Monthly Archives: April 2010

Stakeholder Relationship Management

In addition to normal bound books, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation, is also available as a Gower eBook. We have just been updated on the first quarter sales for the 150 or so Gower books that are available as eBooks and Stakeholder Relationship Management is the second best-seller for the last quarter.

Gower’s eBook can be purchased in their entirety or you may opt for short term access to the book or access to only one or two chapters. The eBook format currently available is Adobe eBook (pdf). For more information visit the Ashgate/Gower website.

To purchase normal books, see http://www.mosaicprojects.com.au/Book_Sales.html for the options available.

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The Central Role of Stakeholder Management

20 years ago, stakeholder management and shareholder/owner management were almost synonymous. In the intervening period, much has changed.

Most enlightened thinkers now place stakeholder management at the centre of effective business operations. The business needs to support, empower and satisfy the people working within the organisation, the general public and customers (now classes as Corporate Social Responsibility or CSR) and the owners of the business. All of these people are stakeholders.

Since the passing of the Sarbanes Oxley Act, organisational governance has become an important focus. For all types of organisation this is directly linked to governing the work of the people engaged in the work of the business; ie, stakeholders.

Since the GFC effective risk management has also become of increasing concern. Risk management is not the foolish attempt to avoid all risk – this is impossible, rather the effective management of risk within the risk tolerance thresholds of key stakeholders including the organisations owners and managers; ie, stakeholders.

Stakeholder Management

As summarised by the diagram above, business operations are intrinsically linked to, and require, effective governance, to meet the expectation of the organisations owners, within acceptable risk parameters to deliver value to society and the organisations clients or customers.

However, whilst stakeholder management is central to all of these processes, effective stakeholder management requires the allocation of scarce management resources to focus on the relationships between the work and the most important stakeholders. At the most fundamental level, the purpose of the Stakeholder Circle® methodology is understand ‘who’s who, and who’s important’ in the stakeholder community surrounding your work.

Once you understand this the effective management of stakeholders becomes possible. However, without the clarity of insight created by the careful analysis of the stakeholder community to determine who is really important the potential for wasted effort is enormous. As with most planning process, the payback from effort expended in analysis, is the reduced incidence of issues and problems as the work proceeds.

Can you afford not to focus some effort on effective stakeholder management?

The upside of Risk

I am amazed by the number of project management commentators who flatly refuse to recognise that  risk = uncertainty that matters and that uncertainty can be positive or negative (ie, it’s uncertain).

The latest commentator in a long line of negative thinkers is Michael Hatfield in PMI’s Voices on Project Management blog. His approach to risk suggested in ‘PMBOK® Guide for the Trenches, Part 4: Risk’ is simplistic and assumes all uncertainties are negative…..

There are numerous problems with this simplistic view of the world:

  • Firstly the same risk – a future uncertainty – can have both an upside and a downside. Failing to manage the upside equates to guaranteeing failure (or at least missing opportunities).
    • Future weather conditions are a risk; they could be good or bad. A major motorway near my home town was finished months early and under budget because they were lucky enough to build the project at the tail end of a 10 year drought. The last few months have had above average rain. If the people building the road only worried about the ‘downside’ risk the road would only just be finishing now.
    • A similar example is the management actions taken to accelerate work on the Panama Canal through the GFC to take advantage of then upside risk of lower construction costs.
  • Second, the environment around projects does not stop changing just because someone has signed off a cost performance baseline. Ongoing risk assessments are critical to avoid surprises; good or bad! The more warning of changed circumstances the project team have the more likely they are to manage the situation effectively.

One of our key areas of expertises is stakeholder management – each stakeholder can be a threat to the project if badly managed and a supporter if well managed. The Stakeholder Circle® methodology has been explicitly developed to first prioritise stakeholders then focus on the important high priority stakeholders to achieve an optimal level of support to allow the project to succeed (for more see http://www.stakeholder-management.com/)

Where we do agree with Michael is on the mumbo jumbo of statistical paralysis many so called risk management systems bog down in. The purpose of risk management is to identify opportunities and threats and then actually do something about them. Recording risks in a risk register and then qualitatively and quantitatively analysing them is a complete and total waste of time unless someone actually takes action. This is the focus of our ‘How To’ build a Risk Management Plan workshop – yes we have a cute Excel risk register but the purpose is action not documentation.

The biggest weakness in the current version of the PMBOK® Guide is the total omission of a process for treating risks. The idea of risk treatment is implied, but not overtly set out as a process, which allows people to think identification and analysis is the end game. Unfortunately managers need to make decisions based on the risk assessment and then take actions if risk management is going to deliver any benefits at all. Hopefully the 5th Edition will fix this.

The Value of Trust

Trust is a key element in the effective management of project teams and contracts. Trust speeds everything up and lowers costs but you have to continuously demonstrate you are completely trustworthy or people will quickly lose confidence in you. As the level of trust goes down, the speed of doing business goes down and costs go up. When levels of trust are low, or distrust exists, relationships and communications are ineffective and everything has to be proved or validated.

Balancing the cost of validation, checking and supporting legal documentation, the requirements of no trust, against the speed and cost effectiveness of trusting the information and actions of others is an interesting dilemma. How much is enough to pay for the lack of trust? Where are the pragmatic limits??

Temporary organisations such as project teams (particularly virtual teams), where people are brought together to complete a given task that requires a high degree of collaboration, within tight timescales and with a high cost of failure don’t have time to allow trust to develop naturally. They have to work out their differences on the fly and blindly trust one another to do their jobs. This is ‘swift trust’ and can be a powerful force but it is fragile and easily broken.

In other places a reputation for integrity and trustworthiness can be established and may pay dividends.

We are working on a White Paper looking at the role of trust within projects. Any thoughts of comments will be welcome. Previous White papers can be downloaded from http://www.mosaicprojects.com.au/WhitePapers.html

ISO 31000 Risk or Issue Management

I have just read an interesting Risk Doctor Briefing from Dr. David Hillson (see: http://www.risk-doctor.com/publications-briefings.asp)

The new ISO31000 “Risk management – Principles and guidelines” standard published in November 2009 has made a significant change to the definition of ‘risk’. Most standards have settled on the definition:

Risk is an uncertainty that, if it occurs, will have an effect on objectives

The new ISO definition is:

Risk is the effect of uncertainty on objectives

This definitional shift has two aspects, the first; the focus of David’s briefing, is the likely reopening of a more or less concluded debate on risks, threats and opportunities. The ISO definition removes much of the focus from opportunities.

The other more significant issue is the time shift implicit in the definitions. If risk is an uncertainty that may occur, the focus of risk management is forward looking and proactive, seeking to maximise opportunities and minimise threats.

If risk is the effect of the uncertainty one presumes the risk event must have occurred to create the effect and consequently risk management is a reactive process managing the effects – not really risk management at all, if the effect has occurred, it is a fact or an issue, not an uncertainty.

It reminds me of the story about the project manager who proudly stated every risk that had adversely affected his project was listed in the risk register and wondered why he was fired……

I hope the ISO definition is quickly amended to read ‘Risk is the potential effect of uncertainty on objectives to ensure risk management keeps its forward looking focus. Other aspects of the standard have this focus – it’s a pity the definition is inconsistent with these other parts of the Standard.

The Art of Learning

I deliver a significant number of training sessions each year through Stakeholder Management and Mosaic Project Services; including both face-to-face classroom courses and using our Mentored Email™ distance learning methodology.

One of the interesting observations is how the rate of information absorption (ie, learning) varies from person to person. The rate of learning does not seem to be correlated to a person’s IQ, industry or role in the workforce. If anything, people who absorb the learning more slowly seem to retain the information longer.

It would appear the ability to learn is a skill that is exercised naturally by younger people, but as one grows older this natural ability seems to fade with only some adults maintaining their innate capability to learn, frequently linked to active practice via university courses, etc. When presented with a large volume of new information (eg, a PMP course) the rest of us need to learn how to learn!

Some of the easier ways to absorb, make sense of, and retain information include:

Using analogies and metaphors

You can learn abstract processes by creating metaphors for more common events. So whenever you learn a fact, ask yourself what the idea is similar to in the tangible world; eg, a data store in a software program may be a cupboard with different things on each shelf.

Build mental pictures

If you break apart a complex mathematical formula into components, you can try to imagine what it would like as a graph or how each component influences each other in a railway switchyard.

Build on the basics

Do a bit of extra research on your most difficult topics focusing on their foundations. You might not understand the more complex theories perfectly, but it makes understanding your testable material much easier.

Become the teacher

The act of explanation creates connections. Ask yourself how would you explain what you’re learning to someone else? Teaching forces you to simplify and break down complex ideas and then re-connect them to build the overall picture.

Stop writing transcripts

Try to free yourself from rigid note taking (the course handouts fulfil this need), instead write down ideas in branches and connections. Add your own thoughts, diagrams and arrows linking ideas so you have a web of information. ‘Mind mapping’ tools are great for this but pencil and paper work just as well

Draw Diagrams

Most people think in pictures and maps. Research suggests drawing will increase your concentration and help develop the connections between ideas. A picture may not be worth a thousand words, but it can often illuminate the connections that lead to a greater understanding.

There are many more sophisticated memory techniques available in a range of books on the subject but certainly in our areas of teaching, the ability to link ideas and understand the flow of both ideas and information seem to be the key to real understanding.

This opens up a second strand of thought – making the best use of a training course. Some simple tips that will help you to get the most from your training course include.

Before the training course

  • Have a clear picture of what you hope to get from the training course expressed in terms of the benefits to you: a pay rise and promotion is more motivating than a PMP credential.
  • Do any pre-course reading and make a note of any questions to bring along and ask the trainer. You won’t pay extra if you make the trainer work hard……

At the training course

  • Arrive prepared
  • Be open to learning new concepts, even if these challenge your previous understanding
  • Don’t be afraid to ask the trainer to clarify points; remember that if you don’t understand something, it is likely that you are not the only one
  • Share experiences when they are relevant and learn from others in the group, they are likely to be from different industries and have different experiences; take advantage of the fact that you’re surrounded by people with diverse work backgrounds.
  • Dedicate time each evening to completing your homework activities, or reviewing the work covered during the day (our training courses cover a great deal of content in a condensed fashion – reviewing the material each day helps to cement the ideas in your mind).

After the training course

  • Use the resources provided during the training course to help you integrate the concepts into your every day work life (the first 24 hrs after the course are a critical period for reinforcing learning by practice).
  • Make the effort to change if you have discovered better ways of approaching your work, but remember you will need to explain the benefits of the change to people who did not attend your training sessions.
  • Recommend the training to any colleagues that you believe will benefit from it

Learning new things should be an enjoyable process at all stages of life and career, and is becoming increasingly important to stay competitive in a rapidly changing world. Learning how to learn effectively is the first step along the journey.

The Value of PM Certifications Confirmed

An International Project Management Association (IPMA) meeting at the end of March confirmed trends we have been experiencing with PMI credentials.

Despite savage cuts in corporate training and professional development budgets, interest in and demand for IPMA certification has continued its robust growth. Despite the tough economic climate, certification numbers grew by in excess of 20% last year and are expected to grow again by circa 25% in 2010.

Much of this demand is attributed to the fact that individuals are extremely conscious of their job stability in a rapidly changing work environment. Candidates are seeking to bolster their curriculum vitae in the most effective manner possible and are giving project management certification a big vote of confidence. In order to achieve this objective there has been a large shift to candidates self-funding. This finding from IPMA mirrors my findings published in my column in PMI’s PM Network magazine in August 2009 ‘Self-Starters’.

The continuing good news is the latest PMI Salary Survey, reported in April’s PMI Today newspaper shows a steady increase in salaries for qualified project managers and in the USA, Australia and a number of other countries, a $10,000 gap between PMP credential holders and unqualified project managers.

The with the evidence from IPMA supporting PMI’s findings, the message is clear: if you are interested in a successful project management career, holding a recognised credential is becoming essential.

The choice between IPMA’s competency based approach (including AIPM’s RegPM) and PMI’s knowledge based assessment is discussed in our January post, ‘The Value of your PMP Qualification’. An overview of the PMI framework with brief notes on other options can be found at http://www.mosaicprojects.com.au/Training-PMI_Framework.html.