When Projects and Organizations Collide

The concept of management by projects is a non-starter. The average company is not a project-driven company, and likely never will be. So why is this an idea that continues to be so prevalent? What problems — real or perceived — do it's proponents hope to address? And if the project-driven organization cannot exist, what business model will surface that will reasonably address these problems? This series takes an in depth look at these questions, and offers insightful and reasoned answers.

Let's start with a discussion of why the idea of a project-driven organization cannot come to fruition. The bottom line: most companies are not in the project management business. For those that are, they know it and they already function that way; they are a limited few — consulting organizations, architecture firms, construction companies. For the rest of us, we need to recognize the fact that our organizations exist for a very different purpose.

Most companies are in the business of providing a specific product or service. Airline companies are in the business of moving people great distances. Telephone companies provide dial tone and long distance services. Toy manufactures create plush toys with which to bribe our children. Drug companies sell pharmaceuticals that save or enhance our lives. But they aren't project-driven companies.

The dichotomy here, of course, is that these same companies rely on projects for their success. Projects are the means by which we create new services and enhance existing ones. They allow us to increase productivity and efficiency, introduce new technologies and implement new marketing programs. They provide the capabilities to build new infrastructure, retire plants and replace systems. But they do not represent the fundamental purpose of the business; they simply create it.

As technological and business advancements continue to accelerate and market pressures increase, projects are the basis of our competitive advantage. The company that can quickly, consistently and reliably deliver projects will enjoy a sustained market advantage as a result. While that company doesn't exist today, it will sometime in the not-too-distant future.

What the project management community needs to recognize, however, is that even once project management continues to deliver these continued advantages, it will not define how companies are managed. How companies compete, sure. How they create shareholder advantage, unquestionably. How they are managed, no. Not in my life time.

Once the project is over, it's over. Ownership is passed on to groups that project managers ascribe labels like ‘functional' and ‘operational' too. News flash. It's the operational guys that run companies. And it's the operational needs of the companies that their structures are designed to support.

The reason why this is true has been around since Taylor was studying operational efficiencies during the Industrial Revolution, accidentally discovering the profession of management consulting in the process. Organizational excellence — the means of efficiently producing drugs, computers and widgets or efficiently moving meals, movies or airplanes — is entirely dependent upon operational efficiencies. And we build our companies in such a way as to get them.

So what does this mean for the project managers of the world, and the organizations that are spending thousands and millions of dollars improving their project management effectiveness? Project management will always be a bolted-on function of operational organizations. You are only as good as your last project. Your continued employment will depend upon your next project. Deal with it.

Project management is an essential, strategic capability — and it's fundamentally expendable. Operational organizations will always require project management, but they can get it in a number of ways. They can engage firms to do it for them, they can contract individuals and teams, or they can build the capability themselves. But they'll never turn the company on it's head to do it.

At the end of the day, companies will gravitate to the most efficient and cost effective solution that still gives them a sustainable advantage. For most organizations, it doesn't matter how they accomplish this goal, so long as it is accomplished.

We are heading for a shake-up in how projects are managed in organizations, and it's likely one that will happen sooner rather than later. The role of project management is being recognized and valued. It won't stay the way it is, though. It will be redefined according to the terms of the companies that pay for it. It will be defined in a way that supports operational organizations, but it won't replace operational organizations.

Of course, operational organizations aren't doing a whole lot today to help themselves in this regard. Project success today most often happens despite the company, not because of it.

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1 Comment

  1. Thank you. This is a very clear explanation of projects and how they are implemented within an organisational environment. I was struggling to understand the relationship between organisational structure and project implementation. This has cleared the issue.

    I think an excellent lead-on article would be a description of project organisations and examples of such organisations. If there is such an article please excuse my ignorance and a link to that article would be very much appreciated.

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