Some say change is the only real constant in the universe – the one thing you can count on is that everything changes. However, there is something else we can count on, change always brings with it uncertainty.
And this why in order to achieve project success we look for better ways to manage change or at least reduce the effects that uncertainty brings.
Now, when it comes to change you will hear folks talk about the technical side of change. This has to do with performance related to cost, schedule, and the achievement of technical objectives which all must be managed properly in the context of change.
You will also hear others talk about the people side of change. This has to do with changing behaviors which is also necessary in order for us to realize different and hopefully better outcomes from the capabilities that our projects create.
Both of these are important, the technical side and the people side of change. However, in this blog post I would like us to take a step back and look at projects and change more holistically.
Because it is my belief that sometimes when we focus on the parts, we can lose sight of the whole and miss out on the bigger story.
All Successful Projects Create Value
And the first thing I want us to see when we look across projects no matter what domain you are in is that every project changes something. All projects transform something of value into something of greater value. All projects do this, at least the successful ones. We use valuable resource: our time, our money, our people; to create something new, usually a new capability that we hope might generate different and better outcomes for our business, organization or the public at large.
We all know that for projects to be successful they must create value and that this value should exceed the value of the sum of its parts used to create it. You could say that this difference is a measure of success. But at least we can say that for projects to be successful they must create value.
How Value Is Created
With the important that projects have on the creation of value it is worth our time to look more closely at how value is created and for this I will be leveraging the work by Michael Porter, Harvard Business School Professor.
Porter developed what he calls the value chain analysis to help companies identify strategies to improve their competitiveness in the marketplace (an adapted version is shown above).
What Porter and others propose is that value is seen through the eyes of the customer, or in the case of projects, the stakeholders who have invested their time, resources, and people in order to achieve a certain outcome.
The set of capabilities used to create these outcomes form what Porter calls the Value Chain. A company can evaluate the effectiveness of value creation by assessing whether or not they have the needed capabilities.
This perspective has utility for us when we consider projects. Although a project will have a different set of capabilities it is these capabilities nonetheless that create the desired change we are looking for. If a project is not performing, then you might look at whether or not it has the capabilities to effect the needed transformation.
To Improve Value You Need to Measure It
Porter suggests that we can measure the value created by the value chain. Essentially it is the difference between what something is worth, and the cost needed to create it. This he calls margin and improving margin is an important objective for business success.
To improve margins, you improve the productivity of the value chain. That's what technology does, and HR, and procurement, and so on. All of these activities keep the value chain functioning as efficiently as possible and it does this by means of cost reduction and operational excellence.
This approach has utility for us also when it comes to projects. We need to pursue excellence to keep our projects as productive as they can be. This should be the focus of every PMO and every project manager. We need to pursue excellence and by doing so we can increase a projects value.
Conceptually, this is as far as Porter takes the value chain. However, we need to take it further. Why? Because there are other outcomes that are valued that need to be achieved both for businesses as well as projects.
There are Other Outcomes to Achieve
These include: quality, safety, trust, sustainability, reliability, and others. These are less quantifiable than technical objectives but are no less valuable and are equally necessary for both mission and project success.
And it is these outcomes where we have greater degree of uncertainty in terms of:
What the outcome is - how do we define it
What the transformation looks like - and by this, I mean the plan to effect the desired change in outcomes, and that
The change itself can be and usually is a significant source of risk.
And that is why high performing organizations including project teams will establish another set of activities to protect the value chain to ensure the achievement of all the planned outcomes including the ones listed here.
These are collectively called risk and compliance programs. The purpose of these programs is not to create value or improve margins, although they often do, but instead they reduce risk to ensure that the planned outcomes themselves are achieved.
This is the purpose of all risk and compliance programs to keep companies between the lines so that they do not jeopardize their chances of success.
You could say that both, Operational Excellence and Risk & Compliance Management are the guardrails that protect against failure and help ensure success for organizations and this is no different when it comes to projects.
Why Is This So Important?
This is important because when uncertainty is left unchecked and risk has become a reality not only do our projects fail but so do the businesses and organizations that depend on them.
Mission success requires project success and risk threatens them both.
Each of the photos in the first picture are examples of failures where change was not managed, or too much change was taken on, or when change itself exposed latent or new risk.
For companies to succeed so must their projects and for that to happen they need to effectively contend with risk in the presence of change.