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Balancing Short-Termism with Systems Thinking: The Enterprise

“If there is mounting pressure to deliver short-term results at the enterprise level, then the first step in resisting the pressures of short-termism is to correctly identify their source, but what is the root cause of short-termism at the enterprise level?”

Short-termism in big business is still under debate for some people. One of these naysayers would inevitably point out that if there was really an issue then there should have been a downturn in corporate profits over the last fifty years. We’ve been doing okay, there has been a suspicious lack of such a trend, but it is also self-evident that indigenous innovation has been dropping since the 1970s. Corporations aren’t coming up with as many truly new ideas. We aren’t solving the big problems. That’s perhaps why we are still driving on non-renewable resources and all our cellphones, movies, computers, and clothes seem to be the same. So, the symptom of short-termism is not a change in profits, but the level of innovation and growth in corporations.

There are still innovative ideas, but it seems to be the trend more and more for big business to acquire innovative small businesses rather than invest in becoming innovative themselves. This conscious decision to forego innovation is solving the short-term need to put out a new or improved product, but only temporarily. The small innovative company is absorbed and constrained by the same red tape. But there is only so much a corporation can acquire before it becomes too cumbersome to react accordingly to the market.

Corporations were not always fixated on the short-term. At one time, they were a positive force that invested in their workers and new technologies, everyone was prospering, but then slowly and over the course of a few recessions, something changed. With this change, the world seemed to speed up and organizations started playing with a quarterly mindset. They had very little consideration for innovation or issues that cannot be solved in the term of ninety days. By continuously absorbing smaller companies, we are just making it harder and harder to make innovative fundamental corporate improvements, but why? What is the root cause of this disease?

The corporations that absorb small businesses are eliminating the competition. They are identifying areas for profit and revenue, as well as expediting innovation, to the point that innovation-through-acquisition inevitably becomes the cheaper option. The reality is that the pain of not doing anything right away is just as painful as when the symptoms returns. Corporations maintain this toxic loop to maximize shareholder value as reflected in the current stock price. For as long as the stock market and the government continue to operate on the short-term concepts, big business will follow.

Breaking this rather dangerous cycle might be impossible, but the ramifications can still be alleviated by first admitting that these corporations are in fact applying a quick fix that creates bigger issues in the next decade. After admitting the we are merely easing the indicators, we can start considering how to enhance long-term incentives and making slow-gestating innovative concepts less risky. In the business world, this might be adjusted tax codes, a reevaluation of corporate governance laws, and spread out compensation packages, so that perhaps we can start solving some of yesterday’s problems with tomorrow’s innovative ideas.

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Project Management: Governance & Approvals

“If I want to have a focused project with a uniform approval process, then I need to have strong governance principles, but I am not sure how to build a foundation of good governing practices.”

When I hear, someone mention the term “governance,” I automatically think about men in powdered wigs standing around shouting at each other. I can’t really tell you why my brain automatically goes to the 18th century, but the term, governance, nevertheless speaks to the same set of policies, regulations, functions, processes, procedures and responsibilities that define an establishment, a government governs their people.

In the project world, it is the management and control of projects, programs, and portfolios. In this governance, the goal is to provide clear and uniform oversight of projects at the management level by formal review and strategic decision-making. A review is an assessment by upper management as well as the uniform evaluation of deliverables as they are being constructed.

A good project manager is not only someone that can communicate effectively, but that has the forethought to continuously prepare throughout the project cycle. Good governance has been a serious topic for centuries, so there is lots to it, so let’s put on our powdered wigs and contemplate actions that would build clarity and establish harmony during a project…

As I mentioned before, there are many different types of governance. Corporate governance defines your organizational line of authority and responsibility, the true powdered wigs. You need project governance to ensure that your decision-making process is as streamlined as possible. Establish a clear line between the two. This will help to define your own line of command for yourself as well as your team, because this is not a short process, project governance starts at the very beginning with the business case and continues past the final review of the deliverable.

In the beginning, with the business case document, you are making a case for why this project should be accomplished and what the exact benefits will be. If these points are not stated clearly up front, then there is little chance you’ll gather the support or teamwork necessary to produce a good product, so no point worrying about governance. At the start of every project, you and your team should have and understand this clearly defined purpose. With this purpose, your team has a focus and can, therefore, single-mindedly create goals for the project cycle.

As the primary wig wearer, how are you going to communicate? Who is going to approve what? This should be established early in the project. You should have a communication plan for all key stakeholders, including your sponsor, the client, the team members, as well as all the other important stakeholders. This is sometimes a regular email or meeting, but rather than taking sole responsibility, you can assign spokespersons to key stakeholders, but updates should remain separate from approvals.

You should have a clear division so that when decisions are needed, setup focused sessions with this select group only. If you include decisions into broader sessions which involve your other stakeholders, the session will become more about getting people up to speed, thereby losing focus and negatively impacting your ability to get to a decision point quickly & efficiently. Having both established at the beginning, promotes project confidence and stability, since you won’t be scrambling to put anything together in the middle of everything else.

Even in the 18th century, people had to work for their wigs, because they were a sign of maturity and authority. Attaining a sense of ownership as a project leader is a similar process, but make sure that the team feels that some ownership is important. After you and your team possess it, you have a single point of accountability promoting empowerment and ownership. You successfully ensured that nobody should be standing around confused about what they should be doing. To get that ownership, everyone should know from very early in the project who is needed for which type of decisions and why. By defining this upfront you’re ensuring less confusion further down the line should an issue or critical decision point bubble up unexpectedly.

The formation of good project management practices takes time, and this is just the beginning of true and meaningful project governance. Yet, building a project foundation with these qualities means that your project has focus, and a uniform understanding of what is expected. You want good governance, because it provides you and your team with solid accountability, strong strategies for project formation, honest disclosure, a definite Business Case, as well as the ability to terminate the project. So maybe governance is not all guys in powdered wigs yelling at each other, because the gentlemen of the 18th century did not have true accountability or honest discourse with each other. The men of the wig wearing period did some incredible things, but in regards to governance, the modern project manager has a slight advantage.

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24/7 Blended Learning

“If I take a training course that is not sponsored by the Center of Excellence, then I might access PM information, but I can’t have it all, and I won’t learn about managing projects using Integrated PM.”

What is the origin of the Olympic logo? In 1896 one of the Olympic founders, Baron Pierre de Coubertin, proposed the idea for a unified motto and symbol to reflect the unified International Community. Later, the meaning ‘Faster, higher, stronger’ began to be applied.

Today, the interlocking nature of the rings are emblematic of unity; unity between the participants, unity between their approach to being the best of the world. Blended Learning brings the best teaching methods to the world, to teach the best methods of Integrated PM developed. And no, we don’t fly the Olympics flag or brand, but we carry the flame.

Out of all the training courses out there that I could take, what courses should I take, given my limited time for personal training? This is a Portfolio Management question, and any Portfolio Manager would tell you, one of the first things you need to address this with is documented selection criteria. However, even before this you must have a list of options.

I’m going to create a little of a false conundrum here, but I promise to fix it before to long. For the purpose of illustration, let me list some of our alternatives.

We could attend a course hosted by a local college. We would receive face-time with the instructor and students. But, we would have to commit to a meeting time, and travel to the location

We could take an on-line course and have access to training material 24/7, and we wouldn’t have to travel. But, we wouldn’t be able to engage with others taking the course.

We could look for scenario based course material which presents new concepts based on a story line that illustrates the deeper ideas of those concepts. Decisions are presented in context of the story line, and based on the student’s decision, consequences of those decisions can then be illustrated in context of the story line, or scenario.

We could require project based training. In this case, we work on a tangible project, we live with the consequences of our decisions, and our experience in the project become our own, personal scenario.

Now, based on our selection criteria, we could use portfolio practices to determine what type of course we should participate in. But wait, we don’t have to choose one over the other. With Blended Learning, we can get the best of all these different approaches.

When it comes to learning new concepts, such as found in Integrated PM, Blended Learning is optimal because it supports multiple perspectives and experiences which are easily accessible over the web. At the Center of Excellence, we have chosen this method of teaching Integrated PM.

Course Designers and Instructors are taught how to produce a course that utilizes these teaching techniques to provide the very best learning experience possible, in terms of course content as well as in course design.

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Social Learning Activities

“If I use a blended learning course, then I can gain the best of all worlds, but it is still very lonely, and I just don’t get as motivated to complete the course as in a live course.”

I get my personal energy from engaging with other people. I learn by study, and then explaining to others. I do my best work, when others can see me. Ok, you might not be like me, but others are. Most of us, for one reason or another, thrive in a social environment where idea exchange is regular. Real learning occurs when people are impacted at a social level.

With pmNERDS courses, they’re designed to engage collaboration. This engagement is accessed over the web with mobile devices and/or workstations. Conversation can be formalized in forums and blogs, chats in the community, or even more public through social media. You control how ‘alone’ you want/ or don’t want to be.

Start learning by participating in the community. Respond to the comments of others, ask questions, share experiences. Read forum and blog posts, make comments and engage in discussions. Within specific courses, participate in workshops where students review each other’s work and use feedback to improve work quality. Participate in course forums and discussions. As you engage with others, you will find that you have lots to offer, and decide to create a course of your own.

With all this talking, don’t you want to do something? If so, plan an event. pmNERDS loves to plan and manage events. Regardless of how big, or how small, in the community you can create a group and plan it. That’s right there is no limit. Plan a canoe trip or a mountain hike. Produce a play or rock concert locally, or across the World. It’s all just a project that the community works together on.

By surrounding yourself with others who are learning, learning will become part of who you are, the material your studying becomes part of the bigger you, the deeper you. The you who plans projects, manages those projects, and completes those projects. While talking about social change, a past US President commented, “What better people are there to take an idea and turn it into reality than project people.” That’s us!

At this point, you don’t remember your studies, you experience it!

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Project Based Learning

“If I complete a course on Project Management, then I expect to understand and be able use what was taught, but when I study Project Management, I fall asleep, and comprehend very little below surface concepts.”

What do you prefer when learning new project management principles; lectures, videos, picture & graphs, role playing, discussions, performance reviews, reading books, podcasts, or maybe modeling and simulation? At pmNERDS, course instructors and designer are challenged to use these teaching tools. Some are better at this than others.

However, in our e-Learning courses there are some standards that every course must be based on. Project Based Learning (PBL) is one of them.

PBL is used by many modern schools to help students acquire a deeper conceptual understanding of the material being studied. PBL is an overall approach to the design of learning experiences. Learning experiences such as Project Based Learning have five key features:

1) They start with a driving question, a challenge or problem to be solved. We are advocates for the use of a well formatted problem statement.

2) Students explore the driving question by participating in authentic, situated inquiry - processes of problem solving that are central to expert performance in Integrated PM. As students explore the driving question/problem, they learn and apply important ideas within Integrated PM.

3) Students, teachers, and community members engage in collaborative activities to find solutions to the driving question/problem. This mirrors the complex situation of expert problem solving.

4) While engaged in the inquiry process, students grow with learning technologies that help them participate in activities normally beyond their ability.

5) Students create a set of tangible products that address the driving question. These are shared artifacts, publicly accessible external representations of the participants learning.

With e-Learning offerings found at the Center of Excellence, technology helps support this PBL approach. All the community developed courses come packaged with curriculum materials. The technology platform helps them build, test, and evaluate qualitive, dynamic planning and manage problems within complex projects.

The tangible artifacts of the course projects allow students to share and have their artifacts reviewed by others- teachers, peers, friends, colleagues, parents, employers, employees, and members of the community members.

Using PBL and our technology platform, instructors and designers create learning experiences that focus on driving questions that students find meaningful and important, and around which students can develop an understanding of Integrated PM.

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Management Science

“If I assume that every project request is a valid request to address a problem, and not a solution to an unstated problem, then my team can design preferred solutions based on our experience, knowledge of our project portfolio, and of our capabilities, but there are many decisions we have to make understanding only part of the problem.”

With projects there is a great variety of decision-making problems impacting performance. In each instance, an Integrated PM approach, based on systems thinking, will lead to more insightful decision making.

The above diagram is an application of Management Science to the world of projects, and has been used in various industries for many years now. The assumption here is that;

  1. The problem has been clearly defined, implying that
    • the objectives of the decision maker are known and there exist criteria to ascertain when they have been achieved,
    • if there are conflicting objectives, trade-offs can be defined,
    • the alternative courses of actions are known, either as a list of options or a set of decision variables,
    • the constraints on the decision choices are known, and
    • the input data needed are available;
  2. That the problem is relatively well structured, meaning that
    • the relationships between the variables are tractable,
    • system behavior can be captured in the project plans, and
    • the computational effort for determining solution scenarios is economically feasible;
  3. The problem can be sufficiently well insulated from its wider system
  4. Optimization of the objectives, whenever possible, is ideal
  5. The problem is of a technical nature, devoid of politics; people are mainly seen as passive objects.
  6. If there are multiple stakeholders, a consensus can be reached about all aspects that affect how well the objectives can be achieved
  7. The decision maker has the power and authority to implement the ‘solution’ or enforce implementation through the hierarchical chain of command.

Yes, I know that this is quite an assumption. The fact is, any constraints in these areas will constrain every downstream project within the system. If you want performance improvement, then this is the first place to look.

In spite of all our PMI training, our system is managed in three phases illustrated in the diagram above.

(1) Problem Formation or Problem Scoping, (2) Problem Modeling, and (3) Implementation of Recommendations.

As shown, each phase consists of several steps. In practice, it is an iterative process where we may have to go back to earlier phases or steps to overcome unexpected difficulties, fill in omissions uncovered at a later stage, and alleviate or eliminate undesirable consequences. There are also forward linkages. At each step, we keep future steps in mind and are on the lookout for difficulties we may encounter. It may lead us to alter our initial approach and look for countermeasures, whenever possible.

I will address each of these 10 steps in future blogs. The diagram illustrates how Integrated PM holistically addresses the entire system, utilizing and solving for the concerns of portfolio management, program management, project management, capacity planning, project management and many more disciplines.

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Multi-Faceted Nature of Projects

“If I categorized and studied the correlations between all the factors (state variables) of project performance, then I could control and optimize the project’s performance, but gathering and computing this information would take too long, and the project portfolio’s state would change before I could interpret it.”

When we consider the many facets of enterprise project management we can quickly see we need a different way of examining the forest instead of analyzing each tree. Due to the lack of a standardized approach, the popular approach is to divide the various disciplines such as Risk Management, Resource Management, Project Management, Portfolio Management, Capacity Planning, Scheduling, and Finance and then approach each facet separately.

This approach while informative, lacks the ability to study the correlations and inter-relationships between each state variable and combinations thereof. This makes impact change analysis impossible at a macro level.

Looking at these facets holistically, as a single system, instead of a plethora of independent factors, and applying systems thinking to management questions and business objectives, we gain real insight and performance improvement.

First, we must list and categorize these factors. Lots has been done in this area, but we continue to grow this effort. Where it will stop, no one knows as mankind produces more and more innovative practices.

Secondly, with this categorization underway, the study of inter-relationships and performance correlations between the different categories can produce meaningful results. New macro-level policies and procedures can be put in place. Improvements to project portfolio performance begins. Management Techniques are defined and new intuitions developed.

Finally, when we begin to understand these correlations, we can apply effect-cause-effect thinking, identify and break performance constraints leveraging systems thinking.

At pmNERDS, the Center of Excellence is all about promoting and moving this practice of applying systems thinking to project management at all levels in the organization.

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Systems Thinking

“If I considered all the business functions impacting project success holistically, then project performance would be more consistent and manageable, but there are just too many factors to consider, and management would be ineffective due to analysis paralysis.”

Projects are at the root of Integrated PM. Change is at the root of projects, and it follows that change is at the root of Integrated PM. Central to Systems Thinking is the performance management of this change. Systems Thinking is applied successfully when these three situations below exist.

First, there is someone who is dissatisfied with the current situation. This someone would like to achieve one or several goals, or maintain current threatened levels of achievement using a change the project is supposed to produce.

Second, the way of invoking that change is not obvious. The problem situation is complex. The interested someone may not have enough information about the situation to know or discover all the consequences of decision choices, or to be able to evaluate the performance of these options in terms of their goals, principle purpose, or strategic intent.

Third, the interactions between various elements and projects have a degree of complexity that the limited computational capacity of the human mind cannot evaluate in the details necessary to make an informed decision.

The typical environment where projects exist are systems. What is a system? For now, a system is a collection of things such as tasks, projects, programs, and portfolios that relate to each other in specific ways, i.e. that are organized and follow specific rules of interaction. Collectively, they have a given purpose, i.e. they aim to achieve or produce outcomes that none of the parts can do by themselves.

We can recognize or view something as a system for our own purposes. This is an important insight, in the real-world systems do not exist or create themselves spontaneously, readymade for us to discover. No, Systems are human inventions. We choose to view projects as a system to better manage projects and improve performance.

If we are to deal effectively with the complexity of projects and decision making within our system environment, we need a new way of thinking. This new way of thinking evolved about 1940 and could be labeled ‘systems thinking’. This system thinking has been proven successful within the context of projects. System thinking is used in decision processes which help decision makers explore portfolios of projects in much of their complexity without having to drill down into the trees of the forest.

System thinking is used to find a ‘good’ or ‘best’ compromise solution, and is used frequently to give answers to important ‘what if’ questions, such as “how is the ‘best’ solution affected by significant changes in various cost factors?” or “What is the effect of uncertainty in a critical resource scheduling?”

Integrated PM is the collection of practices leveraging systems thinking to better manage projects holistically within an organization. You’ll wonder how you survived without it. In truth, you probably weren’t surviving, you just didn’t know it.

Download this free E-book- Integrated PM: Applied System's Thinking with Portfolios, Programs and Projects

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