Introduction
What does it take to deliver a transformational project – the type of project that redefines a business or community - like sending a man to the moon, hosting the Olympics or launching a next generation product? These projects require vision to foresee future project challenges, confidence to develop a plan to remove those challenges and courage to move forward despite the challenges.
As project managers, we utilize a rich toolkit with proven methods for identifying, analyzing and monitoring project risk (Mulcahy, 2007). This toolkit, anchored in the principles of financial risk management, is highly effective in managing stakeholder expectations, developing early warning systems and setting contingency budgets and plans (Kendrick, 2007). To mitigate risk, we often rely on traditional project control methods, contingency planning and risk transference. For the majority of our projects, these proven methods instill the vision, confidence and courage to deliver.
The ability to anticipate and remove project obstacles represents a key ingredient in delivering high risk projects. It combines risk management methods with the leadership arts of integrative thinking, political navigation and negotiation
Exhibit 1 – Transformational Change Requires Risk Taking
Transformational change requires significant risk taking, as shown in Exhibit 1. Projects like the Katrina clean-up effort balance significant financial, legal and social risks with the prospects of generating significant value across a large number of stakeholders. These high-risk projects have several challenges in common - they are highly visible, have a sweeping impact inside and outside the organization and pose significant threats to the project team’s ability to deliver. In this project environment, the project leader uses a risk toolkit to identify what challenges will likely occur and what to do about it. But, these high-risk projects represent the Perfect Storm of project challenges. The project leader fights through competing agendas, project silos, unrealistic stakeholder expectations, time pressures and public skepticism to navigate the project through rough seas.
Beyond the risk toolkit, the high-risk project leader draws on three leadership behaviors for survival:
- The ability to navigate the project’s internal and external power network;
- The ability to build integrative thinking into the project culture; and
- The ability to negotiate project goals and stakeholders’ personal agendas into alignment.
This paper will discuss the characteristics that embody high-risk projects, how these characteristics complicate the typical challenges that projects face and the role these three leadership behaviors play in successful risk mitigation.
Characteristics That Define High Risk Projects
High-risk projects are projects that are highly visible, have a sweeping impact inside and outside the organization and pose significant threats to the project team's ability to deliver. There are as many project risk management frameworks as there are project management methodologies. In line with these frameworks, we can classify project risk into three categories – political exposure, impact to core business and ability to deliver. As shown in Exhibit 2, we can identify risk drivers and factors that shape the level of risk in each category.
Political exposure (“highly visible”) encompasses how project outcomes affect the personal stock and creditability of key stakeholders. Rebuilding the Space Shuttle program in the face of the Columbia disaster was a project with significant political exposure. Like the Space Shuttle program, high-risk projects face an entangled web of political stakeholders with individual agendas, challenging business cases, and, often, a hostile public perception. Managing the amount of political exposure inherent in high risk projects become a fulltime job for the project leader (Laird, 2007). The project leader has to evangelize a clear vision to stakeholders, understand the vision's alignment with stakeholder value and monitor how project decisions directly affect stakeholder value.
Exhibit 2 - Risk Factors Shaping High Risk Projects
Impact to core business (“sweeping change”) addresses how project outcomes will affect an organization’s value chain, including but not limited to business processes, employees, technology architecture and supply chain. Like the break-up of AT&T in the 1970s, high-risk projects contain direct and indirect effects that transcend the organization and sometimes shake up an industry’s ecosystem. The AT&T break-up not only fractured the organization but spawned an entire new ecosystem of companies, technologies, and strategies. The project leader’s challenges in understanding the impact to core business are twofold – the depth and breadth of direct impact and the peripheral vision to identify the indirect/invisible effects.
Ability to deliver (“threats to ability to deliver”) focuses inward on the organization’s commitment and ability to deliver results. For example, the 2002 Olympic Winter Games posed significant threats to Salt Lake City’s ability to deliver. Infrastructure capacity, increased security requirements, funding availability and a time-boxed schedule posed seemingly insurmountable challenges that Salt Lake City overcame. Project leaders rely heavily on the traditional risk management toolkit to evaluate organizational experience, stability of requirements, resource capacity and competency, and schedule flexibility to get a read on whether the organization can deliver.
In isolation, each risk category is manageable. The project leader can identify specific risk drivers, triggers and metrics to understand and respond to project challenges. The project leader can develop sound contingency plans to deal with challenges as they arise.
The Perfect Storm project presents significant challenges and exposure in each area. The project leader performs more than an excellent surgeon role. A strategist, diplomat and judge, the project leader needs to understand the interaction between risk categories and multi-thread risk mitigations to keep each risk category in balance.
What Makes Typical Project Challenges So Tricky in a High-Risk Project
No project is exactly alike – each project’s DNA determines how each project team will respond to challenges. As project leaders, we look for patterns based on our experience and lessons learned. Our playbook to respond to these challenges is developed based on this institutional knowledge.
High-risk projects significantly complicate our playbook. As shown in Exhibit 3, the convergence of risk factors forces the project leader to work issues across risk categories. For example, resolving invalid requirements issues has to balance “clean-up” with stakeholder exposure and impact on the core business. “Vigilant leaders actually embrace uncertainty and have an ability to probe for second order effects” (Day, 2007, p 17). In practice, the project leader needs to know how internal delivery issues will affect stakeholder buy-in, how environmental factors affect the project’s impact on core business and how shifts in political support shape what the project will deliver. Drawing from this need, projects like the Virginia Class Submarine project build integrated process and technical issue resolution teams to break down silos and manage risks across the program (Pate-Cornell, 2004).
The project leader also faces reaction time constraints in responding to high-risk project challenges. Complex projects are rarely nimble. Risk mitigation strategies need to encompass the internal change management effort required to realign project team members, deliverables and schedules to respond to a challenge. For example, a large U.S.-based health care institution performed a Go Live readiness assessment on a strategic project nearly four months prior to the Go Live date. Through this assessment, the institution determined there were significant operational gaps. They seized advantage of the next four months to re-plan and close these gaps, resulting in a successful Go Live only 30 days later than originally planned. In contrast, a large state human services agency performed a similar assessment 30 days before a Go Live of a case management system. The agency lost nearly four months putting out political fires, resolving tactical issues and trying to re-plan the deployment.
The convergence of primary and secondary risk factors complicate the project leader's ability to anticipate and remove project challenges
Exhibit 3 – Risk Convergence Complicates Mitigation
Another unique constraint facing the high-risk project beyond the risk profile is the degree of decentralization inherent in the project team. Given the breadth of impact to the core business, high risk projects usually spawn decentralized project teams, each with its own charter and parochial agenda. This decentralization increases the distance between the project leader and what is happening on the ground. During a recent public-sector IT project, a team lead responsible for functional requirements was asked by the project leader why testing was mired in problems. The team lead reported that the project’s subject matter experts had been bullied into signing off on requirements and designs by the vendor’s staff. The project leader’s astonishment was priceless.
In short, the project leader’s playbook can’t solely rely on traditional risk management methods to anticipate and remove challenges. Convergence of risk factors, reaction time and the distance between the project leader and what is happening on the ground make for a messy problem, requiring special leadership behaviors. Project leaders experienced in high-risk projects (i.e., integrative thinkers) “don’t mind a messy problem. In fact, they welcome complexity because that is where the best answers come from” (Martin, HBR 2007, page 66).
Strategies to Survive the High-Risk Project
Today’s risk management toolkit provides a great framework to develop a playbook on what challenges to avoid and how to avoid them. The project leader tackling the high-risk project also draws on several leadership behaviors to execute the playbook. Three important leadership behaviors are:
- The ability to navigate the project’s internal and external power network
- The ability to build integrative thinking into the project culture and
- The ability to negotiate project goals and stakeholders’ personal agendas into alignment.
Navigate the Internal and External Power Network
Strategy #1 – Unleash the power of the project’s social network to be nimble
The project leader uses the project’s social network to sense the political environment, break down silos and drive change within and outside the project.
”An organization’s culture and its informal structure influence the success of change initiatives in dramatic but invisible ways.” (Johnson, 2007, page 86). The key opportunities are to understand who can help enact change, what cultural values are dominant within the project, how fragmented the project’s internal network is, and design processes to get change through (Johnson, 2007, page 89).
High-risk projects often evolve into complex organizations. Like most organizations, a project’s organizational structure drives how work is managed. The social network, however, drives 1) how work gets done, 2) team member culture and 3) internal and external support for the project’s vision. This social network represents how project team members and stakeholders are socially connected and how information is exchanged.
The project leader can use the project’s social network to get things done in a complex project environment. Through the social network, the project leader can design cross-project issue resolution teams to draw the best thinking from the whole of the project – allowing the project leader to balance risk factors in solving challenges. The project leader can design a change network strategy to quickly push project decisions internally and externally through information brokers, chosen for their role based on competence and the richness of their social network. The information broker can, at times, deliver news to the front line faster than going down the organization chart. The project leader can design status reporting methods that use information brokers with rich networks to quickly assemble a 360-degree understanding of project status or how project decisions will affect stakeholder support.
Exhibit 4 provides an example of a typical project’s social network. Key influencers (information brokers) have a network of relationships within the project and key stakeholders, such as executive steering committee members. These brokers may be on the project team or loosely affiliated with the project. A project leader can assemble a team of information brokers to drive process integration, validate project decisions and build grassroots support for the project. Chosen for their social network, these ‘brokers’ keep project team members informed as well as the steering committee, thereby reducing the surprise of issues and changes in direction.
Exhibit 4 – Navigating the Social Network to Drive Change
The project leader can leverage the power of the project’s social network by considering:
- Strength of the information broker network – breadth and depth (i.e. influence) of a broker’s relationships
- Information broker personal goals – a broker’s commitment to project goals vis-à-vis personal agenda
- Social network isolation – groups of team members that are isolated in their connection to the whole
- Cultural values within the Social Network – distinct cultural values in a homogenous part of the network
Strategy #2 – Elevate public relations into a leadership role
The project leader elevates the focus on managing external and internal perceptions into a key leadership role.
Perception is reality. Most complex mega-projects, such as large public works projects recognize the importance of managing the public perception of the project. Federal and State transportation agencies built an integrated marketing and communications plan to shape private and public support for 2002 Winter Games. This marketing plan instilled ownership in the community that opened new avenues for collaboration across teams (Hauswirth, 2006). In an era of heightened media attention and environmental action groups, the project leader treats the broader public relations program, encompassing employee, media and stakeholder relations, as a key management tool in managing the external power network. This effort targets understanding, tracking and shaping internal and external confidence in the project. The project leader employs several tools to elevate the role of public relations, including:
- An enterprise marketing program with a full-time communications director on the leadership team
- Crisis communication plans embedded into the broader contingency plan.
- Measurement tools to monitor internal and external perceptions of the project
Foster Integrative Thinking
Strategy 3- Practice 360-degree executive decision making
The project leader incorporates holistic decision frameworks into project decision making and trains project executives on how to analyze decisions across all aspects of the project.
A contrasting factor between the successful Apollo program and the Space Shuttle program is the ability to maintain a steady focus among stakeholders on the vision and align project decisions with that vision (Billardo, 2007).
In a high-risk project, the executive team can represent a complex social network of relationships and values. This makes “holding the vision” very complicated and can further increase the reaction time to challenges as they arise. The project leader can design decision frameworks that train project executives to resolve problems from a 360-degree” perspective. The goal of these decision frameworks is to identify how information is going to be collected and presented and identify decision factors that the project executives will use to anchor their decision-making. There are several methods that are helpful in developing this 360 degree perspective, such as:
- Go Live planning session at project inception – conduct a Go/No Go planning meeting with the project executives on Week #1 to reinforce executive commitment to outcomes and to train project executives to understand all the pieces that need to come together for implementation.
- Mock issues meetings – Using the risk management plan, develop scenarios that test project executives’ ability to think across silos. These exercises, though staged, can help the project executive team test their own workflow and exercise their decision making muscles.
- Project management templates that force integrative thinking – shape issues, change control and risk templates that force the project team and project executives to work problems from all angles.
Strategy #4 – The 360-degree contingency plan
The project leader tests the contingency plan to validate the contingencies are anchored in project outcomes and address issues holistically across the project.
The goal of contingency management is to plan for the rainy day. A good contingency plan lays out key performance metrics that tell you when it is going to rain and what to do in the event of a sprinkle, shower, thunderstorm or flood. An ineffective contingency plan forces you to stay inside at the first drop of rain.
Based on this analogy, the project leader needs to structure the contingency plan with a system of gradual escalations to avoid blowing up the project at the first sight of rain. Today’s risk management tools excel at drawing project leader attention to triggers, areas of impact and what resolution patterns may be available.
With the high-risk project, the project leader validates how contingencies will affect all risk factors (risk convergence). In addition, the project leader uses the contingency plan to test executive commitment to the vision and further test the executive team’s ability to work an issue from all angles.
Negotiating Personal and Project Goals
Strategy #5 – Instill accountability through the art of negotiation
The project leader instills accountability into a project by defining non-negotiables, shaping authority around team members’ goals, regulating ‘hand-offs’ between teams, and playing ‘deal maker’ when cross-team conflicts arise.
As project leaders, we often establish clear lines of accountability in the contracts we negotiate with our vendors. In the decentralized environment of the high risk project, the project leader can employ similar negotiation techniques in establishing clear expectations across teams.
Defining Non-Negotiables anchors team leads in a set of guiding principles that will govern authority and team interaction. These non-negotiables include key project outcomes and milestones, how deliverable sign-offs will occur, communications across teams and how team successes will be judged. This list of non-negotiables provides the project leader the basis to negotiate authority across teams.
Shaping Authority in Context of Personal Goals provides the project leader additional liberty to shape each team’s charter around team lead personal goals. The project leader starts the negotiation process with the high-level work breakdown structure and list of non-negotiables. The negotiation process with each team lead heavily rests on listening to team leads articulate their personal agenda – what contribution do they want to make to the project’s goals, documenting expectations clearly and thoughtfully shaping these expectations around the team leads.
Regulating Hand-offs Between Teams provides a set of common rules on how deliverable hand-offs between teams will be managed. Using deliverable acceptance principles in fixed-fee contracts, the project leader can create a system of deliverable contracts that set the entry/exit criteria, roles and responsibilities and form for all relevant project deliverables. The deliverable contract establishes process and rules for deliverable acceptance and cross-team communication. Each team lead signs the contract and agrees to abide by the rules. The project leader then manages to the deliverable contract.
Playing the Deal Maker Between Teams is a key project leader role into resolving inter-team conflicts. On the high risk project, the project leader should be seen as a deal maker across teams. Playing this role, the project leader needs to anchor to the non-negotiables established upfront and be willing to selectively give and take in working cross team issues. Keeping the project’s social network and risk factors in mind, the project leader cut deals across teams to further team member commitment to the project goals.
Conclusion
To survive the high risk project, the project leader combines proven risk management methods and practices with the ability to navigate the internal and external power network, facilitate integrative thinking into the project’s culture, and negotiate project goals and personal agenda into alignment. These leadership behaviors, when cultivated, build the vision, confidence and courage to deliver the transformational project.
