Investile Dysfunction

Are project management standards like PMP, PRINCE2, PMBOK, etc worth the paper they're written on?

I've been watching the Boeing Dreamliner saga for the last many months and am amazed at how such a big project in terms of its scale, strategic importance, and financial implications can go so terribly of course. The delays hurt sales prospects and in the short term, they hurt share price performance as The Street's skepticism of Boeing increases.  It is 9 months late right now and most folks expect that Boeing will delay it further for a variety of technical and non-technical reasons. A brief perspective from TheStreet.com is given for those interested.

But alas, Boeing is not alone with its multi year project debacle. It is very common. Surprisingly and frighteningly common. R&D, product development, IT, infrastructure, etc projects are all prone to significant and often spectacular project failures. Failure is often on multiple dimensions with projects coming in over budget, under scope and over time.

And there are plenty of helpful tips out there on how to prevent project failure. Various books, websites, conferences, etc. And yet, all these tips and tricks and "best practices" make for interesting reading but still project failure continues at alarming rates. This results in a great business for consultants and other ecosystem players who profess to have expertise in project management disciplines.

But what is most unnerving or perhaps a better word is perplexing are the numerous project management certifications and practices that are out there - PMP, PMBOK, PRINCE2, etc.  Here is why I'm perplexed, and I'd welcome comments from project managers out there or someone who can make sense of this.

1. Why is there a need for so many different certifications? Can't we agree on a single standard? Or are all of these basically saying the same thing but because certifying people is such a good business, multiple folks have jumped in to become certifiers?
2. PRINCE2 was a project management discipline developed by a portion of the government. Would anyone argue that the government should be viewed as the authority on how to manage projects? I didn't know the government does projects well especially multi-year ones? This seems to me a bit like asking an alcoholic to come up with a guide on staying sober - it makes no sense.
3. But I shouldn't pick on PRINCE2. Why are any of these certifications or practices coveted when projects still fail at such an alarming rate. When someone has a certification, I assume they now have the capability to do something in a way that someone without that certification could not do. You goto a doctor or lawyer because they can help you with your medical or legal issue. They may not know the answer precisely but in my experience, they're usually pretty close. But I'm not sure project management can brag of such a success rate.  I could probably find hundreds of people who can screw up a multi-year project without any certification at all.  It isn't that hard.

So what I'm not arguing is that project management is not useful. Please don't send me hate mail as that is not my intention.  Doing projects right is obviously important. What I am questioning, however, is the value of the standards that are established from these "accreditation bodies" if projects continue to fail as they do.  The value seems marginal at best. A certification is only valuable if it helps you do the thing you are accredited to do better, right? Someone enlighten me if I'm way off the mark.

American Express Deemed Most Innovative Financial Services Company

Before leaving American Express recently, I'd established and led the company's inaugural Chairman's Innovation Fund.  I was glad to recently see that Fortune Magazine recognized American Express as the most innovative company in the Financial Services industry.  The company's CEO, Ken Chenault, spoke about the organization's innovation efforts and the Chairmans's Innovation Fund in particular.

"A difficult economic environment argues for the need to innovate more, not pull back," says American Express CEO Ken Chenault. A few months ago he established a $50 million innovation fund to finance "employees' ideas for how to transform our business long term. We want great ideas to come from all over the company, not just the chain of command," Chenault says. AmEx (AXP, Fortune 500) (No. 13) has a venerable history of making risky moves during downturns. Back in 1958, despite a slumping economy, the company launched a little thing called the American Express card. "When I first came here, I saw a copy of a letter from an analyst that earnestly explained to our then chairman why the card was a terrible idea and how it would cannibalize our traveler's check business," says Chenault. "It was an impeccably logical argument - that couldn't have been more wrong."

Can You Say What Your Strategy Is? Surprisingly Few Can

We talk about strategy a lot in the business world.  What is our strategy?  How do we become more strategic?  What are our competitors' strategies?  When we don't know how to justify doing a project, we say it's strategic.

But a Harvard Business Review piece in their April 2008 journal entitled "Can You Say What Your Strategy Is?" rightfully asserts what we probably already knew.  Many people can't summarize their company's strategy in 35 words or less.  And that even if someone can, their colleagues may not put it in the same way.

The article states, "It's a dirty little secret: Most executives cannot articulat the objective, scope, and advantage of their business in a simple statement.  If they can't, neither can anyone else."

This is a big problem.  Most firms offer up nonsense like that given in the article of "maximizing shareholder wealth by exceeding customer expectations for _____ [insert product or service here] and providing opportunities for our employees to lead fulfilling lives while respecting the environment and the communities in which we operate."

This is not a strategic objective.  I'm not sure what it is except a waste of space to be honest because I'm not sure as an employee or manager I know what I'm supposed to do with this or how this might inspire me in any small way.

So the strategy as the authors rightfully assert is having an objective, scope and an advantage.  I'd encourage you to read the article as it has some interesting examples.  The area where I think organizations should spend even more time once they have a strategy is on the resource allocation that accompanies this strategy.  Ultimately, if your strategy says one thing but your allocation of resources doesn't match with that, your strategy is again just words on paper.  Resource allocation drives strategy.  This is why corporate portfolio management of the resource allocation process is so vital to executing strategy and realizing financial objectives.

Greed Doesn't Kill But It Can Make Your Wallet Lighter

In January, former chief executive of Bear Sterns, was worth nearly $1 BILLION when Bear Shares hit an all-time high of $171.51.  He recently sold his entire stake in the investment bank for a little more than $61 million.

$61 million ain't anything to sneeze at, but that's a huge drop.  I'm not sure what it says.  Was it hubris that made him think it would go up even more?  Or even a greater arrogance that made him not sell on the way down cuz he thought it might rebound?  Or was it just cluelessness?  When the top dog doesn't know how bad things are, I do feel bad for Bear employees who probably had little to no clue things were so dire and then saw their nest eggs decimated.  And I'm sure the vast majority were not falling back from billions to millions.

Federal Government Suffers from 11 Year Bout of Fiscal Dysfunction

CFO Magazine's March 2008 issue has an article titled "Thriller: The Federal Government's Annual Report is Not for the Faint of Heart" which paints a fairly frightening story of our government's fiscal condition based on its issuance of a 2007 Annual Report.  And the government seems to know this as evidenced by David M. Walker's comment that "If the federal government were a private corporation and the same report came out this morning, our stock would be dropping and there would be talk about whether the company's management and directors needed a major shake-up."  What's notable is that Walker is the Comptroller general of the United States and head of the U.S. Government Accountability Office (GAO).

The government ran a budget deficit of a mere $163 billion which is 1.2% of GDP.  This is supposedly good news as it is 1/2 of the forty-year average which stands at 2.4% of GDP.  But let's not let forty-year averages make us feel good.  The story gets scarier as the article details.  The most alarming thing is that "For the 11th year in a row - that is, for each year the federal government has prepared consolidated financial statements and submitted them for an audit - the GAO could not express an opinion on the government's books, primarily because of material weaknesses in financial reporting.""Of the 24 federal agencies that fall under the aegis of the CFO Act of 1994, 19 did not produce a clean set of books...The worst offender by far is the Department of Defense.  The GAO said that the agency could not accurately account for its property, plant and equipment, which make up 69% of the government's total." Walker who seems to be a straight-talking sorta guy adds, "It seems clear that our nation is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time." And finally, the article's author, Edward Teach, concludes by saying, "What the Financial Report of the United States Government makes crystal clear is that the growth of federal mandatory spending - now more than 62% of the total budget - is unsustainable in the long run.  The same clarity about the government's discretionary spending, however, won't emerge until the Pentagon drains its financial-management swamp.  Who knows what horrors lurk therein?"

So here are some thoughts based on this pathetic situation:

• The government should hold itself as accountable as it aims to hold corporations.  While it won't garner as many headlines as going after big bad corporations, it smacks of a bit of a hypocrisy to not practice what you preach.  And we're all probably owed this accountability given our tax money goes into this blackhole.  (sorry - that is more political than I like to get in this blog but that is not a partisan perspective and it seems this fiscal dysfunction has been going on for a long long time)
• Our federal government needs portfolio management to understand this supposed non-discretionary and discretionary spend better.  Three things will be revealed:
  1. Much of what is non-discretionary probably is actually discretionary
  2. A good portion of this money is probably going to projects of uncertain or dubious value
  3. Overall, the government has a very poor resource allocation process which is highly decibel-driven and siloed

When I talk about portfolio management, I'm not talking about the software and other consultant elixirs out there which are mostly or almost all bunk.  I'm talking about portfolio management in the context of an overhaul of resource allocation practices with the aim of creating a discipline to consistently and continually making better decision-making.  It is not an easy 6 month journey where some simplistic scoring framework or software panacea will save the day but one which will require many if not all of the following:

1. Education within the government about the value of more optimal resource allocation and the losses/impacts of suboptimal resource allocation today
2. Active championing by senior government leaders who get it and not people who give the idea lip service
3. Arriving at a definition of what is a discretionary investment or project
4. Developing a standardized means of valuing projects and investments especially those with non-financial returns
5. Creating methods to track investment performance so that promise can be compared with performance and people held accountable
6. Enabling methods to move resources (money primarily) within and between departments in pursuit of the best opportunities.  This is what is known as optimizing the portfolio.

While much of the above may seem to be a pipedream, I'm encouraged by discussion about portfolio management which is going on with the public sector at least in small parts.  If the conversation veers towards better decision-making as a means to optimizing resource allocation, the government may benefit over the medium- to long-term and we might all know where and why the government is doing what they do.  That might be wishful thinking but maybe we'll begin to at least understand where our money is being wasted to start.  Ultimately, we might actually make the spend more efficient.

HP and Gantry Release More Crap Research

I'd previously written about Aberdeen and their "paid research" model which the Wall Street Journal slammed several months ago.  Now we can add HP and the Gantry Group to the list of those churning out useless research.

In this blog posting entitled, "ROI Study: Project Portfolio Management Yields Results", Michael Krigsman writes, "Project portfolio management (PPM) software is receiving growing attention from CIOs. Riding this wave, HP sponsored The Gantry Group to analyze key ROI measures for PPM software. Although the results are somewhat coupled specifically to HP PPM Center software, the research is useful to anyone studying the PPM category."

Why on earth would this research useful or believable at all?  Let's explore the logic that goes into sanctioning such research with top-secret transcripts that have been uncovered by the Brilliont team of conversations between HP and the Gantry Group.

HP:  Hi Gantry Group.  We need you to do some research about how Project Portfolio Management yields ROI.

Gantry:  Sure.  We'd be happy to do that.  We are known for our best-in-class, paradigm shifting, web2.0, eco-friendly rigorous research reports which are always 100% objective (wink wink)

HP:  Yes we know.  That is why we'd like you to do this analysis.  We will pay you a great deal of money once the findings are revealed and reveal the impacts of PPM.

Gantry:  We look forward to receiving the large check and you can rest assured that our findings and its potential impacts on future business will not be influenced by this at all (wink wink)

Give me a break.  Are we all that dumb or do you just think we are?  If anyone believes this type of research, I have some real estate in Phoenix which I've just released a research report on which confirms it will go up 20% per year indefinitely for the next 30 years.  Please email me if you are interested in purchasing this property from me.

Comcast: For Once, I Actually Recommend Listening to the Street

BusinessWeek's March 24, 2008 issue has an article about Comcast CEO, Brian Roberts, entitled "Deal or No Deal" and the supposed "fork in the road" that he is at.  Wall Street and numerous significant stockholders are hoping and pushing for Roberts to stick to Comcast's knitting (content distribution) and not go for media mogul-dom.  I'm sure investment bankers are pushing for the big sexy acquisition of a large entertainment company.  As you may remember, Roberts did make an unsuccessful overture to Disney several years ago.

For once, I think the Street is really getting this right.  There is no reason aside from ego or shear boredom for Roberts and Comcast to go after an acquisition especially one so outside it's core business.  Every few years, the distribution vs content debate emerges with people arguing that one is more important than the other and then people rushing to buy whatever is "hot" at the time.  AOL Time Warner was an attempt at this, right?  Wildly successful, eh?

But the main point here is not that these deals don't work.  No actually, that is the main point.  M&A really doesn't work esp when trying to smash two businesses together that aren't that similar and for which the rationale for the smashing are ever-elusive "synergies".  So I hope Mr. Roberts continues to focus on his 'core' business and grow that and not give into the temptation of becoming a media mogul.

The other assertion made in the article is that the cable business is a low-growth utility.  Ultimately, there should be plenty of room for Comcast to develop new, innovative ways to distribute content.  Pursuit of these efforts would serve to strengthen Comcast over the long-term and at considerably less risk.

If Comcast does pursue the mega-deal by acquiring a content play, does anyone want to bet it will destroy shareholder value?  Any takers?

More IT Whining

If there is any group in the corporation which seems to have a chip on its shoulder, it is IT.  Marketing and finance are two others who complain a good amount as well, but if there was an Olympic medal given for complaining, the gold would seem to goto IT over any other functional group.

Common complaints include:

• "We're just order-takers."
• "The business doesn't understand the value of IT."
• "Senior management doesn't understand technology."
• "The requirements always change."
• "IT doesn't have a seat at the table."

The list of complaints is a mile long.  And the worst part is that the popular media seems to reinforce these beliefs constantly.  The most recent example comes from Alan Cane in the March 19, 2008 Financial Times.  Cane's article entitled, "It's much too early to write off the role of the CIO" opens with stories from Boots, the UK high street chemist (aka pharmacy) and retailer, House of Fraser, which "did away with the position of chief information officer, a move which heightened speculation that this animal, only recently evolved from less exalted creatures, was on the way to becoming an endangered species."  Per Cane, the "apparent logic behind their decision was that the company's computer systems could be managed perfectly satisfactorily by a data processing specialist.  The job of aligning IT strategy with the objective of the business would fall to the chief financial officer."

So I don't want to argue whether what Boots and the House of Fraser did was appropriate as that is not the point.  I'll just say that I think it is quite a bad idea.

The more alarming point is that Cane seems to extrapolate the removal of CIOs from these 2 organizations as some sort of trend which it really is not.  Who is arguing for the end of the CIO?  Is this a common trend?  Cane then goes onto talk about the history of CIOs, assert the competence of most of them and closes with the advice that CIOs should "concentrate on finding ways to use technology to expedite business change appropriate to today's trading environment."  I have no idea what that actually means but oh well.

In any case, why is there so much conversation in the media and within IT departments of this type?  Has IT never heard of the power of positive thinking.  These types of constant "IT as a victim" rants serve to make the organization territorial, paranoid and probably do nothing for the morale of the people within the organization.

Anyone work for a positive IT organization that doesn't feel victimized by the "business"?  I'd love to hear from you and hear what your organization has done to achieve this.

For a Limited Time Only: Economists Gone Wild!!!!

So are we in a recession? Or aren't we? Who knows? Economists have a different view, and despite a track record as good as your local weatherman, we still listen to them for some reason.

But now a whole host are coming out with their wisdom after the fact not adding much to the dialogue but somehow their "insights" get picked up by the media. The first one is Lakshman Achuthan.  Achuthan is the managing director of the Economic Cycle Research Institute and feels the Fed didn't act quickly enough when it begn cutting key interest rates last fall. The economic stimulus package also came too late, he said. (article link)

"If they had done all this in the fourth quarter … we might not have had a Bear," he said in reference to investment bank Bear Stearns which collapsed last week.

"I think we'd be having a different discussion," Achuthan said.

Achuthan pointed to the end of 2007, when inventories were low, as the time to act. A boost to the economy then would have spurred consumer spending and resulted in increased productivity, he said.

"There was an opportunity that was wasted by policymakers because they didn't understand those dynamics," he told CNN.

Thanks Lakshman. Where were you about 15 months ago?

The other economist who is also crying is John Ryding of Bear Sterns economics squad. In a note issues last Thursday, Ryding and team suggest "that the failure of the Federal Reserve between 2003 and 2006 to adequately raise the federal-funds rate to a more normalized level in part contributed to the downturn the market is experiencing - and by extension, the collapse of Bear Sterns." (quote from 3/22/08 Wall Street Journal)

While I understand that it  must suck to be a Bear Sterns employee these days, I doubt Mr Ryding was arguing too much with the Fed's actions when money was cheap and Bear Sterns stock price was above $100.

Being a Monday morning quarterback sure is easy, ain't it?

AOL Asserts Its Innovation Street Cred - Al Gore Better Watch Out

So everyone knows that Al Gore invented the Internet, right?  Well, if you didn't know that, now you know.

But not to be outdone, AOL wants you to know they're the trailblazing pioneers in another technology movement.  With their recent acquisition of Bebo, a social networking site, AOL is stepping into the latest web2.0, paradigm shifting, synergistic space.  But don't think they are new to the space.  AOL chief Randy Falco states, "Social networking was really invented here at AOL.  We let it get away from us."  So now you know who to thank for the countless hours you've spent on Facebook, LinkedIn, MySpace or Friendster (for those who remember this has been).

It just got away from them.  I like that.  Thanks for social networking AOL.  We owe you.