There is a major transition happening today inside organisations; and, says Antonio Nieto-Rodriguez, companies moving in this new direction are finding immense rewards.
Over many years of working with and observing large corporations, I became aware of a surprising trend that was taking place. Even more startling, I became aware that it was taking place, to a large extent, under the radar of those involved in the businesses as well as those who study business.
The change is one of organisational focus. Many companies have shifted their focus from operations to project-focused activities: one-off, temporary activities with a clear purpose that are performed by multidisciplinary personnel who come together only for that project. It is the opposite of operational work, which comprises standardised activities performed on a routine basis.
I became aware of this shift when trying to gain a better understanding of why running large and complex projects across an entire organisation (for example, a merger, an IPO, a cost-reduction initiative or a new system implementation) always seemed to result in missed deadlines, significantly higher costs than estimated and fewer benefits than initially planned. I became more and more intrigued by the change I was seeing and decided that it was important to find out how organisations could successfully select and manage projects — some of them large, transformational and strategic alongside many smaller ones — when most of them had difficulty efficiently handling just one.
I realised that the only way to fully understand what was happening was to examine the different ways in which companies select and manage their projects to determine whether certain practices had a positive impact on a company’s strategy execution, including its financial growth and shareholder value. I began by reviewing the literature on this issue and then discussing what I was seeing with senior executives and academics — but to no avail. Clearly, finding out what was really happening would require conducting original research, and so I undertook two global surveys between May 2004 and May 2006. The surveys were completed by more than 400 companies across 30 countries.
My analysis of those surveys revealed that almost without conscious recognition of what was happening, companies already had begun to implement their strategic initiatives through their projects and project management. Looking even deeper, it soon became obvious that this trend rendered obsolete some of the most popularly cited theories in strategic management. I started my research into the last century’s business thinkers and their theories. I studied Taylor, Ford, Drucker, Ansoff, Mintzberg, Kaplan, Porter, Peters and so on. None of them mentioned the importance of project management to execute strategy, and they do not even mention projects in their entire theories. What is interesting is that most of their recommendations were focused on improving the management and operations of the business, which always resulted in large projects.
In addition, my research also revealed flaws in the current accounting standards for assessing an organisation’s fair value.
Ultimately, there is no getting away from the fact that the way in which companies create most of their value is by investing in new technologies, creating new products, opening new markets, reducing costs and acquiring new businesses — and all of these strategic initiatives translate into projects that need to be successfully implemented in order to create value.
What also became clear was that what differentiated successful companies was that they had great leaders and a high maturity level in the key elements of their organisation. Moreover, some of these successful organisations were not just reaching but were also exceeding their strategic objectives. What seemed to make all the difference in their ability to surpass expectations was the fact that they were totally focused, which made it easier for them to effectively select and prioritise projects.
Notice that the very word ‘focused’ provides a mnemonic that calls to mind seven characteristics that comprise the new ‘focused’ organisations:
- Fewer projects: They invest in just a few new initiatives. That means the leader of an organisation that wants to become focused needs to learn to say no to many initiatives.
- Organised staff: They organise their staff in such a way that all personnel know what is expected of them. They do not waste time on activities that are not part of their core skill set; rather, they focus on their key strengths.
- Competitive mindset: They compete with the outside world rather than internally. Internal competition is minimised because all of the organisation’s effort is placed on doing what it does best.
- Urgency: They understand that, in business, time flies — even more so with the current level of globalisation. Organisations need to launch their initiatives quickly. The time-to-market for new products must become shorter and shorter.
- Strategic alignment: They link every initiative to a strategic objective; any project that is not so linked is immediately cancelled.
- Excellence: They apply the highest standards, and key initiatives are managed by the best people. Employees understand the importance of quality and continuous improvement. With this approach, there is little room for internal politics.
- Discipline: They recognise that companies today need discipline to execute their key initiatives; without it, consistent performance becomes very difficult. Of course, there is a need for creativity and flexibility as well. The challenge for the CEO and the company’s entire management team is to find the right balance between discipline and creativity/flexibility.
Why make the change?
Making the change to a focused organisation helps achieve strategic goals. The reason is that once the change takes place, everybody in the organisation, from the CEO to the accounts payable employee, knows the direction in which the organisation is going, which two to three initiatives are the most important and the business case for these few critical initiatives. And this clarity of focus makes it easier for employees to perform at a higher level.
In addition, the focused organisation reduces costs by cancelling those projects that are not relevant, which can add up to huge savings. In addition, the focused organisation only continues to pursue those initiatives that give evidence that they will bring significant added value. Taken together, this new focus brings about strong financial results, which are necessary for companies to survive and to please their shareholders.
Of course, becoming a focused organisation involves a radical change in the way organisations select and manage projects — in fact, the creation of a new culture — and the process is not easy. The ability to successfully implement the changes needed depends in large part on how involved the CEO is in championing the change. It also requires that the organisation goes through different maturity levels to reach a focused status and those levels involve changes in its culture, methods, organisational structure and systems, and tools — clearly a big commitment of time, energy and resources.