Posts Tagged ‘Risk Management’

Project managers (PMs) have to deliver; yet power to get the job done can be elusive. Is there a way PMs can take care of themselves and the team knowing they are lower on the food chain? Can they get some power? Yes. How so? Let’s explore.

Portfolios, Programs, and Projects

First some background. A simple, common hierarchy with a current situation in the transportation industry is:

Location Position Example
External Client EPA
Internal Portfolio Mgr internal combustion engine
Internal Program Mgrs gasoline diesel
Internal Project Mgrs 1000cc 3000cc 4000cc 5000cc

The “client” in this case is the external regulatory agency. The deliverable is a reduction in emissions for the various types of engines a manufacturer produces with standards varying based on the displacement and fuel consumed. We’ll look at the client after examining the internal organization.

Internally, working from the top-down, there is a progression from strategic (market position, profits, etc.) to the tactical/tangible (every engine coming off the assembly line has to meet stringent requirements within the next few years). Teams in the internal combustion industry are feeling the heat with pressure coming down from above. Deadlines and goals have been set.

To maintain a healthy balance in this situation PMs will do best understanding and communicating in the language used by those with more strategic positions and power. This language also needs to provide a portal through which the PMs can express project concerns. The language is risk management.

Now, shift focus to the client. It is through the client the PM can gain influence – better known as power. The connection between the PM and the client is quality. As the old saying goes, “The proof of the pudding is in the eating.” Again, each engine needs to perform per regulatory limitations.

So, in a way, the PM has a direct connection with the client through quality. It is important to avoid being Pollyannaish and think the PM has the power baton of the client. The situation is subtler. This is where risk management comes into play.

By understanding how the performance of the deliverable is impacted by quality the PM can gain leverage communicating through the business case. How? The PM uses a specific aspect of risk management – Expected Monetary Value (EMV). EMV can take quality, time, and money and combine them into one model – a model understandable to both the business unit and project team. A good EMV model tells how good or bad things can get in the current risk environment and points to areas where changes (time, money, resources) are needed.

This seems a bit roundabout if quality is the focus. So, why do this? Simple. There can be an intrinsic desire for quality in an organization. That desire, though, can vary in commitment from organization to organization as well as within an organization.

On the other hand, the focus on time and money is pretty much universal and that is the context in which quality sits – always the bridesmaid, never the bride. EMV flips the situation and addresses time and money squarely in the context of quality looking to see how stable and acceptable the deliverable will be in various risk environments.

Consequently, EMV models can help bridge client power to the team’s need to perform and cross over the obstacles of time, money, and resource constraints by showing how squeezing the team too tightly or working in the current risk environment could hammer profits and viability in the long run.

With the stage set, in the next blog some of the specifics of the EMV model and how it works will be addressed.

How stable is your situation? In today’s world the sophisticated businessperson can feel comfortable in believing their situation is secure because they have a high degree of connectedness both personally and in their line of business. The irony is this interconnectedness not only helps achieve high levels of success but also contributes to catastrophic downfalls. It has to do with the fact that systems with a high level of interconnectedness (complex) of and by themselves generate high-impact, random events. Let’s explore.

Black Swans

In his book, Black Swan, the author, Nassim Teleb talks about how the belief in stationarity (sustained, stable outcomes) in a complex situation leads to blindness, which can yield catastrophic results. A good example of this is the collapse of the home mortgage market in the United States. By now everyone is familiar with the financial bailout required for institutions such as AIG. The underpinning to this catastrophic failure was based on a concept statisticians call stationarity, i.e., the belief that consequences will continue to flow as anticipated. The fact is, with the growth of interconnectedness and markets the probability of random, dramatic events increases accordingly.

Randomness

In an earlier blog chaotic systems were defined as those having deterministic, interrelated rules producing nonlinear, unpredictable results. In other words, the results are non-stationary. So, in times of failure complex systems may provide avenues of hope. On the flipside, periods of success may be transitory.

Risk Management

For those of you familiar with my writings you may have noticed how often I refer to the value of risk management in complex situations. The reason for this is based on the reality of complex systems. The reason is simple. It is identical to what the superpowers realized when it came to the use of nuclear arms.  The worst case is intolerable. If financial institutions would have thought this way the recent recession could have been avoided. The problem is success risks breeding blindness in a form called “The Midas touch.” Essentially, when one suffers from the Midas touch they believe that the current string of successes will continue in an unending fashion.

Your Career

So what does all of this have to do with your career? The answer is, “Plenty.” One way to view this is to look back upon your career development. Take out a copy of your resume and list the events, especially the small ones that led to where you are now. You will notice that black swans have probably had a major impact; impacts far exceeding anything you could have planned. For example, there is the chance encounter with someone who provided that slight bit of leverage that made all the difference–the difference that led to a promotion or being fired. What helped you move forward was your degree of preparedness, which amplified positive events or dampen the consequences of a negative one. That is risk management.

The moral to this is remembering to practice a form of cognitive dissonance and learn to carry two streams of thought simultaneously. The first one deals with the best that could happen under the circumstances and the second deals with the worst.  While carrying these two frames of mind learn how to make decisions. It is this discipline that helps underpin career success. It is the absence of this discipline that leads to being a reactive follower and settling for crumbs.

Character and Personality #7: Courage

by Gary Monti on August 17, 2010

Tiger Woods’ difficulties with his swing and Mark Hurd’s (HP’s CEO) inability to fill out expense reports correctly could have a great deal in common – complexes. With Tiger there was admission of adultery repeatedly with different women. Hurd’s situation was different and a lot more bizarre since he settled out of court for sexual harassment in which there was no sex (this was validated by the woman who was the victim and accepted the settlement) and which did not meet HP’s criteria for sexual harassment.

However, he did spent $20,000 on the woman that was mis-reported and could have been a clerical mistake by his assistant since nothing apparently happened. Is that clear to you? If it is, let me know how you figured it out.

In a very public way they both show how trying to succeed simply by ego (the parts of the psyche that have been developed and are the basis of initial career development) has limits and the desire to be complete (integrate the parts of the psyche pushed down to please others) as Self will, when denied, erupt and wreak havoc without any regard to the consequences. In both cases it was sexual indiscretion (or at least in Tiger’s case since Hurd didn’t really do what he settled out of court for and over which he left his job as CEO of one of the world’s top computer firms.)

The bigger issue is the repressed parts of the psyche yelling, “Hey, over here! Ignore me at your own peril!”

Is there anything unique about how they both are behaving? No. As we go through life we all experience the same self-sabotaging behavior in some form (which doesn’t have to be sex) at one time or another. So, empathy is the order of the day for both gentlemen.

A healthy leader embraces his/her complexes and actually works to provoke psychic integration. Most of us, though, step away from doing this proactively due to fear over loss of security, position, control, power, money, or something else to which we are clinging. The belief is it is easier to just keep on doing more of the same hoping that it will work for us as it has in the past. Nothing could be further from the truth.

Refusal to listen to and address those noises coming out of our psychic basement can have disastrous results. For most of us, though, it feels easier to just do something equivalent to turning up the stereo and drowning out the sounds, hoping those things that go bump in the night will just go away. When we do that those entities in the basement just get angrier and stronger. They combine to form what Jung called complexes. Eventually, these complexes break down the cellar door and burst onto the scene. Usually they time it when we have company present; company important to maintaining our hold on what feels important. A real train wreck results.

A term used for these embarrassing situations is “acting out.” A complex sweeps over us and we become a bystander watching the strange behavior play itself out. That is what Woods and Hurd have done – acted out. A common response in trying to repair the situation is to pretend the complex isn’t there and diminish the significance of the problem. The dark cellar is avoided. Ego-based behavior continues until something technical is done to try and stay off-topic, e.g., get a new coach to work on one’s swing. Sounds nice but if the issue is due to a complex, it will just sit there nudging Tiger with every attempt at swinging correctly until the healing occurs.

An Inside Job

A recurring theme throughout these blogs is what occurs in the business world is a reflection of something going on internally. Hurd and Woods exemplify this. In line with this it is sad to see HP’s response to the situation (but that is fodder for a later blog on honesty). So, if the business, career, etc., is to be saved what’s the answer? Save yourself rather than the things you want to cling to. Do it proactively. Do it daily.

Courage

When Woods spoke publicly for the first time after the car accident and coming out of rehab he spoke with wisdom and humility. He owned having drifted away from himself and others and believed the solution was returning to his Buddhist roots. He nailed it! Does everyone have to be Buddhist? No. What’s needed is finding a path that leads to opening the cellar door and inviting those scary entities up into the light to integrate into a life in community.  The big surprise at that point is seeing there was nothing to be afraid of and those hidden parts are actually quite powerful and beautiful! In line with this, good book that is a simple read is “When Things Fall Apart” by Pema Chodron.

There is one caution, though. You could find out there is a need to do something different, requiring a letting go or transformation of the things being held onto. There’s no way of knowing without taking the journey. The one guarantee is NOT taking the journey will insure the loss of those possessions. This is one reason why I put such a heavy focus on risk management.

Change Management

So what are the implications of all this for business? Here’s the big secret.  The piper has to be paid. There is no easy road. Smart money bets are on the leader that not only opens but takes off the cellar door and works to be complete.

Is this difficult?

Yes.

Can there be pain associated with it?

Guaranteed.

Is it rewarding in terms of becoming happy, trustworthy, competent, and capable of being a good team player as well as a leader?

Absolutely.


Leadership and Mythology#1: Purpose of myth

by Gary Monti on May 11, 2010

An earlier Change Leadership blog asked if you have an internal compass.  Later, a Leadership Cancer blog asked you to list your tribes and associated role in each. These are part of a broader, critical question, “What is your personal mythology?” This new series will explore this question and how various answers impact us, people around us, and our business.

The importance of this question in everyday life was explored by the American mythologist, Joseph Campbell, who saw 4 distinct aspects to it:

  • The mystical
  • The physical
  • The sociological
  • The psychological

Mythology – What It Is And Isn’t

Before jumping into the 4 levels, lets try to understand what mythology is. We all go through dramatic, catastrophic periods in life, e.g., birth, death, marriage, parenting, establishing careers, etc., and have a desire to make sense of it all. This is what myth is – sense-making. We enter the world of mythology when we develop stories about our experiences. When there is a collective, tribal effort to develop one story combining all the truths presented the mythology takes shape by transcending the individual story.

So, mythology is simultaneously personal and communal. Teams work well when they share a common mythology and can tell stories that have powerful, emotional truth. Leaders excel when they can tap into these myths and awaken the team into seeing how moving forward with the project is in the individual and collective interest.

As used here mythology is a desire to find a simple narrative in the chaos of life. This is in contrast to “myth” being used negatively as a way to spin a situation, which is essentially distorting the context for personal gain (lying). Even at that, though, by looking beneath the spin a leader can see the mythology that provoked the distortion. This is very valuable information to have in capitalizing on opportunity, holding a team together, dealing with conflict, and responding to adversaries. When we understand the myth behind a statement we give ourselves a chance to let go of emotional reactivity and moral judgments and can respond in our best interest.

Mythology – Who Needs It? Why Bother?

Let’s bring this down to earth. Try this. Ask someone, “Would you give me an update on your project (or work)?” Sit back and listen. Later, come back and ask the same person, “Would you describe the best day you’ve ever had on this project (or at work)?” When they have finished ask, “Would you describe the worst day you ever had on this project (or at work)?”

Contrast the two methods: the progress report versus best/worst narrative. Which has more information? Which has more meaning? Which will convey a richer context? Which will give you a better sense of how the project is faring and what it is really about?

Don’t get me wrong. I am a huge believer in earned value and other methods that provide succinct accurate information. I also believe, though, that those reporting methods get meaning from the mythology that underpins them. That is why risk management is so important. It gets the story out. But I digress.

In the next blog we will start looking at those 4 levels of myth and why they are important to a businessman or -woman.

Share you comments! I’d like to know what you think. In addition to commenting on this blog you can also send a response via e-mail to gwmonti@mac.com or visit www.ctrchg.com.

Have you ever just wanted to make something HAPPEN! It can be a very strong urge in response to a frustration or a flash of insight. There are times when that jump to action makes great sense. There are also times when it is counter-productive and causes damage.

I’ve joked with clients and students about “getting the job done with adrenaline and testosterone.” (Without a gender-neutral phrase I beg the indulgence of women readers. Come to think of it, though, there are situations where high female testosterone levels have a definite impact – hyenas – but that’s another story.) Let’s explore both sides of the issue.

Fight or Flight

If your child was about to stick her finger in a light socket how fast would you jump to save her? That reflex is very handy. Does it have a lasting impact? You bet!

The cost associated with it includes elevated blood pressure, corticosteroids, insulin, adrenaline, etc. Having something like this happen once in a while is manageable. Having it happen every day is another story.

What if you walked into work and your team members were about to do the equivalent of putting their collective finger in a light socket and create a problem from which the project might not recover. You may react fast enough to get them to stop. Having the management bulk to push hard may be essential.

What’s the Problem?

Some people are very proud of being able to react so quickly. After all, part of a good leader’s value includes being able to gauge a situation and determine a plan of action in a timely manner. The problem lies in one word, “react”, or, better yet, being in a chronic state of reacting, a situation where reacting is the modus operandi for moving a project forward. The customer may get what they want but the cost is high.

In terms of scheduling and cost control, chronic reactivity is a sign of being out of variance. This means time, money, and people are being wasted. The project also has a higher probability of being damaged or failing outright.

Aside from this logical reason for letting go of reactivity there is another reason a little subtler and much more destructive. Adrenaline and testosterone can become addictive. This is especially true in highly frustrating environments. Sometimes when people pump up they feel more significant. It’s intense and transcends logic. These are the heroes, the firefighters, in the negative sense of the words. You may know people who brag about pulling all-nighters, working weekends, etc. Do you feel relaxed with them or on edge?

I was lucky enough to have a mentor, a refinery manager named Bill, who focused on safety and getting the job done. He would say, “Beware the expert firefighter, they carry a pack of matches.” Bill understood the dangers of reactivity.

What’s the Answer?

The answer is quite simple – plan. One of the real values of planning is supporting the team in staying in a proactive position. This helps them keep options open including longer time lines to develop responds. Oh, and stay away from the trap that says, “You must be a perfectionist since you always want to plan. What a luxury!” The answer to that is, “Actually, no, since my plan includes risk management the project has greater flexibility at a lower cost.”

If you would like to delve deeper into project management and leadership and how to become more successful send me an e-mail at gwmonti@mac.com or visit www.ctrchg.com.

Is your change leadership transforming your company into a front-runner in your market niche or turning it into aversion of Dr. Frankenstein’s monster? How do you even go about answering this question? What’s your reference point? Is it reliable?

Mary Shelley’s protagonist, Victor Frankenstein, combined with three project management principles, scope management, quality management and risk management, can help answer these questions and keep you and your organization on the right track. By following these principles your organization’s performance will have two important characteristics – Sustainability and Stability.

Frankenstein

Victor Frankenstein suffered from an extreme case of hubris. He was caught up in appearances. He wanted all the glory. He pulled pieces and parts together to create something that breathed and moved and ended up being a demented testament to his limited genius. The monster lacked human spirit. In the end, his creation was the source of his downfall.

Scope Management

The human spirit that was missing in the monster stands out clearly when examined in terms of leadership (see the Leadership post, the first in this series.)

From that blog you may recall the magnetic north for the executive compass comprises the leader’s beliefs and values. For Dr. Frankenstein they were ego, pride, and vainglory. The team (society) was shut out. His only worry was about what he would get from the situation. With that attitude no matter how hard he worked failure was certain.

To be successful the needs of all relevant stakeholders must be included when creating a scope of work that is going to transform your company. This includes competitors as well as clients. Knowing the competition is just as important as knowing your customers.  Success also includes your needs being met as part of the outflow of providing opportunity for others.

Quality Management

So how do you know if changes are moving in the right direction? The answer is simple. Your work must be sustainable. A synonym for “sustainable” is “quality management.” With quality management deliverables are defined in measurable terms consistent with the scope of work. This is the same scope of work that includes all stakeholders.

Going back to the Leadership post, the plan is the arrow on the executive compass that points the way. Quality underpins the plans credibility. It is incorporated into the overall change strategy as well as day-to-day management.

Dr. Frankenstein’s compass was useless. It was unable to provide meaningful direction. His plan was unsustainable.

Risk Management

The final component needed is stability. A synonym for stability is “risk management.”

Dr. Frankenstein’s work lacked stability. He worked in isolation. He lost his connection with society. All his work was self-referencing.

Why is this so important? Recall the dancing terrain from the Leadership post. Complex situations have a terrain that is constantly shape-shifting. There is too much for one person to map reliably and keep current.

Success requires everyone in the organization to be eyes and ears for new, changing information that can keep the map current.

With an accurate map the organization, under your leadership, can plan how best to deal with threats and opportunities present. This is risk management. Executing the risk management plans provides stability.

In the next blog we will look at process management’s place in change management. If this blog has been beneficial and you would like more information or care to comment send me an e-mail at gwmonti@mac.com or visit www.ctrchg.com.