investiledysfunction

The July-August 2008 issue of the Harvard Business Review has an article entitled “Employee Motivation: A Powerful New Model” authored by Nitin Nohria, Boris Groysberg, and Linda-Eling Lee which talks about, as the title implies, motivating employees and the drivers behind motivation.  In it, the authors argue that there are four drives that underlie motivation and those are (directly quoted below):

1. The drive to acquire  - obtain scarce goods including intangibles such as social status
2. The drive to bond - form connections with individuals and groups
3. The drive to comprehend - satisfy our curiosity and master the world around us
4. The drive to defend - protect against external threats and promote justice

One of the organizational dimensions that drives motivation and specifically the drive to defend is what the authors detail as “fair, trustworthy and transparent processes for performance management and resource allocation”.  They cite some corporate examples but the overarching theme is that their should be transparency in the resource allocation process and that while pet projects may get killed, employees need to understand the rationale behind the decision.  Employees reporting that funding criteria and process are fair and transparent leads them to be motivated and to view the organization as a “just one.”

Corporate portfolio management which is a discipline to more rigorously manage and optimize resource allocation is often discussed in terms of the financial and strategic outcomes it enables.  The authors of the article hit upon an employee dimension which is often ignored or misunderstood in discussions of corporate portfolio management.  When we work with clients, we often talk about creating “an internal marketplace for project and investment funding” and in some instances, this idea of competing for funding scares organizations because they worry that this will demotivate employees who are the project/investment originators or who may be working on such projects.

In actuality, this marketplace concept is empowering.  Generally, resource allocation as it relates to project and investment selection is a game where people don’t know the rules.  And so people see projects/investment selections predicated on dubious, incomplete business cases or on the basis of relationships and decibel-driven (vs data driven) criteria.  Imagine for a second that you are playing a game where the rules were unknown or always changing.  It doesn’t sound like a very fun game does it?

When employees know the “rules of the game” around resource allocation, this makes the process and the organization stronger and is motivating for employees.  People come with their best ideas because they know those ideas are actually valued and have a shot at receiving funding.  By knowing the rules of the resource allocation process, they understand what is considered an investment, what is needed for an investment to be considered for funding and they also understand the methods by which their projects will be evaluated and funded.  Yes, there will be times when their projects don’t get the funding they desire but at least they can feel comfortable that the process underlying the selection was fair.

Corporate portfolio management (or it’s children in the form of IT portfolio management, project portfolio management) often fail to consider the organizational behavior that is required to make them happen.  More often than not, they also fail to consider the beneficial behavioral outcomes which they can enable foremost amongst them is more motivated employees.

I’ve previously written about the underwhelming success rates of multi-year projects whether they are managed by governments or the private sector (for example - Boeing’s well publicized snafus with their Dreamliner project).  This week, another multi-year project mess was highlighted that hits closer to home (literally and figuratively) and I’m talking about the World Trade Center rebuilding.

According to reports, the rebuilding of the WTC won’t be done until the middle of the next decade and will cost as much as $3 billion more than initially planned.  My wife and I live in Manhattan’s Financial District so personally, this is disappointing as the revitalization that would have accompanied the new WTC site would be great for the area.  Moreover, as someone who was at the WTC on 9/11, it would be nice if the memorial to the many victims was completed at least by the 10 year anniversary of the event.

But alas, as with virtually all other multi-year projects, the fate of this high profile project seems no different.   I fear the delays and budget overruns will only increase over time.  Despite the work of numerous smart people (and from the looks of it some not so smart ones as well), a likely army of project managers and the pressure of a city and country on the project planners to get this done, it seems nothing can save these gargantuan projects.

In virtually every post on multi year projects I’ve ever written, I always close asking people to provide me an example of one multi-year project that has gone well.  By gone well, I mean the project delivered on time and on budget.  I’ve yet to ever hear from anyone about such a project.  Despite all that is written about multi-year projects, is the success rate really zero percent.  Let’s hope not.

In the meantime, we’ll continue to wait and hope that the WTC site rebuilding is not delayed further.

One of the 7.5 Sins of Portfolio Management is that your portfolio management effort cannot be a tunnel but must be a funnel. By that, we mean that projects must get killed as part of your portfolio management effort to give it some teeth. This could mean killing projects at the proposal stage or shedding underperforming projects along the way. If you don’t do this, you’ve just created bureaucracy (checklists, business cases, etc) but you are really not changing investment and project selection processes and the behavior that goes along with them. If you really want to create useless work in your organization, there are probably other ways to do this. If, on the other hand, you genuinely think that there is no project in your organization that should be stopped or that should not have been started in the first place, then we should talk as I have some real estate in Florida which is expected to go up 100% this year which I’d like to sell you.

Given this sin, it’s nice to see a company living by this mantra especially in the area of R&D. One notable example is HP Labs where Prith Banerjee, the new labs director, is planning to unveil a list of 20-30 major projects down from the 150 or so currently being pursued.

According to Business Week, “The labs’ $150 million annual budget will remain the same, but he’ll group the most promising related projects while dropping those with little shot at a profitable payoff.”

Banerjee himself asserts that “Just because it’s scientifically interesting won’t do it. We need to create whole new business opportunities for HP.” He is also forcing researchers to compete for money by pitching projects and writing business plans and then having those goto a central review board that will approve ideas and track progress.

It sounds like HP Labs’ is avoiding many of the 7.5 deadly sins namely:

1. They’re making it a funnel by killing projects whose proposals are not good or that are not performing
2. They’re reducing the decibels in the decision making process by requiring more intensive business cases/plans
3. They are tracking results

It sounds like HP Labs is onto the right path. There will inevitably be culture change and resistance that emerges from such an overhaul, but if they can work through these impediments (not easy), HP will go a long way in making each R&D dollar go further.

A recent tournament for computer programmers crowned a champion whose winning secret was “avoiding bells and whistles, and asking questions until he knew exactly what the judges wanted his software to do.”

WOW! What a novel idea - do the basics right and really understand what the client wants. And don’t try to overwhelm them with a lot of fluff they don’t need.

We work a lot with clients looking to pick a project or IT portfolio management or innovation management solution, and it is amazing the sheer number of useless bells and whistles that the developers of these solutions show us during demonstrations. I presume the aim is that by showing us lots of potentially cool but ultimately useless features, we and our client will be so taken with the “shock and awe” that we will forget the real needs we have. Sorry guys.

Unfortunately, we’ve talked to companies who’ve already picked a solution and been lured by these features which will never be used and which they’ve realized after the fact.

Yes - it is true that 80% of the features in most of these tools will not be used. Figure out what is really important and pay for that. This requires understanding the processes and outcomes you are hoping for and not assuming that a slick system or a “solution” will save the day.

We’re pleased to announce the launch of an education and training offering called the Portfolio Management Game (www.portfoliomanagementgame.com). 

We created the Portfolio Management Game in response to feedback from clients and practitioners who often said it was difficult to get senior leaders, their peers and employees to fully understand and committed to the idea of portfolio management.  To build this understanding and commitment, The Game uses role-playing, brainstorming, collaboration and some healthy competition to illustrate the challenges of project and investment selection.  It also fosters creative thinking about how to solve these challenges.  It is an engaging, entertaining and interactive way to ensure people really understand the importance of resource allocation and the power of portfolio management. 

We built the Game to answer these challenges and based on research that indicated that employee learning is accelerated when you conduct education using games and competition.  The Portfolio Management Game leverages and builds upon this research. 

You can learn more about the game at the site but below is a quick high-level overview:

It is a role playing game that focuses on a fictitious company, Qaio, Inc which has 4 business units and within each unit, there are several functional groups, e.g. ,marketing, IT, R&D, etc

As part of the Game, each participant is assigned a functional role and a business unit and is given several investments (given out on Game playing cards).  Each investment has details supporting why it should receive funding including strategic rationale, financial projections and risk factors.

During the Game, people take on different roles (functional and business unit roles) and are given various scenarios where there are funding constraints.  Participants must work with their peers from other units and/or functional areas to determine which project and investments should get funding and why.  Doing this requires influencing and collaborating others, and ultimately working together to identify issues and develop solutions.

Expected discussion/outcomes from The Game include:

• Participants will understand and see firsthand the dysfunction that exists when it comes to investment/project selection
• Participants will develop ideas on how project & investment selection, e.g., resource allocation can be improved
• Participants will leave with a greater understanding of the fundamentals and the power of corporate portfolio management (this applies just as well to IT portfolio management, project portfolio management, etc)

Again, please check out the website at www.portfoliomanagementgame.com. 

If you have any questions or would like to learn more, please contact us via email by clicking here.

So I recently spoke at a conference in Amsterdam where I heard an executive from Air France, (Marco Vd Poel), talk about their portfolio management effort. It was a refreshingly honest and well-articulated presentation. It was one of those presentations that only a practitioner can give because it was based in reality and showed the good and bad of their portfolio management efforts.

Marco had one line in his presentation that was simple, to the point and absolutely SPOT ON. I’m not sure if it’s a line he came up with, but he’s the first person I’ve heard say it so he gets the credit. He stated:

“Project Management is about doing projects right. Portfolio Management is about doing the right projects.”

Now let that sink in for a second.

How money is that line, eh? It is absolutely 100,000% correct and elegantly simple. So the next logical question is why are project managers running portfolio management efforts within their organizations if it is a different skillset altogether.  It’s a bit like having Eliot Spitzer teach a class on abstinence.  They don’t go together. 

Undertaking the right projects and investments is about measuring value, considering strategy, risk and financial returns, etc and optimizing the portfolio based on those inputs and factors.  Plain and simple - this is not what project managers know how to do nor what they are trained/supposed to do.

Portfolio management in the corporate setting especially IT has basically evolved like this. If you have enough projects, they roll up into a program. If you have enough programs, you all of a sudden have a portfolio. Somehow having a portfolio defined this way gives you the skills to do portfolio management. Wrong.

I’m not sure when folks will realize this. When they do, it will let project managers do their job better because they won’t have to do these portfolio exercises.  And it will let organizations get the right people to head up their portfolio management efforts and actually get the value they can from such an effort - instead of the glorified project management that it currently is.

This is not meant to disparage project managers. I just think they’re being asked to do things that they’re not best-suited to do. Picking the right projects as part of a portfolio is a strategic, financial and risk discipline and very different than the skills possessed by project managers. If you are in the handful of project managers who can do it all, please don’t write to tell me this. You are awesome and a rare gem. I’m talking about the average project manager who doesn’t have the project management + strategy, finance, risk, etc skills.

Thoughts? 

I’d previously written about Aberdeen and their “paid research” model which the Wall Street Journal slammed several months ago.  Now we can add HP and the Gantry Group to the list of those churning out useless research. 

In this blog posting entitled, “ROI Study: Project Portfolio Management Yields Results“, Michael Krigsman writes, “Project portfolio management (PPM) software is receiving growing attention from CIOs. Riding this wave, HP sponsored The Gantry Group to analyze key ROI measures for PPM software. Although the results are somewhat coupled specifically to HP PPM Center software, the research is useful to anyone studying the PPM category.”

Why on earth would this research useful or believable at all?  Let’s explore the logic that goes into sanctioning such research with top-secret transcripts that have been uncovered by the Brilliont team of conversations between HP and the Gantry Group.

HP:  Hi Gantry Group.  We need you to do some research about how Project Portfolio Management yields ROI.

Gantry:  Sure.  We’d be happy to do that.  We are known for our best-in-class, paradigm shifting, web2.0, eco-friendly rigorous research reports which are always 100% objective (wink wink)

HP:  Yes we know.  That is why we’d like you to do this analysis.  We will pay you a great deal of money once the findings are revealed and reveal the impacts of PPM.

Gantry:  We look forward to receiving the large check and you can rest assured that our findings and its potential impacts on future business will not be influenced by this at all (wink wink)

Give me a break.  Are we all that dumb or do you just think we are?  If anyone believes this type of research, I have some real estate in Phoenix which I’ve just released a research report on which confirms it will go up 20% per year indefinitely for the next 30 years.  Please email me if you are interested in purchasing this property from me.