwC report found that organizations that have had a PMO for six or more years reported higher performance around quality and achieving intended business results.
Mr. Jutte is currently working with Crédit Agricole Consumer Finance in Amsterdam, Netherlands to implement an agile approach for its IT department. The stakeholders were skeptical of the process—and of the IT department's ability to deliver projects on time and budget. Rather than try to explain the benefits of a more agile approach, the PMO decided to show them.
The IT team chose a project to rework a customer website, created a proof of concept and delivered a rapid prototype of the upgrade in two weeks. Then the PMO brought the stakeholders together to show them the prototype, demonstrate the new site and receive feedback on how to proceed.
The stakeholders were properly impressed, Mr. Jutte says. And by getting their reactions early on, the team was able to make adaptations to increase the project's value.
REDUCING THE DRAMA OF CHANGES
No organization can keep up with all the shifts without securing buy-in across the enterprise—and that takes change management. The PMO has a pivotal role to play by acting as a source of information and adviser to portfolio leaders. “The PMO provides the facts so the executives can make the best decisions,” says Janice Weaver, PMP, associate vice president of the enterprise program management office at Norton Healthcare, Louisville, Kentucky, USA.
Ms. Weaver's team aims to ease the drama of change by building flexibility into its standard project management practices. If, for example, an issue has a low likelihood of occurring, the team won't run it through a formal risk registry and review process.
“We make note of it and discuss it informally,” she says. “But we don't spend hours on tasks that don't add value to our process.”
The best PMO leaders help manage change on projects by acting as a knowledge channel between leaders, vendors and front-line workers, she says. Often, that means doing whatever it takes to keep the project moving forward—especially when that comes to guiding the team through unexpected changes.
PHOTO BY CHAD HURST
“It's a paradox. In this age of declining budgets, organizations have to deliver more results at a faster pace than ever before.”
—Niel Nickolaisen, Western Governors University (WGU), Salt Lake City, Utah, USA.
Ms. Weaver points to a new Norton pediatric outpatient facility project. Prior to the launch meeting, the architect sent an eight-page tabbed spreadsheet denoting all the potential building features and asked representatives from all 20 departments to fill it out before the kickoff event. Although the exercise was a good one in theory, the hospital staff had neither the time nor the patience to complete the document. So Ms. Weaver met with the architects, who then came back with a revised statement of work, and the next meeting went much more smoothly.
When problems arise and changes occur, PMO leaders can intervene and help organizations act with agility—allowing everyone to be more productive.
PMOs foster even greater organizational agility when they're empowered to find and implement innovative solutions. According to the Pulse of the Profession Organizational Agility report, 71 percent of organizations that are most effective at change and risk management report having a PMO, more than 20 percentage points above the study average.
This year, Gulfstream's PMO launched a project to build an analytics tool to act as an early predictor of failure. It examines risks correlated to previously identified root causes of missed project targets, allowing the team to more readily spot danger points and take proactive corrective actions.
“If you can predict in advance what will cause a project to go into a ditch, you can intervene before it happens,” says Mr. Nathan.
With that information, PMOs can implement review steps to determine if a new project is headed down the same path. For example, an absentee project sponsor and multitasking human resources are both high predictors of troubled projects at Gulfstream, says Mr. Nathan. When project leaders spot these potential issues during assessment, they can find a new stakeholder or secure additional resources. Or, they can delay the project until it has the leadership and support needed to succeed. Either way, the leaders must manage those changes in the project plan to ensure it doesn't go completely off track.
“The biggest factor that causes problems on projects is surprise. If I know something is going to happen, I can plan for it, but if it's a surprise, it takes a lot longer to deal with.”
—Jody Pollack, PMP, Ricoh Company, Atlanta, Georgia, USA
“Early predictors can be a project's salvation,” Mr. Nathan says. “You can change its fate and get it back on track.”
It's that adaptability that drives organizational agility, he says. “The sooner problems can be solved, the more agile an organization becomes.”
Organizations can further enhance their agility by incorporating strategic interventions into the project plan, says Jody Pollack, PMP, senior program manager at office equipment maker Ricoh Company, Atlanta, Georgia, USA. “The biggest factor that causes problems on projects is surprise,” he says. “If I know something is going to happen, I can plan for it, but if it's a surprise, it takes a lot longer to deal with.”
Mr. Pollack is currently overseeing deployment of 750 copiers and devices to 85 locations. Each machine must be configured based on the client's unique specifications, and many of the locations—such as a chemical company and government sites—require background checks and safety training for the installation crew. “There are a tremendous amount of logistical issues to contend with,” Mr. Pollack says.
On such projects, resources are always stretched thin, and clients have a high sense of urgency. So rather than waiting until these issues rear their ugly heads, Mr. Pollack's team is deepening the talent pool, working with senior executives to launch a training program and background checks for all technical personnel who will then be ready for action.
By thinking about project obstacles from a portfolio perspective, the PMO eliminates a recurring risk—and accelerates the company's response time.
Of course, there is no single path to organizational agility. But if PMO leaders and executives work together to add more iterative practices, identify risks upfront and be more open to change, they can solve problems, take smarter risks, and deliver innovative products and solutions to market faster.
“We are trying to think about change and risk management more proactively,” Mr. Pollack says. “It's easy to get mired down in the day-to-day battle and not take a step back to look at the big picture, but that's what you need to do to succeed.” PM
CASE STUDY Risk Management
Finding the Right Pace
Delivering major projects in the public eye is always fraught with risks, and few people know that better than Srikantha Nalhamuni, head of technology for the Unique Identification Authority of India (UIDAI) in Bangalore. In this role, Mr. Nalhamuni is leading a four-year, countrywide project to provide a unique identification number to all Indians using eye and fingerprint recognition, creating the largest biometric database in the world.
When the Indian government hired Mr. Nalhamuni, he immediately recognized that the need for speed and agility could create some problems. “The project had to move quickly,” he says, “but the government of India, like most governments, is a pretty bureaucratic organization.”
Rather than run the project as a traditional government effort and expose it to the myriad associated stakeholder risks, he created distance between the team and the sponsor. Instead of setting up shop in the government headquarters, he rented an apartment near his home as his base office. Then he pulled in people from different government departments, hired technology experts from the private sector and asked professionals from around the world to join the team.
This ensured he had individuals with the broad expertise and viewpoints he wanted, and who could work in a flexible project environment. “We broke down the barriers and made it a bare-bones operation,” he says. “That gave us quite a bit of agility.”
Agility was particularly important in the early days of the project, when his team was still brainstorming. Together they created a series of innovative ideas to alleviate the potential risks of a project involving more than a billion people. For example, the team partnered with dozens of vendors, municipalities, registrars and other community groups to run scaled-down versions of the project locally, rather than trying to hire thousands of workers to fan out across the country.
“It was all about speed,” Mr. Nalhamuni says. “We realized early on that the project was too big to deploy as one monolithic system. By partnering with local groups, we could actually get the job done faster.”
Rolling out the project in smaller groups allowed local teams to address critical concerns. Data security and transparency became priorities as the team deployed the biometric technology and infrastructure to local partners and began collecting data. “The key is controlling the chaos and bringing in structure a little bit at a time,” he says. “And recognizing that speed is the price you pay for structure.”
PMI'S VOICES BLOG—On Risk Management
Risk management must be [considered] a common practice and not a best practice. We should move away from using the words “best practices” for things that should be [seen] as basic, and risk management should be a basic/common practice in all of our decisions.
Bterram, El-Koura, Lebanon
If project managers “avoid” risk and change management, then they are not doing their job. They are avoiding it. They have to embrace risk/ change management rather than work on avoiding them.
Ibrahim Dani, PMP
Abu Dhabi, United Arab Emirates
For more posts on risk management, visit PMI.org/Voices.
As the project plan was honed and they began to implement pieces, Mr. Nalhamuni brought structure in incrementally, adding process and oversight, and eventually moving it into the government offices.
Today, the project has a formal project management structure with regular milestone reviews. It is under budget and ahead of schedule for the 2014 deadline, according to Mr. Nalhamuni. As of July 2012, the teams had signed up 1.2 billion people.
CASE STUDY Change Management
PMI'S VOICES BLOG—On Change Management
Change management is an organizational responsibility, but having said that, the project management role is to understand its clear meaning.
Directly and indirectly, change management has a tendency to impact project management in terms of scope/quality/time/cost. All the good project managers are always aligned to policies of change management being in practice.
Syed Moiz, PMP
Jeddah, Saudi Arabia
In my opinion, the effective way to implement changes is top down. I will add [that] project portfolio management [helps with change management. To begin:]
- define a strategy and the necessary changes.
- Use project portfolio management to choose the right projects to implement the strategy.
- Implement the strategy via these projects.
Frank Spiegel, PMP
Unless the change is initiated or supported by the senior management of the organization, there is not much impact or support that can be achieved from the other staff.
The impacts or the effects of changes (both positive and negative) and the time when the benefits are expected need to be clearly communicated to the staff who will be impacted by the change. Or else, a lot of resistance for the change can be expected.
Padmakar Boyapati, PMP
The organization is responsible for the change management strategy and plan, but I also believe that the project scope must include execution of that plan, including reporting back up to the sponsor(s) when/if there are challenges with user adoption and what might be the reason for those challenges. Delivery of the product only is shortsighted.
Nina Kelley-Rumpff, PMP
Feasterville-Trevose, Pennsylvania, USA
For more posts on change management, visit PMI.org/Voices.
CASE STUDY Iterative Processes
PMI'S VOICES BLOG—On Iterative Processes
I strongly believe that we tend to underestimate complexity. Most IT projects today involve innovation and learning while we work. New technical solutions emerge while we work. New needs pop up while we work. And we discover new opportunities while we work.
Risk analysis and traditional change management will not do in these cases. They just get sand in the machinery and will delay progress and learning.
In predominantly complex projects, there is no use making detailed plans up-front. You need to have a process that emphasizes learning while working.
Scrum is very well suited for the complex area. In Scrum, there is collaboration, self-organization and a constantly emerging backlog of work.
There isn't a need to be purist about the approach [to projects]. It's good to know the advantages of each perspective and to guide the project life cycle in accordance with what the specific situation demands.
In some cases, more of a waterfall approach can help maintain clarity of direction and momentum. Scrum is very component-oriented, which can have a fragmenting effect that disrupts emerging over-arching concepts.
Many of the techniques of Scrum, such as the close attention to completing delegated tasks and the spirit of group problem-solving, I think, can be useful to any approach.
Greater Boston Area, Massachusetts, USA
For more posts on iterative approaches, visit PMI.org/Voices.
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OCTOBER 2012 PM NETWORK