Yesterday I listened in on my CEO Kent Crawford’s webcast on “Unlocking the Value of the PMO” I was struck by the theme of the questions being asked by the participants. “What if you don’t have the authority to implement resource management policies?” “How do you get the executive level to pay attention to the need for portfolio management?” and so on.

Granted, webinar participants are a self-selected group, and the title would draw those who are seeking (or struggling) to communicate more clearly what a PMO offers to the organization. But, listening to their questions, I shared some of their frustration. Nevertheless, one quick audience poll that Kent took offered a glimpse into their problems: nearly two-thirds of the listeners were not measuring performance.

[Pause while I let that sink in.]

Thus the title of this blog post. If you aren’t measuring benefits … you have nothing to say to the C-level of your organization except “Trust me, this is working” - an unlikely strategy. I’m repeating myself here (see my previous post) but being able to assign either a dollar value, or an important organizational goal achievement (which isn’t always money), to the activities of the PMO is absolutely critical. Kent pointed out that there are four subjects that are relevant to the C-level’s information needs:

1. Governance - How does the PMO make the organization run more smoothly and predictably?

2. Portfolio Management - How does the PMO help us work on the right projects, all the time?

3. Resource Management - How does the PMO help us put the right people on the right projects, and optimize the value of our human capital?

4. Performance Measurement - How is this making us money, or moving us towards important strategic goals?

A PMO director who can’t answer at least one of those questions with facts is in deep trouble these days.

Around here, we believe in baselining … otherwise, you can’t tell if you are making any progress. The start of a new year seems an appropriate time to look around at the business environment, as well as our internal organizational environment, and make a few resolutions based on a clear-eyed view of present circumstances.

Looking up economic data for a project I’m working on, I came across Moody’s Business Confidence Index. Wow! Love that steep and continuing climb: it bodes well for ventures of all sorts and sizes. Yet even the most confident of the business leaders surveyed were not rushing out to make large investments in inventory or facilities; instead, their immediate plans primarily focused on process improvement.

This is an approach that makes sense to anyone that has ever managed anything, including a home or a garden. During the last recession, when homeowners quit spending money on vacations and new cars, a new word - cocooning - entered the lexicon. Instead of running off to Aruba, they put in a patio, added a little fountain, put up bird feeders … and discovered the beauty of their existing assets and resources. A recent column in the New York Times (Doing More, Spending Less) indicates that the same trend is resurfacing now.

On an organizational level, if we “do more, spend less” that translates to process improvement. And what process is most likely to yield organizational performance improvement? A decade of research carried out under the auspices of PM Solutions tells us that, across the board, improvements in project management processes also correlate to improvements in an array of organizational performance metrics, from the financial bottom line to the qualitative bottom line of customer and employee satisfaction.

No matter where you turn your gaze in the organizational household - aligning the portfolio with strategic vision, improving the portfolio management process, training staff in project management, implementing processes to turn around (or turn off) troubled projects, or improving resource management - you will see an area that, tweaked and polished, results in money saved, morale boosted, or customer confidence improved.

In Italy, it’s traditional to clean out closets and cupboards on the first of a new year, and get rid of all the unused stuff that’s weighing you down - Arrividerci to all that junk! Let’s not forget that the very word “economy” comes from the Greek for “household.” January 2010 seems the ideal moment to take a good look around you (that is, assess and baseline) at how your household is running. Then start cleaning those organizational closets! Tucked behind the inefficiencies and outdated assumptions, you may just find a forgotten treasure.

[For some thoughts on how the PMO can be instrumental in this improvement, see our new Solutions Brief: "Recession? Bah, Humbug!"]

I’d like to tie those last two posts together with a couple of thoughts engendered by listening to Kent’s keynote, and by some of the conversations I shared with PMO directors at the Summit.

“Governance” is in danger of becoming a buzzword. It’s one of those ideas that many corporate leaders accept is important, and necessary, without having the time to really drill down into what that will mean for their organization’s processes.

Yet, like most profoundly important ideas, governance is pretty simple. I liked the definition Kent used in his presentation, from the IT Governance Institute:

“A set of responsibilities and practices in use by executive management with the goal of:

• Providing strategic direction
• Achieving objectives
• Managing risks
• Using resources wisely.”

When I read that list, I thought: sounds like simply what executives are supposed to do. Yet how easy it is, especially in public companies with the pressure to boost stock price; or in public agencies blown about by the winds of politics; to forget that wisely providing direction is what it’s all about. Every now and then we need a new word to buzz in the ears of management, waking them up to thier true path.

When the buzz of governance is paired with the concept of the PMO, I think we are really getting somewhere, however. The definition of governance above asks leaders to rise to the occasion. The PMO gives them a structure for doing that.

Why do I say that? –in part because I’ve read, heard and seen that, without a PMO, the portfolio management process goes astray … and without portfolio management, you don’t really have a mechanism for governance. In our 2007 book Seven Steps to Strategy Execution, Jim Pennypacker wrote:

“Each level within the organization must apply the same principles of setting objectives, providing and getting direction, and providing and evaluating performance measures. A common governance framework ensures that decisions are made the same way up and down the organization …”

True. And some entity within the organization must specialize in making these processes flow up and down the organization; must be the seat of metrics collection and analysis; must red flag what isn’t working and grease the wheels for what must work. And if that entity isn’t a PMO … then what is it?

Any alternative structures I should know about, readers, for governing the portfolio of projects that is today’s organization?

I had the pleasure of delivering the keynote address at the CBP Summit this year, on the subject of PMO Governance. And, because the topic of governance always touches on areas in organizations where our assumptions rule … where things that “can’t” be questioned (but should be) take up residence … I thought I’d kick it off with a little exercise to show my audience how we can all suffer from “perceptual blindness” - the failure to see things that are right under our noses - simply because we are focused elsewhere.

I won’t go into this too much so as not to spoil the effect, but take at look at the video on this site. Tip: Notice how many times the white shirts pass the ball and see if you can detect any gender bias.

Gotcha? Well, the same thing happens in organizations. We are sure we “know” things about our processes that in fact may not be true. For example, it isn’t uncommon to hear of highly successful PMOs that are disbanded. Another speaker, Paul Ritchie of SAP (check out his Crossderry Blog in our Blogroll) addressed this in his Summit presentation. He mentioned the wake-up call he received when he realized that others did not view his “successful” PMO in the same light he did, and the self-examination he went through to address his own blind spots.

When developing a governance structure - for the PMO or an entire organization - it’s critical to have a clear view of organizational structures, politics, and status. Devising the rules that govern what’s in and what’s out of a portfolio of project investments can’t be based of false assumptions about value, markets, resources, or strategies. That’s why some of the top research firms - Gartner, for example - have recommended bringing in outside voices to address similar organizational change issues. When assessing the organizational playbook, it helps to have a little perspective on the game.

Eavesdropping on the attendees at the CBP Summit here in sunny Cambridge, Mass yielded the following gems:

“Project management is like a ‘black art’ to the executives … no one understands how it works. They kind of want it but are scared of it at the same time.”

“This merger is a little different, because they are keeping the team intact…”

“I worked in the space program, but never built a rocket; worked in the computer industry but never designed a chip … project management is transferable. It’s like Jack Welch said: he never made a lightbulb at GE but he was a great CEO.”

“If I were naming PMI today, I think I’d name it something different. The People Management Institute. The Process Management Institute. The Performance Management Institute. The focus on the project makes us blind to the larger issues.”

“We’re looking for predictable outcomes … instead of the ‘project black hole’.”

“My company is back in the 80s. How do you fast-forward through project management into strategic management-by-projects?”

… It’s exciting - but also daunting - to hear the recipients of the PMO of the Year awards describe what they’ve done - and the speed with which some of the improvements were implemented. Stay tuned for some brief interviews with the Award winner and the finalists later today and tomorrow.

Meanwhile, if you have an answer for that last question: we are all ears.

Whew! These are some challenging times. As I read the news daily I am struck by the fact that our economic woes are primarily management failures - failures in the areas of governance and strategy. This only inspires me to redouble my efforts to spread the word about integrating the strategic level of organizations with the task level via great project management discipline.

As the CEO of a small company, it’s hard to fathom how corporate leadership could let an organization come within weeks or months of complete meltdown without making radical changes to avert disaster. Granted, the sheer size of some of the businesses that have failed creates difficulty - the old “turning the battleship” phenomenon - but still, when it comes to strategic and financial failure, the role of the CEO is that the buck stops here. A closer track on whether or not the organization’s strategies were working, and workable, would have flagged approaching problems months, if not years, ago. A scoreboard of measures that included metrics beyond the short-term financial ones would have helped, too.

A couple years ago, we envisioned that the role of project management would expand upward and outward from the project level to change the way organizations are run. That’s happening, though not as fast as I’d like to see. Governing organizations as portfolios of projects will streamline and revolutionize business, providing a path forward out of our present economic turmoil. As we discussed in our 2007 book, Seven Steps to Strategy Execution, strategy must flow down through the organization and permeate it, with governance bringing methodology, portfolio processes, and resource management into harmony. When we see an enterprise-level PMO orchestrating these areas -  as our research shows is increasingly the case - we know that the organization is moving toward a structure that can potentially achieve great things by streamlining processes, eliminating duplications of effort, and bringing project management discipline to all the organization’s strategic initiatives. When I see an organization implement the CPO title - Chief Project Officer - I’m even more impressed. We’ve long campaigned for this role, putting the discipline of managing by projects at the highest level of the organization.

Turning around failing projects … faltering organizations … struggling industries … a challenged economy … for CEOs and CPOs, it’s a great opportunity to put the logic of project management into play. Where old-school management and processes have failed us, it’s time to put some new thinking in place. That should be every leader’s game plan for 2009.