Focusing on projects ruins your business

I have seen product development projects used as tool to extract results from the organization. It has been chosen to solve an organizational problem. It worked in certain conditions, but when the organization grew and outside competition became harder yesterday’s solution became today’s problem.

I try to explain my point with a lifecycle of an imaginary organization. My real life example companies vary from 15 people to thousands.

Startup phase

Once upon a day a group of engineers started to develop a product. In the beginning everyone knew each other and there was fluent informal communication. The techno-cultural foundation was laid. The business started to grow.

Growth and the first coordination crisis

Money comes in and the organization grows. There is more coordination work, so some developers become managers. The organization develops “naturally”, creating specialized roles and competences. There are more customers and releases. Ownership of the product gradually becomes scattered. There are bottleneck resources.

At some point the “professional project management” steps in. It is solving the coordination problem, one project at a time. The project manager has permission (by role) to demand results. She becomes powerful member of the organization, getting credit for creating order and bringing money in. Often the personality of the project managers support this specialization. Portfolio management still works or is less important. Business does well.

This is a critical bifurcation point, a leadership crisis of unrealized significance . There is still an opportunity to start a Lean evolution. My example goes to the mainstream way. From the psychological perspective this is the easiest solution. It requires least personal change from the most of the people.

Gradual Scattering of the organization

Eventually there are several parallel and sequential programs going on at the same time. Each project is re-built and re-learned every time, because they surprisingly are different from the previous one. The projects becomes a separate powerful dimension of the organization.

The projects become a kind of device extracting money out of the complex and uncontrollable organization. The business management alienates from the R&D, because the real value seems to come from the project device – the development can be replaced, off-shored, outsourced. Long term development of the R&D is seen risky and difficult. Frustration and distrust grows at both sides.

You may recognize one or more of the following characteristics:

Short term rules. Quick fix. Avoid conflict. Nonproductive feedback. Gap between business, customer and development. Continuous reorg. Exploit development. Specialization and separation of responsibility. Cling to nonfunctional ERP. Clear social classes within the organization. Big power differences. Command and control. Waiting. Big plans. Wish for predictability. Slow and vague feedback. Learning and improvement don’t work. Projects compete of resources. Cost management. Number management. Measure hours. Maximize resource utilization. Knowledge and power seems always to be elsewhere.

Market saturation and the productivity crisis

Now the product (family) is growing old. And there is competition. The business management is facing a situation where the portfolio management is very difficult because of the complicated product and organization; lack of transparency and flexibility.

Even in this situation, I have seen the management to grab the tool that used to work, trying desperately to improve the project management. This is very painful for the project managers.

My point here is, that in product development you may do excellent “conventional” projects, and fail. Even fail because the projects have been successful.

My vote for the one word root cause would be overspecialization.

Please comment and share experiences, I have not emptied this subject.