Making Effective Choices: A Critical Look At Executive Decision Making

As organizations develop more effective approaches to managing their projects, attention typically begins to shift from how projects are being conducted to what projects the organization is choosing to conduct. While greater process is demanded of project managers and teams, the way in which project choices are made is often not subjected to the same level of scrutiny and rigour.

While it is fair to say that the process by which projects are evaluated, prioritized and approved often has the appearance of process, a closer look at the mechanics of project initiation frequently reveals a very different level of formality. But what are the consequences of an informal prioritization process? Why does a more formal process of initiating projects make sense and what are the implications of establishing one? What are the essential capabilities that such a decision-making process should have if it is to be effective?

The most significant challenge in not having a formal process by which project choices are made is one of inconsistency. While executives will often defend their approaches to selecting projects as being ‘dynamic’, ‘responsive’, ‘flexible’ and enabling them to quickly respond to changing market conditions, the reality is that project decision-making is frequently opaque and often bizarrely Byzantine. For many organizations, the clearest interpretation of their strategy can be determined by the projects they choose to undertake. Where there is little continuity or rationale for project choices, what must be inferred is that there either isn’t a strategy in place, or what is defined is so loosely established or adhered to that it is largely irrelevant.

As well, organizations without a consistent approach to making choices about their projects often suffer from a number of other organizationally-induced project management challenges: lack of awareness of staff capacity for project work and what they already have taken on; lack of clarity of the cost of projects and of the project choices that have been made; and an incomplete picture of the full scope of work within the organization. The consequence is that decisions are made with no appreciation of whether the organization can accommodate it in terms of staffing or costs and the degree to which it aligns or conflicts with projects already underway.

Recent observations in one organization provide a concrete example of how these issues surface in practice. Within the organization there was nominally a process by which projects were expected to be defined, reviewed and approved. Projects were expected to produce a business case defining the project costs and benefits, which was to be reviewed and approved by the senior executive team. Projects were expected to have defined budgets and at the time of presentation there should be a clearly defined resource plan for the project. Moreover, the anticipated benefits in the business case were expected to be a concrete commitment by the sponsoring executive, with any revenue increases or cost reductions committed to in operating plans for subsequent years.

All good on paper, but the operational reality was very different. For most projects, the production of business cases operated on a ‘first past the post’ basis – whoever got a reasonable business case produced early enough in the fiscal year tended to get funding. Later business cases tended to be thwarted from a lack of funding, yet often projects would still be approved based upon the desirability of the project or the influence of the sponsor. While some projects were approved with a relatively informal, superficial business case, other projects were constantly referred back for further review and analysis – sometimes for a period of two or three years – without every being approved, even with a solid and comprehensive project return.

The bottom line was that this organization rarely met a project that it didn’t like. One executive described the senior management view of projects as having “the appetite of a tiger, and the digestive tract of a hummingbird.” And yet, after a number of months of observing the senior management team in action, I still couldn’t describe the process by which a project would be approved or declined. There was such inconsistency in actual practices that there was no clear path a project manager could be expected to follow in order to get their project approved. The result was constant rework, revision and refinement of some business cases, while others were approved at first glance. In other words, chaos.

Worse, the same staff members within the organization were identified as project resources over and over again. Initiation of a project became an inevitable function of “rounding up the usual victims”. By my calculations, one person within the IT department had 13 person years worth of work scheduled within a single 12 month period. Great for job security, but inevitable bad for retaining one’s sanity.

Such an approval process is essentially Darwinian in nature. Prioritization becomes a product of seeing what projects limp across the finish line at the end of the year, and which fall by the wayside as attention and capacity wanes. Where the senior management team will not determine the projects it will undertake, the organization will. Without choosing projects that fit within the capacity of the organization, staff will decide to work on what they perceive as important or interesting, or whatever landed in their inbox first.

In short, lack of formality creates confusion, frustration and stress. While the ability to make ad hoc and arbitrary decisions may in fact by the purview and privilege of senior executives, that doesn’t mean that they should use it. If the desire of an organization is to be efficient, effective and productive, senior management bears primary responsibility for creating an environment where such qualities are possible. Process cannot be something that is valued ‘as something to align my staff’ without a commitment to lead by example and provide clear guidelines and expectations of what is expected and why, and ensuring the capacity is in place to effectively follow through.

 

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