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SPECIAL SECTION || Organiiational Agility

In a time of extraordinary upheaval, organizations must build agility into their DNA using iterative practices and robust risk and change management

BY SARAH FISTER GALE ILLUSTRATIONS BY JAMES STEINBERG

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AGILITY DOES NOT EOUAL ANARCHY.

Faced with a tumultuous marketplace, organizations have to act fast. But a solid foundation of project management practices still applieseven if it is implemented in a quick and iterative manner. Recklessness is no substitute for organizational agility. Yet the increased volatility and complexity of the project landscape makes reacting to and planning forchanging market conditions more difficult than ever before. Whether due to anemic economic growth or the continuing digital revolution, three-quarters of executives said their business environment was changing, according to a 2010 report by the Institute for Corporate Productivity. To thrive in such an uncertain business world, organizationsand their project management offices (PMOs)must identify risks sooner, adapt to change quickly and deliver value incrementally across the project life cycle. PMI's Pulse of the Profession Organizational Agility report found that of projects at organizations with high agility: 73% finish on time 75% finish on budget 83% meet goals and business objectives 71% meet or exceed ROI All those numbers are well above the survey average. "It's a paradox," says Niel Nickolaisen, CIO of Western Governors University (WGU), an online university based in Salt Lake City, Utah, USA. "In this age of declining budgets, organizations have to deliver more results at a faster pace than ever before." Business and project leaders are discovering one of the best ways to do that is by aggressively reshaping their culture and business practices on a three-pronged front: More collaborative and robust risk management Rigorous change management to better adapt to changing market conditions Increased use of iterative practices, based on a solid foundation of project management standards, that enable teams to follow new lines of thought AH three practices are gaining favor as organizations worldwide scramble for an elusive edge on the competition, according to PMI's 2012 Pulse of the Profession report

Severe resource constraints caused by economic conditions require PMs to be ultra efficient. Karthik Project Managers on Twitter (#pmot) Talk About the Components of Organizational Agility
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"Organizations across sectors are trying to increase their agility so that they can get innovative products to market faster," says Kshitiz Verma, head of cloud operations at NEC, an IT firm in Mumbai, India. By stripping away the layers of procedures that can slow projects and replacing them with more collaborative decision-making processes, organizations can deliver projects faster and more efficiently than their rivals. "You can't achieve agility if everyone works in isolation," Mr. Verma says. "You've got to operate as a team where everyone has a chance to contribute." Such partnerships enable organizational leaders to build the strongest portfolio and ensure that project goals align with business strategy, says Mr. Nickolaisen. This, in turn, liberates organizations to take calculated risks and turn all the volatility and chaos to their advantage. "That's when you get organizational agility." THE RIGHT RISKS When organizations are forced to make rapid-fire decisions, projects can careen out of control. Proactive risk management that begins during project selection and planning enables executives and project leaders to identify the factors that could secure or sabotagesuccess. Whether it's tracking a shifting regulatory environment or recognizing a lack of adequate internal resources, early and consistent risk management allows organizations to be more flexible and manage obstacles more fiuidly. That can only happen when executives, business units and project teams work together throughout the project life cycle. Only then can they make changes to projects before problems arise, says Pete Nathan, PMP, senior manager of the PMO at Gulfstream Aerospace Corporation in Savannah, Georgia, USA. "The next step in managing project risks is preventing the risks that derail projects, not dealing with them after they happen," he says. A June study by Deloitte and Forbes Insight

found that 91 percent of U.S. executives say they plan to reorganize their approach to risk management over the next three years. Strategies include: Elevating the profile of risk management throughout the organization (52 percent) Reorganizing risk-management processes (39 percent) Providing additional training for staff (37 percent) Incorporating new technologies (31 percent) To make the most of their risk-management efforts, executives need to leverage the firsthand knowledge and expertise of project leaders, particularly those within the PMO. "Executives choose projects for business reasons, but they may not fully understand the technological or resource limitations related to those choices," Mr. Verma says. By joining forces, executives and PMOs each get a more diverse perspective on risks and opportunities. Mr. Nickolaisen says that at WGU, every project plan is evaluated based on whether it will increase graduation rates, improve operational excellence and serve WGU employees. "You have to define your competitive advantage, then focus your innovation efforts on projects to support that advantage," he says. Establishing stringent selection criteria lets organizations identify where to take risksand where to scale back. At WGU, for example, network reliability projects may be mission-critical, but they don't drive competitive advantage, so Mr. Nickolaisen opts for off-the-shelf solutions that require fewer resources for implementation. That lets the school focus on a more cutting-edge student analytics project that could help the university improve graduation rates. "Because we choose standardized solutions for those projects, we have the capacity and resources to support innovations that push our competitive advantage," he says. ITERATIVE APPROACHES To lessen the possibility of failure on these high-

"You can't achieve agility if everyone


worRs in

isolation. You've got to operate as a team where everyone has a chance to contribute."
Kshitiz Verma, NEC Mumbai, India

Ramamurthy, PMP, @froivkanhik, Chennai, Tamilnadu, India \\ I think org change should be bottom up. You need the support from the people

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value projects, WGU's delivery team breaks them into smaller chunks, delivering iterations in phases. "By breaking the project into bite-sized, value-driven pieces, we lower our risks dramatically," he says. That's one big reason more organizations are adding iterative and agile approaches. PwC's Insights and Trends survey of global project management practices released in August found that 34 percent of respondents use an agile project management approach within their organization. And the Pulse of the Profession report has seen a steady rise in the use of agile approaches. When a project is divided into smaller pieces delivered more frequently and with a regular stream of stakeholder feedback, organizations can deliver prototypes on a rapid basis. Not only can project owners get immediate value from those deliverables, they can gain better control over what comes next. "It's a business enabler," says Bart Jutte, managing director of Concilio, a project and risk management consultancy in Delft, Netherlands. "It's a low-risk, low-cost way to deliver big benefits." But adding such iterative approaches won't deliver benefits without standards as a foundation. Then the outcome can be chaos. To achieve true buy-in, everyone, from the executive office to the PMO to the delivery team, has to be on board with the basics and the processes. Alas, it's the top tier the one that can compel the rest to followthat's often hardest to convince. "The programmers are usually in favor of iterative methods. The hurdles come when you try to get operations and management to accept the approach," Mr. Jutte says. "But you must have support from the top if you want to achieve this kind of change on an organizational level." That's where the PMO comes in. PMO leaders can act as a vital link between senior leaders and project teams, communicating the business value of iterative practices in terms executives understand. The PwC report found that organizations that have had a PMO for six or more years reported higher

performance around quality and achieving intended business results. Mr. Jutte is currently working with Crdit Agricole Consumer Finance in Amsterdam, Netherlands to implement an agile approach for its IT department. The stakeholders were skeptical of the processand of the IT department's ability to deliver projects on time and budget. Rather than try to explain the benefits of a more agile approach, the PMO decided to show them. The IT team chose a project to rework a customer website, created a proof of concept and delivered a rapid prototype of the upgrade in two weeks. Then the PMO brought the stakeholders together to show them the prototype, demonstrate the new site and receive feedback on how to proceed. The stakeholders were properly impressed, Mr. Jutte says. And by getting their reactions early on, the team was able to make adaptations to increase the project's value. REDUCING THE DRAMA OF CHANGES No organization can keep up with all the shifts without securing buy-in across the enterpriseand that takes change management. The PMO has a pivotal role to play by acting as a source of information and adviser to portfolio leaders. "The PMO provides the facts so the executives can make the best decisions," says Janice Weaver, PMP, associate vice president of the enterprise program management office at Norton Healthcare, Louisville, Kentucky, USA. Ms. Weaver's team aims to ease the drama of change by building fiexibility into its standard project management practices. If, for example, an issue has a low likelihood of occurring, the team won't run it through a formal risk registry and review process. "We make note of it and discuss it informally," she says. "But we don't spend hours on tasks that don't add value to our process." The best PMO leaders help manage change on projects by acting as a knowledge channel

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for it to work and to have a long lasting effect. Kristen Dammers, @KristenDammers, London, England || Describe "organizationa

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"It's a paradox. In this age of declining budgets, organizations have to dieliver more Jesuits at a faster pace than ever before."
tftUei Nickolaisen^Vdlli^ltfpernors University (WCU), Salt LateCity, U t i p A . <

PHOTO BY CHAD HURST

between leaders, vendors and front-line workers, she says. Often, that means doing whatever it takes to keep the project moving forward especially when that comes to guiding the team through unexpected changes. Ms. Weaver points to a new Norton pdiatrie outpatient facility project. Prior to the launch meeting, the architect sent an eight-page tabbed spreadsheet denoting all the potential building features and asked representatives from all 20 departments to fill it out before the kickoff event. Although the exercise was a good one in theory, the hospital staff had neither the time nor the patience to complete the document. So Ms. Weaver met with the architects, who then came back with a revised statement of work, and the next meeting went much more smoothly. When problems arise and changes occur, PMO leaders can intervene and help organizations act with agilityallowing everyone to be more productive.

AVOIDING SURPRISE PMOs foster even greater organizational agility when they're empowered to find and implement innovative solutions. According to the Pulse of the Profession Organizational Agility report, 71 percent of organizations that are most effective at change and risk management report having a PMO, more than 20 percentage points above the study average. This year, Gulfstream's PMO launched a project to build an analytics tool to act as an early predictor of failure. It examines risks correlated to previously identified root causes of missed project targets, allowing the team to more readily spot danger points and take proactive corrective actions. "If you can predict in advance what will cause a project to go into a ditch, you can intervene before it happens," says Mr. Nathan. With that information, PMOs can implement review steps to determine if a new project is headed down the same path. For example, an absentee project sponsor and multitasking human resources

agility" in one word: Flexibility. Odeiar Vando de Oliveira, PMP, @odelar, Sao Paulo, Brazil \\ In the public sector, it's hard to use both

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The biggest factor that causes problems on projects is surprise. If I k n o T A T something is going to happen, I can plan for it, but if it's a surprise, it takes a lot longer to deal with."
i l l Jody Pollack, PMP, Ricoh Company, Atlanta, Georgia, USA

agility, he says. "The sooner problems can be solved, the more agile an organization becomes." Organizations can further enhance their agility by incorporating strategic interventions into the project plan, says Jody Pollack, PMP, senior program manager at office equipment maker Ricoh Company, Atlanta, Georgia, USA. "The biggest factor that causes problems on projects is surprise," he says. "If I know something is going to happen, I can plan for it, but if it's a surprise, it takes a lot longer to deal with." Mr. Pollack is currently overseeing deployment of 750 copiers and devices to 85 locations. Each machine must be configured based on the client's unique specifications, and many of the locations such as a chemical company and government sitesrequire background checks and safety training for the installation crew. "There are a tremendous amount of logistical issues to contend with," Mr. PoUack says. On such projects, resources are always stretched thin, and clients have a high sense of urgency. So rather than waiting until these issues rear their ugly heads, Mr. Pollack's team is deepening the talent pool, working with senior executives to launch a training program and background checks for all technical personnel who will then be ready for action. By thinking about project obstacles from a portfolio perspective, the PMO eliminates a recurring riskand accelerates the company's response time. Of course, there is no single path to organizational agility. But if PMO leaders and executives work together to add more iterative practices, identify risks upfront and be more open to change, they can solve problems, take smarter risks, and deliver innovative products and solutions to market faster. "We are trying to think about change and risk management more proactively," Mr. Pollack says. "It's easy to get mired down in the day-to-day battle and not take a step back to look at the big picture, but that's what you need to do to succeed." P M

are both high predictors of troubled projects at Gulfstream, says Mr. Nathan. When project leaders spot these potential issues during assessment, they can find a new stakeholder or secure additional resources. Or, they can delay the project until it has the leadership and support needed to succeed. Either way, the leaders must manage those changes in the project plan to ensure it doesn't go completely on track. "Early predictors can be a project's salvation," Mr. Nathan says. "You can change its fate and get it back on track." It's that adaptability that drives organizational

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[change/risk management]. W e use risk management techniques as much as we can. Jrme Gdor), @jeromegedeon, Catineau,

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