In today’s project economy, many businesses run multiple critical projects simultaneously. But which ones are truly critical? Which ones should you prioritize to avoid spreading your teams too thin and risking project failure? Our latest research found that only 15% of companies are achieving their goals for key initiatives.
For our study, “Overcoming the Execution Challenges of Mission-Critical Projects,” we surveyed more than 400 senior executives across North America, Europe, and Asia Pacific, and in four global industries.1 We also interviewed executives responsible for projects at five leading companies: a major pharmaceutical firm, a large medical device and pharma company, a global luxury goods manufacturer, a large chemical company, and a supplier to the technology industry.
These executives explained the interlocking operational and structural challenges of executing multiple critical projects. Their unanimous complaint: extreme difficulty in motivating thinly stretched and distributed teams who are juggling daily duties across a multiplicity of project requirements. It’s little wonder that about one-third of the executives say achieving their projects’ key goals has become more difficult since 2020.
Preventing Project Proliferation
An Asia-Pacific comptroller for a luxury goods manufacturer told us her teams are involved in 19 concurrent projects. “My team does double work — their regular work and then their project work,” she explained.
A traditional project management office (PMO) will rightly ask: “Are these projects adequately resourced?” But a more strategic question would be: “Which of these projects will add value, either from the shareholder, customer and/or operations perspective?”
Without an answer to this question, a large organization runs the risk of greenlighting every project that appears to have merit (at least on the surface).
At a panel event where we previewed key findings from the research, Adrienne DeTray, CIO for Adtalem Global Education, said one reason for project proliferation is the tendency to define everything as a program, resulting in running hundreds of projects all the time. Many of them should be treated as standard operating procedures, rather than a strategic program with all the complexity that entails.
“It’s like building a house on a broken foundation. If you keep piling these strategic initiatives on top of something that’s not stable, the house will fall down,” Adrienne said, adding that leaders don’t say no enough. “Focus on maintaining a strong foundation while investing in things that are pushing you towards your Northstar and say no to the rest.”
Creating a Strategic Portfolio Management Office
Our January 2023 report details the research findings and outlines an effective approach to accomplish this difficult balancing act.
Complementing the PMO’s capabilities, companies should create a strategic portfolio management office to evaluate current and proposed projects across the organization. It should greenlight projects that align with the company’s strategy, as communicated by the C-suite. The office should be headed by a senior executive with the business and large project leadership experience to make credible, authoritative decisions.
Without this control mechanism, projects will proliferate. That will increase financial risk and employee turnover. It will also prevent more deserving projects from being executed.2 Effective strategic portfolio management offices can help you achieve three key benefits:
01.
Greater value through “Agile” funding
Projects that use Agile project management techniques are quite different from those that use waterfall methods, in which pieces of a project are done sequentially. With waterfall methods, the project may not deliver business impact until all the project steps are completed.
In contrast, Agile projects are organized into smaller initiatives, each of which delivers business impact. The funding of these projects should be based on the delivery of business impact over the life of the project — rather than on some predicted business impact of the entire project when it’s done.
In this way, projects delivered through Agile methods may draw more funds only when they produce interim results. If they don’t, they are easier to shut down — and without having incurred the entire upfront investment.
02.
Lower risk, higher quality, and greater efficiency
With an entire view of the project portfolio, a company can prevent duplicate efforts and resource conflicts. “Some projects can run in parallel to a certain degree, but at some point, they collide,” said a finance executive at a global biopharmaceutical company. “There’s an interdependency, or the complexity is just too great for us to staff effectively without getting too cost-heavy.” Finding synergies among projects maximizes the use of scarce resources.
03.
Higher employee retention
Companies often assume they can scale up dozens of project teams to run multiple concurrent projects. What they don’t realize is that many projects will require the same employees. “People work so hard on so many projects that they stress out and they wind up leaving us,” said a comptroller of a luxury goods maker’s Asia-Pacific region, who said turnover at her company was high.
Limiting projects to effective, value-generating initiatives can reduce the workload and improve employee focus. The strategic portfolio management office replaces traditional pre-pandemic hierarchical project delivery structures. It identifies the highest-value projects and focuses cross-functional teams on delivering value on manageable work streams.
Without an effective project control mechanism, companies increase the risks of project failure and project team burnout.
“I always say you can kill 50% to 60% of the projects in one day, and nothing will happen; your business will continue,” said renowned project management expert and keynote speaker Antonio Nieto-Rodriguez, commenting on this challenge at our recent panel event.
Prioritize learning how to say no, he advised, but be discerning so you don’t inadvertently end a project that is critical to the future of your business. “Find that balance where you can test ideas, while focusing on three to five initiatives that are going to deliver value,” he said.
Bringing More Rigor to Project Prioritization
Transforming your enterprise PMO into a strategic portfolio management office can help you strike that fine balance, and it’s one of three key steps our report recommends to elevate critical project execution capabilities.
Read the full report to learn what project execution leaders are doing differently — and how your organization can join their ranks.
1 We defined “mission-critical” as those with investments of at least $1 million, with the goals of major improvements in cost, time to market, quality and other key metrics.
2 “Too Many Projects: How to deal with initiative overload,” Rose Hollister and Michael D. Watkins, Harvard Business Review, September-October 2018
