Transform Your PMO into a Value Center
All organizations are looking to provide value. It seems simple that everything you do will ideally create value for the business. So then why do project management offices (PMOs) and PMO leaders constantly find themselves justifying their moves and validating their existence? After working with a number of these organizations and watching the market develop, I have some ideas on why the PMO might be a “cost center” by default and how they can flip the script to establish themselves rightfully as a value producing entity.
The first step to being a “value center” is knowing exactly what that is. While delivering value isn’t hard to conceptualize, understanding what is valuable to your organization might be hard to define and even harder to measure. While the PMO is typically focused on efficiency metrics, such as delivering on-time and on-budget, they less often tally up the value contribution of the projects they deliver. They also don’t always evaluate the strategic competence of the projects, rather focus on getting them done with a level of quality.
That’s not to say any of this is negative – actually quite the opposite. PMOs have gotten really good at knowing how much effort a certain project will take and what resources they will need to complete them. That is a huge benefit to the business and when applied to strategic projects has exponential impact. The problem then becomes what is a “strategic” project and what value is placed on it (because spoiler: it’s not always cut and dry).
When defining what is classified as “strategic” for your PMO, it helps to categorize those initiatives as transformative, sustaining, or efficiency gain. Transformative projects tend to have a high level of uncertainty and risk, and less measurable direct impact. Sustaining projects tend to have a medium degree of uncertainty and a decent level of risk. Efficiency projects have the least amount of uncertainty, higher levels of measurable impact but also (unfortunately) less business results. By that, I mean they are just an improvement on what you are already doing, not a disruptor or game changer. I’m not suggesting that all or even most projects can be “game changers” – just that some of them need to be in order for the PMO to have the desired effect on the business. And that every PMO leader should know how many and which projects are the “game changers.”
Let’s Talk About Change
Let’s talk about change for just a minute. These “game changers,” the projects that are transformative in nature; that are innovative, ground breaking, build a competitive edge projects are hard to manage and not easy to come by. They are also what differentiates and drives your business forward. The future of your company if you will. We’ve experienced these high intensity changes in our industry before and seen the impact – Netflix moving to streaming, for example. Often times these transformative projects require incremental and strategic build to minimize risk and increase the chances of adoption. Organizational change by nature is gradual and evolutionary. Business transformation has been in play for years at some companies and they are still working on getting it right. It is a delicate process and the PMO is the perfect team to execute this type of change.
But lately, this entire year for many, PMOs don’t have the luxury of slow roll outs and methodical approaches to ensure success. For the most part, PMO leaders have been firefighting and transforming at incredible rates to overhaul the business and meet new requirements. I’m talking about 2020 and the changes that it has brought. I’ve seen and worked with PMO leaders that have done more in this one year than they have in the last five as far as progress toward changes. And it has been impressive to watch them rise to that occasion. We’ve seen our customers implement sweeping resource changes seemingly overnight with little problems. Business pivots from in-person, brick and mortar stores have transitioned to fully online operations in record time. Change is a constant and this past year has only reminded us at the incredible impact change can have.
The Fundamental Gap
It’s easy to highlight those business that are succeeding or rising to the occasion to meet changing business demands, but what about those struggling to stay afloat or caught in the turns and stuck in the process? It’s not easy to implement change in the best of circumstances, and when it’s challenging, it’s really challenging. The gap between where you are and where you want to be can feel draining and it’s hard to overlook the fact that that gap exists for a reason. I tend to think of it as a right brain, left brain conundrum where there is a fundamental way of doing things and trying to break that cycle is against what we feel is natural. Change is hard and it is much easier to bet on what’s worked in the past than to try something new. But what happens when you stick with the status quo or let the change happen rather than be the change your organization needs? Almost always innovation is the first to lose out. When panic strikes, it is usually the exploratory, transformative projects that get cut in favor of the sustaining work that needs to get done. It’s common and it’s natural to react that way but I’d like to challenge you to review that thought process and try something different.
The Future of the PMO
In order to become a “value center,” a PMO that makes the business better and is relied on for business changing projects, it requires a different model. A different mindset. A cultural shift where change is embraced and encouraged and leaders are looking to you for direction. No, this isn’t some PMO utopia, it is actually what the PMO was meant for. The purpose of the Project Management Office is to improve the business and advise on what projects can and can’t be done – and also what should and shouldn’t be taken on. Your strongest ally – your data. Since the PMO is equipped with information, it’s not just a word of warning, it’s a reliable piece of information that should be part of the decision-making process and every leader aware of what is at hand. What I see as the “next generation” PMO isn’t just a doer or execution machine, it’s really a vessel for strategic business empowerment through the coordinated management of projects, programs, products, portfolios and any other “p” word that is entailed. The PMO needs to think beyond processes and projects (though that is the groundwork) to fulfill a strategic gap. Instead of hierarchies and relationships, projects need to be thought of as interrelated pieces of a strategic puzzle, all coordinated together to a specific goal.