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Project Governance – It’s Okay to “Just say No”

According to a 2014 report “Project Smart” by The Standish Group (https://www.projectsmart.co.uk/white-papers/chaos-report.pdf), only 16.2% of projects were on-time & on-budget, while 52.7% were challenged, and 31.1% were impaired or cancelled.” Why were so many projects considered unsuccessful? Here are some of the top-ranked reasons:

  • Lack of executive support and user input or involvement
  • Unrealistic expectations
  • Technology incompetence and lack of resources

If a projects lack executive support, are unrealistic and the teams are inadequate, why were they approved?  Perhaps they were launched under the radar.   Maybe it was approved because a politically powerful executive thought it was a great idea, but lacked the time to provide executive sponsorship.  It’s possible that organizational cultures value boldness and eschew prudence.

The impact of these project failures extend throughout the organization.  Project team members feel responsible for the failure and morale takes a hit.  Talented leaders are blamed for the failures and some feel compelled to resign and others become overly risk-averse.

The solution is effective portfolio management and governance processes that result in more than just rubber-stamped “yes” decisions.  Portfolio management and governance must also result in “not yet” and even “no” decisions.

The Annual Budgeting Process – It Can Use Some Improvement

Over the years, I’ve had the opportunity to work with a wide range of managers and executives. Some had a very IT-centric education and background while others were decidedly non-technical. Most were command-and-control types while others viewed themselves as servant-leaders long before that description was popularized. The majority were calm and reasonable while blessedly few were screamers. If I were to assemble all of these people in a single location and ask their opinions they would not agree on much. Except for one thing – their dislike of the annual budgeting process. Since most 12-month budget cycles are started 3-4 months before the cycle begins, managers are asked to accurately predict what will happen in their organizations 14-16 months thereafter. They are asked to describe funding requirements for projects that have not yet been conceived and their performance will be judged by their adherence to a budget which is merely a wild guess. As organizations have attempted to apply agile principles at scale, managers have discovered that the annual budgeting process is not only disliked, it impedes organizational performance because:

      1. The extensive up-front effort to define and analyze project business cases yields little useful decision-making data and results in green-lighting projects with limited business value

        2. Project cost-overruns result in shifting funds from valuable early-stage projects in order to complete an over-budget project for which the business case is no longer valid

          3. It is difficult to reduce resources on approved projects to work on newly-identified opportunities with greater business value

So, how do we fix this dreadful process? Following are some sources of ideas for applying lean | agile principles to budgeting:

The Scaled Agile Framework (SAFe) proposes that, in lieu of project-based allocations, budgets should be based on funding long-standing teams organized around business value.

The Lean Startup book recommends Innovation Accounting for new products

The Lean Enterprise book advises the reader to eliminate project-based funding processes and separating funding decisions from the annual fiscal cycle

Product Development – “Are we there yet?”

Those who sponsor software product development are frustrated by the time it takes to go from a great idea to the first trickle of revenue.  The months slowly pass and the sponsors adopt the refrain of children during a long road trip, asking “are we there yet?”  The product development team provides the parental response, “we’re almost there” and continues the usual product development practices.

The book, “The principles of Product Development Flow” by Donald G. Reinertsen, proposes that the sponsors are justified in their complaints that teams are taking a long and tortuous path to market.  Specifically, he points out that product developers focus too much on capacity utilization and not enough on cycle times.  As a result, the developers create large batches of work that result in large queues of work that are invisible to the product developer’s dashboards.

Reinertsen proposes a new flow-based product development framework, adapted from lean manufacturing, that seeks to measure and reduce the size of queues by reducing batch sizes and applying WIP limits. He proposes a prioritization method that takes into account cost of delay and the size of the job being scheduled.  Underlying this framework are some 175 principles that complement those of agile software development.  The book is quite deep and may require a couple of re-reads before the concepts settle in fully.

Per Reinertsen, this framework results in product development process improvements of 5 – 10 times, thus allowing product development teams to honestly tell their sponsors that, “we’re almost there.”

Becoming both a quitter and a winner

Agile organizations must be prepared to adapt quickly to changes in the market. To pursue a new opportunity, they must be willing to re-deploy scarce resources by abandoning a product, service or activity that already exists. The decision to abandon is painful and is typically delayed far too long, thus depriving the new opportunity of resources.

In his book, Management Challenges for the 21st Century, the late Peter Drucker proposed that abandonment decisions must be practiced systematically. Drucker described an outsourcing firm that scheduled abandonment meetings on the first Monday of every month. At each these meetings, all levels of management complete a comprehensive review of one aspect of the business and identify what should be changed or abandoned. Twice a year, all levels of management must report on the actions taken as a result of these meetings.

Without a formal review process, unnecessary work and unprofitable business will drain resources and impede progress. If you periodically review your operations, you will find projects that should be canceled, services that are no longer profitable, and reports that no one reads. Such work should be identified and eliminated. Your competitive edge could very well result from the work you don’t do.

Belts and Suspenders

Have you ever seen a fellow wearing both a belt and suspenders? Not only is this a Class B felony among the fashion police, but it is redundant. Either one is sufficient to hold up a pair of pants. While this is a rare fashion faux pas, the thinking behind it is quite common in business processes.

Consider business processes that require multiple management sign-offs. How often do these sign offs result in catching an error that would have otherwise been missed? If the answer is “never,” then the sign-off steps are worse than wearing belts and suspenders. The step is not only redundant, it adds multiple days of lag time in the process. A lean, nimble organization should not tolerate a design faux pas such as this.

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