How to build a business – Partners, Practices, PPM

Apparently it is a mixed blessing to be a partner in our company. We have a structure wherein partners are by and large responsible for their own success in the context f our organization. The Partner profile has several components, but in the end we are most interested in the motivation of potential partners. Usually we have known them for a longer period and are already convinced of their professional and intellectual capabilities, as well as of their management and interpersonal skills. More difficult to fathom are the real value of their network, the leadership skills, and most difficult to assess is the motivation.

Although there is a list, (which I have attached as Profiling) of fifty skills and competences that we find relevant, in the end it all boils down to what drives the candidate. Mastery is probably the most obvious motivator, and the one that stands out. Partners are without exception the ultimate specialists in their fields, have had success and recognition in the past, and…    And then what? Do they want to cash in on that capability? Then there is an issue, and they are bound for disappointment, because there are many capable professionals. Are they on the other hand also driven by a sense of purpose, a desire to make a relevant contribution, then we get more excited, and if that contribution extends to a group of peers they want to work with, then we might be enthusiastic. Now if the potential partner has what we call Autonomy, that is to say, if he convinced that he can be successful himself, wants to take the risk and responsibility for his own and our collective success, and has the characteristics of the entrepreneur than we are convinced.

Sometimes it does not work out that way, and a partner that seemed to have it all, turns out to be primarily focused on “the next assignment” and on “what is in it for me”, and we have to go our separate ways.

And sometimes it works out much better than we could have hoped for.  A partner like Peter Rappange was always recognized for his expertise in the area of programme and portfolio management (PPM), but instead of pursuing roles for himself he decided to organize a circle of professional around that expertise, spend time and effort – based on his vision of how companies can benefit from it – on developing the content and material that will enable a larger group of people to help clients implement processes and to define, execute and control a portfolio of projects.

He started our first Practice, and with us will make it a success. When you work with Peter, you cannot help but think about Napoleon – in the good sense. No success is not an option. His leadership style was considered unorthodox at the time but today we see that he had all of the major and minor characteristics that make a strong leader. Not only on the battle fields, where most of the opposing armies where perplexed but his military strategies, but also internally where Bonaparte with his hands on approach, was able to connect with the people he was leading.  Knowing that your boss is willing to jump in and help out when you need it as opposed to judging you if you aren’t able to handle it, is very reassuring.

Peter deserves respect for giving up considerable short-term revenue and recognition, and trading it in for longer term content, connections and value.

And clients do need what he has to offer.

I sent this tweet yesterday:

The article behind it is from Harvard Business Review and sketches a dreary picture of cost and schedule overruns: “1 in 6 IT change initiatives such as ERP and CRM systems turn out to be money pits, with cost overruns averaging 200% and schedule overruns of almost 70%, according to Bent Flyvbjerg of Oxford and Alexander Budzier of McKinsey, who studied 1,471 such initiatives worldwide”

In the ‘90s I worked for Shell, and this phenomenon was one of the reasons for me to leave and put all my energy in a company called ICE. ICE delivered ERP projects for clients like Reliant Energy and Philips Medical systems on budget and time. All we had to do was work with good people. Our company thrived.

Project Delivery capability alone means nothing, though. After ICE I joined Samas, an office furniture manufacturer, as CIO to run their IT department. We could deliver IT projects, too. And we did, almost killing the company. While we successfully rolled out SAP in Germany and Switzerland, the CEO saved France from bankruptcy, and the CFO refinanced the enterprise and started reorganizing The Netherlands. Then, we all landed on the Dutch organization at the same time. Samas was organized in the typical silo manner: strategy, technology, finance, human resources, marketing and sales had their own goals, targets and responsibilities.

The Samas disaster taught me some valuable lessons, and I decided to start Qhuba, a company focused at Strategy Execution across disciplines.  In my view the old stovepipes should all come together in an orchestrated Strategy Execution effort, and the organization should be adapted to serve the short-term and long-term needs with regards to strategy definition, execution and control.

Some of the decision making and activities will be performed by centralized, permanent bodies, some by temporary needs-based bodies, and some by participative bodies (for instance on a part-time basis).

Strategy Execution

Portfolio and Programme Management is a capability crucial to Strategy Execution, and a PPO (Portfolio and Programme Office) is a typical example of such a centralized permanent body.

At clients where Peter and his team where able to share their ideas, and take responsibility for execution they were met with interest, sometimes skepticism, and often enthusiasm. Now that the results become more visible, benefits become tangible, and the approach has matured from “bringing capable people on board to deliver on projects and programmes” to “implementing the process, adapting the organization, taking responsibility for the results and anchoring the approach in the culture of the organization”, we have seen his attitude change from selling and converting to sharing.

I have asked Peter to make all of his ideas, successes, lessons learned and material available, and I know that he is preparing to do this in blogs, articles, whitepapers. Below I will already sketch some backgrounds on this, an forgive me for all the beautiful jargon: Wait until you see him jump from his chair, run to the whiteboard and explain what it means to be Ranking value and benefits, Determining the size of the portfolio pipeline, Assessing the impact of uncertainty on projects and portfolios, Understanding the benefit and risk relationship, Establishing a portfolio governance capability, Managing the portfolio to maximize benefits and Implementing PPM and a PPO.

The process from Idea to Realisation is fairly straightforward:

PPM

Key to the success of this process is being able to rank the ideas is a way that ensures that only the ideas that are critical to strategy realization are funded and executed.

The Flow

When defining a Portfolio and Project management Process (PPM) the most important questions to address in the organization are the WHY and HOW questions. No rocket science, but still:

The Why is supposed to address the question of  Purpose: Can we ensure we do those projects that are adding to the implementation of the corporate strategy and bring us most value.  It is a focus on effectiveness, or: doing the right things

The How process looks at the way an organization implements the Programmes and Projects they have selected.  Here we look at the efficiency or doing things the right way. How well can an organization plan, execute and monitor the Programmes and Projects.

The Enterprise Portfolio & Programme Office plays a role in managing the process.

Central PPO

Peter will start sharing his approach and the whole body of knowledge in more detail soon, and hopefully especially the client stories.

Apart from enthusiasm, is there any evidence that this is an answer to where we started: are projects – and especially IT related projects – simply bound to fail or at least have significant overruns in budget and deadlines?

Industry research by Gartner, Forrester and others report cost savings from applying project portfolio management in the order of ten to twenty per cent of the total IT budget – but are such reports supported by reliable research?

An MIT study of more than 300 organisations in 23 countries found growth and agility was linked to a portfolio approach. They also argue that governance is crucial and that organisations ‘with superior IT governance have more than 20% higher profit than firms with poor governance given the same strategic objectives’.  The results of this study were published in a book by Harvard Business School Publishing.

In another MIT study more than 100 Fortune 100 CIOs were surveyed and interviewed. They found that 65 per cent believed IT project portfolio management yields significant business value, although only 17 per cent appeared to be realising the potential value in practice.

An a four-level IT portfolio management maturity model (ad hoc, defined, managed and synchronized) in the lower maturity level significant benefits were reported– from removal of low value, duplicate, redundant and poorly performing projects, but enterprises at the synchronised stage showed a substantial improvement on asset performance – they achieved cost savings of 40 per cent, better alignment of IT budgets and business strategy, and greater central coordination of IT investments across the organisation. Other benefits identified by interviewees included: wider support from senior business management; the process was perceived to be fair and objective; and it resulted in increased investment in IT.

In the Netherlands Chris Verhoef of the Free University came to similar conclusion. I cannot advise you to read his article on Quantitative IT Portfolio Management though, unless you are fond of almost hundred pages of formulas.

Funny that the better the performance, the more money is invested in technology. I am not sure if the last one is good news:. There must be a break-point… If you look at it from an asset optimization point of view it makes sense though: best invest where the return is high.

Still good news for clients, and for us: there is a lot of room for improvement, and we do not have to accept failure. Way to go Napoleon! Just steer clear of Waterloo.


4 Responses to How to build a business – Partners, Practices, PPM

  1. Michiel ten Kate says:

    Like it! Good story!

  2. Emijet says:

    Interesting and good to read, txs!

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