Why It’s OK to be Paranoid About Performance!
Is Rising Internal Complexity a Risk to Your Ambitious Plans?
Many organizations are playing ‘whack-a-mole’ with priorities, projects and initiatives. No sooner do they scrap one project, but another appears. Thus, while consolidation has been widespread, its impact has been limited.
In ambitious organizations there will always be more projects and initiatives, than available resources. Priority ‘whack a mole’ points to the need to ensure focus and alignment re key business needs and priorities.
- Project Consolidation: Two-thirds of leaders report that projects have been scrapped (average of 3.71 affected projects).
- Project Proliferation: Despite widespread consolidation, 84% of leaders say there are too many projects and initiatives competing for scarce time and resources.
- Driven by Ambition: The reality is that in ambitious organizations there will always be more projects and initiatives, than available resources.
- ‘Whack-a-Mole': Leaders can find themselves playing ‘whack-a-mole' with priorities and initiatives. Especially during times of market uncertainty, when business needs and priorities are in flux.
- Prioritization: Not all priorities and projects are equal. The key is to ‘whack' only those priorities or initiates that are not strategically important. However, Project whack-a-mole is far from the textbook approach to effective resource allocation, or successful execution.
- Decision-Making: Decisions regarding priorities and projects are far from 100% perfect, even at the best of times. Making the right decisions becomes more difficult at a time of market uncertainty when cost-cutting and consolidation can outweigh considerations of strategy.
- Root Cause: ‘Whack-a-mole' is just a symptom. At the root of the issue is strategic focus and alignment in a dynamic environment where business needs and priorities are changing. Also, where leaders must balance the need for today's performance with the requirements of tomorrow's transformation.
- As leaders point out, few projects are a nice to have, rather they are a business necessity. Moreover, saying ‘no' or ‘not now' to projects or initiatives proves very difficult, especially when they come from the top (or from corporate).
- The Solution: Improving focus and alignment is key to addressing the issue – consolidation alone is insufficient. A key question is:, How to dynamically align resources, enabling them to flow to where they are most needed.
Pause to reflect: Are you playing ‘whack-a-mole with projects and initiatives?
- What is the level of clarity and alignment re business needs and priorities? How well is this reflected in project resourcing decisions?
- Do you have too many projects and priorities competing for scarce time and resources?
- Is there an effective process for decision-making and resource allocation around priorities and projects?
- How well does your strategic portfolio reflect business needs and priorities or balance the need for performance and transformation?
- Have there been any unintended consequences or collateral damage resulting from efforts at consolidation?
How Effective has Consolidation been?
Two-thirds of leaders (66%) say they have had projects or initiatives scrapped or stalled, with the average number of projects affected being 3.71. That sounds impressive, doesn't it?
With that rate of consolidation, you would expect project proliferation to be a thing of the past. Yet, the numbers tell a very different story!
Most leaders (84%) still believe there are too many projects & initiatives competing for time, attention & resources. How could that be? Well, the reason is a surprising one: Organizations are playing ‘whack a mole’ with projects and initiatives. No sooner do they scrap one project, but another appears. Thus, while consolidation has been widespread, its impact has been limited.
No sooner do they scrap one project, but another appears.
Making the right decisions about priorities and projects becomes more difficult at a time of market uncertainty when concerns about cost-cutting and consolidation outweigh any considerations of strategy.
As leaders point out, the level of discretion around projects and priorities is limited. Few projects are a nice to have, rather they are a business necessity. Saying ‘no' or ‘not now' to projects or initiatives proves very difficult, especially when they come from the top (or from corporate). Moreover, a ‘gung-ho' approach to projects and initiatives means that people may be less likely to question whether a project can or should proceed (at this time).
In pressurized situations, the decisions made are unlikely to be as considered, coordinated and consistent as they should be. In playing ‘whack-a-mole’ it is inevitable that some projects will get whacked, that shouldn’t, while others get missed. The result is a project portfolio that does not fully reflect key strategic priorities. The fact that many leaders don't have full visibility of the portfolio of projects and initiatives doesn't help.2
While it is a key leadership skill, disciplined prioritization is something that organizations are still grappling with. However, this is a complex issue. Seeing the failure to effectively consolidate projects and initiatives as a lack of leadership discipline or an organizational weakness may be overly simplistic. Rather, it must be seen in the context of issues such as alignment, ambition and even transformation.
Seeing the failure to effectively consolidate projects and initiatives as an organizational weakness may be overly simplistic.
What is the Root of the Problem?
The problem is that most project consolidation efforts only tackle the symptoms of project proliferation. At the root of the problem are fundamental challenges around strategic focus and alignment. These challenges are aggravated by an old-fashioned approach to strategy that is based on hierarchy, functional silos and an outdated approach to resource allocation (centered on traditional planning and budgeting cycles).
It is a reactive, inefficient and imprecise means of dynamically aligning scarce organizational attention and resources.
Inevitably, efforts at consolidation are going to struggle unless they are accompanied by improved focus and alignment. Furthermore, unless there is a more dynamic and effective approach to resource allocation that reflects changing business needs and priorities.
You could see ‘whack-a-mole’ is a symptom of poor strategy. As being a reactive, inefficient and imprecise means of aligning scarce organizational attention and resources. It is, after all, far from the textbook approach to successfully executing on strategy.
However, we have started to see proliferation as an organizational reality, rather than simply a problem. There are always going to be lots of projects competing for scarce resources (and even more scarce management time and attention). What really matters, however, is the sub-set of critical strategic projects and initiatives (i.e. the strategic portfolio). The rest is a sideshow or distraction in terms of strategy.
Decisions around projects (which ones to invest in and to divest from) should be among the most carefully made of all business decisions. Yet, where project whack-a-mole is evident, the decision-making and resource allocation process is most likely flawed.
However, decisions around projects and priorities are never going to be 100% perfect, especially if (as happened over the past 12 months) those decisions are driven more by short – term financial expediency, rather than strategy. They may also be driven by a range of non-business related factors, such as personalities and politics.
How does Ambition Drive Proliferation?
Viewed through a positive lens, the proliferation of projects and initiatives supports the notion that this is the most ambitious generation of leaders yet!
For decades, leaders were told to dream big – to shoot for the moon – to set not just goals, but ‘big hairy audacious goals’. Leaders have embraced this message.
Despite economic uncertainty, our data shows that corporate ambition is up and this ambition is inevitably expressed through new projects and initiatives across the organization.
As one CEO put it: ‘We see so much opportunity and have so much ambition. That makes it tough to stay focused and not take on too much!’
…this is the most ambitious generation of leaders yet!
Telling leaders to rein-in their ambition is not an option. However, project ‘whack a mole' raises questions regarding the basis upon which project decisions are being made:
- It raises first mile questions, including the level of rigor applied to highly ambitious and potentially over-hyped project investment decisions.
- It warns of the need to slow down in making commitments to ambitious projects and initiatives in order to speed up in their execution.3
More fundamentally, project ‘whack-a-mole' questions an organization's ability to deliver against its ambitious strategies. It can be a tell-tale sign of:
- A lack of alignment where key organizational stakeholders are pulling in different directions
- A knee-jerk reaction to changing business and market needs or a zigzag approach to strategy
- A failure to make strategic choices and the required tradeoffs or to effectively bridge the gap between strategy and execution.
Here is how one CFO put the challenge: ‘We have been asking ourselves whether the real issue is about projects or prioritization? Most projects are valid and worthwhile, but resources only stretch so far! It starts with getting alignment behind a key set of priorities.‘
…transformation means more projects and initiatives – especially those business unusual initiatives…
Project ‘whack-a-mole' makes transformation more difficult, however. An ad-hoc and reactive approach, where projects are continuously coming and occasionally going, often indicates an organization struggling to adapt with confidence to changing business needs & priorities. Most at risk are those future-focused and innovative projects that fall into the business unusual category.
How does Transformation Drive Projects?
The proliferation of projects is also evidence of the transformational load underway within organizations:
- On average, leaders say they are involved in 7 transformation initiatives, with one in 5 leaders being involved in 10 or more.
- However, each of these initiatives could contain up to 20 projects.
So, do the math, and it is easy to see why (despite attempts at consolidation) project proliferation remains an issue.
Putting transformation on hold for project consolidation would likely be a mistake. This transformational work is essential and will continue for some time yet – as can be seen from the following numbers4.
- Leaders expect their organizations to experience 73% change and disruption.
- Leaders say their organizations are (on average) 60% ready to capitalize upon & profit from future change/disruption.
For decades, leaders have been warned that: ‘Only the paranoid survive’. As the above transformation data suggests, leaders have embraced the zero-complacency message about future change and disruption. Indeed, it could be argued that today’s leaders are transformation-aware, like never before.
The downside is that transformation means more projects and initiatives – especially those business unusual initiatives that often find themselves at the end of the list when seeking resources. Here is how one COO explained why this matters: ‘With the cancelling of projects we have very much returned to BAU (business as usual) mode. The thinking is now much more short term, which may be a little myopic'.
‘As we raced ahead in the execution of our strategy, it became clear that something was wrong' explained the leader, adding ‘There was a wobble at the front wheels!' ‘Rather than being 100% focused and aligned, we found ourselves being pulled in many different directions.'
Using Pitstop Analytics, the leadership team's alignment score was 68% – that was the figure for clarity and alignment re results, priorities and purpose. This number was related to a range of other variables such as the number of projects and initiatives and confidence in resource allocation decisions.
Fast-forward 3 months and alignment had risen to 81%, with the completion of Pitstop to Align by the leadership team. The result was a growing sense of confidence that the team that was moving not just in the right direction, but at the right pace too.
So, Is Consolidation Futile?
The ‘whack-a-mole' data points to the futility of many consolidation efforts, especially in the absence of more fundamental strategic work. But does that mean that leaders should give up on stand-alone consolidation initiatives?
Some might argue that any consolidation is welcome and that some consolidation is better than none. They might ask: ‘If the efforts at consolidation had not been attempted, what would the number of projects be?'
However, consolidation is not a universal blessing. In 2022, we predicted that consolidation initiatives would save some organizations, while costing others millions. A key distinguishing factor is the basis for the cuts and consolidation decisions. Specifically, would it be:
- An impulsive decision driven by short-term expediency
- A strategic decision based on logical analysis and long – term joined up thinking.
Consolidation is the easy part, the hard part is alignment. You need to do both together. If you're going to cut and consolidate with surgical precision then focus and alignment is essential.
Consolidation is the easy part, the hard part is alignment. You need to do both together.
What are the Dangers of Whack-a-Mole?
Whilst it may not be a surprise, unrelenting project proliferation is dangerous. The dangers include:
- A greater risk of project setbacks and disappointments, even failure
- A scatter gun approach to projects and the failure to set projects up for success. In particular, the first mile of the project and its business fundamentals – factors that typically are scored (by project leaders, stakeholders and teams) at between 63% and 71% for most of strategic initiatives using our analytics.
- Dissipation of scarce resources and a failure to invest sufficiently on those most important projects and initiatives
- Projects can take on a life of their own, becoming focused on their own goals rather than on business needs (what we call project myopia)
- Siloed decisions regarding projects. Rather than stand-alone decisions, organizations need to develop a portfolio mindset. This enables:
- Synergies to be leveraged and knowledge or resources to be shared across the portfolio.
- Linkages, connections and dependencies between projects to be managed.
- The effective sequencing and timing of projects and initiatives (e.g. they cannot and should not all start simultaneously).
- Leaders find themselves juggling many projects and initiatives, struggling to give them the time that they need and burning themselves out in the process
- It can start to feel a big chaotic or out of control (what we call C2 levels of complexity).
((Credits: Whack-a-mole gif from Refresh Records on Giphy))
This insight emerged from strategic conversations with business leaders on the requirements of delivering today's performance & tomorrow's transformation. It is part of our most exciting research yet:
SOLUTIONS & SERVICES: Here are some of the ways that our research & insights are put to work by our clients:
- While leaders in our research put the rate of consolidation at 66%, the de facto rate is probably higher. With increased pressure on resources, most projects are trying to do more with less. So, there is a powerful-hidden consolidation drive underway within most organizations.
- Many leaders struggle to answer questions such as the number of projects that are under way, the total invested in projects, the number of projects that are succeeding or struggling and so on
- Of course, the temptation would be to create a range of bureaucratic processes and procedures to kill off projects before they get started, or at least two better vet those initiatives that will receive funding. However, most organizations already have too much bureaucracy and worry that it is slowing them down in responding to emerging opportunities and threats. Effectively balancing agility and rigor is the challenge.
- The details of this research by Growth Pitstop can be found here