We’ve discussed how innovation and change can be used to create the expectation of business benefits. Let’s finish up the concept of how companies “Respond” with more about the investment aspect, specifically, how benefits are actually realized through projects.
Successful companies are good at delivering on their core value proposition, and most measure key metrics that focus on consistency of delivery, quality and productivity. They build organizations that are attuned to achieving those metrics. They become good at process, minimizing fluctuations, and reducing exceptions. These same organizations often struggle with delivering projects, whose objectives are all about cross-functional change. Good process leaders have knowledge of where benefits from innovation exist, as well as knowledge of how to capture them through improvements to the business process, but they are often not skilled in leading and/or managing change. Your best people already have a day job; adding a project to their responsibilities is extra work. Make no mistake, if you want to realize significant benefits you usually have to drive significant change, and that leads to significant work.
Fortune 500 companies consider the ability to deliver projects – that is to say their ability to deliver benefits through transformation – a core capability. Most of them have dedicated groups who do nothing but plan and manage projects. Without a knowledge of how to run projects (any project: software, M&A, business restructuring, etc.) there’s a good chance that you will overspend, under perform and wear your best people out.
Why Do Large Companies Do Projects Well?
- They ensure the right sponsorship (determining who will take ownership). The broader the impact of a project within the company means the more highly placed the sponsor needs to be. Sponsors usually delegate the responsibility for planning and execution to managers, and frequently use Steering Committees when dealing with multiple stakeholders.
- They focus on the benefits. Defining the benefits basically asks “why we are willing to undertake this?” The goal of a project (especially IT related) is to produce benefits — business benefits. Project requirements, planning, resources, cost and risk management should all align to benefits creation. Business leaders need to understand benefits at the beginning in order to evaluate the attractiveness of any project.
As companies are responding to the COVID crisis, time and resources are both of the essence. You need to drive revenue, manage cost or enable a previously unavailable capability critical to your vision and plan. You don’t have the time or investment to do it over. I’ll continue to talk about projects next week.
Update: COVID-Related Loans
The rules for PPP forgiveness are probably set to change, with the House passing a bill last week that allows for 24 weeks to spend the funds, a reduction from 75% to 60% for payroll spending, an extension of the date to hire back workers to avoid being penalized and an extension of the term to pay back any amounts not forgiven from two years to five. The Senate is expected to weigh in this week, and I expect there will be a reconciliation of their views with those of the House. In any case, look for relaxed requirements for obtaining PPP forgiveness to be signed into law within a couple weeks.