Hands and knees leadership

The "PM maturity" challenge for financial services execs

by Michael Finley
Copyright 2002 by Michael Finley

Exclusively for PM Magazine

A marketing project manager at IDS Financial Services (now American Express Financial Services) recalls a meeting some years ago with then-IDS CEO Harvey Golub (who retired two years ago from the Chairman/CEO job at parent company Amex):

"Golub invited me to his office to discuss new products. At one point, he got down on his hands and knees to find a plug behind his desk for my laptop. There he was in his Armani suit, with his butt sticking out from under the desk. It was -- remarkable."

By all accounts, that was Harvey Golub, a hands-on, and in this case, on-his-knees high-level patron of project management.

What about in financial services generally? High-level project management has become a fixture in many FS companies in the last decade. But it's a struggle. Mergers and acquisitions upset the PM applecart, reshuffling the project portfolio every time a new company is brought under the umbrella.

 "When Comerica acquired Imperial Bank in California a year ago," said Shirley Edwards, project manager for Comerica, a Detroit based bank holding company. A significant-sized acquisition, "it forced us to do an immediate reprioritization, bumping several worthy items out of the project portfolio so we could follow through on our commitment to analysts. When an opportunity like that comes along, every other project gets shoved down."

Then there is executive churn. Data from Drake Beam Morin indicates a third of CEOs last three years or less in their position. That pattern is less true at the more conservative banking and insurance end of FS, but truer at brokerages, asset managers, and financial conglomerates like Citicorp and MBNA. And that suggests a steady source of disruption to carefully-laid strategic plans, and what project managers call the biggest project management sin a CEO can commit: shifting projects in midstream.

An "immature" industry

"Financial services came to project management pretty late in the game, compared to pharmaceuticals, government, aerospace, and construction," concedes Edwards, a past president of PMI's specific interest group for financial services.

Some of this "immaturity" stems from the closeted character of the banking and insurance professions. CEOs and other corporate officers tend to rise from within institutions, so cross-pollination of ideas from other industries is scant.

"But we're getting there," Edwards says. In the olden days of a decade ago, projects tended to reside entirely within IT. As the mainframe era subsided, technology became more distributed throughout companies, so projects began to arise in other lines of business.

As projects evolved out of the computer lab, executives at banks, insurance companies, and investment houses have been unable to avoid them. Many, like Golub, saw the advantage of closely aligning projects with their own strategic direction, even sponsoring projects themselves. These leaders added the project management mindset to their existing set of operational skills.

A prime example from today's headlines is The Basel Accord, the global risk management standards template requiring a colossal reengineering of every bank, insurer, and investment firm worldwide. "Many firms are calling it the next Y2K," Edwards said, "impacting every line of business, from the credit side to the back office, from the printed forms to the underlying culture." No way can an organization find its way to compliance without extraordinary project management, she said, plus the support and understanding of the senior team.

'Bungee-cord' management

The opinion of some project management professionals is that some top FS managers still don't "get" PM. They either regard it as a mechanical process (which it can be), or they think it is all done by software (which it isn't).

Christian Rosenstock, head of the project office for BNY Clearinghouse in Milwaukee, a subsidiary of the Bank of New York, agrees that project management is in the curious state of being an indispensable core competency of modern FS organizations without every organization committing to the discipline.

"We're an intangible industry with invisible products, so it's been harder for us to see the need," he said. "The need is that leaders connect project management with the concept of change. That's how you'll know you're in PM: at the end, something is very different.

"The earmarks of a tough project are that it requires change in the way people think, in their culture, and that it requires crossing or redrawing boundaries. The smart leader sees these difficulties in advance and addresses them early on."

Because of their unfamiliarity with the discipline, some CEOs miss the primary attributes of project work. First, that it is bounded by a clear beginning and end. Second, that it is strategic in nature, and critical to the organization's future. Third, that unlike operational work, it is inevitably about organizational change.

"The biggest thing senior management needs to understand about project management is that all the best planning in the world doesn't guarantee success," said Nancy Mingus, author of Teach Yourself Project Management in 24 Hours (Alpha Books).  "Effective PM increases the chance of success, but doesn't guarantee it."

An corollary, Mingus said, is that estimates of costs and times are guesses. Too often, top management drifts into thinking that the estimates are the "real numbers," and the actual costs are the aberration. Would that it were so!

Shirley Edwards sees two main problems CEOs have with PM. "The first is the failure to recognize the importance of effective project portfolio management." Companies that adopt best practices in this area fortify their infrastructure to select and prioritize the right projects to commit to.

"I call it 'bungee-cord' portfolio management, because you wind up going up and down according to the flavor of the month. It's very frustrating, and very inefficient."

Second, she said, there's the inability to know when to kill a project off. The Gartner Group estimates only 24 percent of IT projects are successful. That means 76 percent keep occupying organizational resources. We need to identify when a project dies before we throw more time, people, and money at it.

"There is no one rule," said Ganapathy Subramaniam, vice president for Tata Consultancy Services in Bangalore, India, Asia's largest IT firm. "It depends on the project, it depends on the stakes. As a CEO / COO, one needs to have an overall  feel of the project. Have a feel for what the Project Manager does not tell you. Decode what he tells you. Interpret information, not data. Review the top risks, and check that processes are in place to address them. Have a mature mechanism for external reviews, reporting in to you. Have a feel for client comfort, concern, and stake."

And when required, Subramaniam said, "Give the tree a rough shake."

"Drowning the puppies"

The hardest challenge for a CEO is pulling the plug on a pet project, what Rosenstock called "drowning the puppies." That's when portfolio discipline comes to the fore, before the pet trashes the whole house.

Edwards and Rosenstock see "PM smarts" as arriving in stages. The fledgling PM organization clusters around the basic methodology, with managers continuing to make seat-of-the-pants decisions. As they grow, they incorporate best practices and start creating an authentic project discipline. Eventually, the company sees the value of having its PM staff be certified.

And at the highest evolution (that we know of yet, anyway), PM is sewn into the organizational fabric, with a permanent project office and portfolio, both enjoying the support and understanding of senior management. When PM flowers at that level, a tight link between strategy and implementation is formed.

As companies mature, many offer training in project management for their own executives. Comerica offers a 4-hour course that provides senior management with a comprehensive overview of project management concepts.

But David Rea of Bond and Company in Toronto points out that the task of a PM-smart CEO isn’t to be a junior project manager. Being in charge of a complex organization is a different thing than running a specific project. PMs are obliged to have a kind of tunnel vision, focusing solely on the details of their project.

"We don't have to think about stock prices, disasters in other areas of the company; all we have to think about are our project goals," Rea says. Top managers can’t afford that kind of focus, and they certainly don't have that kind of time.

Background plays a role in maturation, he said. "People from finance tend not to understand project management. People in technology or operations have a natural feel for projects." (Sometimes to the project's detriment, as their enthusiasm segues into meddling.)

Curiously, Rea said, some of the best CEOs from a PM standpoint are those with a background in sales and marketing. Why? "Because sales is about managing customer expectations, and project management as a practice is all about keeping people's expectations engaged but in check."

The business of uncertainty

The first things executives need to know about project management, say Amy Schwab and David Schmaltz of True North, a  strategic project consultancy operating out of Walla Walla, WA, is that it never works in reality the way it does on paper, or on the computer screen. 

"The hardest thing for executives is seeing beyond what people are saying," Schwab says. She and Schmaltz decry the "master/slave" culture typical between PM and top management at most organizations, and worry about CEOs who yearn for at-a-glance understanding of projects and too readily believe good news. 

"You can't rely on software to manage projects," Schmaltz said, citing portfolio management products like PlanView and Pacific Edge Project Office which link projects to provide a comprehensive view of time spent and money invested. "There is no algorithm telling you what the duration a series of tasks with less than 100 percent certainty will be," he said -- the math isn’t there. 

Even PERT/CPM, the underlying algorithm in MS Project and Primavera Project Planner, can’t guarantee clarity or predictability. "Not only do today's projects result in average 40% cost overruns -- they've been doing that for over 100 years. Ours is a discipline rooted in uncertainty."

Schmaltz is careful not to confuse uncertainty with pessimism. "Things can get done," he said. "You just can't be sure when or how or if. With a novel project, by definition, there is no reliable experience base."

A sign of this discomfort with uncertainty is how FS projects tend to resemble their respective products. "An insurance project tends to look and feel like an underwriting exercise," he said. "A bank project is managed like an account. A hedge fund project may sidestep risk management altogether." When in doubt, we fall back on familiar metaphors, he said, and therein lies the problem. 

Sometimes the best thing a leader can do is turn off the Powerpoint show and engage in two-way conversation, not asking "Why did this happen?" and taking names, but "What do we do now?"

A sign of this discomfort is how FS projects tend to resemble their respective products. "An insurance project tends to look and feel like an underwriting exercise," she said. "A bank project is managed like an account. A hedge fund project may sidestep risk management altogether." When in doubt, we fall back on familiar metaphors, she said, and therein lies the problem.

It is plain that the stereotype of the CEO as matador, finessing difficulty in the spirit of "Everything is possible," is false. "CEOs are the most realistic people in a company," Schmaltz said. "They know this is tough stuff. They know, that if all they get is happy news, something is wrong."

Schmaltz says it is still rare for CEOs to really connect with PM, but he remembers one example, at Standard Insurance Company, now StanCorp, where he used to work as a project leader. 

"Our team was in the company basement over the weekend, sorting out reports. The executive responsible for the project, Jerry Halverson, snuck down, and under one arm was a half case of beer, which was technically illegal. "I really want to you know your work is appreciated," he told us. 

It was the same kind of hands-and-knees leadership Harvey Golub displayed, searching under his desk for a plug. It means connecting with complexity in a human way, with a mature understanding of how difficult true change is. It's the best hope top managers and project managers have for success.  +

Bio:

Mike Finley is co-author of The New Why Teams Don’t Work, winner of the 1995 Global Business Book Award for "Best Management Book - the Americas." He can be reached at http://mfinley.com.

Sidebar:
Project Palaver

Like all disciplines, project management has its share of obscure phraseology. Here is a sampling of phrases and acronyms that CEOs hear all the time, but may not have a complete handle on.

Feasibility study. A formal investigation to determine the likely success of a project.

WBS  (Work Breakdown Structure) A hierarchical representation of all work to be performed in a project.

SOW  (Statement of Work) A written confirmation of what a project will produce, and the terms and condition under which it will be conducted.

Network diagram  A flow chart showing the sequence of activities in a project.

Activity-on-the- arrow diagram. The "classical" network diagram format, in which circles represent events and arrows represent activities.

Activity-in-the-box diagram. The other major diagram type, in which circles represent both events and activities. (The diagram types are equally valid.)

PERT  (Program Evaluation and Review Technique) A network diagram analysis tool using three ranges (optimistic, pessimistic, and most likely) to gauge a project's duration. PERT is the core logic of most PM software.

CPM (Critical Path Method) The "critical path" is a sequence of the most time-consuming activities in a project. CPM is the standard method for plotting this sequence.

Gantt Chart. A graph showing bars on a timeline, depicting when each activity starts, is conducted, and ends.

ROM  (Rough order of magnitude) A ROM estimate is an initial "ballpark figure" estimate of the type of work a project will entail.

"backing in" A way of measuring the time a project takes, starting at the end of the project and scheduling it backwards toward the beginning. Backing in is frowned on, because it usually fails to deal with the time an activity really takes.

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_{COPYRIGHT (c) 2002
by MICHAEL FINLEY}