So welcome to the webinar. Today we've got Ben Chamberlain with us.
So for those of you who don't know, I'm Stuart, Stuart Easton.
We do two webinars a month here at Transparent Choice.
One of them is usually just pure thought leadership, and then we do something much
closer to doing around portfolio management prioritization,
something much more practical and hands-on.
So this is very much the thought leadership one, and for many of you, this is going
to be pushing you a little bit beyond your comfort zone, or at least I hope it will
be. Because we're going to be talking about strategy execution, and I think in the
PMO community, we sometimes think that strategy execution starts and ends with
projects, but I hate to tell you it doesn't. Right?
Just this morning, actually, I saw a survey from the PMO Leader community asking
about strategy execution challenges, and it was all about projects.
But that's only part of strategy execution.
Not necessarily even the most important part.
It might be, it might not be, depends where you are in your cycle.
And so today we're going to talk a little bit more about the bigger picture, and
we're going to talk a little bit about what Ben calls the leading indicators.
So, we're going to share a couple of statistics that you see in the market,
if you're in this sort of strategy execution game from the likes of Gartner or
Yankee or some of the McKinsey guys like that.
And the challenge is that those are such high-level numbers.
The response to those numbers is, "Yeah, so what do I do about it?" Right?
And we're going to dig into some of those, yeah, what am I going to do about it and
why kind of issues today. And explore a little bit about how you
can start to use that to build a case for strategy execution
to be something that gets some real executive sponsorship.
So if you're struggling to get sponsorship for your PMO, this should be a great
session for you today. If you're trying to position your PMO as being about
strategy execution, this is going to be a great session for you today because
you're going to get a slightly bigger picture than you're perhaps used to, at least
I hope so. And
that will help you play that role more effectively.
So Ben, why don't we kick off with just a little bit of a background on you, who
you are and what StrategyFX is all about.
Yeah, happy to. Hi, everyone. So Ben Chamberlain, I'm a co-founder of the Strategy
Execution Forum. One of the key things we talk about at the forum is it takes a
village to master strategy execution.
I'm a firm believer based on that there's not one person, not one function, and
certainly not one consulting organization that
knows it all, right? Myself included, right?
So when I think about my background, I've been in some flavor of strategy execution
for longer than I can remember, so approaching 30 years or so.
As Stuart said, I originated from the UK, so I started my career as a project
manager in the construction industry in the UK.
Soon realized that wasn't for me, ended up in some form of management consultancy
and early stage PMO governance set-up.
And then got mixed up in an organization in 2002 called UMT that
actually came out with a product very similar to
Stuart's product. And they had an opinion on what portfolio management should be,
even back then. Much more than just dashboards and status reporting.
They had an opinion in terms of how to align investments with
strategy and focus on maximization of value on scarce
budget and resources. So we built a framework of technology, whatever, became kind
of the darling of Gartner back in the sort of 2004 timeframe, which resulted in
Microsoft acquiring the product and the company, which had already moved
to New York at that stage, and that's why I ended up on the West Coast here in
Seattle. So I spent, for my sins, a couple of years at Microsoft running the
product management for the integrated projects and portfolio management offering
that is Microsoft Project Server, Project Online, soon to be decommissioned as time
has gone by, right? Spun out of there
in around 2010 timeframe because obviously Microsoft has always and always will be
focused on task management, trying to be the ubiquitous toolset for project
managers across the world, right?
We wanted to finish our strategic portfolio management journey.
So we embarked on picking up where we left off, building another product and
framework around elevating the importance of portfolio management on top of any
form of project execution, which encouraged Gartner then to bifurcate what the
discipline is of projects and portfolio management into strategic portfolio
management and adaptive project management and reporting two very important and
integrated layers. So again, I built a product there, another listed as Gartner in
one of the top four strategic portfolio management offerings for that's worth.
And then ended up selling that company and deciding to establish the Strategy
Execution Forum. And I can give you a little bit of insight, Stuart, if you like,
into why I did that.
Which is probably the reason for your question.
Well, yeah. Absolutely. Before you do that, because that I think is going to flow
quite nicely because the next question is going to be what the heck do we mean by
strategy execution? So before we jump into that piece, I just want to pull out
something that's really important.
It's not often that I'm on one of these sessions where the guy on the other side
has been doing this for more than a decade longer than I have. Right?
And so Ben's had the kind of journey that has allowed him
to learn, to try some stuff, to fail sometimes.
And that usually is the path to wisdom.
So, today we're not just listening to some talking head who's done a couple of
things.
Ben's been around for three decades doing this stuff, learning and developing.
So I don't know, was it Donna Fitzgerald that was at Gartner when, was she running
that practice when you were interacting with her?
She was definitely involved, but back then it was Matt Light who-
Okay
... in 2004, actively encouraged by us, created the PPM disciplines
we know. So smashed together the worlds of project and portfolio management, right?
So here's the really interesting thing, right? So I know Donna really well.
And the first time I met her, she ran over and she's like, "Oh, I've heard so much
about you guys," gave me a big hug. She's a wonderful person.
But sitting down with her, she's been around, right, so your 30 years, she'll take
that and add another 20 years on top of that in terms of experience.
And when you sit down with Donna, the thing that's really interesting is that none
of this stuff's new, right? None of this is new.
When these ideas were being formulated really early on, it was always
about strategy execution. It was always about business results.
It wasn't about project execution. That's just an enabler, right?
But it was always about how do we maximize, I think you used this phrase earlier on
something like this, how do we maximize the return on investment, the business
value from the investment in our
organization? And
one of the things that I think we're going to lead into right now is that's more
than just projects, right? So in your mind, over 30 years doing this, how do you
think of strategy execution, and why did that lead to forming
StrategyFX, XF?
Yeah. Well, so when I decided what I wanted to do next, having sold and
integrated the last company with the acquirer, I've had this twice in the last 30
years. Now do I stay in this space or do I go and focus on something else I'm
interested in? So I said if I'm going to stay in this space, then I feel like I've
had an impact, maybe a big ripple small pond, but I want to have a bigger
impact on the space. So it took about six months to do a retrospective in terms
of what's going on and playing back the last sort of 10 years of customer
interaction, right? And spent far more time on LinkedIn than I think I ever want to
now and in the future, right? It was amazing to me and quite honestly frustrating
the amount of people talking about the inability to bridge the gap between strategy
execution. And not just the project management community or the PMO community, but
the architect community and others, right?
And all also professing to be the missing link, right, that critical bridge between
strategy
and execution. So I found that frustrating and also was like, well, as you say,
organizations have been focused on this for a while. Before my time, right?
Donna's time, whatever, she was a CFO wherever she was doing this stuff, right?
So Despite all the investment that has been made, right, and there's been
significant process and tooling investment made over the years, why hasn't the
needle moved that much, right, in terms of an organization's ability to execute a
strategy? Of course, there are pockets of excellence, right?
But we're talking generally, right?
And of course,
coming from a kind of analytical mindset, you can drill down and identify hundreds
of reasons why.
But the reality is, I started to think about it at a more macro level and came out
with three main reasons why organizations still struggle to bridge the gap between
strategy execution. And first is I think it's a vantage point, and you've got to
start with executives. I don't think the C-suite understand what strategy execution
is. In fact, commonly, I think they think of it as more like program management on
steroids, which that's part of it, but it's not its entirety.
But the critical part is that they don't fully understand the amount of business
value that is actually at risk due to suboptimal strategy execution capabilities.
If you think of it as program management on steroids, and program management's not
a perfect science, right? Some waste is acceptable, 5%, 10%, whatever.
Let's write it off as a cost of doing business. It is much more than that, right?
But not being able to understand the value at risk or see it or touch it, I think,
is one of the reasons why it's not seen as an enterprise imperative or critical
discipline. The next goes back to what I said before.
It takes a village to master strategy execution.
Reality is it's multiple critical functions of the organizations that need to come
together to execute an organization strategy.
And often what happens is we all optimize our own domains.
The PMO does their thing, architecture does their thing, finance does their thing,
HR. And there's nothing wrong with that, right?
We're all looking to improve our contribution to the organization.
But when you actually aggregate that, the superset of that, you end up with a
fractured operating model, right?
And one where these teams should perfectly adjoin. They're not.
There's cracks in that operating model.
And staying with a value analogy, value kind of continues to kind of seep through
those cracks where those teams should perfectly adjoin.
And then the last, maybe the third reason, maybe not the least important, but the
third reason anyway, is that it feels like every 10 years I've been doing this,
there's a new methodology that comes around, whether that's from project and
portfolio management or other critical disciplines, that claims it's going to solve
world hunger and world peace, right? The first, this one, last one failed.
Believe me, PPM failed because it was waterfall.
Let's go on
an agile revolution, right, or agile transformation.
Nothing wrong with that, right? But invariably, when I think about why PPM failed,
or didn't fail, why PPM struggled, it was because when we addressed
PPM, when Garner actually created the project and portfolio management discipline
and smashed the two Ps together, we started bottom up.
We started with the task, the time sheet, and kind of deferred portfolio
management. I don't think PMIs started talking about it till 2010 plus, right?
And then decided, not PMI, but then the world decided that PPM was wrong because
it's waterfall. You need to do agile execution.
And nothing wrong with agile execution, but the way we went about it was wrong.
Again, we started bottom up, right, until we hit the portfolio management
wall. So again, this one-size-fits-no-one approach that we always try and
force down people's throats is holding organizations back.
And I think it's mainly because to successfully enable strategy execution in the
organization, it has to be heavily personalized to the nuances, idiosyncrasies,
culture of an organization. So yes, there is no one size fits all, right?
Mm-hmm.
So with that in mind, that's why I decided, look, it's an exercise in futility for
me, even though I've built frameworks that Garner have ratified to set up another
consulting company. It's definitely an exercise in futility for me right now,
right, because it's a
busy space to go and build another software solution, right, that somehow is going
to solve this, right? No, I can solve part of the problem.
I'm not going to solve the entirety of the problem.
So I said, look, based on it takes a village, what I'm going to do is create a
forum called the Strategy Execution Forum, which will be the first community out
there that's focused on uniting the multidisciplinary leaders.
So people from strategy, people from operations, people from both flavors of
architecture, business enterprise, or even op model design.
The transformation office, the change management office, the enterprise PMO, the
domain PMO, the change management folks, right?
Going to bring these all into one community so we can figure out approaches for
doing this. As you say, we've all been doing this for a period of time, whether
it's 30 years, whether it's 10 years, right? We've all made mistakes.
We've all had successes. So let's pool that knowledge to come up with approaches,
and what we are doing is rejecting a one-size-fits-all approach completely, right?
To say what are the different ways or best practices we can solve different aspects
of strategy execution. And Kevin, Stuart, Al, and McCool here have
been helping define what we call the universal standard of excellence around
strategy execution, which are the 10 key principles for mastering strategy
execution. It really is acknowledging we have a problem and where we have a problem
before we figure out approaches, crowdsource through the community to address the
problem. So I'll pause there and then go back to your actual question, which was
what is strategy execution?
Well, so okay, I'm going to pose that question again.
We will get to it eventually. I just want to kind of ask a quick question of the
audience for a second. So has anybody ever had a significant project or
program derailed because some of the key resources you need suddenly get pulled off
back into their day jobs, right? Has anybody ever had that problem?
Just drop a quick yeah, me. Endlessly.
Yeah. Anybody else? Yeah. Just drop a little message into the chat.
Let me know if you've seen that. All the
time. There we go. Okay. So anybody who's ever had that problem,
right, and we're seeing this, it's really common. It happens all the time.
Anyone who has that problem, this is exactly what Ben was talking about when he
says it takes a village, and it's not just about the project execution piece,
right? The reason that's happening is there's someone else who thinks their job is
strategy execution in BAU who is executing the strategy.
I mean, that's what they're doing in BAU.
They're actually executing work, real work that brings in revenue, right?
So of course, we are the engine of strategy execution, and your silly little
project over there, that's just something that's happening in the background,
right? And there are other communities that Ben talked about, the business
architects and so on,
all of whom have that same mindset of my silo, my discipline is strategy execution.
Everything else is just kind of other stuff that happens so that I can do strategy
execution. And I'm putting words in your mouth here, Ben, but what I think Ben's
really trying to do, which is tremendously exciting, is bring those communities
together
to understand how to build an operating model for the organization, not just for
any one of these silos. So not just the change portfolio, not just BAU, not just
the business architects who are trying to...
And the risk management team, and FP&A, and everybody else around the organization,
right? They're all part of that solution.
But how do we start to bring that together?
And so
the reason that I invited Ben here to talk to you guys is that the
kind of the change and transformation part of strategy execution is absolutely one
of the core pillars of doing strategy execution.
But it is not all of strategy execution, right?
So as I was saying earlier, I'm hoping we're all going to come up and out of our
silo, the one that we live in right now, and think a little bit differently by the
end of this session. So
finally, what do we mean by strategy execution, Ben?
I think you summed it up, right.
Again, one of the things we're doing at the community, and one of the harder
things, and I think one of the more enjoyable things is we're really trying to
define this as a community. So if the first problem statement was
C-suite doesn't necessarily understand what strategy execution is, we better come
up with an evolving definition based on the community in terms of what strategy
execution is. Now, I don't have it in front of me, and there's no point reading out
whatever it is, 50 words. But the key part of that was the alignment of all
activity and spend And the optimization of that against strategy.
So yes, we can focus on the strategic or discretionary activities we often do, as I
have done most of my career from a project, program, portfolio management
perspective.
But if we're not
applying the same rigor and lens to the BAU or the operational activity and spend,
we have a problem. I'm not just talking about how we execute on the operational
side, but I'm talking about needing, from an architecture point of view, to align
the operating fabric of your business, the op model, the business architecture,
however you want to call that, with the strategy. So your target state is aligned.
Because if you don't do that, it's equivalent to dragging anchor.
You are going to be impeded in terms of the course of direction.
So the simplest thing, to me, is we've got to look at the entirety
of activity and spend relative to strategy.
And one of the reasons I created the forum, I've spent most of my time looking at
how to align investments, initiatives, programs, whatever you want to call it, with
strategy, which represents whatever percentage of the problem you want to give it.
Let's give it 30% of the problem. But as we were defining
with our strategic portfolio management offering, we started to get into beyond
that. To me, strategic portfolio management is two sides of the same coin of
portfolio management on one side from a project, program, portfolio perspective,
and architecture on the other side to get a view of all activity and spend.
So it's critical to be able to get that architectural viewpoint so that we can
align the operational activity and spend as much as we do the discretionary stuff.
And I think that remains the biggest black box, which may equate to 70% of the
overall budget, that we need to focus on as much as we do the other side.
Because otherwise you are, as I say, dragging anchor.
I can't think of a better analogy for that, but I'm sure there are.
Yeah. There we go. So it's about bringing all these things
together into a coherent operating model,
which is great. So
let's start with some of the statistics.
So if you've had an expensive, shiny-suited consultant come in to present to your
executive team, they will have heard statistics like
70%
of strategic investments fail from Gartner.
Or
67% of formulated strategies fail, and that's Harvard Business School.
70%, McKinsey. 60%, "The Economist" . These numbers are huge.
It's really
not very impressive that here we are in sort of a quarter of the way through the
21st century, and we still have numbers like this.
And
so you've taken an approach of those numbers are so big we don't really know what
to do with that. How do we break it down into what you're calling these leading
indicators, the key domains that are contributing to that failure,
the sources of leakage of value, if you like.
So why don't you just high level talk us through how you've broken it down,
and then we might dive into some of those statistics
once you've done that.
Yeah. Happy to. Like I said, I think a lot of those stats you just mentioned have
been around since the year of the flood, assuming they're still accurate.
My issue with them, they're opaque.
If you're a C-suite member that doesn't really understand what strategy execution
is or just thinks it's a program management on steroids, what do you do about that?
How do you fix that? One of the members said once that
think of a manufacturing company with a production line, maybe a bottling plant.
If there was one out of three, one out of five, whatever amount of waste you want
to emulate, bottles were defective on their line, you're going to do something
about it. Because you can touch it, you can feel it, you can see the problem,
you're going to fix the problem. When we're leading with these kind of macro opaque
stats, sort of fear stats, I don't understand how I fix that.
So how do we communicate to the executives the amount of business value that's
actually at risk to prove it is significant?
And
then from there,
what's the impact that it's having and where the fixes lie
across that operating system? Yeah, so I'm not sure. Is this the updated deck?
Doesn't matter if it's-
I think it is. I think so
All right. Okay. So then I started to think about, and again, it's actually
something that the community has refocused on over the last couple of weeks.
Every Thursday we meet for, we call a think tank Thursday session.
Last week, we started to actually go back and look at these leading indicator
metrics that suggest where value is being lost.
Yeah, I think these are the older slides.
Those are the old ones. Apologies.
But it's fine.
So
what we started to look at, and I'll give you the running play where we're at now,
is we started breaking down them into two camps.
What we call portfolio structural risk and portfolio execution risk.
I think more is known around execution risk.
But portfolio structural risk is broken down into, as it stands today, which is
being currently challenged by the community,
three key metrics. Strategic misalignment of initiatives, redundancy,
and discretionary budget increase from reallocating operational savings.
So if you're thinking of portfolio structural risk, do you want me to share my
slide, Stuart? Or do you-
Yeah, whichever. Yeah.
So when you think of portfolio structural risk, you can think of it as
value that's either being left on the table,
it's almost like an opportunity cost, value you didn't even know was missing in the
first place, due to poor portfolio planning and poor
architectural decisions. And portfolio execution risk, like I say, more
is known about that. That's just due to the effective or ineffective execution
capabilities within the organization. You'll see them there.
Then on the portfolio execution risk side, more is known about this.
Outright failures, cost overruns, schedule delays.
So when we think about the portfolio structural risk, we started looking at common
stats out there and other things. I'm not going to go through the slide on each of
these, I won't spend too much here, but you start to see that it is actually fairly
significant when you think about the actual value being lost or not even identified
in the first place through poor alignment of initiatives and redundancy and overlap
between initiatives. Now, this is just focusing on the side of the equation that we
normally look at, which is the project or program or initiative side of the house.
We wanted to dive a little bit deeper in terms of if we look at the operational
cost, not just IT, which we normally focus on, but business and IT.
What's the opportunity if we were to rationalize that to be able to free up funds
to drive more growth and innovation? And it is significant.
So if you look at the-
Sorry, I'm just going to interrupt for a second, wave our flag a bit.
So anyone who's seen one of our demos has seen how prioritization should be done to
deliver the alignment, and Ben spent a lot of time thinking about this AHV
methodology over the years as well.
I'm sure there's got to be a cure for that, Ben, somewhere, but there we go.
So if you've seen one of our demos, you've seen how to fix that piece,
or at least a good way to fix that piece.
But you'll also have seen something called the efficient frontier in there.
And when you start to apply tools like the efficient frontier, you can really start
to make these trade-offs where you're saying, "Okay, how much
of this effort should we be putting into our change portfolio?
How much into our IT portfolio? How much into our BAU operation manufacturing
portfolio?" And start to make these trade-offs about how much extra business value
are they driving? And you can only do that if you have a really good, solid way to
quantify the contribution of your different activities, whether they're projects or
BAU work streams or whatever they may be. You need to be able to quantify those.
And using software like Transparent Choice is a great way to do that and to be able
to make those trade-offs visible.
But if you look at these numbers, they're huge A quarter of your portfolio
is misaligned and the stat from PMO is, I know you know this one, Ben, is 20% of
projects are so badly aligned with the goals of the organization, they should be
stopped immediately. It's right there. There it is.
All left them. Yeah.
And there's probably another 20 or 30 that's poorly aligned.
Right. Well, exactly. And this is not meant to be ...
You can say to me, "I disagree with this to whatever percentage," 50%, whatever.
It's still a significant number even if you do.
But when you think about the misalignment one, right?
It's due to poor portfolio planning techniques.
And it's wrong to say that it's actually value that's lost, because value never
identified in the first place, right?
So it's an opportunity cost more than value that's actually getting lost in terms
of poor execution. And a lot of it comes down to poor portfolio planning
techniques, right? Often when we walk into organizations, Stuart, I'm sure you see
this all the time, right? It's more of an annual planning technique, which is more
bottom-up in nature, right? They've got the requests come in, an impact assessment
into
strategy. Maybe using sophisticated tools like you have in terms of prioritization,
optimization, and efficient frontier modeling.
But in essence, it's more of a bottom-up approach, right?
It's what I call a project driven demand process.
And so you end up selecting the best of whatever's been proposed, right?
And you do.
Based on limited budget resources, these are the best things that are going to
drive the bang for the buck. But that in itself is a problem, right?
Because I may not have had the right mix of work in the portfolio in the first
place, right? Because strategic planning is often dealt with bottom-up and just
using strategy as a filtering mechanism.
Versus, as we move to what we call initiative driven demand process, where you
start with the strategy, you decompose strategy.
It's actually principle three of the strategy execution playbook of how do
you clearly define, translate, and communicate strategy.
So how do you decompose, set metrics, and communicate strategy rigorously across
the organization? Because as you decompose strategy, the good chances are you're
going to end up with the right actual project, right?
So you don't have misalignment from the get-go.
You've identified the right work to move the needle on the strategies and metrics
that you have. So you think of that traditional annual bottom-up
process where a lot of the value is being left on the table, but also that annual
planning in terms of not revisiting that throughout the year on a continuous
cadence, whether that's monthly, quarterly, doesn't really matter, right?
And trying to avoid that sort of Q4 panic and reallocation of funds where value is
definitely hemorrhaged, right? So obviously you see the stats here, you see the
reasons for this. It is significant, right? So whatever.
We're saying in this particular stat, you are going to get some value from these
projects. They may be the wrong projects.
You're leaving value on the table, so it could be worse.
We're actually further discounting it based on the fact that even if you're
delivering the wrong stuff, it is going to give you some value, right?
Portfolio redundancy is important too, right?
And again, this is much bigger than just the project side.
This also features on the operational side to a larger degree, too.
When you think about the core contributors to portfolio redundancy from an
initiative or project perspective, if you don't have that enterprise function that
is looking across everything, right? All investments.
The chances are you're going to have duplications in investments.
If you don't have
more standardized or mature business and architecture capabilities, it's going to
be very difficult to see if you are investing in the same thing or whether you are.
You may have duplicate capabilities in different parts of the organization or
whatever else, right? So redundancy is a big deal.
BizDesign, one of the architecture tools out there, equates things here.
McKinsey and LeanIX did a study that also looks at best practice can save you
around 15% around operational redundancies.
The reality is, surprisingly, there's not a huge amount of stats out there outside
of IT that confirm the challenge here, right?
And again, I think because Gartner and others have spent 75% of their time, because
75% of their customer base focused on IT, less on the overall operating expenses
of an organization. However, the problem is still there, right?
So whatever you want to put a percentage here, say like 15% of risk around
redundant or overlapping initiatives.
And again, let's equate some value to at least one of those initiatives, right?
Even if they're overlapping. So again, further discounting the impact.
But without that enterprise function, looking across all investments, without
strong structured business enterprise architecture capabilities, redundancy is
going to be hitting you in the back pocket from a value attainment point of view,
and you're leaving value on the table, or you're leaving funding that could have
been applied to another growth
initiative. Now,
this-
Sorry, Ben, just to jump in. So as we're going through this, right, what I want
people to really be thinking about is the fact that what we're actually doing here
is we are building a case for change, right?
We're building a case that we can take to the leadership team that says, "We
know we're leaking value, we know we're not executing the way we need to be,
and here is a case for how much that's actually costing us." So as we're going
through this, I want to challenge everyone to try and convert some of these numbers
into things that you know about.
And if you want help doing that, I'll put a link in the chat again, so you can book
a meeting and I'll help you go through some of this stuff.
We've got a little thing that we do to help you build a case for change.
So this isn't just talking head Ben
giving you some numbers. These numbers are here so that we as a community can start
to take them to shift the mindset of the leadership teams that we all work
for. To start trying to pull together this story about strategy execution being
a joined up model. That there are components that we can identify and address to
make a difference. So as we're going through this, please be making notes.
Be making comments, whatever it is that make this applicable to
your organization, because these are not academic irrelevant numbers that are
interesting, but don't apply to me.
They absolutely apply to you, and these are the numbers that you can use as the
benchmarks to drive the case for change within your organization.
Sorry, Ben, to interrupt.
No, no problem at all. Now, something we're diving into this week as a community is
yes, listen, there's more stats out there we just went through in terms of the
project side of the equation, right?
But again, whether that represents 30% of the overall budget, it's still important,
but it's still insignificant. We're not applying the same lens or rigor to the true
operational activity and expenses.
And we are looking at this through more deeper lens than just this metric here that
I'm going to share, right? But there's an opportunity, and I put this little
hypothesis out there. If we were able to rationalize the operational expenses, how
much more could we fund in growth and transformation, right?
And so think about why does that operating spend remain such a black
box or bucket, right? Every year we introduce new capabilities
and additional technical debt and business debt, right?
To not just the technical IT stuff, but also
capabilities, business processes on the business architecture side, too, right?
So without strong
business and enterprise architecture capabilities, it remains a black box, right?
We don't fully understand or can see the full operating model, or what we say in
the community, the operating fabric of our entire business that needs to be
optimized relative to our strategy.
Otherwise, we are going to be dragging that anchor.
So obviously, over time, that operating fabric becomes bloated
with debts on both sides of the equation, business and technical, right?
Can I put that a different way, or at least ask if this is appropriate then, Ben?
So, we all know that in your change portfolio projects, we
should be investing disproportionately in projects that add the most business
value.
And we should be killing off projects that are not going
to add as much value and maybe are getting into trouble or whatever it may be.
We should be killing them early. Get rid of them.
And this is basic portfolio management.
So hopefully nobody's surprised by those statements.
And what I think I just heard you say is that we need to apply that same logic
within BAU, within the operating framework of the business.
We should be looking at the processes and the services and the tools that we have
that are maybe not pulling their weight, and we should be killing them off.
Yeah. Again, where there's redundancy, yes, we should. Exactly.
We need to understand, isn't it? It's easy to think of strategy execution as
program management on steroids. That's the easy way to think about it.
Because we have these big bets, strategic bets as an organization.
We need to execute them, and it requires strong program management or
transformation management, whatever terminology you want to use.
And ignoring that operating fabric.
But that operating fabric is as important, if not more important in my mind, in
terms of how you execute as an organization.
From the sort of primary strategic capabilities all the way down to the
BAU operational capabilities that an organization needs to run on.
So this is applying a similar level of rigor, not the same techniques, but a
similar level of rigor to hold every dollar accountable or whatever currency we
want to denominate in to the same level of rigors we do in terms of value cost from
a project point of view. But to do that, we have to understand
how that spend is being broken down. It can't remain a black box.
And so one of the things we're working on in the community is exactly that.
How do we bring together the architects that have been saying this forever,
and are positioning architecture as that missing link?
How do we bring them together with finance?
Because it's going to require a different budgeting technique.
Not organizational budgeting, budgeting by capability or product or whatever.
We're not prescribing a one-size-fits-all architectural approach here.
What we are saying is we need to get visibility into the operational activity and
spend, and build a model that provides an objective alignment to strategy the same
way we're used to doing through models like you have around the project side
of the equation. And capabilities may easily be that bridge to achieve that.
Obviously, we need something that is static and won't change that much over time.
But again, when I looked at the stats out there, even going into all the great
tools that focus on business enterprise architecture, there's very few stats out
there that really delve into the extent of this problem. On IT side, absolutely.
Everyone's talking about the 30% redundancy or 30% ability to
rationalize the IT operating costs to a degree for whatever reasons.
But less more on the business side, and IT is a rounding error.
We talk a lot about technology because the technology is so important.
When we actually look at technology spend relative to the overall operating budget,
it's actually a rounding error in the grand scheme of things.
But obviously technology is a key enabler.
So you see some stats here that brought this out.
So I've really kind of lobbed all this to a degree and said, look, high-performing
organizations need to have strong business and enterprise architects or business
and technical architecture. Trouble is that most of the time we think of
architecture, it is the sort of solution or technical architecture.
To me, business architecture needs to lead technical architecture the same way
portfolio management needs to lead project execution with that alignment back into
strategy. So if you look at that, and there's a whole model around here I built off
a $6 billion organization. I won't get into that.
But at the highest level,
you can look to save around 9% costs and 25% of the
IT operating costs. Now, what's interesting about that is when you, because IT is a
rounding error, so that gives you about a 9.8% total opportunity savings of your
operational costs. What's interesting about that is if you then look at that
relative to the discretionary budget and say, okay, if I make a 9.8 saving and then
I apply that to more
growth versus just banking it. You can actually increase your discretionary spend
significantly, around almost 40%.
So that's 40% more funding to drive growth initiatives.
So we talk about leaving value on the table.
There's the strategic misalignment in terms of the funds that we already have that
we're leaving value and there's potentially another 40% bucket over time that we
could fund as well. Now this is one way of looking at the problem, rationalizing to
drive more growth, but there's also other ways we want to rationalize to then
optimize the environment too from a target state architecture point of view.
All right. At the risk of us running out of time, I'm going to inject one quick
thing. So you said a couple of times that IT is a small number.
However, there was a really interesting
paper I read, piece of research I read a couple of years ago.
Well, I can dig it out for you, Ben, at some stage.
And it was looking at
the contribution, the correlation between alignment of IT with
business and the performance of the business.
So it might be a small percentage in terms of spend, but having IT be
well-aligned with business goals actually is correlated at about 20%
level with overall performance of the organization's profitability or shareholder
value, whatever you want to look at.
So it might be small as a percentage of the spend, but it's
huge. It's way out of all proportion when it comes to its impact on your ability to
actually achieve your business goals.
And so-
And I think they're two distinct things, right?
They are. Absolutely.
But I think a lot of times we think of enterprise architecture as focused on that
kind of rationalization of the IT spend versus the true architecture, which
is business architecture that brings together people, processes, and tooling.
Three legs of the stool. Tooling is obviously important, or very important to your
point. To be able to optimize that target state operating model
to drive value.
Exactly that.
One of the key things we're trying to do here is IT-- Listen, working in IT
put a roof over my head for many years.
I think that in between 2004 and 2012, a lot of portfolio management was
done in IT. As IT was looking to show the value that IT was providing to the
business and stack rank initiatives coming from the business.
And there was a lack of professionalization in terms of IT.
And so we spent a lot of time as consultants working to professionalize IT in terms
of their overall capabilities. I think there's the same
void today at the enterprise level, and the enterprise needs to be
professionalized, and this needs to become an enterprise discipline where
technology and IT is a critical component, but is just a component alongside
everything else. And that comes down to why these metrics are being established by
the community. Because what we want to do is be able to report back in actionable
terms to the C-suite what strategy execution is, identify the areas of
value that's being lost today, and quantify its impact to get C-suite
sponsorship to address this problem top-down, which rarely happens.
Versus people within the middle of the organization trying to solve it from their
vantage point, relying on influence only.
And then creating a strategy execution function or similar enterprise, whatever you
want, the name is irrelevant, that has the right mindset, the value architects to
be able to build that cohesive operating system across the village.
So let's move on to the next one, Ben.
I'm just conscious of the fact we've got 10 minutes left.
Well, yeah. I said these ones are
more understandable. Not that the other ones were
not. But
portfolio execution risk. So this is poor execution capabilities.
These kind of stats have been around since the year of the flood, where we look at
sand, or chaos, or whatever it may be.
So obviously as we start to pin our ears back and execute, value's being lost
through outright failures. Or whatever.
The stats are consistent in terms of failures.
Obviously, X percent is being lost through failures alone.
More value is also being lost in terms of cost overruns.
And I think we should talk about that a little bit. Because budget is finite.
If one project increases its costs or requires more incremental funding,
something's got to give. We're going to de-scope another, we're going to delay
something. So it is having an impact on the value achievement of your portfolio.
Budget utilization is a major issue.
One customer once that was only utilizing 80% of their funds each year
on a $4 billion, it was a $2 billion portfolio.
So leaving a significant amount of money on the table relative to deriving value.
So we need to look at that, and that's why that continuous planning process is so
important to ensure that every dollar Whether that's on the project side or the
operational side, is continuously optimize against the strategy at any given point
in time. So going back to your fishing frontier, that we're getting the best bang
for the buck, right? Continuously, not just this is what we thought, we're going to
put our ears back and go, right? So the cost overruns are significant too.
And then of course, schedule delays, right?
Schedule delays in itself, let's just be kind and just say that all that's doing is
delaying or deferring value, right?
But that assumes that when the actual thing is launched, the value opportunity is
the same. You may actually be losing value because you were late to market or
whatever else, right? So I won't, I mean, we're short on time, so I'm not going to
go through the slides that break these down, but they should be understood.
One of the really interesting things here is I want to try and connect some of the
dots here. So this, that feels like a story about
project management. We've got project failures, and that's leakage, right?
So we've got projects that are just failing to deliver the benefit or projects that
are failing, that are going over budget and deferring the benefit, going over,
delivered late, deferring the benefit and all that kind of good stuff.
So, the logical thing to do there is to say, "Great, let's go and do more project
management." But actually, what the data tells us is that that's not
often the problem.
Of course, you need to have reasonable project execution hygiene.
But when you look at the data, what really drives more project completions on
time and on budget and actually delivering the benefit is the bit you were talking
about earlier, the portfolio management.
And the reason for that is that when you have really clear priorities, it means
that you can then sequence your projects so that your people aren't overloaded.
And as soon as you do that, then people, your projects stop colliding.
And it's the collisions very often that are causing projects to be late,
right? And, or that are causing them to fail outright.
So if you have this clarity over priorities and help use that to drive your
sequence your projects so you're not overloading your people, you can actually
accelerate. So I was talking to somebody just about a month ago.
They'd implemented some of these techniques.
They got about an 82%, I think it was 82, 84, I forget which one of those two, it
was one of those two, increase in the flow of projects, project completions, right?
That's not a small increase. There's a bunch of research out there that looks at
this across many portfolios and typically what you'll see is
somewhere between a 30 and a 50% increase in the flow of successful project
deliveries. So this stuff, and that's by fixing the portfolio management, not by
fixing project management. And of course, I'm saying that because we sell portfolio
management software, but actually the point I'm trying to make is that these
different domains that Ben's talking about are all connected.
Right?
Yeah, and that's a portfolio management domain, right?
I mean, there's a strong argument to say too, I mean, so again, as a PMO, yes, you
should be. If you're not focused on portfolio management integrated with project
management today, you're missing something, right?
But there's also a lot of outright failures and delays are to do with poor
architecture, right? Inability to see the operating fabric of the business.
Exactly.
So as a PMO, you have to influence that change or connect the dots with that
change, right? That's why it's a village, right?
And that's why, to a degree, I think we are challenged in getting that C-suite
buy-in because every function is running to the C-suite through their direct
report, whatever, saying, "We need to invest in architecture as a critical missing
link" or "It needs to be an enterprise PMO or a VMO" or whatever you want to call
it, right? Although we're going to go about project status reporting the same way
we've done since the year of the flood.
No, it's all of those people coming together because every function has a piece of
the puzzle, right? And then building that cohesive operating model that gets the
multiplier effect by integrating these, and so we perfectly join, right, in terms
of like a, it's critical. But not necessarily imposing a one size fits all approach
to them because everyone has their day jobs still, right?
I mean, to me, one of the critical things around strategy communication, right?
To me, if you fix translate and communicate strategy, you fix 50% of the problem,
maybe, right? Because that's done very poorly, even though you and I should have
been focused on this for forever, right?
It's still done very poorly in organizations.
But HR has a huge role to play in that, right?
The continuous communication of strategy, the alignment of the incentive and
performance
models relative to the strategy so that as coin-operated individuals, individual
incentives don't somehow have six degrees of separation or whatever, or diverge,
drift from the strategy, right? So everything's connected.
All these functions need to come together to build that cohesive operating system.
Otherwise, you will end up with execution drift at any given point, right?
100%. So, if you want to do something with this, and Ben, I'm going to
give you this question in a second, so I'm going to give you some advance notice so
you can think it through. Right? What should everyone on this call do tomorrow to
start the journey? Right? That's the question.
Now, if your answer to this,
most of the people on here are in the PMO, right, PMO leadership role.
And so the logical place for a lot of people to start will be in making sure that
at least the PMO and project land is delivering their part of strategy execution
well. And even doing that requires a case for change, right?
Because it's not actually about software.
Software is an enabler, but it's actually about having the right
processes and people and everything in place, proper decision-making structures and
governance processes and so on, right?
That and not overloading people and all this kind of good stuff, right?
So doing the portfolio management well is a really big piece of that.
So if you would like some help to build your case for change,
at least for the PMO, because that's something you can control, right?
You can't control what business architecture do right now, but you can control what
the PMO does. Then go book a meeting with me using that link.
I'll just put it in the chat. And I'll help you build that case for change.
We allocate about an hour to that. I have a limited number of those sessions a week
that I can do because we don't charge for them.
It's sort of a free, no strings attached kind of thing.
So I have a few slots each week that I allocate to doing that.
So if you would like help kicking off your own case for change, use that link.
Let's book a meeting. Let's get going.
Ben, so answer to the question, if you please, sir. The answer is, drum roll.
Oh, yeah. I'll ask a simple question first is,
do you have C-suite buy-in to solving this problem?
Because if you're a PMO within one of the departments, yes, you can effect change
within that department. But what we're talking about here is effecting change in
terms of how the entire organization executes on its strategy.
So does the C-suite understand what strategy execution is, right?
And do they understand, and if they do, if the answer is yes to both these
questions, then the answer is simple, right?
Do they understand the amount of value that is at risk?
If so, then they should be elevating an enterprise function, right?
To become the value architects of that cohesive operating system, right?
If the answer is no to those, then I would be starting to
talk to architecture. I'd start to talk to FD&A, I'd start to talk to the other
critical components and form a coalition.
Principle one of the ten principles of mastering strategy execution is how do we
expose the cost of poor strategy execution?
How do we build a value case that can be pitched to the C-suite so they understand
what it is, they understand the criticality of the thing, and will form an
enterprise function to become those architects of that cohesive operating system.
Which is not an enterprise PMO, it's not a change management office, it's not a
one-time transformation management office.
It's the architects of the value flow in the organization by unifying those teams.
And I agree 100% with that, and I'm going to raise it a little bit.
I like to think of it as the head, the heart, and the heartbreak. Right?
So what Ben just said is you need a head argument.
You need to bubble up that value at risk discussion. Right?
So that's the head. That's the logical business case.
But I think that in most cases, you also need a bit of a heart, an emotional
case for someone to take ownership.
Because at the end of the day, a lot of these senior leaders, they're being paid
reasonably well. They're smart people, right? They're respected in their industry.
And so they don't have to prove Anything in the way that
perhaps some people further down the tree do.
So maybe they have an incentive not to change stuff, but I bet you there's stuff
out there that's driving them crazy, like a lack of visibility, a lack of control,
right? A lack of understanding where decisions are being made, or how are my
investments supporting my goals, right? Those are emotional issues.
It's really hard to put a number on those things, but they're emotional things that
can help you win the heart, right? So the numbers that we've gone through today
will help you with the head. Those things will help you with the heart.
And then the heartbreak I like to think about as go out and find a disaster,
right? Something that was really an existential problem for someone and
show how this lack of things being connected, this lack of coordination and
strategy execution directly led to that disaster. Right?
Use that heartbreak to say, "We really don't want that to happen again," right?
So when you put those three together, it becomes a really, really compelling case.
So that's what we do around the PMO and that workshop thing I just put in the chat.
But I think it's-
I think you've raised a very important point then, and not to run over time, but
I think the problem is, again, a big problem is that often these things are
reactively created after that disaster, right?
And as we go, some major program went off the rails, so we need an enterprise PMO
that comes up and creates what a PMO does.
Too much structure, too much focus on just project management methodologies, right?
Or we've got bad financial performance, so we have an operating model redesign
where architecture is elevated to the top because we want to rip out costs, right?
Or we have a transformation office is one key transformation that just can't fail,
right? What I'm asking people to do here is proactively invest in this, and that is
difficult, right? Because especially when there isn't a disaster or the disaster
isn't in someone's short-term memory, right?
Because especially if the business is performing okay, right?
Gotcha.
Because the big, I just put out a post about this, Gavin.
We're doing a bunch of sort of comic skits coming out of the challenges identified
through the community is you're always going to rush for Q1 or the next quarter's
performance over understanding that there's a bigger prize in investing in
developing this muscle in terms of total performance.
You're leaving, celebrating the 4%
growth for the quarter, not realizing you left 8% on the table.
12% was actually lost, or 8% was lost, right?
And I think that's, to me, one of the biggest things is we're asking for a
proactive
intervention to drive value by improving all these processes that
these leading indicator metrics represent.
Safe in the knowledge if you tweak that, more value's going to flow on the back
end, maximize and acceleration.
And so here's my response to that. And apologies, we're going to run over just by a
minute or two. So if you can stick around, great. If not, thank you for joining.
So here's a quick response to that, Ben, which I think is a really good insight.
So this community here is all about project management.
People in this community tend to be quite organized and they tend to plan things
because that's why they've gravitated to this space.
And so with that hat on,
let's flip that around.
Let us as a community be proactive in preparing so that when that next disaster
happens and you know it's coming,
instead of an executive bringing McKinsey in or Big Four in saying, "What should we
do because we just had this disaster?" And they'll just give you a vanilla answer,
right? We all know this. Instead of that, you do the root cause analysis
now.
You pull the numbers together now.
So as soon as that disaster happens, you're ready with the analysis and you can go
in and use that. Who was it who said, "Never let a good crisis go to waste"?
I forget who it was. Sounds very Churchillian, doesn't it? Sounds like Churchill.
Probably wasn't, but we'll blame Churchill, right?
Never let a good crisis go to waste.
So be prepared, and the next time one of those crises hits, use
it. Use it to do the heartache part of the head, heart, and heartache.
And make sure you've got the head ready, you've got the heart arguments.
Start talking to people and building those heart arguments ahead of time, right?
That's about understanding their personal pain is the heart.
And then as soon as the heartache appears, you're ready to strike.
So I think it's not just about the executive team proactively investing in this.
I think the people on this call can do something proactively now to be
ready to respond when something goes off the rails.
So there we go. So as we're wrapping up, I want to thank you, Ben, for your time.
Thank you for sharing that. I think this is one of the first communities to get
visibility of this work, which is really exciting, so thank you for that.
Really appreciate it. Thank you for sticking around for an extra five minutes at
the end there. Ben, a million thanks to you, sir.
And we'll see you all on the next one.