Well, as they say at the races, Ils sont partis! … the gates are open and the horses are away: the PMO of the Year Award competition is off to a running start. Already I am getting questions from prospective applicants, and from some of last year’s applicants who are ready to try again. One fellow asked me if I could tell him where his organization stood in the rankings, which isn’t really an answerable question, since we didn’t sort or rank below the top six or so who formed the pool from which we chose the winner and finalists. (This is by way of saying, please don’t write and ask me this question!)

What I could do, and what was interesting, was to glance at the evaluation form that had come back from the judge. His PMO had scored high in almost every area; but the area where the judge had reservations was whether or not the PMO had business impact on the organization as a whole.

And, there it is in a nutshell: whether your PMO is a winner or a loser (and I am not just talking about the award here) all hinges on business value and/or perceived organizational impact.

I say perceived because I think that many PMO directors still have not realized that there’s a large component of marketing communications, not only in establishing a PMO, but in institutionalizing it. I’ve written before that PMOs are vulnerable to their own success: once the systems for executing strategy through well-run projects are in place, it’s tempting to think you can rest on your laurels. But, no such luck. When project and program management is working well, it’s invisible: nothing bad happens. And the PMO becomes, apparently, a line item of overhead.

So, the perennial question PMO directors have to answer is: What have you done for me lately?

Implementing a measurement program within the PMO that tracks the benefits provided can provide those answers, but only if it’s wisely designed. Too often, PMO leadership self-measures by metrics I can only call navel-gazing: numbers of people trained in PM, schedule compliance, numbers of project completed, and the like. They forget that a key piece of their role is as liaison with the executive level, and their metrics need to measure things that the executive level cares about.

So, you trained 100 people and they got their PMPs. So what? Aaron Coffman at American Power Conversion (a 2006 award finalist, mentioned in my last post) matched PMP achievement with dollars earned or saved due to projects being delivered on time. Bingo!

It’s not always about money, of course. The 2007 winner, Norton Healthcare, succeeded in large part because the PMO made sensitivity to the needs and concerns of clinical staff paramount. “How will this impact hospital staff?” was a central question involved in selecting and prioritizing the portfolio. Consequently, they have been able to pull off massive capital building and technology projects without ticking off the doctors who run the place … in fact, making themselves indispensable.

So, helping the executive level to perceive the value of the PMO is an exercise in walking a mile in non-project management shoes. What are the drivers of value in your organization? Answering that question is a good place to start.

Join us for more along this same line at our Webinar, Unlocking the Value of Your PMO, next Thursday, March 11. “See” you there.

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’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 wish this were not true, but ever since 2002 when we began facilitating project management benchmarking groups, I have been meeting PMO directors who brought project management to the attention to senior management, created PMOs or Centers of Excellence, drove PM improvements across organizations, improved project and portfolio performance … and wound up unemployed.

Of course, the present economic climate puts every area of the organization under the microscope, but it does seem that PMOs are more susceptible to the ax than many other functions. My theory about this is that great project (or program) management is like great editing: invisible. When the management of projects, programs, or portfolios goes smoothly …. nothing dramatic happens. Things get done, decisions get made, money gets made, schedules are met. No problem. No bloopers, no typos.

“Hey,” says the CEO. “Everything is going so well. What do we need this PMO for? It’s overhead.”

The latest cover story in PM Network magazine focuses on just this issue: the crucial requirement for PMOs to show value, and show it often, in order to simply maintain their place in the organization. (The Accident Fund PMO, by the way, has been a finalist and a winner of our PMO of the Year Award in previous years, under the previous director Norm Buckwalter–something that isn’t mentioned in the article).

Often, PMOs succumb to a disease that is affecting all areas of organizations: the short-term CEO syndrome. Research by executive search firm Drake Beam Morin notes that when CEO tenure drops, businesses focus on achieving quick and short-term results. Since (as our 2008 study The State of the PMO revealed), it’s only mature PMOs that bring business benefits, it’s easy to see how short-term thinking can doom PMOs. Unfortunately, this only harms organizations in the long run.

Have a PMO success-to-sadness story? I’m all ears.

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.

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.

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?

Over the past ten years, we’ve come to value the results of our Center for Business Practices action research events, the Strategy & Projects Summit and Project Management Benchmarking Forums. At these events, project management leaders from major organizations have met and exchanged advice, best practices, challenges and solutions. They’ve forged working relationships with the CBP and with their peers that have helped them to positively impact the project management culture in their own organizations. With this blog, we’re expanding these face-to-face events to a global discussion network.

For years, we’ve watched as project management has expanded in influence and clout. We’ve followed with excitement the upward trajectory of project management within organizations - and, we hope, offered research tools to lead the way. From a tactical, single-project focus to the IT project office … to the enterprise Center of Excellence, and on to the EPMO … from the project to the project portfolio … from project excellence to strategy execution … .

Today, when management gurus and CEOs discuss execution, they are talking project and program management: governance, portfolio selection and balancing, performance measurement, resource capacity and competence, and the IT infrastructure that makes interdisciplinary management of “strategic initiatives” (those things we’ve always called projects) possible.

It’s an exciting time for project professionals. Best practices are only now being worked out for the deployment of project management at the strategic level. We’re constantly identifying new practices and approaches, and look forward to sharing them with you and hearing your feedback. Sign up below to receive a heads-up when new content is posted here; or come back and visit often.

We’re looking forward to the conversation.

Onward and upward,

Jeannette Cabanis-Brewin
Editor in Chief
PM Solutions