Stakeholder

Methodologies define a step-by-step process for delivering projects. Each methodology will describe each step in adequate depth, so that the project team understands what has to be done to deliver their project. This is quite different to a standardised knowledge framework such as the PMBOK® Guide (for more on this see: PMBOK -v- Methodology).

By using the same steps for every project the organisation undertakes risks and uncertainty are minimised and there is likely to be an overall saving of time and effort on projects.

Defining ‘your’ methodology

The key steps to follow are:

• Define what it is that you want from your methodology, the type of content it should contain and the way in which it will be used.
• Create a set of specific requirements. Some options include defining:
  • How much of the project lifecycle needs to be incorporated
  • How much detail should be included? What practical templates and examples are needed to help to complete the step quickly and easily?
  • Should it follow one of the worldwide project standards such as the PMBOK® Guide?
  • Can/should the system be easily customised suit all project types and sizes?
• Determine the best methodology to use:
  • Review the methodologies used currently by your organisation and compare them to your requirements to see if there is a good fit.
  • Review the commercially available methodologies to see if there is a good fit.
  • Select the option with the best fit to your requirements
• The best methodology is still only likely to have a 90% fit (or less), this is normal. Make sure you can customise the remaining elements to meet your requirements.
• Ensure adequate flexibility for the range of projects in your organisation.

Implementing the methodology

The key steps are:

• Create an Implementation Plan supported by a change management plan. Implementing a methodology is a significant organisational change.
• Run the implementation as a change management program, including customising the methodology for your environment. Stakeholder engagement is vital to the overall success of the initiative.
• Train the users and support staff in the methodology and ensure ongoing support.
• Ensure the methodology is followed.
• Start improving the methodology (for more on measuring and improving the organisations project management maturity see Mosaic’s OPM3 home page).

Improving the methodology

Processes are always capable of improvement. Observing the actual implementation of the methodology will define actions and outcomes within the following matrix.

Unauthorised, unproductive activities need to be stopped and authorised productive processes supported. The two zones for process improvement are refining or removing elements of the methodology that do not add value to the overall management of the project and incorporating unauthorised processes that are not in the methodology but that are being used add value.

The easiest and most important area for action is rectifying the unproductive processes already in the methodology. Care need to be taken to ensure the definition of ‘unproductive’ is understood. Most planning processes don’t produce anything and consume effort; superficially they can be classified as ‘unproductive’. In reality, effective planning contributes significantly to the efficient delivery of the project and its value to assist in the efficient execution of the work being planned is significant.

Excessively detailed planning though is usually counterproductive. Value judgements are needed to assess the point at which adding more detail or rigour becomes ‘planning overkill’ reducing the overall value of the process and conversely, how much detail can be safely removed from a planning processes to improve overall productivity before insufficient planning starts to cause problems.

Adapted from Firdman, H. E. (1991). Strategic information systems: Forging the business and technology alliance. McGraw-Hill, New York.

Adapted from Firdman, H. E. (1991). Strategic information systems: Forging the business and technology alliance. McGraw-Hill, New York.

Ensuring the methodology is seen as ‘productive’ is essential for it to be generally accepted and supported by your stakeholders.

Once the existing methodology is optimised and firmly in the ‘authorised and productive’ segment, the next area is to examine unauthorised processes that aid productivity and progressively incorporate these into your methodology. The ‘unauthorised and productive’ quadrant is where you find genuine innovation and opportunities for organisational gain.

Summary

No methodology works ‘out of the box’ they all need customisation and tailoring. However, the effort is worthwhile. OPM3 has demonstrated standardised processes that incorporate best practices can provide significant benefits to an organisation (see more on OPM3).

The challenge is balancing systemised processes with the need for adequate flexibility to deal with the circumstances of each unique project. An effective project management methodology needs core components, scalable components and optional components designed to meet the needs of your organisation.

It has been a fascinating 24 hours in Australian politics. The former Prime Minister Kevin Rudd was dumped and we now have our first female Prime Minister Julia Gillard. The unfolding drama was a mixture of ruthless efficiency in the coup to oust the previous Prime Minister, immediately followed by the start of a process of inclusion and healing.

Managers faced with difficult decisions can learn a lot from today’s events. My thoughts on several key issues are:

1. Ethical dilemmas are always difficult and need decisions. As Henry Kissinger said: “Competing pressures tempt one to believe that an issue deferred is a problem avoided, more often it is a crisis invented”. There is no right answer to a dilemma, every option has a downside. Leaders choose a way forward and live with the consequences.
   [See: Ethics and Leadership]
    
2. When you do decide on a course of action, don’t hide the issues that created the dilemma in the first place, explain your reasoning and acknowledge both the greater good and the consequential harm. When a Deputy takes over from her leader there are inevitable questions of loyalty and trust, honest reasoning lets observers understand the reasons for the decision.
    
3. Conversations and transformational negotiations lead to better outcomes than win-lose transactional negotiations but often you need to make the first concession to start down this path [see: Win-Win Negotiations]. The Government and the mining industry were locked in a head to head battle over a new tax. In the space of 5 hours the new Prime Minister had unilaterally cancelled government advertising over the issue and offered open negotiations. The mining industry had reciprocated and suspended their advertising campaign. The negotiations may or may not reach a consensus (no one like having their taxes increased) but both sides are likely to end up with a better outcome if the transformational negotiations work.
   [See: Negotiating and Mediating]
    
4. In a disagreement over principles, you only need to achieve your objective; you don’t need to destroy the other party. The former Prime Minister has been offered a position of his choosing in the new government. If accepted, this means his talents and knowledge are still available to the team. Reluctant allies are better than committed opponents.

It’s certainly been an interesting day watching a really effective communicator in action in action; I feel as though I have learned a lot.

Research by Dr. Brian Hobbs, University of Quebec at Montreal, Quebec, Canada published in a White Paper prepared for the Project Management Institute (PMI) highlights the precarious existence of the majority of Project Management Offices (PMOs). Approximately half of the PMO’s in existence are seeing their relevance or very existence questioned.

Whilst PMOs have been popular since the middle to late 1990’s and new PMOs are being created at a relatively high rate; PMOs are also being shut down or radically reconfigured at a similar rate. As shown in the figure below most PMOs in existence today are rather recent creations. The sample suggests more than half the PMOs in existence today (54%) were created in the last two years and only 17% have been in existence for more than five years.

This data suggests a PMO often has only a short time to demonstrate its ability to fit into the organisations culture and create value before it is restructured or closed down. We have looked at some of the issues and challenges associated with PMOs in a Mosaic White Paper ‘PMOs’.

Based on years of observation, the key to achieving an effective start up for a PMO has more to do with the PMO’s management being able to effectively manage their key stakeholders, particularly in the executive suites than any methodology or reporting processes the PMO may import or develop. For more on this see the numerous papers we have published [paper listing]. The key message is technical competence is never going to be enough to justify the existence of a PMO.

I published a post on the PMI Voices on Project Management blog a couple of weeks ago; Is This Your Project Stakeholder?. The post outlined a scenario and provided two options for readers to respond to.

• Option one was to focus on stakeholders and value with an enhanced probability of technical failure (running late and being over budget)
• Option two was to focus on the ‘iron triangle’ of time cost and scope.

A surprisingly high number of comments from people in the IT industry chose ‘option two’ – just do the job, a focus on short term technical achievement. Whereas managers with a broader perspective tended to select option one for a range of reasons.

You will have to wait a few days for my second post outlining my views on the best answer and why (I have just finished writing it and its now being edited). So check the Voices blog ‘home page’ in a few days or follow my posts.

In the interim though I have to say I was amazed at the number of IT practitioners who still seem to believe IT is somehow disconnected from the overall business of the organisation. I would suggest 99% of IT projects involve changes to business processes and will never deliver their full value if the people working in the business don’t embrace the changes.

Further, I would suggest probably greater then 50% of all IT projects are specifically instigated to support a business initiative or change. Projects in this category are integral to the value creation process – if the IT project team alienate key stakeholders the whole initiative could easily fail to deliver value to the organisation and become a waste of time, effort and money.

I discussed stakeholders and change management a couple of weeks ago (see post) and the ‘Value Chain’ was covered last year (see post)

Based on the responses to the PMI blog, there’s still a lot of work to do to convince IT practitioners that being on time and on budget are not directly related to value. Value is created when people (ie, stakeholders) actually use the IT implementation to generate wealth.

When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your project, program and your organisation.

Change Management and Stakeholder Management

Stakeholder management is a key facet of organisational management where stakeholder management is often aligned with marketing, branding and corporate social responsibility (CSR) initiatives.

Similarly, stakeholder management central to change management and the ability to realise the benefits the change was initiated to deliver. The benefits will not be realised unless the key stakeholder communities accept and embrace the changes.

Project and program management also has a focus on effective stakeholder management. In a change initiative, the project and/or program undertakes the work to deliver the elements needed to facilitate the change but are only ever part of the journey from concept to realised value.

A typical evolution of a change initiative would flow along these lines:

• The organisation decides on a major organisational restructure and as a consequence initiates a change management process and appointed a change manager.
• The change manager develops the business case for the program of work and the executives responsible for the organisations portfolio management approve the business case and agree to fund and resource the program.
• The program manager sets up the program management team, established the program management office (PgMO) and charters a series of projects to develop the various deliverables needed to implement the change.
• The projects deliver their outputs.
• The program integrates the outputs with the operational aspects of the organisation.
• The organisation’s management make effective use of the new systems and processes.
• Value is created for the organisation and its owners.

The change manager is the sponsor and primary client for the program but the people who need to be convinced of the value of changing are the operational managers and their staff. If the organisation does not accept and use the new systems and processes very little value is generated.

Within this scenario, stakeholders in the operational part of the organisation, and particularly the managers will be key stakeholders for a range of different entities:

• They are stakeholders in the organisation itself and part of the organisational hierarchy.
• They are stakeholders in the change process being managed by the change manager.
• As end users of the new systems and processes they are also stakeholders of the program.
• As subject matter experts (SMEs) they are likely to be stakeholders in at least some of the projects.

In one respect change management is stakeholder management. Therefore, in a change management initiative, stakeholder management should be an integrated process coordinated at the change manager’s level. All of the organisational elements working on the change need to coordinate their stakeholder management efforts to support the overall outcome. Confusing and mixed messages don’t help anyone.

But this is just one typical business scenario. When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your organisation. Consequently, focusing on a simple one-to-one view is unlikely to provide the best outcome for anyone.

Effective stakeholder management requires a mature organisational approach. One approach to developing this capability is the SRMM (Stakeholder Relationship Management Maturity) model described in my book. Stakeholder Relationship Management: A Maturity Model for Organisational Implementation. I will outline the SRMM model in a later post.

Complex decision making is a vital project management skill; required not only by the project manager but also by the project’s sponsor and client / customer among others.

Some of the key areas involving complex decisions include risk management, many aspects of planning (particularly optimising choices) and dealing effectively with issues and problems in a range of areas from scope and quality to cost and performance.

There is an underlaying assumption in project management (derived from traditional scientific management) that decisions will be based on a rational assessment of the situation to optimise outcomes. Unfortunately this is not true! As complexity increases assuming a ‘rational decision making paradigm’ becomes increasingly unrealistic. Human decision makers become ‘predictably irrational’.

Understanding the built in biases and ‘predictable irrational’ decision making processes used by people confronted with complex decisions can help managers requiring optimised decisions to craft strategies to minimise suboptimal outcomes. But where can busy project managers access this information?

I have just finished reading the most amazing paper on the subject that canvases the whole spectrum from risk aversion to behavioural economics in a practical, easy to read format; and it is free!

Behavioural economics and complex decision making: implications for the Australian tax and transfer system has been written by Andrew Reeson and Simon Dunsttall of the Australian national science agency, CSIRO. The report was commissioned by the ‘Henry Review’ into the Australian taxation system and is published on their web site. Whilst you can safely skip the last section which focuses on applying the knowledge to our tax system. The preceding 7 sections are focused on how people make complex decisions in any sphere and are just as relevant to complex project decisions as to complex investment and taxation decisions.

You can download this free resource from the review panel’s website: download the paper (a copy is also on the Mosaic web site on the assumption the Government site is temporary and will close once the Henry Review has reported: download from Mosaic).

If you find the report useful and you don’t live in Australia, you can buy the next Australian you meet a beer; it was his or her taxes that paid for this amazingly useful report. I know I will be keeping my copy handy for a very long time to come.

Chief Executive Officer’s editor, Michael Jones, is featuring an excerpt from my book, Stakeholder Relationship Management, A Maturity Model for Organisational Implementation. CEO is an online industry resource for senior executives.

The excerpt Why stakeholders matter follows the saga of the Heathrow T5 from construction through to its public opening in 2008, and examines whether the passage of time can alter those perceptions. To read the full article go to: http://www.the-chiefexecutive.com/features/feature68469/

When beetles battle beetles in a puddle paddle battle and the beetle battle puddle is a puddle in a bottle…
…they call this a tweetle beetle bottle puddle paddle battle muddle.
Excerpted from: Tweetle Beetles, ‘The Fox in Socks’, by Dr Seuss

The connection between a book written to be read to under 5s and business stakeholder management is the ‘puddle muddle’ otherwise known as the stakeholder pool. The challenge of managing stakeholders is a factor of the disturbance caused by dozens if not hundreds of battles most of which, the person attempting to efficiently manage his or her stakeholders has no control over whatsoever.

Most stakeholder management methodologies start by assessing the stakeholder from the perspective of the work. This is not unreasonable but can easily miss many important factors.

Figure 1: The Stakeholder Pool

Figure 1 shows ‘the stakeholder’ in the overall stakeholder pool being influenced by the ripples created by your battle in your part of the pool (your puddle). Unfortunately the stakeholder pool is a much bigger, more turbulent place.

Figure 2: the Stakeholder Pool with turbulence

Show some of the other disturbances in the pool and you start to see the stakeholder buffeted by waves and impacts from all directions, in Figure 2. ‘The stakeholder’ is continually being buffeted by waves from other projects, the organisation and many other influences. These other waves are one of the prime reasons stakeholder responses to your perfectly reasonable needs or suggestions are frequently so unpredictable. All of these influences, both current and past have helped shape the stakeholders perceptions and attitudes towards your industry, your organisation and ultimately, you.

Consequently, a single view point is really not sufficient! Effective stakeholder management needs an organisational approach. Successful stakeholder management requires all of the influences perceived by the stakeholder to be coordinated and authentic. And this can only be achieved by the organisation as a whole adopting mature, ethical stakeholder management as a core discipline.

Very little has been written about mature organisational stakeholder management until recently. To date, the focus of most papers have been one dimensional focusing on CRM and the ‘customer experience’ or one dimensional focusing on the relationship between the stakeholder and a project (or other organisational activity).

My new book, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation, takes this next step to define the interaction between the organisation as a whole and its stakeholders using the Stakeholder Relationship Management Maturity (SRMM®) model.

Effective and ethical stakeholder management cannot happen overnight and cannot happen in isolation. The preconceived perceptions of stakeholders towards your work are based on multiple experiences over an extended period of time, and the stakeholder-to-stakeholder conversations that occur outside of your hearing or control. To actively improve these conversations and create a positive and supportive stakeholder environment needs a long term consistent effort, organisation wide.

The SRMM model offers a practical framework that can be used by organisations to build from ad hoc, single project attempts to manage stakeholders to a situation where stakeholder management is a core skill used by the organisation as a whole to maintain a competitive advantage. As with any culture change, this cannot happen overnight but at least my book provides a road map organisations can use to improve their management of stakeholder relationships to the benefit of both the stakeholders and the organisation.

Stakeholder Relationship Management: A Maturity Model for Organisational Implementation is published by Gower, ISBN: 978-0-566-08864-3

I have been involved in a series of posts on both my SRMM Blog (see post) and the PMI Voices on Project Management blog (see post) that have stirred up sections of the agile software development community.

Despite the Agile Manifesto focusing on providing excellence to stakeholders, many Agilists seem intent on advocating their rather extreme view of agile including no documentation, little planning or architectural design and less control. The mantra is ‘give the software developers free reign and you will get better software’. Whilst this may be true (although I somehow doubt it in anything but the smallest and simplest projects) it ignores the needs of the project’s key stakeholders.

Most IT projects exist to enhance the capability of the organisation. Consequently the software development is only one part of an overall project to change the organisation, deliver new capabilities or similar. In these typical circumstances, the IT component needs to meet predetermined requirements; any change in the IT capability delivered requires changes in other parts of the project. In fact the best IT solution may turn out to be an unacceptable business solution.

Meeting the needs of the businesses key stakeholders demands discipline and communication not just within the ‘scrum’ or XP team but to the customer’s managers. This needs at the very least a minimum of documentation to prove the IT team and its immediate customers understand their scope of work and other constraints and know how they will achieve the outcomes needed to support the business. Adequate documentation and effective communication are essential.

This post is not suggesting a return to Waterfall or other heavily documented software development process (they don’t work very well anyway – refer the Standish reports) but rather for an appropriate level of documentation to meet the genuine needs of senior management stakeholders. Saying ‘trust me’ is not enough and is not good stakeholder management.

Identifying the key stakeholders, assessing their requirements and expectations and then managing these key relationships so the stakeholders realistic expectations can be realised definitely involves up-front planning and effort, needs tools and methodologies such as the Stakeholder Circle® and involves on-going monitoring and control but is, I would suggest, worth the effort. Your project is unlikely to be seen as successful if the stakeholders expectations are not realised!

In most aspects of life the long term enjoyment of real freedom required a significant measure of self discipline. The agile extremists may do well to consider this and focus on meeting the needs and expectations of all of the stakeholders involved in their work.

The only purpose of undertaking any business activity is to create value! If undertaking the work destroys value the activity should not be started.

The Value Chain

Any value proposition though is ‘in the eye of the stakeholder’ – this is rarely solely constrained by either time or cost. Effective value management requires an understanding of what is valuable to the organisation and the activity to create value should be focused on successfully delivering the anticipated value.

The chain of work starts with a project or similar activity initiated to create a new product, service or result. However, the new output by itself cannot deliver a benefit to the organisation and the project manager cannot be held responsible for the creation of value. The organisation’s management has to make effective use of the output to realise a benefit. It is the organisations management that manages the organisation and these people need to change the way the organisation works to realize the intended benefit. The role of the project team in value creation is to ensure their output has all of the necessary characteristics and components to allow the organisation to easily adopt the ‘new output’ into it’s overall way of working (eg, effective training materials).

The outcome from making effective use of the output is expected to create a benefit – however to realise a benefit, the outcome needs to support a strategic objective of the organisation. If the outcome is in conflict with the organisations strategy, value can still be destroyed. Strategic alignment is not an afterthought! The processes to initiate the project should have as a basic consideration its alignment with the organisations strategic objectives.

Assuming strategic alignment is achieved, the realised benefits should translate into real value. The challenge is often quantifying value – the concept of ‘value drivers’ helps. Value drivers allow the benefit to be quantified either financially or by other less tangible means.

In the current economic climate, organisations are finding operating capital in short supply. Therefore a new process to accelerate the billing cycle can be measured at several levels:

• The output from the activity to develop the new billing process is simply the new process – this has no value.
• Once the organisations management starts using the new process the measurable outcome is a reduction in the billing cycle from (say) 45 days to 32 days.
• The benefit of this reduction in the billing cycle could be a reduction in operating capital needs of $500,000.
• The value of this reduction is $500,000 at 12% interest = $60,000 per annum.

The above example may also trigger additional value by allowing the capital to be redeployed into another profit generating activity, improving customer relationships, etc.

Once the whole organisation is aware of the value proposition, decisions to de-scope the initial work to meet time constraints and/or cost constraints can be made sensibly.

• A decision to de-scope the project to achieve a 2 week saving in time that results in a 6 week longer implementation period (eg, by reducing training development) is clearly counterproductive.
• Similarly a decision to de-scope the project to avoid a $5,000 cost overrun that changes the reduction in the billing cycle time from 13 days to 6 days will result in a halving of the capital saving and a cost increase to the organisation of $30,000.

The challenge is identifying and communicating the value drivers to all levels of management involved in the activity so that valuable decisions are made in preference to knee jerk gut reactions focused on short term, easy to measure metrics.

Value is created by meeting the strategic needs of the organisation’s stakeholders – this requires careful analysis and understanding of who they are and what are their real requirements; ie, effective stakeholder management.

For more ideas on the realisation of value, see the work by Jed Simms at: http://www.valuedeliverymanagement.com/

For more on effective stakeholder management see: http://www.stakeholder-management.com