Sunday, April 26, 2020

Why Long Projects Fail So Often

Why Long Projects Fail So Often
A long-duration project is more likely to fail outright, meaning it will be cancelled or will not be used, because it outlived its usefulness prior to implementation.

This is even more true for technology projects.

See my project failure case studies for a number of prominent examples: LeasePlan paid $100 million for a SAP system that never went liveHertz paid Accenture $32 million for a website that never went live, and of course the £10 Billion IT Disaster at the NHS.

But also projects that do go live after a long time (usually with a significant budget and schedule overrun) still fail often.

Being over time and/or budget does not necessarily mean failure. But not delivering enough value is. And value creep is a real killer on any long project.

Value = Benefits - Costs

Value creep is when the benefits of your project progressively go down while the costs go up. The result is a loss in project value, often resulting in a move from positive to negative returns.

And this is happening all the time. Most long projects are subject to the scope changes, unforeseen events, and time and cost overruns that represent this value creep.

Of the various reasons that make long-duration projects fail so often, the most significant is the inevitable changes that will occur in the business environment, which will require adjustments to virtually all elements of the project.

Keeping executive support and interest at the needed levels gets more difficult over time. Especially on long projects, executive sponsors get reassigned to other projects, never totally engage in the project or simply lose interest as the project drags on.

Team fatigue and burnout lead to complex human interactions and unavoidable staff turnover, both of which are difficult to predict and manage.

Completion is satisfying. Being able to deliver a finished project is a big part of being fulfilled at work. That’s why projects that stretch into a far-off horizon are challenging for even the most seasoned project manager.

So what should you do?

Short and fat projects are the answer.

Short and fat projects imply that your company runs a small number of short projects in parallel, armed with sufficient resources.

The alternative is running many long and thin projects concurrently, which means that your organization’s resources are spread insufficiently between many parallel projects that are having a hard time crossing the finishing line.

The underlying concept is visualized in the diagram below.
Research has repeatedly demonstrated that short-duration projects are more likely to be successful than prolonged endeavors.

And of course faster realization of benefits is just better. A dollar earned today is more worth than one earned next year.

Also when you are done after 6 months instead of 12 months you can use the existing team for a different project delivering even more benefits for your organization.

So not only do you get your benefits for your original project sooner and/or longer, you will get those for your next project sooner as well because it starts earlier and is staffed with an experienced team.

A reasonable recommendation would be to try to complete any project within 6 to 9 months.

For large (and normally long) projects the only way to get the duration down to this level is to structure the effort into a program comprising multiple projects and to use incremental/iterative solution development.

In a nutshell: Long projects without usable intermediate results have a high risk losing value, relevance, executive interest, support and staff.

You can buy my eBook The Project Valuation Model ™ by clicking here or on the image.

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Wednesday, April 22, 2020

Do Your Projects and Initiatives Support Your Strategy?

Strategy has little value until it is implemented.

In a world where disruption can happen overnight, moving rapidly from strategy formulation to implementation is critical.

Yet too many companies go only halfway, putting their best people into formulation and in effect ending up treating implementation as an afterthought. As a result, strategies fail, customers leave, key talent is lost and financial performance suffers.

One key piece of closing the gap between strategy formulation and strategy implementation is strategic alignment.

Most people think of strategic alignment as a noun (“the state of having everything aligned to strategy”), but it’s better to think of strategic alignment as a verb - it’s about action.

Here’s a better definition.

Strategic alignment (verb): The process of aligning an organization’s decisions and actions so that they support the achievement of strategic objectives.

This definition emphasizes decision-making and actions. Actions typically follow decisions so if your organization doesn’t have the ability to make well-aligned decisions, you  really can’t take well-aligned actions.

Implicit in the definition is also the fact that strategic alignment involves NOT doing some of the things that you might currently be doing. For example things that do not support the realization of your strategic objectives.

One of the most important and costly “things” your organization is doing are projects. And managing the strategic alignment of your projects must be part of your project portfolio management process.

Not for nothing is “creating a strong link to strategy” one of the four goals of project portfolio management.
Strategic Alignment
But before you can assess the strategic alignment of the projects in your portfolio you must do two other things first:

1) Weight your strategic objectives
2) Scale your strategic objectives

Weighting your strategic objectives

I assume you have a list of your strategic objectives. If not, please read my article “What Is Strategy? And What Isn't.” first.

What you need to do now is determine the relative importance of your objectives.

Not all of your objectives are equal. Also your key stakeholders are unlikely to agree on what the relative importance of your objectives are.

Without a common “set of rules” that can guide decision-making and actions it is difficult to keep things aligned. So, you need to “weight” your objectives but you need to do it in a way that everyone supports.

While this sounds like a simple task, it is not. Simply grabbing a whiteboard and asking a room full of people to weight / rank your strategic objectives is most of the time not very effective.

That kind of process is wide open to decision biases and tends to be poor at building real consensus and buy-in (though you may think you reached consensus).

Research into decision making (specifically into multi-criteria decision making which is what you’re dealing with here) shows that a method called Analytic Hierarchy Process (AHP) is one of your best choices.

You can learn more about AHP here. For the purpose of this article I assume that you have a weighted list of your strategic objectives that clearly shows what is most important.

You should share this list with your team(s). The wider you share it, the more thoroughly your team(s) understand what you’re trying to achieve and why, the more likely they are to use your objectives to help drive their own decisions and actions.

“Strategy execution is helping people make small choices in line with a big choice.” - Jeroen Flanders

Scaling your strategic objectives

The next step is to create a scale for each of your strategic objectives. These scales should measure the contribution to the objectives. For example, if entering the Chinese market is one of your strategic goals, your scale might look like this:

What difference will this project make to our ability to enter the Chinese market?

0 - No impact on Chinese market entry
1 - Small impact on Chinese market entry
2 - Moderate positive impact that would make a small, but definite difference
3 - A real difference to either the speed, size or risk of market entry
4 - A significant difference to either the speed, size or risk of market entry
5 - A game changer or “must have” for market entry in China

It is hard to write a good scale but you get the idea - you’re looking to capture what the impact is on the strategic objective.

Assessing the strategic alignment of your projects

Selecting projects and initiatives is one area in which strategic alignment can be easily and quickly improved and where that work has a massive impact on the performance of your organization.

Selecting projects is often done by an executive committee and, because of this level of visibility, people tend to assume that the resulting project portfolio is aligned to strategy.

Research indicates that this is not the case. According to research by the PMI, 20% of projects in your portfolio contribute so little to strategic objectives that they should be stopped.

By assessing the strategic alignment of your projects and killing off the projects that are not aligned (labelled as “Waste” in the following diagram) you can re-allocate those resources to important projects that are struggling (red) and turn them into successful projects (pink).

What you’ve seen so far is that strategic alignment is about making decisions and taking actions that align to your strategic objectives.

“Objectives” is plural. There are usually several of them.

So assessing strategic alignment is not simply a check box task. Asking a simple yes/no question, “Does Project X align with strategy?” is one of the most common mistakes people make when trying to achieve strategic alignment.

This is because everyone will just say “yes”.

What you’re interested in is the contribution Project X makes to your various strategic objectives.

In other words, whenever you’re making an important project portfolio decision you should be evaluating the contribution each project makes to your strategic objectives. Only then will you be able to work out which alternative is best aligned to those strategic objectives.

So you have a weighted list of strategic objectives, you have a scale that captures the contribution to these objectives, now you need to define who is actually evaluating the actual contribution.

And this depends on which project you’re evaluating. Generally, the answer should be “people who are experts and who do not have a preference for one outcome or another”.

If the person requesting the project is asked to score their idea against different objectives, they will try to “game” the system by scoring everything higher than it should be.

Making your scale about “contribution to an objective” has made it much harder to game the system than simply asking, “Does it contribute..” so you’re already ahead of where you were, but you will have scoring bias if, for example, the project sponsor answers the questions.

This is why it’s a good idea to have an “independent expert” do the scoring where possible. If that’s not possible, you can always have an expert review answers for reasonableness. This helps you collect more consistent and unbiased data.

Sometimes you’re measuring something that is quite subjective or something that you can only estimate by intuition (as opposed to “level of effort” or “net present value” which you can model or based an estimate on previous data).

For example, you might be asking “What is the contribution of this project to employee satisfaction?” That’s a hard thing to estimate in any really “rational and reliable” way. In this case, pulling in a panel of people and asking them all the same question will give you a much better answer.

Research shows that a group of people, even if it’s just 3 people, is much better at making estimates than an individual.

So the rules are:

> Use subject matter experts to score the contribution of your projects against your weighted strategic goals.

> Ask a group of people their opinion.if you’re measuring something that is inherently subjective.

Now you’ve scored your alternatives, simply multiply together the score and weight for each goal to calculate an overall score for each alternative. The result is an overall score for each alternative allowing you to see which projects are most aligned to your strategy.

It’s often a good idea to present this information in a format with the weighting of each goal and the contribution to each goal for each alternative clearly visible.

In a nutshell: Strategic alignment is the process of aligning an organization’s decisions and actions so that they support the achievement of strategic objectives.

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Saturday, April 18, 2020

Digital Strategy Does Not Exist

Digital Strategy Does Not Exist
Let me say it again. There is no such thing as a digital strategy. Honestly. If you think your organization needs a new digital strategy in 2020, then I’m sorry to say that you’ve completely missed the boat.

It is misguided and dangerous to be creating a separate digital strategy for your organization in a world that is not “going digital”. We already are digital.

There is no digital strategy. Just strategy in a digital world. - Bud Caddell

What your organization needs is a strategy with a mix of strategic choices that are supported by digital capabilities. These are just one of the many kinds of capabilities that your organization needs to achieve its chosen strategic positioning. And your positioning is what you will find at the intersection of the where-to-play and how-to-win choices. See “What Is Strategy? and What Isn't."

Besides digital strategy, it seems that the whole business world is talking about digital transformation these days. Just look at the search trends for both of the terms.

But while more people are talking more about digital transformation, it’s pretty clear that many are still missing the point.

As cool as it is to discuss new technologies such as blockchain, AI, robots, edge computing, and the internet of things (IoT), the focus on technology can steer the conversation in the wrong direction.

Because when it comes to digital transformation, digital is not the answer.

Transformation is.

Technology itself doesn’t provide value to a business. It never has (except for technology in products). Instead, technology’s value comes from doing business differently because technology makes it possible.

E-commerce is not about the internet — it’s about selling differently.

Analytics is not about databases and machine learning algorithms — it’s about understanding customers better, or optimizing maintenance processes, or helping doctors diagnose cancer more accurately.

IoT is not about RFID tags — it’s about radically synchronizing operations or changing business models.

In our digital world, a strategic focus on digital sends the wrong message.  Creating a “digital strategy” can focus the organization in ways that don’t capture the true value of digital transformation.

In a nutshell: You don’t need a digital strategy. You need a better strategy, enabled by digital capabilities.

When you need some guidance on how to define and measure project success have a look at my Project Success Model here or by clicking on the image.

The Project Success Model

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Monday, April 13, 2020

Project Recoveries Are Surprisingly Easy (But Expensive)

Project Recovery is Surprisingly Easy (But Expensive)
Project recoveries are really fun.

They appeal to the ego because you are striving to achieve something that the previous team failed to do.

They are also surprisingly easy.

There are multiple reasons for this.

First and foremost, if the project failed and the organization is trying to recover it, there really must be a very good reason for delivering it.

No one spends a lot of money, fails and then makes the same reinvestment if they aren’t absolutely sure that they really need this project to succeed.

Given that one of the main reasons projects fail is a lack of clarity over the business case, you’re already off to a good start.

Secondly, everyone involved is feeling guilty. The reasons the previous project failed were complex, but they have had big discussion, played the blame game and put someone’s head on a stake.

But although the corporate lynching was tremendous fun, people know privately that, well, they could have done just the tiniest bit better themselves.

Most people have a pathological dislike of making the same mistake twice so they are all committed to doing better this time around, or at least, they’ll make different mistakes.

So the only fundamental question to address when you start a project recovery is exactly how much can be recovered.

The depressing answer is usually somewhere between "nothing" and "not very much".

If the project has gone wrong to the extent that it requires a formal recovery rather than just cleaning up, you have to ask yourself: is there anything at all that you can rely on?

Most of the time not.

And that is why project recoveries are so expensive.

You have to redo (almost) everything that was done so far.

In a nutshell: Project recoveries are surprisingly easy, but they will cost a lot.

You can buy my eBook The Project Valuation Model ™ by clicking here or on the image.

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Thursday, April 09, 2020

Your IT Has No Customers

IT Has No Customers
Have you ever heard the head of sales, marketing, or manufacturing describe any other part of the business as his or her customers?

Have you ever heard the head of sales, marketing, or manufacturing talk about “aligning” those functions with the business?

The only people in any organisation who ever describe anyone except the people who buy the organisation’s products and services as “customers” are IT people.

The only people in the organisation who ever talk about “aligning with the business” are IT people.

Maybe the head of sales has talked about aligning her function with a new strategy or a new value proposition, or the head of manufacturing has talked about aligning with new key performance indicators—but aligning with the business?

That view can’t be good for IT.

It is a legacy of the era in which the “data processing” organization was almost entirely populated with people who had very little day-to-day connection with the rest of the business.

Those days are gone, but the mind-set subtly persists, and it separates IT from the rest of the business in an unhealthy way.

What executives ultimately want from IT is not alignment, nor being treated like a customer.

Executives want business outcomes. 

Increased sales, increased margins, and increased market share are examples of the outcomes that executives want.

If the IT team is talking about and helping to deliver those outcomes, then “alignment with the business” is a nonissue.

But if alignment is the goal and the topic under discussion, then the IT team is in effect showing that it is not focused on the outcomes that matter.

In a nutshell: IT is an important part of the business and must focus on business outcomes.

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Sunday, April 05, 2020

Your Project Is Not Disruptive. And That Is OK.

Your Project Is Not Disruptive. And That Is OK.
Innovation means the application of ideas that are novel and useful.

Creativity, the ability to generate novel and useful ideas, is the seed of innovation but unless it’s applied and scaled it’s still just an idea.

Innovation must lead to the introduction of new products and services that add value to your organisation and your clients.

Innovations can be big or small, but breakthrough or disruptive innovation is something that either creates a new category, or changes an existing one dramatically, and obsoletes the existing market leader.

So we need to stop calling everything breakthrough or disruptive, especially in internal company discussions. It is more than OK to have a balanced pipeline of big and small ideas, and we need to get comfortable with that again.

If we demand nothing but disruption or breakthrough, (delivered tomorrow and on small budgets) then that is all people want to work on, and to accommodate this, everything gets labeled in those terms.

But language matters, and once we start calling good but smaller ideas breakthrough, we lower the bar.

This is a recipe for mediocrity, and is one of the reasons why so many companies struggle with too many small initiatives and not enough big ones.

In a nutshell: It is important to have a balanced pipeline of big and small ideas, and we need to get comfortable with that again.

You can buy my books The Art of Technology Project Portfolio Management and The Science of Technology Project Portfolio Management separate or as a bundle in my store. Just click here or on the image.

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