The following is an extract from my new book ‘How to get Fired at the C-Level: Why mismanaging change is the biggest risk of all’ in association with my friends at Tailwind Project Solutions – the extracts follow a series of 5 Challenges that I think every organisation should consider, and consider very carefully:
‘Change is the law of life. And those who look only to the past or present are certain to miss the future’ John F. Kennedy
Challenge 1 – invest in the right Portfolio Management
Knowing the value of your investment in change, and the consequential cost of failure to deliver this change, is critical.
So how can you get across the message that executives need to stop failing their projects without looking like a project manager with a chip on their shoulder?
Fear is one way, so why not try this simple exercise when you get the opportunity. Putting a price on something works well, I find.
Start with your company project portfolio value (this should be a reasonable reflection of the strategic investment). For the sake of this example I am going to use pounds’ sterling but of course it works with any currency. I am also going to use a small portfolio value of say £20m; again, please insert your own figure here.
The next step will depend on the type of industry you are in but if we choose a typical regulated commercial model for a business it can be said that out of that total portfolio some projects are compliance driven and some business driven. In this example, we will use 40% as compliance and 60% as business growth projects. Therefore, in this example we have £8m invested in compliance projects and £12m in business development projects, again insert the appropriate figures for your organisation. A regulatory light organisation may devote only 20% of portfolio to compliance, with 80% devoted to growth.
You know your business so I will leave it up to you to decide.
But we don’t stop there. For each project to be sanctioned there must be a ‘value added’ benefit. For compliance projects this might be expressed better as cost impact. So, failure to deliver ‘X’ will result in a potential fine of ‘Y’, and/or a potential loss in self-certification of ‘Z’ and so on. All such failures have cost impacts. This may be a 2:1 ratio calculated as the potential penalties for non-compliance plus the actual project-investment costs. In our example this would be £8m multiplied by 2 plus the original £8m, which equals £24m.
Now for the rest of the portfolio, the business growth or development projects. There would be no point in investing £1 to gain £1, there must be a return on investment. In terms of a ratio that typically might be at around 4:1 (apply your own business factor here you should be able to find relevant figures in your business case approval process). Therefore, investing £1 would gain a return in investment of £4. Using the same maths as the compliance projects we now have in our example a total of £12m multiplied by 4 plus the original £12m, which equals £60m.
We now have a ‘true’ project portfolio value of £24m plus £60m which gets us to a chunky £84m.
And guess what? We haven’t even considered disruption of business costs during the projects. What shall we say here, maybe another 20% of the total portfolio investment, so about £16m or so? But the two types of project don’t behave in the same way. I suspect that the 40% we allocated as compliance project investment has a greater success ratio than the other projects. It is not that these projects are any more ‘healthy’ but the fear of non-compliance ensures that the company throws resources at these projects in a way that it doesn’t with the 60% that are business development projects, ensuring ‘success’ the hard (and costly) way.
Now if the compliance projects are ‘successful’ (he says smiling knowingly), then the other 60%, the growth projects, must carry even higher levels of potential failure.
Work out these figures now. In our example, we will use 10% across the whole portfolio for simplicity.
Can you work them out?
Do you have the data (the accurate and real data) to do this? If not, does that worry you? (It should.)
Looking back at our portfolio we said 40% was compliance activity and 60% was business growth but think about it, on balance how many of these growth projects represent real clear blue strategic change?
I bet that most are just to keep pace with your market and perhaps only 10% of projects represent real change. So again, if failure is the ‘norm’ and the focus on success tends towards the compliance end of the project scale, how successful is this 10% – the true change projects you have underway in the organisation?
I realise that these figures are open to interpretation and maybe my maths is a bit rough but you can see the general idea. It is a little like fantasy finances but the underlying points are that a) your portfolio is bigger than you think it is and b) unless you are in the special minority you probably don’t have a good insight into how this portfolio investment is being managed and how the organisation’s money (and future) is being protected.
In our example this takes a £20m base portfolio right the way up to £105.6m.
Extensive investment in strategy through projects needs to be backed up by real commitment to successful delivery and, whilst the development of good project managers backed up with appropriate processes and methods is critical, it is the clear responsibility of the executive leaders to connect such strategy to project activity and to sponsor these projects in a competent way.
Hopefully putting a value on the portfolio will have woken up the executives (or even you).
Tailwind Project Solutions was formed in 2014 to provide a bespoke approach to project leadership development. Owned by Director & CEO Alex Marson, the organisation works with large FTSE 250 clients including some of the biggest companies in the world in the Asset Management, Professional Services, Software, Automotive, Finance and Pharmaceutical industry. The company has a team of world-class experts who provide a bespoke approach to the challenges that our clients have, and the company was formed because of a gap in the market for expertise which truly gets to the heart of the issues clients are facing – providing a robust, expert solution to change the way that companies run their projects.
At the time, the market was becoming flooded with training companies, providing a ‘sheep dip’ approach to project management, and the consensus was that This didn’t solve the real challenges that businesses and individuals are experiencing in this ever-increasing complex world of project management. The vision was to hand-pick and work with the very best consultants, trainers and coaches worldwide so that Tailwind could make a difference to their clients, to sit down with them, understand their pain points, what makes them tick, and what is driving their need for support.
These challenges being raised time and time again are in the project leadership space, from communication issues, not understanding stakeholder requirements or having the confidence to “push back”, lack of sponsorship support, working across different cultures, languages, levels of capability and complexity. We expect more from our project managers – we expect them to inspire, lead teams and be more confident.
Tailwind’s experience is vast, from providing interim resources in the project and programme management space, supporting the recruitment process, experiential workshops, coaching – from project managers through to executives, providing keynote speakers, implementing PPM Academies, PM Healthchecks and Leadership development. The approach is created often uniquely – to solve the real challenges of each of their individual clients.
Tags: apm, c. level, ceo, cfo, change, cio, lazy, peter taylor, PMI, pmo, pmp, project, project manager, projects, projtec management, tailwind
The Lazy Project Manager's Blog 
Leave a comment