"It is impossible for ideas to compete in the marketplace if no forum for
  their presentation is provided or available."           Thomas Mann, 1896

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Achieving Business Intelligence through Project Intelligence

Conventional wisdom, or at least conventional wisdom as proposed by many consultants and a variety of organizations, is that change is driven by a combination of people, process, and technology.   This is nonsense.  People neither change because of increased awareness or education, nor do they change because a better process is developed and communicated.  They change, and will invest in changing, only under three conditions:

1. The change has a tremendous upside;

2. The change helps to avoid a tremendous downside;

3. Change is easy and natural.

Since projects are the primary vehicle for change within organizations, projects that are undertaken must meet one or more of the above conditions if the output of the project is to deliver substantive value.  Ensuring that projects are linked to one or more of the above conditions defines the practice of Project Intelligence.  The aggregation and visualization of information associated with project performance and value delivery is Business Intelligence.  If you have Project Intelligence, getting Business Intelligence is straightforward.  As such, this paper will focus almost entirely on the requirements for Project Intelligence, both from a business value perspective and a planning and execution point of view.

Project success should be a normal consequence of undertaking meaningful work, not a celebrated event delivered through Herculean effort.  A customer should expect that a professional can effectively estimate the effort required to successfully meet a particular scope, schedule, budget, and quality need.  Customers who allow suppliers to start work without a complete understanding of the requirements for success should understand the risks they are absorbing.

Of course, one could argue that some customers do not know their own requirements, and that part of the work is to discover the real needs.  In reality, this argument is only reasonable if the project scope is limited to discovery.  There are many terms applied to the breaking down of projects into meaningful, measurable components, but the key point is that the practice of progressive elaboration (i.e., ongoing improved understanding of scope) is minimized within projects once they begin. 

When projects have problems, the reasons typically fall into one of two categories:  difficulty in the realization of business value and challenges in the delivery of the “technical” solution, commonly called the “work.”  As numerous studies and papers have argued, doing the work is seldom the real problem.  There may be complexities and overruns, but projects can often be delivered if enough time and money is provided.  Of course, such overruns may negate the underlying business value, but that is a governance problem around ensuring project validity.  (Firms that regularly undertake projects with a poor projected return is a sponsorship problem and a subject for a different paper.)  As such, the real challenge is almost always around ensuring that the work done is accepted so that firms can realize the benefit of the business value delivered. 

This leads us back to the drivers for change.  For many projects, the capture of business value is dependent on the customers and end-users of the solution accepting and embracing the required change.  In far too many cases, a set of cultural beliefs, typically held by organizational leaders, creates a sense of obligation to change that creates a false sense of reality.  That is, some organizations believe people should change because they are being paid.  Others think people should change because of the organizational power structure (i.e., command and control.)  On occasion, there is an expectation that smart people will understand the value and accommodate the change.  While each of these models may be effective, history tells a different story - the data, minimal as it is, on project execution and business value delivery shows that performance has not improved much in over 30 years (N.B. the reasons are discussed in my draft EPM paper published at the PMI Latin America Congress.)  For the uninitiated, studies report that somewhere between 40% and 92% of all project fail to meet their business objectives. 

As a reaction to lack of improvement, many projects now include change management or change leadership.  The intent of the activities associated with managing change is to create a context for the change and make the change as simple as possible.  While the intent is correct, this paper will argue that the impediments to charge are typically so great, that no amount of short-term concerted effort can overcome the inertia.

Why indeed!  Well, projects are often conceived, planned, managed, and implemented with a lack of appropriate forethought, so what better to describe the improvement than “intelligence.”  Project Intelligence is provided by integrating three major components:  consistent capture of work plans and estimates; use a commonly understood process for ensuring that business value is delivered; and the linkage of business value back to organizational intent.  This intent is typically expressed in the terms of strategies and values, and these strategies and values are quantified as goals.  The primary goals lie in initiatives, which is the key link between budget and business value delivery. 

Because initiatives are long-term, the work performed to deliver business value is broken into programs and projects.  While some organizations create a more complex hierarchy (e.g., sub-programs, sub-projects), simplicity is better served by establishing rules associated with the duration of the elements in the hierarchy.  A reasonable model is:

The key point is that the model creates a logical link between the work, which is where all the value is generated, and the higher level constructs where measurable business value is identified.  This model automatically provides a context for the work being performed and drives two-way accountability.

Migrating back into the discussion around change, the very best way to ensure that something changes is by ensuring accountability.  Accountability necessitates transparency, and dealing with the consequences of enabling transparency is a big change for most humans.  The dissemination of perfect, or simply more information, has many interesting effects.  For example, imagine if compensation systems were made public.  How would pay packages be explained?  Alternatively, what impact would there be if tax returns become public information?  Or what if the price paid for everything was easily accessible so everyone could see the mark-up and assess the incremental value-add in the manufacturing, distribution, and sales process?

The impact of tracking and releasing project information is that projects, and their related business value, are going to be put under the microscope.  Nothing drives accountability like visibility, and nothing drives performance like measurement.  Make no mistake, however, this is a significant behavioral change, which brings us back to the focus of this paper on making change happen by instituting Project Intelligence.  PI is fundamentally about driving change and improving the probability of realizing benefit from that change.

Our concept of change is guided by the Change Triangle (CT), show below.  The CT highlights the three drivers for change referred to in the Abstract section of this paper.  Ultimately, we would like to see that all action that is undertaken at the individual or organizational level be in one of the green, or Positive Action, zones.  The yellow zone, or Zone of Incrementalism, is where activities occur that offer some value, but are not very impactful.  The red zones indicate High Risk Behaviors, which typically have a small number of winners and a large number of net losers.  The Zone of Inevitable Spend is where, the Opportunities, Threats, and Simplicity are equal motivators of action.  Expenditures in this zone are inevitable because everyone involved has a core driver to change behavior.

The underlying argument about behavioral change is that change is typically driven by a major opportunity or threat combined with time pressure.  Absent of time pressure, the primary way change will occur is if the change is viewed as easy.  Extreme behavior (i.e., high risk) is exhibited when the perceived opportunity or threat appears urgent, or if taking advantage of the situation is simple.  For purposes of this paper, an environment that offers visibility and accountability (BI through PI) is treated as a pre-requisite to successful delivery of business value.  PI necessitates planning, and planning requires forethought, which happens mainly in the Positive Action Zones.  So, if you are not in this zone, your chances of success are low.

Now, one could argue that projects are successful because once a firm makes a commitment, they execute and deliver.  While this may be true, note that true success is defined as having a plan, and meeting the specific criteria for successful execution of the plan (i.e., scope, schedule, budget, and acceptable quality) plus the specific criteria for successful delivery of planned business value.  High level plans and general success criteria allow people at all levels to avoid accountability and arbitrarily redefine success and failure.  Further, lack of meaningful metrics leads to an inability to improve.  That is, if one cannot identify the criteria that lead to success or failure, the benefit of efforts to improve the success rate will be difficult to ascertain in anything more than an anecdotal sense.

Avoiding downside is the slowest form of change because many people are too optimistic, frequently overestimate their contribution/value, and often underestimate the impact of threats.  While fear of a big downside can be a motivator, downside alone is insufficient.  Referring to the above graphic, Threats that are severe and urgent tend to drive high risk behaviors.  If avoiding the Threat can be made easy (i.e., Simplicity), then some action will likely be applied to eliminating or mitigating the threat.  Ultimately, however, the goal is to be the green area where the Threat is understood and meaningful action is undertaken.  The Positive Action Zones are places with good project management techniques can be applied.  If something is perceived as overly urgent or very easy, shortcuts (such as minimal planning) will often be accepted.

Please note that two of the center zones, Complacency (not overly urgent) and Incrementalism (easy), are areas where there are insufficient drivers for meaningful behavioral change.  For example, does telling someone that they need to change their diet or they will be suffer illnesses later in live really lead them to alter their habits?  One might ask if you really want to interact with people who make decisions mostly based on how to avoid downside (which might mean that they are transferring downside risk to you)?

Tremendous upside is often easier to accept and thus more likely to drive behavioral change.  If risk can be managed and the incentives are strong, people will be willing to take chances to change (or drive change) solely on the hope of the great benefit.  As with Threats, Opportunities combined with a sense of urgency can lead to high risk behaviors.   When the realization of an opportunity is made easy (i.e., Simplicity), a set of low impact behaviors are typically applied to see if the opportunity is real.  That is, if realization of the opportunity is easy, some effort will be applied.  The area where such behaviors are most common is in investing.  A savvy broker will talk about upside opportunity of a particular investment vehicle while making the investment easy (i.e., Simplicity.)  All the customer needs to do is hand over a little money to take advantage of the upside.  Of course, the behavior is typically low value add (i.e., Incremental) because the upside is always overstated.  So, as with the Threat driver, the place to be is in the Positive Action Zone around the opportunity so that planning techniques can be applied.

Examples are plentiful where opportunities are pursued with abandon.  The .com bubble and burst is a perfect example of people engaging in high risk behaviors with minimal planning.  Some people made millions (or billions), but most did not fare so well.  That is not to say that pursing dreams and wealth is not a worthwhile endeavor.  The pursuit of happiness is core to the value system of the United States.  However, an insufficient understanding or appreciation of risk (which is core to good project management) can often result in unhappiness.

While opportunities and threats can be effective motivators for change, something else is typically required to facilitate intentional and impactful change.   That something is convincing the audience that the change can be made with ease.  As previously discussed, time pressure is also factor in undertaking a change, but time pressure is subjective and relative.  For example, meeting SOX (Sarbanes-Oxley) compliance dates is very important to an executive who faces criminal charges.  However, the remainder of the organization would not be motivated by avoiding jail time.  Instead, their focus would be retaining employment, maintaining an income stream, demonstrating value, showing loyalty or career development.  And, in most cases, a path of minimization would be taken.  By minimization, I refer to applying the least effort and/or least cost to making the threat go away, commonly called the easiest path.

A change that is made easy and natural has a far greater chance of success.  The simplest way to make change easy and natural is to make the change entertaining or intriguing.  This is why entertainment and technology are critical industries. Entertainment allows the “customer” to be persuaded passively.  Technology creates intrigue by allowing the “customer” to do something that was previously implausible, inaccessible, difficult, or banal.   Nothing is more powerful than entertainment combined with technology.  How much better of a story can you get then something being fun and easy?

Importantly, opportunity and threat identification is a precursor to adoption of high risk behavior and/or volatility/irrationality.  Because the triggers that drive individuals and organizations to change vary greatly, they are hard to track and predict.  At some level, macro and micro economics tries to explain behaviors, but economics is really a social science that has a difficult time generating actionable predictive models.  Further, while there are few tools to effectively forecast, there are plenty of examples when psychological manipulation has been, and will continue to be, a potent tool to drive change.

Sophisticated, well told stories of opportunities and threats can be used to manipulate people on a grand scale.   Note that, in this case, manipulation is a neutral term, meaning that it can be good or bad or neither.   Since fear is frequently an effective mechanism to placate people and/or delay specific action, threats are often used by people with a specific agenda to facilitate that agenda.  As mentioned, combining a threat with an opportunity is a nice way to create a compelling story, particularly if one adds that the response to the opportunity/threat does not require any or much personal effort (i.e., it is easy to respond.)

A common theme in the above list is that there is an implied guarantee.  People love to buy implied guarantees.  (e.g., If you do A, B will occur.  If you do not do C, then D will occur.)  Basically, the idea of effective marketing is to sell you a story that you already believe.  Unfortunately, transactional folks are very good at selling a story around long-term value while driving short-term individual or organizational benefit.  Insufficient validation and accountability allows proliferation of what is commonly referred to as the “short con” -- big promises of the future delivery of benefit.  An effective short-con frequently becomes a “long con,” where the short con has enough validation that it appears to be delivering the future benefit.  More frequently, the future benefit is delivered to a select few, while the majority of “buyers” are at great risk, albeit much of the risk is unknown to them.   When the risk hits, the “long con” folks typically begin to search for extraneous circumstances that make the risk “unknowable” or “unplannable.”  This is almost always nonsense.

If we recast this discussion around probability and distribution of outcomes, the conclusions might change.  In a risk encouraging or risk tolerant culture, people and firms can engage in high risk behaviors, with a reasonable expectation that they will realize benefits or live to try again another day.  In this model, everyone would maintain a moderate (individually defined) lifestyle as they continue to pursue their dream, until, at some point, circumstances dictate a shift in priority.  Hollywood is a great example of this.

The studio system provides a base of resources to generate income and finance projects.  Aspiring producers, directors, actors, actresses, and screenwriters, head to Hollywood with the hope of becoming a success.  An entire ecosystem has been constructed catering to people in pursuit of the dreams, and offering, in general, “easy” ways to get into the business.  This ecosystem includes agents, managers, photographers, and a variety of skills training (voice, dancing, and character acting.)  As long as there is large enough population of people entering the business, the ecosystem can survive, and as long as the rewards remain high for the few “winners,” that population is assured. 

The reality is that large numbers of people come to Hollywood in hopes of being successful and end up leaving/giving up their dream is seldom discussed.  Everyone knows the odds are poor, but people are willing to try anyway.  One could argue that this mode of operation is very efficient.  Resources are quickly redistributed to those who are chosen.  The ecosystem provides an infrastructure to maximize the total return (i.e., extract the total value) as soon as possible.  The fact that many people fail is simply a cost of doing business.  However, ensuring that studios (or other providers of capital) make money is critical to long term viability.  So the studios, like most organization, are constantly trying to determine how to minimize risk and maximize return.

So, applying this logic to projects, we find some interesting parallels.  If venture capital (whether internal or external) is similar to the studio system, projects are the vehicle by which people can realize their visions, and the ecosystem (mainly consultants or one type or another) provides a support structure, then the only important question remains:  what can be done to increase the return on invested capital?

Interestingly, both the studios and the investment community have a vested interest in improving their success rate and return.  However, what is not clear is whether or not disciplined techniques are leveraged to drive accountability.  If the measures are purely financial and the expectation is arbitrary (i.e., the studio or venture firm defines the expectation of success) and accepted by the shareholders, then there is little reason to improve. 

Fortunately, we have competition that is constantly devising new ways to deliver higher return, which pressures others to do better.  This paper is essentially arguing the Project Intelligence is the primary mechanism to drive individual and organizational performance improvement.  Setting a context, creating meaningful metrics, ensuring a consistent level of planning, and disciplined execution of work ultimately produces better results and reduced risk. 

However, the drivers for behavioral change (Opportunities, Threats, and Simplicity) need to come together if any meaningful progress is to be made.  There must be a great opportunity combined with a significant threat, and the required change must be reasonably easy to adopt.  In the project management world, the lack of meaningful global competition to the United States has created a level of complacency.  My contention, as described in the paper Enterprise Project Management - Why Now? (published as part of the PMI Congress Latin America in 2005), is that this complacency is being challenged and that organizations intent on survival will find new ways to deliver extraordinary value.  Project Intelligence is one of those ways.