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.

In 2003, when I began researching PMO roles for our books, Optimizing Human Capital and Project Management Roles and Responsibilities, I proposed adding a role called “Manager of Project Managers” to our list, and was met with some skepticism, and rightly so. At that time, there was little evidence that project personnel were being managed and supervised within project offices: the matrix organization ruled.

Nevertheless, because we hoped that the book would be prescriptive - a force for change - rather than merely descriptive of present circumstances, this role (along with others that were rare at that time) was included. Whether it was because we correctly fingered the pulse of the industry … or because companies took our advice … by 2007 when we did our State of the PMO research, the majority of enterprise-level PMOs were actively managing a stable of project managers, plus a wide array of specialist positions, within the PMO.

What do I mean by “managing”? - well, pretty much everything that HR used to do: hiring, training, performance reviews, mentoring, and providing oversight. In addition, the PMO Resource Manager (the most common take on this title among our clients today) also stays close to the Project Portfolio Management process, assisting the PMO Director and/or Portfolio Manager in allocating and levelling resources to optimize the organization’s strategic portfolio.

Does your organization have a PMO Resource Manager? Share insights about the role with us, and we’ll be sure to include them in the next edition of our Roles & Responsibilities book.

Next week in our review of PMO roles: The Program Manager.

I’m still digesting that Accenture research on what companies that emerged strongly from the 1990-91 downturn did differently during the bad times. As I said in my previous post, this is one of those business news articles that is all about portfolio management, without ever mentioning it.

I suspect that is because a lot of companies - and many management researchers - don’t know there is a name, a history, a set of standards and best practices - for what they are trying to do.

A key finding, for me, was that the most successful companies had a keen insight into their business. Now, this might sound elementary, but 15 years in business journalism have taught me that business is not as rational as you might think. Companies frequently have no idea what is going on within and across departments; duplication of effort is therefore the norm rather than a fluke; and lacking any systematic measurement system, they also have trouble knowing what is working and what isn’t.

That’s why implementing project portfolio management (PPM) usually results in some AHA! experiences. “You mean … we were doing THAT? … three times?” and the resulting cost savings.

So, PPM is one of those project management tricks that both saves money … and allows companies to invest in some “blue horizon” projects that will carry them forward. A tuck here, and let out a seam there, and you can take the “stitch in time” that lays the ground for growth.

But, there’s another aspect of PPM that’s also in line with the research linked to in my earlier post. With apologies for the resolution on this graphic, check out the Portfolio Scorecard model we proposed in our book, Seven Steps to Strategy Execution:

Balancing with realism means taking resources into consideration

Now, usually, you’d see the profitable projects (”bread and butter” projects is one nickname for these) and the necessary ones in two blocks of that square. But, in fact, they fall into the same category. You are going to do these things … no matter what. Either they are required, or they make money (rarely both) and so they are IN.

What’s missing from the balance equation in many models is the upper left quadrant: Do we have the capacity to do this? The people, the skills, the cash … the software, the space, the ideas: the resources that, without which any list of projects is just a wish list.

Everyone is writing about how business can thrive in spite of the downturn … including me. We’re working on a new white paper on the ways that project management discipline can help companies contain costs and become more efficient. (You’ll be able to read it here on or before August 13). But something about the whole idea made me antsy, because merely cutting and thinning and pruning isn’t enough. You’ve got to add the sunshine and fertilizer, too.

And, in fact, research into the ways strong companies have survived previous economic upsets, shows that, indeed “You can’t shrink your way to greatness.”

I was reminded that great Tom Peters quote from Circle of Innovation many times this spring as I watched the unemployment figures rise.

So I went looking for other evidence that greater success - or at the very least, a more sustainable form of success - is created when companies both prune judiciously and invest creatively in their own future.

And I found it.

It’s pretty extensive research, so explore the link yourself, but just to give a precis, companies that flourished coming out of a recession in the early 90s:

• They cut the RIGHT costs .. and did not engage in self-defeating cost-cutting.
• They leveraged their IT systems to gain insight into the business
• They collaborated with stakeholders … instead of pursuing projects/products dreamed up in a vacuum
• They killed or refused the RIGHT projects and opportunities … also based on insight into their own finances, markets, capacity, and so on.
• Rather than merely shrinking - via cost and headcount cuts - they invested in innovative products and processes.

This is one of those articles that never mentions project, program, or portfolio management. You wouldn’t find it if you searched under those terms. Yet, take another look at that list … are we not talking project and portfolio management here?

More rants on why PM/PPM can not just save, but grow, your business … coming soon.

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?

The Center for Business Practices’ Strategy & Projects Summit is in full swing this morning, here in Cambridge Mass … I’m blogging with a view of the Charles River, which is a nice change. And, speaking of change: the Massachusetts Biotechnology Council’s here with us, listening to my CEO Kent Crawford do his presentation on the PMO - material drawn from our books on the topic.

I say, speaking of change, because last year at the Summit I chatted with a young man who worked for a Cambridge-based biotech firm and he had a familiar-sounding tale to tell: tasked with implementing portfolio management, he struggled to get his execs–doctors and scientists by training–to buy in to the process. As I recall, he said that they felt project management was both less of a rigorous “science” than they were used to dealing with, and more of a standardized approach than they liked to submit to–as people who were used to thinking of “academic freedom” in their approach to daily work.

What a difference a year makes!

Looking at the Mass Biotech website, we find not just our Ultimate PMO seminar being offered (and it is at capacity) but a meeting of the organization’s Project Management committee coming up within the month, addressing how biotech companies can implement sustainable practices. Here’s a quote:

Inherent in the concept of sustainability is the minimization of waste and reducing the use of natural resources to better match the rate at which they are replenished.

There’s a nice resonance between this balancing of resource use with resource availability … and the very same kind of resource balancing that PM practitioners are used to managing in terms of human resources. This may well be yet another area where the tenets of project management prove to be portable across industries, across sectors … and even across the divide of a changing global economy and climate.

Just after I made my last post, several things came across my desk that said: Nope, you aren’t crazy after all. First, my colleague Matt Crawford sent me this link to coverage of the role of PMOs in the downturn. According to the CIO of the Baylor Health Care System,

“Anytime you add what might appear to be a process, you always get a little bit of pushback,” [Muntz] said. “But the benefits are huge - how we justify our employees, managing our resources, asking for more resources and how we spend our time … “

Clicking through on the link to information about “staff resources” in the article leads to another piece highlighting how the CIO of Roseville, CA used project portfolio management to lop a cool $680,000 off his $10 million budget. The key point that I draw from both these articles, as well as from our own recent research on PMOs and Resource Management, is that the PMO is a powerful nexus of people and processes; companies that use this organizational structure wisely can invest wisely, cut costs wisely, preserve valuable resources wisely … and avoid the worst dislocations of recession.

Then, a new survey of CEOs around the globe by pricewaterhouse showed that, surprisingly, the top honchos share my unreasonable optimism. I was especially cheered by the way they organized their research findings into four key themes - not the themes you generally associate with global CEOs, either. Short-term profits are absent from the list, as is draconian cost-cutting and planetary slash-and-burn. Instead, PWC says, what these business leaders see developing (and necessary) as we move forward are:

• Durability - measuring success in decades, not quarters
• Collaboration - rethinking assumptions about the relationships between the private sector, governments, customers and employees
• Balance - Meeting present challenges, redefining future success
• Connectedness - Recognizing the financial meltdown is a downside of globalization; rethinking priorities in a world united by crisis.

And, it’s not only the global CEOs that are upbeat. A friend of my husband’s works at a popular local restaurant, which did record business on Valentine’s Day, in defiance of all expectations. On Monday, he remarked that people should stop reading the news, because all it was doing was instilling a false sense of dread. James Suroweicki said the same thing a few weeks ago in the New Yorker - check out his blog and columns in our blogroll.

One of my favorite scenes in movie history is from The Lion in Winter, which takes place at Christmas in the castle where Henry II (Peter O’Toole) has imprisoned his uppity spouse Eleanor of Aquitaine (Katherine Hepburn). In the midst of a raging domestic battle over the king’s mistress and his succession plans for their three sons, Hepburn winds up lying on the floor. “Ah, well,” she says in a calm, philosophical tone, her cheek on the threshold. “What family doesn’t have its little ups and downs?”

Well, it’s Christmas time again, and members of the global family we call “the economy” are having our ups and downs. Mostly downs, you might say, And yet - speedreading the headlines in the various business and tech newsletters arriving daily in my inbox, I’m getting the sense that, at the same time that certain aspects of our economic life are darkening and dwindling, other aspects are getting ready to come into their own.

Case in point: Management Consulting News reports in its December 2 edition on the generally lousy state of the ten top publicly-traded consulting firms the organization tracks. No surprise there; but wait - there’s one exception:

Of the companies in the MCNews Index, only Hewitt has managed to hold onto a gain in its stock price over the period of the last two years. From the inception of the Index in January 2007, Hewitt’s stock price has gained almost 6.0 percent, while all of the remaining companies face heavy losses in their stock values.

What interests me about this fact is that Hewitt, alone among all the other companies in the MCNews Index, has been a finalist in our PMO of the Year Award competition. Their innovative management of information technology globally and their application of project management problem-solving techniques to the challenges of going public are described in the 2008 awards program. Since I don’t much believe in coincidence; I’m betting that great project and portfolio management has allowed this HR outsourcing and consulting firm to do the things that less-savvy businesses are now scrambling to implement: resource optimization, portfolio management, aligning strategy with action via projects. None of these processes can be well managed without a PMO, so companies that hope to thrive in lean times should take a leaf from Hewitt’s notebook.

A few years ago I attempted to map the high-performing organizations in our Strategy & Projects study to available financial metrics. It turned out to be impossible, as the companies ranged from big nonprofits to small close-held consultancies; from government agencies to the Fortune 500, so no common metric could be found. But, what I did find when I Googled their names was a string of superlatives along the lines of:

Winner of the 2005 Best Place to Work Award!

Professional Services Company of the Year!

Customer Service Award!

Regional Poll Says We Are Tops in Patient Care!

… and so on. That’s when I knew that our instincts about the bottom-line effects of managing by projects were correct. Now, I’m thinking that economic collapse is the perfect environment for project management to prove that executing strategy as a portfolio of projects, balancing resources wisely across the portfolio, eliminating rework and duplication, and so on, will be the differentiator between organizational success and freefall.

Going up?

No, this post isn’t about the Rockies … except in the sense that projects face a rocky road when confronting with resource management challenges … which is, according to our research, the most common challenge in project management.

No, the divide I’m posting about is the one between projects and the executive level … the divide between decision makers and reality. That divide is legend, but it’s also apparently very real: in our latest study on Resource Management Challenges (to be released soon at www.cbponline.com) respondents indicated that executives commonly believe that there are enough resources to accomplish projects–when the reality is quite the opposite.

Resource Management literature is filled with descriptions of “best practices” and software vendors rave about the resource management capability of their sophisticated tools. Yet study after study shows that resource management issues continue to be the number one challenge to organizations that practice project management. What are the root causes of these resource challenges and what can be done about them? And how do best-in-class organizations manage their resources differently from the rest of us? The Center for Business Practices recently conducted a survey in order to understand the issues surrounding resource management challenges and to see if we could find some possible answers to those questions, and here are some of the findings:

• Resource management maturity is low in organizations
• There is a direct connection between the level of resource management maturity and the performance of organizations
• There are significant challenges particularly in resource planning and estimating

What’s particularly puzzling is that organizations fail to practice many of the resource management standards noted by the Project Management Institute. In fact, organizations don’t seem to even practice some basics consistently — like creating staffing management plans for their projects. But high-performing organizations are significantly more likely to practice these standards than low-performing organizations. Those standards in particular include:

• Resource career plans used to effectively utilize and train employees
• Information about potentially available resources used for estimating resource types
• Staff assignments are effectively negotiated with functional managers
• Scope of work and resource data is used in estimating activity durations
• The organization has a centralized pool of resources
• Resources required is used to determine the duration of activities
• Project performance reports provide information on resource performance
• Resource leveling is used to keep resource usage constant
• Resource reallocation from non-critical to critical activities is used

It isn’t hard to imagine how bad resource management can cause otherwise good strategic planning and portfolio management to implode. High-performing organizations (as identified by our study) address strategy, the portfolio, AND resource issues wholistically by centering project personnel in a strong, effective PMO. They have a resource-sharing culture as well as a project management culture.

So, to us it looks like the enterprise PMO is the pass across the Great Divide: a place where strategy management, portfolio management and resource management meet and synchronize.

You can read more about my PMI paper on this subject at: Resource Optimization: The Most Significant Challenge to Project Management Effectiveness

I’m presenting it at 2:30 today. Or, stop by the booth and chat with me about it if you are in Denver this week.

Every organization wants to effectively execute strategies, but many struggle to implement a process for doing so. This struggle is one reason that the Balanced Scorecard has had such a wide following and impact on business. Simply put, the BSC emphasizes the linkage of measurement to strategy. For the first time, the details of the project portfolio (what the Balanced Scorecard creators call “strategic initiatives”) become important to a company’s strategic thinkers. Companies that have implemented this model have seen measurable bottom line successes, according to research by Scorecard creators Kaplan and Norton.

Such alignment resolves thorny project management problems. Many studies have cited the lack of executive support as a key contributor to project failure. Project managers complain that their projects do not receive the resources they need. Projects completed “successfully” by project management standards (on time, on budget, to spec) have been considered failures because they did not address a business need.  All these issues are alleviated in a company that ties strategic planning to portfolio selection and project execution. In our 2007 book, Seven Steps to Strategy Execution, we call this an “execution environment”: one where strategic vision waterfalls down through the organization, linking corporate direction to goals, objectives and performance measures at every level—providing each team member with the “zest” of understanding how their work contributes to the organization. Meanwhile, excellent project management provides the data that executives need to make adjustments to the overall strategic plan.

If you’re in Denver at the PMI Global Congress North America in Denver, Colorado, come talk with me in more detail about these ideas! My presentation based on our Seven Steps book is on Monday, October 20, 2008 from 12:45 pm – 2:00 pm.

Meanwhile, here’s a question for you: Isn’t “the strategic plan” just another way of saying “the project portfolio”? And, if not … why not?