In today's organizations, it is not enough to view success of a project from only the tactical perspective; overall project success must be viewed from the strategic requirements of the business. If the project is technically successful, but doesn't move the organization forward strategically, then there is not true success. Project managers have to have knowledge of the organizational strategy, ensure their projects are aligned, and know how to engage the executive team if there is an adjustment in strategy that will impact their projects. Project managers have unique access to cross-functional teams across the organization; combine that with strategic knowledge and project managers then play a key role in the successful implementation of strategy. Understanding and awareness of this strategic responsibility brings greater value proposition for the project manager in the organization.
Project managers face many daily challenges in order to drive their projects to successful completion. A successful project is defined many different ways, and is potentially defined differently by individual stakeholders. We are taught that defining the success of the project upfront is a best practice so that stakeholder expectations are properly set. Getting to the end of the project and being able to see that success is a rewarding part of project management makes all the effort worthwhile; but is it really enough for the organization and the project manager?
As project managers, we are doing much more than just managing and tracking all the tasks, keeping the project within budget and timeline, and setting success criteria. Project managers have a unique perspective into the organization that many other roles do not have. We work in cross-functional teams with subject matter experts all day long. We talk to managers and discuss how the project impacts their functional area and we interact with executive management as stakeholders. We cross the organization and collect critical perceptions that many in the organization may not see or hear.
Because project managers have this additional knowledge of the inner-workings, we also can better determine if our projects are aligned with the strategic objectives of the organization. Having knowledge of the corporate strategy is very important and needs to be a part of the project manager's toolbox. Then, you must know where your project fits into that strategy, and equally important, you must know if your project does not fit that strategy.
Strategic project alignment has become a very important topic. The Economist Intelligence Unlimited (2013) surveyed 587 senior executives globally concerning how C-level executives engage in the implementation of strategy and the barriers that impede the integration of strategic initiatives into operations. It was found that 88% of the executives surveyed considered successfully executing initiatives/projects to deliver strategic results to be either essential or very important to the competitiveness of the organization over the next three years.
These executives realize there is a direct correlation between the success of the strategic initiatives and the financial performance of their organization (see Exhibit 1). It was also found that 61% of those same executives acknowledge that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation. Not surprising then, only 12% report being excellent at successfully executing initiatives/projects in order to deliver strategic results. This is where project management can play a central role in increasing the success rate of these projects that bring strategic benefits to the organization.
This can be daunting for the project manager; after all, you are responsible for a successful project. However, we must begin to think beyond just the tactical success of our projects. We must begin to use our talents to ensure that our project success helps in moving the organization forward by being strategically aligned. More so, if we reach a situation where we are sure that the active project is not aligned with strategy, then we have a responsibility to bring that to the executive team in a respectful manner for their consideration and decision.
Defining Project Success
What do we mean when we talk about project success? The definition has evolved as the profession has evolved, and that evolution will continue into the future. Success of a project is defined in multiple publications. One such definition includes the following characteristics of a successful project (Duggal, 2010):
- Stakeholder and customer satisfaction,
- Meeting business case objectives,
- Customer/end-user adoption,
- Quality of delivery,
- Meeting governance criteria, and
- Benefits realization.
We all have heard of the triple constraint: time, cost, and scope. Jack Duggal expanded on the triangle of constraints to construct the diamond of opportunity when defining success (see Exhibit 2). The diamond analogy shows the expansion on the triangle triple constraint to pictorially show that, not only do project managers need to focus on tactical success of the project, but they also need to combine the tactical with the broader strategic outcomes of the project. So, project managers need to manage to organizational benefits and customer/stakeholder benefits.
This diamond of opportunity provides context to the project manager and keeps the cornerstones of quality and governance at the center of the triangles. What project managers deliver to the stakeholders must always be of the highest quality. The benefits and satisfaction derived from our efforts are obtained by solid governance over all processes throughout the lifecycle of the project.
Project Failures: We All Have Them!
To know success, we must also know failure. How can we learn if we don't dissect the circumstance of failure, find the true points of failure, and realize what could have been done differently?
Some large scale project failures are shown below:
- FoxMeyer ERP Implementation (Why Projects Fail Blog, 2012)
- In 1993, partnered with Andersen; an SAP implementation project was initiated. The original cost estimates were US$35 million and the timeline was set for 18 months.
- By 1994, SAP was only processing 10,000 orders versus the legacy mainframe ,which continued to process 420,000 transaction daily.
- By 1996, FoxMeyer declared bankruptcy.
- JC Penney Fair and Square (Why Projects Fail Blog, 2013)
- Ron Johnson, a former Apple executive, spent seventeen months as JC Penney CEO and initiated the Fair and Square program at JC Penney.
- Sales plummeted and customers hated the new flat pricing scheme and no coupons or sales.
- By April 2013, he was ousted as JC Penney CEO. Also fired were the Chief Operating Officer, Chief Technology Officer, and Chief Talent Officer, all former Apple executives that Ron Johnson brought with him.
- Orca: Mitt Romney campaign, 2012 (Haberman & Burns, 2012)
- Orca was implemented for “Get out the vote” to coordinate Republican election day voting and support for Mitt Romney in 2012.
- The system completely failed on election day, primarily because it was not properly stress tested prior to the big day. The system failed to notify key stakeholders and supporters were left with nothing to do on this critical day.
- Mitt Romney lost the 2012 election, in large part because of the failure of Orca.
- Sainsbury – Automated Supply Chain (Chandani, 2013, p.1.)
- Sainsbury invested US$526 million in an automated supply-chain management system. But, upon implementation, merchandise was stuck in the company's depots and warehouses and was not getting through to many of its stores.
- Sainsbury was forced to hire approximately 3,000 additional clerks to stock its shelves manually.
- The project was cancelled.
These failures must always be studied and discussed; we learn from these project events. Different reasons for failure can include:
- Lack of executive backing for the project,
- Improper planning for resources needed for success,
- Loosely defined and/or changing requirements,
- Disconnect between customer requirements and offering,
- Inadequate testing and implementation plans, and
- Inability to properly realize potential risks and no risk management.
Case Study: Project Success, Organization Failure
Now, we will discuss a real-life project that was the result of the acquisition of a similar size and similar product-line organization. We will discuss the success of the project, the ultimate failure of the organization, and what could have been performed differently.
Project managers play an integral role in the integration of two companies. Many strategic initiatives/projects are started immediately following an acquisition. It was no different when a profitable, well-established US$500 million company, let's call it Company A, acquired Company B. Company B had a history of growth by acquisition without proper controls in place, so it brought a legacy of complex architecture and processes. This newly-combined, US$1 billion company quickly went to work outlining its list of Top 10 strategic items that must be performed immediately in order to meet financial objectives and bank covenants.
The Enterprise PMO played a key role in this management of the Top 10 list. All projects had to be approved by the Project Oversight Committee (POC), and then updates were given weekly at the PMO status meetings, which included executive management. One of the initiatives on the Top 10 was named the “Operational Footprint.” A significant part of the synergy savings would come from closing manufacturing facilities that performed similar work. This also required integrating customer’s orders into the new facility.
A project was defined to migrate the customer's Print on Demand (POD) orders from Company B facilities to Company A's facilities. Executive stakeholders were named as: CIO, COO, CFO, VP Manufacturing, VP Customer Service, and VP PMO. The timeline was set from November 2013 to December 2014. The IT Architecture team and Subject Matter Experts (SMEs) were engaged for solution design. The first solution designed was not valid, based on legacy systems. We then started a second design session that was then prototyped and found to work successfully.
Requirements were completed and development took place. Then, QA, and the first implementation launched in early April 2014. The implementation was successful, based on all criteria established:
- Accept all online order transactions,
- Flow the transactions through the bridge that was built,
- Have the transaction accepted at the target manufacturing facility,
- Have the order manufactured and shipped,
- Maintain all current customer SLAs,
- Having the target plant, then bill for the order to the originating division, and
- Correct billing to the customer.
This was considered a very successful project launch. Customer orders were flowing with few issues. SLAs were met for all order deliveries, and the orders were no longer being processed in the facility that was to be closed.
Overall cost of the project broke down as follows:
- 3 PMs, 2 at 100%, 1 @ 60% – US$325,000;
- 2 BAs - US$100,000;
- 3 Architects @ 25% - US$175,000;
- Developers - US$250,000;
- QA - US$125,000;
- Trainers - US$50,000; and
- Total direct costs = US$1,025,000.
Project Impact and Organizational Dynamics
Just over a US$1 million investment was required to put the solution in place. But, what did it take to support this solution? Customer service needed a dedicated team of resources; another team was needed at the plant; and various SMEs were needed regularly to solve issues. These teams had to be scaled in order to support the implementation of six other locations in 2014, while four others were pushed out to 2015.
- Customer service's dedicated support team included:
- 4 FTE's - US$200,000;
- 2 FTE's at plant %75 – US $100,000; and
- 1 FTE's billing – US$75,000 .
- Total incremental cost to organization = US$375,000 per location
The solution implemented also complicated the already complex technical architecture that was in place. Meanwhile, there were both complex and disturbing dynamics occurring in the organization.
- Sales were continuing to decline, the sales organizations were not aligned post-acquisition, and sales strategies were not optimized.
- Key resources in the organization were over-extended with all the acquisition initiatives that were ongoing, namely:
- Consolidation of warehouse locations,
- Consolidation of financial systems,
- Build out of new customer facing technology,
- Implementation of SalesForce.com for sales and customer service,
- Rollout of new customer service model,
- IT build of new architecture footprint, and
- HR migration to Oracle.
- Operational issues were hindering the ability to manage the organization:
- Could not create correct P&L for plants or organization,
- Manual financial statements for combined organization,
- Incorrect reporting for headcount and cost tracking,
- Old customer facing systems were costly and drove manual processes,
- New solutions being implemented drove additional complexity of the architecture footprint, and
- Two email domains meant communication issues across organization.
- Fractured focus of the executive team
- There were too many priorities, and that drove confusion at the executive level. For example only, the priorities of the operations team did not necessarily equate to the priority of the IT teams; and
- These differing priorities drove a lack of cohesiveness in the messages that were sent out to the organization and there was sometimes confusion on what was the top priority to assign resources to.
The organization declared bankruptcy in the first quarter of 2015. As a result of the bankruptcy, all projects were then placed on hold and the focus turned to vendor and financial management. There was a loss of key resources to the organization as they left and moved on to other opportunities. The company was auctioned off and ceased to exist.
Analysis of Case Study
The single project discussed above did not bring about the demise of a US$1 billion company. But, the circumstances surrounding it and the execution of other projects all combined, contributed to the ultimate outcome. The Operational Footprint POD project added manual costs and complex architecture into an organization that was already straining its resources. The implementation of each additional site added more cost and more complexity. There was not a plan for the next stage of true integration, so these costs were becoming permanent.
Additionally, the company was in a declining industry, and both companies had a history of recent declining sales. The sales organizations were fractured and lacked an overall strategy that might have allowed the company to gain back sales that had been leaking for years. Customer service costs were very high in each organization because the antiquated systems did not allow for full customer or order lifecycle viewing. This made issue resolution lengthy and costly to the organization customers.
Meanwhile, the executive team struggled to work through the integration. The declining sales brought constant pressure, and opinions differed as to the correct path to turn things around. The PMO tracked the projects and reported back to the teams, but lost overall PMO leadership partway through the integration and that left the PMO fractured at a critical time.
What Should Have Been Done?
It is very difficult to get a project started and sometimes, it is much harder to stop one. All of our instincts as project managers are to make the project a success and find creative solutions to get to the end of the project. So, it is not a normal thought process for us to stop a project. But sometimes, stopping the project is the right answer.
According to Moorhouse (2011, p.1.), the introduction of more hard gates into delivery is a method for stopping failing projects (see Exhibit 3).
Hard gates force the project sponsors to reauthorize the project. This is based on a foundation of five criteria, as follows:
- Early Warning Indicators – track key performance indicators closely, so that problems are identified as early as possible.
- Clear Status – ensure that your project status reports are clear and concise; be sure to use business versus technical termination to ensure that project sponsors can understand true project status.
- Incentivize honesty – make sure that team members are comfortable and hear their real concerns.
- Value Risks – make sure that your risks are quantified and weigh them against the potential benefit of the project.
- Hard Gate Criteria – build hard gates into your planning, so that funds for the project have to be requested in increments.
From the individual project perspective, none of these criteria alone would have been enough to stop the project. It would take a combination of many of these criteria and strong engagement with the executive team to re-evaluate the project.
Stopping the Project
For this project, after the first solution design failed, that should have been a stopping point where the whole project benefits were re-evaluated. It was known then that it was going to require dedicated resources in the organization to support the manual processes needed. But project sponsorship was sure that the savings from the closing of the facilities would offset any incremental costs.
However, that perspective was too narrow based on all the other activities going on in the organization. Remember, the project manager has a unique ability to see across the organization and to know that there were many other factors to take into consideration for continuing or stopping the project. Do not think that management has that same luxury of seeing what you, the project manager, are seeing on a daily basis. The project manager is seeing the daily execution of the strategic initiatives; the executive is simply scanning status updates received once a week.
The first thing that must be done is to build a case with facts! There is no place for rhetoric in project review and decision making with executives. You must have solid facts. In our case study, it was critical that the project sponsor be walked through the facts of the situation. The original business case may need to be revisited and updated based on the latest facts. Sometimes, this will be enough to convince the sponsor that the concern for the project is real and that further discussion needs to take place.
The business sponsor's main responsibilities, according to Diego Nei, project portfolio manager at CEACRE (2010, p. 1), are:
- Understand how the project is aligned with the organization's overall strategy;
- Provide clear direction for the project;
- Secure project resources; and
- Ensure the project is on time, on budget, and on scope.
I would add that there are two more key roles for the project sponsor:
- Change management as needed across the organization for scope changes, and
- Communication with the executive team.
If the business sponsor is not on board with a re-evaluation, the project manager will need to scan the political environment and find a champion that can step in and help. Experienced project managers should always have a champion that will back them if needed; sometimes, this can be the manager of the PMO if you have one in your organization. Other times, this can be another executive that you have worked with in the past. Most of us have at least one executive that we have supported with a successful implementation in the past; this executive trusts you and will back you if your facts are accurate.
Show the updated business plan to your sponsor or champion and discuss what has changed that requires the organization to re-look at the effort. Have all projected costs, both tangible and intangible, and know all benefits. Once you have the backing of your sponsor or champion, then you are ready to build the message that you will take to the executive team.
Project managers must keep in mind that executives have many conflicting objectives vying for their attention. Leaders need to coordinate efforts at both the executive and the managerial levels. When leaders bridge the executive–manager gap, they better deliver both current business results and organizational capability improvements. They also develop and capitalize upon knowledge with projects and processes, and coordinate various department goals (Kloppenburg & Lanning, 2012). Exhibit 4 looks at all the initiatives, processes, inputs, and results that executives are juggling on a regular basis.
The portfolio for the organization is constantly changing and new projects are being defined and requested all the time. As new knowledge is obtained, a new project can be structured, and there are many different types of projects across the organization:
- Knowledge building projects,
- Options development projects, and
- Implementation projects – includes process improvements.
Executives are also responsible for managing all the normal day-to-day processes in all the departments. Their attention is short-lived; they move very rapidly and you need to be able to also move at their pace.
This is being shown because you have to know your audience. If you are going to put together a presentation for executives, you have to realize that they are bombarded all day long and expected to make decisions on key initiatives. As you begin to put together your presentation, here are some things you need to know:
- What priorities they are focused on right now? Is there an overriding event in the organization that has their attention? If there is, then your timing will be very important for when you establish the meeting that you want.
- Will all the executives be available or will they be traveling? Check with the administrative assistants and find out when they will be available for your session.
- Make sure you know what the current portfolio of projects is in the organization. The more information that you have at your fingertips, the better. Where does your project fit into their priorities?
Paul Williams (2015, p.1) has seven tips for communicating as effectively as possible with executives:
- Presenting at the senior level is very different than presenting weekly status reports. The executive team is not interested in the details of your project; they want to know when they will see benefits.
- Focus only on why you are there. Again, they have short attention spans and you need to make your point quickly.
- Find out their preferred communication style and use it. Don't take a five page report in if they prefer a bulleted list in PowerPoint.
- Do not waste their time; get straight to the point of why you are in the room.
- Be prepared. They may take you completely off the topic that you came into the room with. They may ask you questions that you never thought they would ask. Do not hesitate when you answer, stall or sit tall and present your knowledge with confidence.
- Keep your material short; they stop paying attention if you delay the point.
- Respect their time. Do not overstay your welcome in the room; they have many other things to be doing. If they are driving the delay with questions, then answer their questions succinctly and accurately.
These are great tips from Paul Williams and they are very applicable with any executive team that I have been in front of. I would add the following to the list:
- Know the one message that you want them to walk away with.
- This is critically important and you need to identify this right away and have it prominently displayed in all material that you have for the executives. What is that one thing that you really want them to know, and want them to drive through the organization?
- Stay very focused on this one thing. Start the presentation with it and end your time with it. If you put out meeting notes (and you should), include your one message very clearly in the notes.
- Don't assume that they have all the knowledge that they need!
- Many project managers assume that the executives have perfect knowledge of all things that are happening in the organization. They don't!
- You are bringing your unique perspective into the room; that is your value-add and how you can help the executive team in implementing their strategy in the organization.
- In your presentation, give them a brief background of the project to baseline for them. They can't remember every project and what is occurring in each project.
- Be sure that you are right; take the time to validate your facts and then re-validate them. You do not want to be the one that walked into the room unprepared.
- Document the decisions made in the room and send the notes out to the full executive team to ensure that everyone is aligned with conclusions.
At the core of project management methodology is the execution of successful projects. We learn so much from managing our projects:
- How to properly plan for timeline, scope, and budget.
- How to manage stakeholders.
- How to manage cross-functional teams.
- How to manage the priorities of multiple projects.
- We then, based on professional preference, move into program and portfolio management.
With all these skills, we also are now armed to shift more comprehensively into the Strategy Alignment Management of Projects and Portfolios. This evolution has already started, but moving into 2016 and beyond, we will see more of this type of project management value-add activities for strategy execution in the organization. It is a very exciting time for project management and I am looking forward to seeing where we go.