New Core Competence: Successfully Delivering Projects & Programs

Core competence is a central concept in strategy¹. But perhaps the most ‘core’ of all organizational competencies relates to successfully executing on strategy. Specifically, the ability to distil strategy into a range of projects, initiatives and programs and to execute on them effectively.

This new ‘project and program competence’ is key to the success of ambitious strategies ranging from digital transformation to organizational change.

A New Competitive Advantage

Some organizations enjoy a higher batting average when it comes to the success of critical projects and initiatives. They are not just luckier, but more skilled and capable in planning, management and delivery. For them, it is a core competency – a source of competitive advantage. Here we explore what that means for your organization:

• What is your business unit or organization’s pedigree in respect of project, program and portfolio management?
• Does it have the competencies, processes and structures that are required to consistently deliver those complex and ambitious projects and initiatives that drive business success?

A New Core Competence

Bringing strategy to life via projects, programs and initiatives is rarely found within the standard list of organizational core competencies.  Yet it is a multi-million-dollar competency given the budgets of the projects involved and their importance to the sustained performance of the organization. Not only is it core, but it is also complex demanding a diverse range of techniques, mindsets and skills (including leadership, strategy, project management, agility and so on).

Excellence in delivering projects and initiatives is not naturally occurring, however.  If it were, then we would not be faced with the dismal statistics regarding project failure. 

The Next Six Sigma?

Successfully delivering on projects and initiatives is an important organizational competence – one that must be nurtured and developed over time. In this way it is the same as any other organizational competence – ranging from Six Sigma levels of quality or the ‘Great Place to Work™’ designation.

Indeed, Six Sigma is a particularly interesting comparison. If an organization commits to delivering quality levels of 99.99966% (defect free), then what is the threshold for the successful delivery of projects and initiatives?²

Organizational competencies in project, program and portfolio management yields benefits across all business domains. It does not matter if the project or initiative is in the realm of Digital Transformation, Organizational Change, Driving Performance or Accelerating Growth & Innovation. All are likely to benefit from a higher rate of project and program success.

One often-quoted study measured the success of a strategy in terms of the % of the goal(s) set that were realized. The ‘magic number’ was 63% – as in typically strategies only realize 63% of what they aimed to achieve³,

Now imagine if boosting the capacity to deliver on strategy by 10-20% could boost the % realized by a similar amount. For a strategy aiming to deliver $10 million revenue, boosting ‘project-execution competence’ by 10-20% could potentially boost results by $1-2 million. Now multiply even a proportion of that across the 50, 100 or 150 projects, initiatives underway across your organization at this time. That is a compelling business case!

How Are Projects & Programs Being Managed?

In assessing how confidently a portfolio or program of projects and initiatives will deliver on the organization’s strategic ambition, it is natural to look to project status and results. That is the focus of our first 2 steps. However, it is also important to look to the process by which those results (on time, under budget, etc.) are delivered. 

The question is:  To what extent has your organization got the capabilities and processes, systems and structures to consistently deliver successful projects and initiatives?  Executives may offer their perspective on this question, however, nothing speaks more clearly about the program and portfolio management capabilities of an organization, than its track record in delivering complex and ambitious projects. 

So, what does your organization’s track record of project delivery reveal about:

• Its level of competency or sophistication in this area? 
• What strengths are evident? 
• Where might the gaps be?
• Who owns the responsibility for developing this area?
• What is the strategy being employed for its development?

For some organizations project success is an organizational competence, for others it is a department. For more it is both.

What’s the Role of the Project Management Office?

As you start reading this section you may be preparing for a barrage of initials such as PMO, PPMO, EPMO or OSM, CXO and so on.  This would be inevitable in any exploration of who manages or oversees the portfolio.  However, our research is primarily concerned with what effective project, program and portfolio management looks like, rather than where it happens. 

Of significantly greater importance than the title of the department that assumes responsibility for or oversight of the project program or portfolio, is how it does its work.  In particular, whether it seeks to manage and control, or to coach and support key projects or initiatives and the teams running them.

Rightly or wrongly, project management has fallen from grace within many organizations. It is often seen as being bureaucratic and is tarnished by a legacy of failed or floundering projects. But let’s not let that cloud the issue. The requirements of successfully executing on the strategy goes beyond any one function or department. It is an organizational capability rather than a specific department.

Two Styles of PMO

Most PMOs (or their equivalent, whatever it may be called) are to be found on a continuum between two different styles or approaches to project, program and portfolio management:

• At one end of the scale are those who take on the role of a cop with the aim of enforcing compliance and threatening sanctions. 
  
• At the other end of the spectrum are those PMOs that take on the role of coach – they aim to boost project success by building awareness, developing skills and providing support. 

Based on its style or approach, where is your PMO on the scale from cop to coach (shown below)?  More important still, how is your PMO seen by its stakeholders – that is by project sponsors, senior executives, project teams and so on? 

Cop Vs Coach

Questions often arise as to where a PMO should be on the scale above.  The easy answer is ‘5 or higher’, but a more nuanced answer would be: ‘it depends!’

No two PMOs are alike, just as no two organizations are the same.  What is best varies from organization to organization, depending on factors such as culture, structure, strategy and so on. 

If you were to contrast the two PMO styles – cop and coach – the following differences (see image) would emerge.

Balancing Bureaucracy & Agility

Obviously, ‘management’ is a key word associated with projects, programs and portfolios.  Closely related are the words ‘visibility’ and ‘control’.  The need for control and how it is exercised is a key distinguishing factor between PMOs:

• The ‘PMO cop’ aims for centralized control, corralling projects and initiatives through a bureaucratic process that provides greater visibility and standardized efficiency. 

• The ‘PMO coach’ seeks to balance autonomy and control, ensuring that the people running the projects or initiatives are empowered to succeed.

The challenge for PMOs is to balance the need for visibility and control, with the need for speed and agility.  This is a key distinguishing factor between the two contrasting styles.  But to understand why it matters we need to look at the nature of the work in hand and in particular the level of complexity inherent in those projects within the portfolio.

Managing Complex & Ambitious Projects

Some projects are easier than others. As such, they can be executed in a linear manner by carefully following a project plan and Gantt Chart. There is a tried and trusted path to follow. Surprises and setbacks are few and the demand for creativity and innovation is limited. Here traditional more bureaucratic or control-driven project management methods may be all that is needed. However, such relatively straightforward projects neither test or reveal the organization’s competence in projects or project portfolios.

To see how sophisticated the organization’s approach to project management is, we need to look at how it delivers ambitious projects that require speed and agility. Such complex projects have many moving parts and are more unpredictable or difficult to manage. While setting out with a plan is important, rigid adherence to a plan can be dangerous. 

Bureaucratic top-down controls, with cumbersome approvals processes and slow to act committees, are a major impediment to the success of projects that require speed and agility, as well as collaboration and innovation. 

Authority must be delegated to those closest to the decision.  For example, rather than having to produce documents and present before committees, executives are empowered to adjust the approach when the plan is not working, or a previously unseen opportunity or challenge emerges.

Rather than providing a rigid set of processes that must be followed without deviation (think railway tracks), the objective is to provide tools, frameworks and guidance that help those running projects to maximize their success and to tackle key project risks (think roadside crash barriers).

For complex projects and initiatives, the path from strategy to success is not a straight line. Because it is difficult to ‘see around corners’ an agile approach is important, with innovation and fast learning enabling the project to adapt based on what is working, rather than what is set out in the plan.

Is Your PMO Fit for Purpose?

Typically, the PMO is a logical extension of the organization and its style of management. It is, after all, born of the organization and steeped in its culture. So, an organization that is bureaucratic and hierarchical will likely have a PMO that operates similarly. If projects and initiatives must be delivered with speed, innovation and agility, then such a PMO may not be fit for purpose. 

Where the PMO must be an instrument of change, it must manifest those changes in the approach it adopts. In an increasingly complex and dynamic environment, the path from strategy to success is not a straight line.  Rather there are many twists and turns and seeing around the bend is not easy.  To deliver complex ambitious projects, PMOs must foster speed and agility, as well as innovation and cross-functional collaboration. 

To quote that famous saying the PMO ‘must be the change that it seeks in the world’. If a PMO wants to successfully deliver complex and ambitious projects then it must be agile, collaborative and innovative.

Challenges arise when the organization applies rigid traditional methods of project management to complex ambitious projects. The challenge for all PMOs is to optimize projects, programs and portfolios without turning to the traditional bureaucratic controls that stifle speed, agility and innovation.

For the PMO cop, an agile approach to project management can sound like a ‘free for all’ that will likely result in chaos. However, it is possible to strike a balance between autonomy and control.  Think of it as a ‘loose tight’ approach. It is ‘loose’ in that teams are given autonomy, but simultaneously ‘tight’ in that they but act within a set of tightly held principles. Such principles might include the role of the business case and external validation in project approvals, or the role of effective project reviews and cross-functional collaboration in how projects are run.

Indicators of Project Management Excellence

What are the tell-tale signs of effective project, program and portfolio management?  That is, the practices and behaviors that indicate whether an organization is playing ‘at the top of its game’ when it comes to executing on its strategy. 

Our research points to 6 leading indicators of project, program and portfolio management excellence (as shown in the diagram). Find the detail behind each of these factors here.

These factors go beyond the style or approach to the specific practices involved. In this way it is a helpful playbook, regardless of whether you have a PMO or not and how its role is defined.