Complex technology projects often make use of professionals who are widely dispersed, both geographically and organizationally. The development of computer-based communications systems and the increased pressure within firms to decrease fixed costs have combined to increase interest in what have come to be called “virtual organizations.” It is tempting for project managers to forget the critical role played by teams and teamwork in an environment in which expertise can be contributed from anywhere in the world at short notice. However, both real and virtual organizations have a unique contribution to make to project management.
Although the term may be new, virtual organizations have been synonymous with project organizations for decades. They allow efficient use of highly expert professionals for short or fixed durations without the cost associated with a permanent staff. To achieve outstanding results, however, also requires the commitment of an inclusive project group (covering the critical interdependencies within the contractor(s) and customer). When well designed and led, these groups are determined to make the new technology work, regardless of who or what is causing problems. Their basic commitment is to the end result of a well-functioning system, not winning individual recognition. The individual's will to achieve (in spite of daunting challenges) gets multiplied by the reinforcement provided by common group members.
The Virtual Organization
Virtual organizations are those in which the work required for a finished product is not handled by employees with a common organizational affiliation. In a sense, most project management is conducted in a virtual organization. Many, if not most, of the contributors have no long-run employment relationship with a common organizational unit. Particularly in larger projects, these employees are dispersed among a number of distinct companies: contractors, subcontractors, vendors, and one or more clients or customers.
The obvious advantage of employing a virtual organization for a project is expertise. While it might be prohibitively costly to hire a world-class expert in an arcane software specialty on a permanent basis, expert time can be purchased for a project for almost any duration, either from “freelance” contractors or from existing employees of the performing organization who are temporarily assigned to the project.
Another key reason is vitality of expertise. In one example, a project manager who had just finished a massive World Bank project made an ideal candidate for another Bank project. His expertise gave the new project a jump up on the learning curve and the benefit of hard-won experience on a related project.
Lastly, outsiders often bring “connections” to other people and other organizations that can be brought to bear on the problem being addressed. By “renting” these connections, the organization can tap into a much wider resource and knowledge pool than they would normally have at their disposal.
Thus, many systems integrators use a mix of permanent staff, contract employees (hired for one or more specific projects), and very-short-term personnel. An example of the last category is industry experts, currently employed by other organizations, who work for several days doing quality assurance assessments for ongoing projects.
The “outsider” brings a powerful combination of fresh perspective and breadth of experience. Often, “insiders” find it difficult to be self-critical and to intermix their local-based knowledge with external “best practice.” (Professional courage is required to expose one's work to the expert review of those who do not have a long-run employment relationship and a social group membership to protect.)
These temporary project members often act as a catalyst for change. Today the average life cycle of a new product in the electronics district of Japan is less than 45 days! “Outside the box” thinking therefore becomes essential. Breaking with established practices, even rules, becomes commonplace in fast-paced, project-oriented electronics companies.
After the Good Ideas, Coordination
Project managers always confront the tough problems of coordination, of making sure that the contributions of the dispersed parts add up to an efficient, effective whole. Relatively easy, although surely not problem-free, are more routine projects, particularly in manufacturing. For example, in soft goods (clothing), a small “core” company finances and coordinates the work of a dozen contractors who may do the designing, parts fabrication, assembling, shipping, and even some of the merchandising.
By tightly specifying and controlling what all the component units do and carefully selecting satellite contractors able to meet those specifications the “core” company can be as efficient as if everyone worked within the same organization. Costs, however, can be much lower because of geographic differences in labor costs and the savings associated with using highly specialized firms (whose fixed costs get spread over many contracts).
More difficult are one-of-a-kind engineering projects, like those in systems development, where new processes are being created. Here the interdependencies among the parts being produced by separate organizations and widely separated (in time as well as space) professionals are much greater and often ambiguous. Even minor deviations or problems in one unit can ramify throughout the system; often with highly destructive consequences. Thus a critical management issue for state-of-the-art projects is gaining the advantages of specialization associated with the virtual organization and, at the same time, maintaining tight coordination.
Sources of Coordination
When coordination cannot simply be programmed in (by unambiguous specifications), interpersonal communications, exchange and negotiation are required. In the course of any development project, for example, several of the participants will have to modify or adapt their work to unexpected systems and business requirement contradictions.
There are at least three cost-efficient approaches to facilitating these exchanges so that they lead to optimal design solutions instead of becoming the source of internecine squabbling. These approaches are: selection, contemporary communications and data processing technologies, and developing teams.
Selection. Selecting outstanding professionals who place their commitment to long-run project success and the mission above short-run career manipulation is the most obvious approach.
For example, Tandem Services Corp. has identified a worldwide cadre of skilled systems professionals, many of whom work on fixed-life contracts. They are prepared to travel anywhere in the world at short notice. Talented, peripatetic and cosmopolitan, they are used to working in diverse cultures and contributing to projects almost “on arrival.”
This, in fact, is a major construct of what behavioral scientists call a “professional.” The professional is one whose training allows him or her to apply a broad variety of general principles to cases that are unfamiliar in their detail and their specific requirements. Without additional training and with very limited indoctrination, the true professional is able to begin making consequential contributions to a new, unfamiliar task. In everyday terminology, they are able to “hit the field running,” making a contribution almost from the first day on a new assignment.
Technology. A second mechanism for coping with interdependencies and the need for continuous adaptation and learning is technology. The contemporary world of telecommunications (faxes, e-mail, beepers, cellular phones) is well suited to interconnecting professionals and allows them to cope with unplanned adjustments.
The film Apollo 13 serves to remind the American public of a little-known NASA management innovation in virtual organizations. When a crisis occurred—such as the extreme damage to the spacecraft in that mission—NASA was able to mount an extraordinarily sophisticated set of interpersonal and interorganizational linkages via telephone and computer. Thus the original designer of a specific piece of hardware, the manufacturing supervisor, the engineer who supervised the testing and installation of that hardware, as well as other experts located in a variety of contractors, subcontractors, NASA Centers and Mission Control could all be interconnected in a real-time conference call. Simultaneously, computer analyses and simulations could be run assessing alternative “fixes.”
NASA's management system in the 1960s and ’70s brought together those professionals who knew nearly all the documented and undocumented details of the hardware and software (from early conception to actual use). This was an ideal virtual work group to “brainstorm” and contribute to exploring a broad range of creative improvisations that had never been conceived in the original plans. They recognized that, if they collectively failed to find a workable solution, the potential loss would be enormous and this motivated their dedication to working together toward a solution.
Real Work Groups. The third managerial approach to facilitating coordination is the development of teams based on work groups with high levels of face-to-face interaction.
Executives need to be sensitive to the limitations of virtual organizations. They do not substitute for the powerful role of integrating and motivating work groups. Substantial literature and a good deal of anecdotal evidence tell us that demanding projects (those loaded with uncertainties, tough tradeoffs and continuing technical and organizational crises) absolutely require the contribution of teamwork. Everything we know about large, technically difficult and stressful projects emphasizes the need for cohesive project groups.
In real work groups, interdependent employees develop a high degree of loyalty and commitment to one another, interact frequently, and share a common vision of the goal(s) they intend to accomplish collaboratively. They take ownership of a project and, when well led, do everything humanly possible to meet its objectives. This kind of commitment is critical because every project has to confront a threatening series of unpredictable impediments, obstructions, and changes: for example, a key user-group defects from supporting the new technology; a relevant state or federal statute gets changed; an anticipated piece of technology, hardware or software fails (or fails to appear); needed components soar in price or become unobtainable; and so on.
Without the “can do” and “will do together” commitment of a cohesive group, these hurdles become grounds for project stalemates and mutual recriminations among key project participants that add to the problem and inhibit solution. Finding fault, seeking legal “responsibility,” and angry outbursts absorb all the available project energy; as adversarial relationships develop, problems tend to worsen rather than get solved.
What Groups Do
To move toward solutions, projects require that their participants share the struggles, risks, and rewards of common work group allegiances. To begin with, participants must freely and openly exchange sensitive information, even if some of it is derogatory to their “home organizations.” Without a common group loyalty and membership, communications become stilted, formalistic—if not legalistic—posturing.
Next, these projects need influential user community participants as part of the group. Without community participants, the project will not know about major structural and political impediments (within the client organization) that threaten the viability of the project. The project will not be able to obtain the wholehearted involvement of users and some sacrifices on their part (to give up scarce time and equipment resources and favored routines and practices). Without such participants, the primary focus in outside-the-group communication may be on rights, future claims and self-protection—not project facilitation.
These projects also require an “above and beyond” kind of mutual aid and sacrifice. No one makes those kinds of personal sacrifices (including sacrifices to family life and personal comforts) and takes a variety of personal risks without strong group ties and commitments.
What teams do best, and almost uniquely, is make optimal tradeoffs that favor project cost, time and systems functionality over the status or convenience (or cost) of the participating organizations. An extensive body of research, extending from front-line troops in wartime to technical projects, shows that employees who have group loyalty can perform extraordinary feats. These feats of sacrifice and performance play a major role in the success of projects—not doing things by-the-book, doing merely what one is supposed to do in terms of job definition and contract.
In addition, research data underlines the importance of having close colleagues with whom one can share subjective (even irrational) as well as objective anxieties. Groups provide empathetic listeners who support and aid their fellow members.
Under the stress inherent in these projects, key employees easily get “burned out.” Part, but surely not all, of the stress comes from the sense of isolation: being an individual contributor in a project that is hundreds or thousands of miles from family and back-home colleagues. As an astute project manager said candidly: “Most of our people don't really have anyone to talk to on the project with whom they can really speak openly about their problems and their worries. There is no one who both understands the situation and who can give them the feeling that they are not alone.”
Then there is the time element. Many projects not only confront a seemingly endless series of unanticipated obstacles, they may also last for years. Individuals can better endure these struggles and the continuing postponement of real gratification when they have developed strong loyalties to a commonly shared goal. The mutual confidence among colleagues and their mutually expressed determination to “win” keeps them going. Time after time cohesive groups accomplish what seems like impossible goals.
Finally, smoothly functioning teams, by quickly sharing and critically reviewing new ideas, in a context where a diverse group can make contributions, can be creative problem-solvers. Often a creative improvisation, something “way out of the box,” can solve a seemingly insoluble stalemate. But these ideas only get thought of or accepted in groups where there is a high level of mutual respect and solidarity.
Conclusion
Virtual organizations are indispensable to most projects; they enable project managers to focus the skills and broad experience of diversely trained professionals on project-specific issues. The virtual organization, however, needs some underpinning, some foundation of cohesive groups, formed on the basis of people who have close and continuing interrelationships with one another, and who, then, evolve a strongly shared mutual commitment. ▄
Leonard R. Sayles, emeritus professor of management at Columbia University Graduate School of Business, is the author of several books on managing new technologies. The most recent, The Working Leader, was published by The Free Press, 1993.
William Yeack, a practicing project manager, is president of Tandem Systems (a part of Tandem Computers). He has managed many large systems development projects in the U.S., Europe and Asia.