Executives: Stop Failing Your Projects!

Yes you read that right – not ‘Executives; stop your failing projects’ but ‘Executives; stop failing your projects’

In ‘Why good strategies fail: Lessons for the C-suite’ published by The Economist Intelligence Unit Limited in 2013 the report stated, in the conclusion, that there was a need for increased C-suite attention to implementation (therefore projects) ‘Leadership support is the most important factor in successful strategy execution, yet a substantial number of survey respondents indicate that the C-suite is insufficiently involved’.

On the subject of finding the right level of C-suite engagement the report declares ‘… one of the most worrying findings of our survey is that leading executives at a large number of companies do too little about strategy implementation. Only 50% of respondents say that strategy implementation secures the appropriate C-suite attention at their organisation. Similarly, 28% admit that individual projects or initiatives to put strategy into place do not typically receive the necessary senior-level sponsorship’.

This is why I make the loud and bold challenge that ‘Executives are failing their projects’ and I strongly believe that this situation needs to stop – now!

C Suite Executives

So how can you get this message up to the highest level in your organisation?

Well fear is one way so why not try this simple ‘script’ when you get the opportunity.

Start with your company project portfolio value (this should be a reasonable reflection of the strategic investment). For the sake of this example I am going to use pounds sterling but, of course, feel free to adopt your own currency of choice. I am also going to use a small portfolio value of say £20m, again please insert your own figure here.

Now this next step will depend on the type of industry you are in but choosing a typical regulated commercial model for a business then it can be said that out of that total portfolio some projects are compliance driven and some business driven. In this example we will use 40% as compliance and 60% as business growth projects. Therefore we have £8m invested in compliance projects and £12m in business development projects.

But we don’t stop there. For each project to be sanctioned there must be a ‘value added’ benefit. For compliance projects this is less ‘value add’ and more ‘cost impact’ and so perhaps this is a 2:1 ratio as a result of potential penalties for non-compliance plus the actually project investment costs. In our example this would be £8m multiplied by 2 plus the original £8m, which equals £24m.

Now for the rest of the portfolio, the business growth or development projects, then you don’t invest £1 to gain £1 – what’s the point? – Of course not, there has to be a return on investment ratio that typically might be at around 4:1 (apply your own business factor here presumably you have something in your business case approval process that has such a figure defined?). Therefore investing £1 would gain a return in investment of £4. Therefore using the same maths as the compliance projects we now have in our example a total of £12m multiplied by 4 plus the original £12m, which equals £60m.

We now have a ‘true’ project portfolio value of £24m plus £60m which gets us to a nice big number of £84m.

In the ‘Project Management Institute, Inc. Pulse of the Profession™, March 2013’ it was assessed that the value impact on poor project sponsorship from the executive level had real significance. The report suggested that with regards to ‘Meeting Project Goals’ there was a +29% variance with good sponsorship in place but when there wasn’t good project sponsorship in place there was a -13% variance of ‘Project Failure’ that is there was a 13% more likely chance of the project not delivering what was expected.

Investment in project sponsorship is evidence that the executives are taking strategy investment seriously, and not doing so an example of where the C-suite are failing their own business and investors (and projects).

Taking our £84m portfolio and doing nothing to develop good project sponsorship means that 13%, or £10.92m, is practically written off from day one.

If your CFO is in the room right now and paying attention tell them to go get the shredding machine and stuff £10.92m in to it right now – you might as well as this is what is more than likely going to happen to all that money, all that investment, it will just disappear and you will have nothing to show for it except a lot of resources wondering what they had been working on all this time (I would say burn it, visually more powerful but also more of a safety risk).

And hey we haven’t even considered disruption of business costs during the projects – what shall we say here, maybe another 20% of the total portfolio investment, about £16.8m or so?

And you know what? Everything is never equal. I suspect that the 40% we allocated as compliance project investment has a greater success ratio than the other projects, not that these projects are any more ‘healthy’ but that through the fear of non-compliance the company throws resources at these projects over and above the other 60% of business development projects and achieves’ success’ the hard (and costly) way.

Now if these ones are ‘successful’ (he says smiling knowingly) then the other 60% must carry even higher levels of potential failure.

Workout these figures now.

And looking back at your portfolio we said 40% was compliance activity and 60% was business growth but think about it, of the balance how much is real ‘clear blue strategic change’? I bet that most is just to keep pace with your market and perhaps only 10% is real change. So again if failure is the ‘norm’ and the focus on success tends towards the compliance end of the project scale, how successful are the true change projects you have underway in the organisation?

Now I realise that all of these figures are open to interpretation and maybe my maths is less than perfect but you must get the general idea. Big investment in strategy through projects needs to be backed up by real commitment to successful delivery and, whilst the development of good project managers backed up with appropriate processes and methods is critical, it is the clear responsibility of the executive leaders to connect such strategy to project activity and to sponsor these projects in a competent way.

Hopefully all of this will have woken up the executives and you have their full undivided attention but just in case here is one last statistic that may well help.

A four-year study by LeadershipIQ.com interviewing over 1,000 board members from 286 public and private organizations that fired, or otherwise forced out, their chief executive found that the number one reason CEO’s got fired was …. Wait for it …. Mis-managing change! And what is change if not projects.

And so I go back to my opening statement and shout it out once more ‘Executives; stop failing your projects!’

Peter Greenwood, group executive director— strategy, CLP Group agrees, in ‘Why good strategies fail: Lessons for the C-suite’ notes that ‘Companies fail or fall short of their potential not because of bad strategies, but because of a failure to implement good ones’.

 

And if you need some help with this message then I am happy to speak on your behalf – just email me at peter.b.taylor@btinternet.com today and let’s get that message heard loud and clear!

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2 Responses to “Executives: Stop Failing Your Projects!”

  1. Journeyman PM (@journeymanpm) Says:

    that was way more insightful than expected, you need a certain degree of eminence to be able to make this kind of plea though … or a lot of guts 😉

    • thelazyprojectmanager Says:

      Glad that it was surprisingly useful 🙂

      You are right to have that conversation direct to C level needs authority and opportunity but you can arm those directly above you with this argument at least

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