The Need for Change

There are a number of key factors that typically drive a senior leadership team to decide that program management is needed within their business. The most common factors we have witnessed in working with organizations are detailed in Chapter 2, and summarized below.

Improving alignment between business strategy and execution output. As an organization begins to grow its business, maintaining alignment between work output and strategic intent often becomes a challenge. Simply stated, the link between execution output and strategic goals begins to weaken, and in some firms may eventually break. For many organizations, program management provides value by serving as the organizational glue that can prevent the misalignment between execution and strategy by creating a critical linkage between strategic goals, program objectives, and project deliverables.

Managing increased complexity. The pervasive rise in complexity due to customer demands for more integrated, larger scale and connected solutions has emerged as a primary challenge to the way we have historically operated within our businesses and organizations. For decades, people working to create and deliver complex solutions have used a systems and program-based approach to simplify the levels of complexity they encounter.

Achieving business scalability. As an organization grows, its ability to effectively scale its business processes and consistently deliver positive return on investment can be constrained by a business manager's ability to personally scale. The addition of the program management discipline and skilled program managers removes this constraint as program managers become accountable for delivering the business results for each of their programs.

Improving integration of cross-business functions. Companies continue to be plagued by ineffective collaboration between their business units and divisions caused by parochial behaviors within traditionally siloed functions. The inclusion of program management in a firm's business model can provide value to those organizations by helping them to execute business strategies through the collective efforts of their business functions working to achieve a common vision.

Managing distributed collaboration. The ability to digitize, disaggregate, distribute, produce, and reassemble knowledge work across the globe has created a new business model where highly distributed team collaboration is required. Many companies have come to the realization that they need to adopt a new business model not only to compete, but in many cases to survive. For many, program management provides a management model that specializes in the distribution and reintegration of work.

Now that we understand some important factors involved in the transition decision, we can essentially consider whether to transition to a program-oriented organization. As noted, organizations can find success with either a project- or program-oriented model. Each fits one situation better than another. To decide whether to transition, we devised a simple tool, outlined in Table 12.1, that can be used to guide a discussion and ultimately a decision.

In Table 12.1 we list which of the two approaches may be a better fit based on eight factors. This table can be used as a guide in the assessment, discussion, and decision to transition to a program management model. When using this table, we recommend first tailoring the factors for your specific case, and then determine if each factor favors project or program management by placing an “X” beside your choice.

If the majority of “X's” are on the project management side, do not transition to program management. If, however, the majority of “X's” are on the side of program management, you may have the justification to prepare a case for transition. A word of caution may be of help here. This is a simple but practical tool to make your transition decision. Like any other tool, it is only as good as the information contained in it and the discussion that occurs from it. Therefore, prepare high-quality information for your case and assess the factors completely, critically, and professionally among senior decision makers within your firm.

If the decision is made to transition to program management, we recommend creating a business case for such a transition as outlined in Chapter 6. Use the business factors and operational factors to guide the business case and discussion regarding the transition. Further, don't forget about the need to plan for and overcome communication challenges (build a compelling story), active management support (ensure senior management engagement), and mitigate possible in-fighting due to politics, defending turf, and power tripping.

Transition Is Both Evolutionary and Revolutionary

To obtain the broad-based benefits from applying program management to the business model of the firm, several fundamental changes are required. As noted earlier in this chapter, to achieve a successful transition to program management requires an awareness, a willingness, and a commitment to change the organization's culture, overcome internal politics, and establish a new mindset regarding roles, responsibilities, and functions. This affects all levels of management as it changes the rules of engagement, decision-making hierarchies, and team structures, and requires competencies different than project-oriented organizations. To achieve such change requires time, which is the reason we use the word “transition” throughout this chapter. Transition is meant to imply changes are being realized over time—evolutionary. On average, we have consistently witnessed the transition taking three to four years. This is from transition decision to fully functional program management operations.

The successful transition to a program-oriented organization requires the senior management team of the firm to consciously decide that they will make the fundamental structural and cultural changes necessary to move the organization to program management and lead the implementation of changes. This decision is revolutionary, as are some of the fundamental changes that are required, such as changes to roles and responsibilities, changes to decision-making empowerment, changes to the organizational structure, and changes to the incentive systems. Therefore, success in transforming an organization to a program management discipline is both evolutionary and revolutionary.

Create a Compelling Story for Change

Transition success begins with creating and communicating a compelling story for change.¹ A compelling story is necessary because, prior to any change, people must first understand why the change is needed. Beyond just understanding why the change is needed, importantly the employees must agree with the change before actually changing. To accomplish this, you need a compelling story.

There are three points to remember when crafting a compelling story. First, what motivates you may not motivate everyone. Some people may be motivated by a compelling story about how to positively impact society. Others may be focused on maximizing customer satisfaction. Others may be interested in achieving the highest level of financial return. Others yet may be focused on self—what's in it for me. A compelling story will focus on all (or at least multiple) areas of motivation—self, organization, customers, and society.

The second point to remember in creating a compelling story for change is that the story is best written by the employees. Often, position-level leadership (the CEO, for example) writes and conveys the story. The highest probability for sustainable change occurs when employees can write their own story. In this case, the leaders' role is to clarify the situation (problem or opportunity) from which others set the change in motion relative to their story—what we need to do, what we can do, what we will do—and then the leaders establish commitment, responsibility, and accountability to enact the change. This establishes a culture of employees being involved with the change rather than having the change imposed upon them.

The third point to remember in creating a compelling story for change is relative to the problem or opportunity. Sometimes senior leaders get in a pattern of promoting change because of a problem—not enough units sold, not enough market share, not enough profit margin, and the like. Other times, the pattern may be about opportunity—chasing best practices regarding one thing or another. This can be tiring for individuals and organizations at large; the results could be change fatigue in which case creating a compelling story and establishing a sense of urgency lose meaning due to desensitization to the need for change. To be effective, the compelling story needs to balance problem and opportunity.

Senior Management Sponsorship

Firms that have been most successful in transitioning to a program management model have had strong sponsorship from the senior management team of the organization. Implementation of the model works best when it is managed from a top-down approach, rather than a bottom-up approach. When senior management buys into the approach and drives the implementation, the rest of the organization begins to fall in line. It is difficult to derive the necessary and significant changes in an organization when it is attempted through middle management, because barriers within the functional organizations quite often become too difficult to overcome. Coupling this point of sponsorship with the need for a compelling story, as noted above, senior leaders can push for change (from the top), but are most successful when engaging staff in making sense of the change and detailing the story for change.

One senior executive told us how his first attempt at implementing program management within an organization was a complete failure. As he told us, “The transition failed because it didn't have executive support and, worse yet, the executives weren't even open to learning about the value of program management.” This was an organization that was too hard to move without top management supporting and driving the transition and necessary change in culture. According to the senior executive, their philosophy was, “If a person was not a technologist, he or she wouldn't be able to lead a development team.” This is a common problem encountered in technology or engineering companies, making the transition to program management much more difficult than in other types of organizations.

Success most often occurs when the senior sponsor is an influential change agent with a compelling story for change. This means someone with sufficient power, influence, and respect in the organization; someone who can ensure that the organizational structure, behavior, and culture move in a new direction. The change agent must have a clear vision of what the change is and why it is important for the success of the organization. This value proposition should be sufficient for the senior executive to champion the change.

Transitioning Methodologies

Once a strong program management foundation is established, transition to a program-oriented organization can begin. Many day-to-day tasks have to be managed during the transition, but several structural and cultural elements also need to be in focus for a successful transition.

Many methods to explain transformation have been published. Some are highly academic, others are highly technical, some are more useable than others, and all of them have shortcomings. The challenge is that many tools and models for change explain why change is needed, yet are rather superficial when it comes to explaining how best to transition an organization.

Explaining how to transition is difficult because of the uniqueness of organizations, their strategies, their culture, their situation. It is for this reason—uniqueness—that we recommend having a qualified organizational development expert within the business or an experienced organizational change consultant to lead the transition process and team. Experienced individuals in this field have the requisite skills to navigate over or around the barriers that will be encountered and they represent a neutral position within the company, both of which are necessary to properly plan, lead, and sustain organizational change. Having said that, it is valuable to become familiar with popular change models for reference purposes and for a starting place for planning your transition. Although dozens of models exist, some popular models include Marvin Weisbord's six-box model,³ William Bridges' three-stage model,⁴ and John Kotter's eight-step process.⁵ These models and others were studied by Sergio Fernandez and Hal Rainey in a meta-analysis of organizational change models, processes, and practices. They concluded that there are eight common factors among organizational change models.⁶ These factors include a common understanding of the needs, a plan, internal support, means to overcome resistance, top management support and commitment, external support, resources, institutionalization of the change, and a desire to accomplish even more comprehensive change.

Our experience is that while these models exist, most attempts to plan, lead, and sustain organizational change fail. Change transition success in reality has little to do with the change model implemented, and much to do about changing behavior and overcoming political resistance. While these models can be used to provide a framework for what needs to be done during an organizational transition, they fall short on advice on how to do it. Based on our experience working with organizations involved in program management transition, we have been able to extract a common and repeatable process used by these organizations. This process is presented in Table 12.2.

What is a bit remarkable about this process is that it has been applied by a wide variety of companies in a number of business settings: a customer resource management software company implementing program management to provide alignment of their agile software processes to the business goals of the company, an aerospace company reestablishing program management as their basis for developing their new products after experiencing a significant number of execution failures, a start-up services company using program management to provide structure to scale its business and provide repeatable results, and a nonprofit organization implementing program management in order to manage the growing complexity of its projects.

Designing the Program Management Model

We mentioned at the start of this chapter that when organizations make the decision to cross the point of transition on the program management continuum (Chapter 1), they make the decision not only to become a program-oriented organization, but importantly they make the decision to transform their organization. Therefore, when planning for program management transition, aspects of structure, system, and culture will be at the forefront. Each is connected and affects the other relative to program management design. This is illustrated in Figure 12.1.

Program Management Structure

Utilizing program management to create new capabilities for an organization involves the combined efforts of many personnel across an organization who work together to perform the tremendous number of activities and tasks necessary. This combined effort requires effective communication, coordination, ability to resolve issues and barriers, and effective decision making both within the team and by senior management. An organizational structure that supports and facilitates this collaborative approach is necessary.

Traditional organizational structures range from a purely functional structure to a purely project-oriented structure. Both extremes create some significant limitations from the perspective of program management. The purely project-oriented approach minimizes the critical importance played by functional managers in providing for the long-term viability of the functional capabilities by staying current on the latest technology and maintaining the highest-skilled and best-trained resources to support the enterprise. A purely functional organization minimizes the importance of cross-discipline knowledge and a systematic view needed for programs. Functional organizations tend to limit cross-discipline thinking, with authority resting only with the functional managers. As Christopher Meyer, author of Fast Cycle Time, stated, “By far, the most serious problem with the functional structure is that it serves its members better than its customers.”⁷

The most effective organizational structures for the program management model is a compromise between the two extremes—the matrix structure and the program structure. With both approaches, formal responsibility and authority for the program resides with the program manager.

The Matrix Structure

Figure 12.2 illustrates one form of the matrix structure that is used in various companies, but there are, of course, many variations of the matrix structure that can be implemented.

In a matrix structure, program team members continue to report directly into their functional organization (depicted as solid lines) and are loaned to the program manager (depicted as dotted lines). The program manager is responsible for integrating the cross-discipline contributions. The functional managers are responsible for overseeing the core capabilities, processes, and tools within the function.⁸

Like all structures, matrix management has its pros and cons. The strengths of the matrix structure are considerable and include the following:⁹

• The program manager has access to the entire pool of experts within the functional organizations.
• Duplication of functional departments is eliminated, with a single organization for each function.
• Resources can be shared intelligently across programs to ensure effective use of critical and scarce skills.
• Integration of the functional disciplines is enhanced, which serves to reduce power struggles and improve collaborative teamwork.

The Program Organization Structure

The second organizational structure that we will discuss is the program organization structure shown in Figure 12.3. This structure comes in many forms and is found in industries such as aerospace, defense, and automotive.

In the program organization structure, the project teams report directly to the program manager. Whether functional managers report directly to the program manager is specific to the organization. All resources reporting to the program manager are dedicated to and work full-time on their programs. Generally, cross-program functions such as marketing, finance, and human resources support all programs, and therefore are not dedicated to a single program.

Strengths of the program organization structure include the following:

• The program manager is in direct control of all resources on the program.
• Resources are completely focused on a single program, which leads to improved productivity and cycle time.
• A high degree of cross-project integration occurs.
• A high level of program identification and team cohesion emerges.

An important element in both organizational structures is that program management is a stand-alone function. This is important to the program management model because the positive impact of program management is considerably diluted when it is contained within an existing functional organization.