One of the most important elements of problem solving is information. Without the proper information, problems cannot be solved to any degree of accuracy. Solely using gut feelings to solve problems can often cause more problems than are solved. We need to measure in order to do the following:
Know where we are in relation to where we were supposed to be;
Predict future status;
Facilitate comparison and benchmarking;
Plan new projects;
Understand and model the impact of driving factors behind performance;
Find and give priority to improvement actions;
Verify effects of actions and relate these effects to goals.
Measurements and models by themselves do not result in good decisions. They do not replace thinking, knowledge, and good judgment, but they do provide the objective foundation that good project managers need in order to make quality decisions.
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Chapter 8: Deploying the project office
Since many of the problems experienced by the organization today are to a large extent the result of actions it sanctioned and behaviors it rewarded in the past, PO deployment requires that, in addition to processes and tools, the organization revisit the assumptions on which it was built and is now being run.
Very few of the management "silver bullets" that were proposed in the last decade are still around, in general not because of their lack of merit, but because they ignored the culture of the organizations in which they had been deployed. A lasting and effective change therefore requires the alignment of the organization's culture, its reward system, power structure, and mental models in consonance with the PO's primary rationale for its existence: maximizing the benefits across the entire portfolio, rather than on individual projects. It requires that the organization stop rewarding employees who "fix" problems and start rewarding those who do not create them. It requires that the organization stop promoting staff members who promise things that they later cannot deliver and start promoting those who take calculated risks.
8.1 Layers of change
Most change and improvement efforts live short lives or fall short of the expectations they were born with. The reason for this is that most organizations make only the relatively easy changes: They introduce a new process, a new tool, maybe even a reorganization of sorts, but they fail to make the deeper cultural, political, and behavioral changes needed to institutionalize the new mindset and ensure the realization of its long-term benefits .
Effective and lasting changes require that the organization make congruent decisions in each of the nine areas of concern depicted in Figure 8.1. By congruent decisions, we mean decisions that support or reinforce one another and not decisions that by design or omission promote conflicting behaviors, because as Figure 8.2 shows, contradictory messages do not result in a balance between competing objectives but in a loss of overall performance and dysfunctional behaviors across the organization.
Figure 8.1: Business-process-improvement layers of change. (After: .)
Figure 8.2: Incongruent messages and their negative effect on overall performance. (After: .)
8.1.1 Reward structure
Promotions, incentives, and recognition are the mechanisms that organizations use to further their organizational goals by matching individuals to the jobs they are best suited for and enhancing the motivation and satisfaction of individual employees. Promotions serve two important and distinct purposes. First, individuals differ in their skills and abilities and jobs differ in the demands that they place on individuals. Promotions are a way to match individuals to the jobs for which they are best suited. The matching process occurs over time as employees accumulate intellectual capital and as more information is generated and collected about their talents and capabilities. A second role of promotions is to provide incentives for employees through the pay and prestige associated with a higher rank in the organization.
While promotion relates to the long-term relationship between the employee and the organization, incentives and recognition focus on promoting specific types of behaviors within definite time frames. Incentives such as a pay raise, bonus, and stock options have a monetary value, whereas recognition in the form of awards for good performance and favorable mentions in company newsletters are symbolic rewards, satisfying socioemotional needs. Some other rewards, such as dinners for two or tickets to sporting events, although they have a monetary value, are also primarily symbolic.
Pay-for-performance systems were touted as the answer to linking contributions to rewards, but since their implementation is usually plagued with unanticipated side effects, their efficacy in promoting sought behaviors is far from being universally accepted. There is, however, total agreement that a misaligned reward system guarantees dysfunctional behavior.
To align the long-term view that should prevail among the PO staff with the reward system, small annual rewards should be replaced by more significant ones, to be paid once the results, desired or otherwise, of a given administration have had the time to manifest.
Rewards should also be the result of a multidimensional evaluation, because single objectives, achieved at the expense of other equally important concerns, are easy to attain. For example, what good does it do an organization to deliver a project on time if half the members of the project, including the organization's best designer, resigned in the process? What good does it do if a project is delivered on time, but the organization loses a client because of the product's lack of quality? What good does it do an organization to sell hundreds of systems if it is losing money on each of them, and worse yet, doesn't know that it is losing money?
8.1.2 Organizational culture
Organizational culture is the pattern of norms, values, beliefs, and attitudes that influence individual and group behavior within an organization. Originating with the founders of the organization, culture is shaped and honed over time by succeeding senior executives and other stakeholders. Culture filters down through the organization and is further refined and modified in the day-to-day priorities and actions of everyone in the business. Culture affects performance because it affects how people think, feel, and act and helps to determine the situations in which they act.
Enculturation into the beliefs, practices, values, and style of discourse of the organization occurs through work routines and positive reinforcement from someone who has already been successfully enculturated. Enculturation is not just the process of internalizing the knowledge and skills required by a job; it is the process of becoming a member of a community. For newcomers to the organization, enculturation entails picking up the relevant social language, imitating the behavior of successful members, and gradually beginning to act in accordance with community norms.
Organizational cultures fill the information gap existing between what is explicitly communicated and what is required by the task at hand by providing preexisting ways of understanding what is occurring, how to evaluate it, and what kind of actions constitute an appropriate response to the situation. The desirability of a strong culture depends on the accuracy and validity of the knowledge it provides to the employees.
Among the mechanisms by which the PO manager could steer the evolution of a project management culture within his or her sphere of influence are as follows:
A clearly articulated vision, expressed in the PO mission and its processes;
The recruitment of like-minded employees;
The use of symbols to reinforce cultural attributes;
Repetitive socializing and training of employees;
The praise and reward of behavior consistent with the desired culture;
The design of an organizational structure that reinforces the desired values.
Having a strong culture could be a detriment, if as in the case of the now defunct People Express  it prevents the organization from learning and adapting to a changing environment. People Express Airlines was patterned after the values of Don Burr, its founder and chief executive officer, who effectively used cultural levers to develop a strong company culture. Burr's explicit purpose was to form an airline that would be a model of customer concern, people sensitivity, and teamwork. People Express achieved almost unbelievably successful results during its first 5 years of existence, setting world records for income and profitability. However, a change in environmental demands brought about by the airline's purchase of Frontier Airlines, a unionized company, led to the rather swift demise of both companies. People Express, with its strong culture, was simply unable to adjust to the requirements of a radically different environment.
8.1.3 Power structure
According to Rosabeth Kanter , power is the United States' last dirty word. It is easier to talk about money and much easier to talk about sex than it is to talk about power. People who have it, deny it; people who do not have it, do not want to appear hungry for it; and people who engage in its machinations, do so secretly.
Robert Dahl  has defined power by saying that person A has power over person B to the extent that A can get B to do something that he would not otherwise do. Access to resources, information, and the ability to show discretion or exercise judgment in extraordinary circumstances are attributes of organizational power. Because of this, people with power are capable of accomplishing more and passing on more resources and information to subordinates. When employees regard their manager as powerful or influential, they see their status enhanced by association and they generally have high morale and feel less critical of or resistant to their boss. More powerful leaders are also more likely to delegate—since they are too busy to do everything by themselves—to reward talent, and to build a team that places subordinates in significant positions. The result of power is then more power.
Although people vary to the extent that they seek power, they rarely relinquish it voluntarily. This is eloquently expressed by Machiavelli in The Prince :
It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.
Power in organizations comes from a variety of sources. Structural sources of power refer to the power that the organization vests in an individual based on the work or position he or she is responsible for. Personal power is derived from the characteristics of the person him or herself, such as expertise or friendship. Structural sources of power include the following:
Reward power (the capacity to dispense rewards);
Coercion power (the capacity to dispense punishments);
Task power (the power that accrues naturally to a particular role in the organization);
Legitimacy power (the authority that emanates from a position in the organization).
Personal sources of power include the following:
Expertise power (the power derived from the possession of valuable information or status);
Referent power (the power arising from the desire of others to imitate or be agreeable to the referent).
The introduction of a PO into an organization implies a shift in the balance of power. The design and location of the PO manager job makes it a very desirable position for anyone aspiring to an executive role in the organization. Not only is the job relevant, it allows considerable discretion in its exercise and spurs close contact with higher-level people who confer approval, prestige, and recognition. PO power comes at the expense of the line functions, which formerly oversaw the execution of the projects, the sponsors, accustomed to dealing directly with project managers with little or no oversight, and the project managers, who might see their margin of maneuver reduced. The paradox is that these are precisely the people the PO manager needs to support the change. Despite what much of the literature says, operational changes do not take place at the top nor at the bottom. They take place at the middle. If the PO concept is going to work, it is the line managers, the product managers, and the project managers who need to buy into it. Therefore, it is crucial that the people responsible for the deployment of the PO acknowledge the existence of these concerns and make sure that the changes introduced do not render other levels of the organization powerless.
Power is distributed across the organization and not just concentrated at the top, so even apparently powerless members of the organization who feel threatened by change can retaliate. This is clearly illustrated by the relationship between a manager and a subordinate, where the manager who asks the subordinate to do a particular job becomes dependent upon the subordinate to complete the task correctly and on time. Certainly the manager has the power to replace the subordinate if the task is done poorly or late, but firing the subordinate will not change the fact that the task needs to be done and that valuable time has been lost. Furthermore, the manager will not escape the situation unharmed; to some extent he will be hurt by his inability to get the job done without resorting to the power of his position.
People do not resist change because they are stubborn or because they are afraid of new things, they resist change for reasons that make good sense to them even if they do not make sense to us. Resistance is seldom overt, it rather manifests in the form of pseudo-technical excuses explaining why the PO, although a good idea, will not work in this particular organization. It manifests also by noncooperation and misinformation that could lead the PO manager to make some bad choices. In making changes, then, it is wise to make sure that the people affected are involved, informed, and taken into account, so that the process can be used to build their own sense of worth. If such involvement is impossible, then and only then is it time to ask for managerial support to move these people out of the territory altogether.
8.1.4 Mental models
Aside from organizational culture and political structure, employees have their own mental models through which they perceive and interpret the messages generated by the organization.
There is a simple experiment, popular among organizational behavior professors to illustrate the concept of mental models, in which a group of students is asked to read a short and simple story, around two pages long, and then to rate the characters appearing in it from most despicable to least despicable and then explain these ratings. The surprising thing about this experiment is that rarely do two students come up with the same ranking for the characters, and that some of the traits that cause people to pick one character over another are completely ignored by other participants reading exactly the same material.
Mental models can range from simple generalizations, such as "people work best under pressure," to complex models such as the one presented in Chapter 2 to explain the propagation of delays across projects. But what is most important is that mental models are active, they shape what we see, how we interpret what we see, and how we respond to it (see Figure 8.3). The perceiver selectively attends to sensory inputs, constructs a representation of the inputs, and attaches a meaning to the constructions. Perceptions are then used as inputs to elaborate responses that again are conditioned by our beliefs about how the world works.
Figure 8.3: How the mental model conditions the active process of perception. (After: .)
Mental models also play a role in filling in gaps of missing information required to make a decision, so in the absence of knowledge or facts, we use beliefs. If our mental model holds that people work best under pressure, when we are confronted with a project that is slipping away, we are going to conclude that we are not exerting enough pressure. Furthermore, we are likely to look, and find, clues that confirm that this is in "fact" the case and disregard or explain away contrary evidence.
In his book The Fifth Discipline , Sengue explains that the first thing that needs to be answered about mental models is not whether they are right or wrong, obviously a fairly important thing, but rather whether they are tacit or explicit. A tacit model is a model that exists below the level of awareness; in consequence, it prejudices our judgment without us knowing it.
As the stock market demonstrated during the dot-com era, entire industries can develop chronic misfits between mental models and reality. But as devastating as mental models can be to any change effort, they can also be powerful change accelerants if they are made explicit and discussed. Shell and the World Bank have used this approach for internal improvement processes as well for initiating change in their external projects.