Leading Change: Measuring success

I made a promise to myself some time ago to transform a lecture I have given on leading change in a corporate environment to LinkedIn as a series of posts. Here goes the first one on measuring success. Perhaps I will follow up with other leading change or sourcing topics. In this one, I will refer to the change with the project management words, but its easy to replace that with those used for sourcing cases, or in leading transformations.

It is irrelevant to measure the accuracy of milestones, and counter productive.

It is easy to fall into the trap that milestone dates are the key deliverable of the project. As in the picture above, we very often have a picture like that in mind when we think of projects. That the project is completed when the mountain top is reached, when the project is, well, complete. Even in the mountain climbing example, the hardest part of the journey is still left when you have reached the top, i.e. the descent back. What required muscles, sweat and tears climbing up, is now a slippery and treacherous journey down, where every step you make can turn your ankle, cause a slip or otherwise incapacitate you.

But in general, leading change has nothing to do with the mountain climbing example. You are usually creating or improving an internal or external service or product. The end of the project phase is just the beginning of the phase of starting to create the value the project was planned to create. Whenever any of my projects were launched or a sourcing contract was signed, I gave the Churchill speech:

'Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.'

What is the business impact of not hitting the date one has planned and agreed? Usually much smaller than we think. The hit to our ego, much bigger.

Measuring costs is of relative importance

Another pitfall is emphasizing the costs of the project. I was once in an internal kick off for a new development organisation, and the whole group was shown a chart of the main programs sorted by cost. One person stood up and said how proud he was to be working in such an important program (the one sorted as the top one). I tried to be silent but had to comment that we are used to measure the importance of a program by the business value it creates, not the cost. While I was being a smart-ass, I know, there also lies the underlying folly that I just could not allow the newly kicked off group to start its organisational journey with.

The size of the costs is not a measure of the importance of a project. Success is not hitting the milestones on time.

Measure the success of a project through the profit it creates in the business

One of the key points of opposition from those listening to the lecture has been that of course time is relevant. How can you say that that it is counter productive to measure time? If you complete the project earlier, the less costs and the more benefits! Yes, one of the best ways to create more profit is to be Sun Tzu fast. But only one, and the one which is most often misused.

I have seen many very fast projects that have created no value whatsoever as either there was no value to be created to start with, or the project failed as too much focus was given to time and costs. I have also seen many slow projects that have created enormous business value, even when they were delayed or ran over budget. It all depends on the project. Borrowing from Sun Tzu and distorting beyond recognition:

It is not the greatest project manager who completes a hundred difficult projects on schedule and cost.

It is the greatest project manager, whose projects create the greatest business value with seeming ease and even joy.

The key task of the project team is to plan how to measure success from day 1. If it's hard to measure the direct profit impact, as it very often is, try to get measures that are as closely as possible linked to the profit. Incentivize your team and the leaders with the true success measures. Open up the business case, the why, the link to profitability or value as clearly as you can, to everyone. Not just the steering group or boss.

Elementary, dear Watson, elementary?

Simple? Yes, very simple and intuitive. But more often than not, even when we agree to this principle, in practice we still shackle ourselves to schedules and cost limits. Or our boss or business owner does. And it rubs our ego to keep our promises of timing and budgets. Often the different aspects of project management (benefits, cost, timeline, quality, etc) are shown as equal in weight. They are not. All the other aspects are tied to the success in the business results. For example, a delay is fatal only if linked in such a manner to the business results expected of the change.

The solution is not to promise things that are irrelevant. Create an environment where people are focused on the business success, and incentivized on that success. If people require otherwise, fight that fight immediately, as basing a project on false assumptions of success is bound to come back to haunt you, with a vengeance.

The same principle applies on a project portfolio level. The worst service the portfolio leadership can make to business results is to set incentives on milestone slips, budgeting accuracy and the like. If they are irrelevant on project level, looking at them on a portfolio level does not make them any more relevant. Even less so. I already hear the opposition say: 'We need to be more consistent as a project organisation, learn from each other!' . Change is never consistent. You learn from these type of numbers and metrics much less than people assume. We learn from stories of successes and failures. What you measure is what you get. In the good, the bad and the ugly.

People do what their leadership does. We are monkeys, we copy each others' example constantly. Whether you're a project manager, a core team or a steering group member, a head of a business, a coach, or just an observer, require from your colleagues only what you want them to practice. Walk the Walk.

Leading change is not about hitting your schedule, its not even about minimizing cost, its only about maximizing profit.

Looking forward to any comments, insights and stories! First LinkedIn article ever!

Further articles:

Leading Change: 1. Measuring Success, 2. It's all about people

Source to Gain: 1. Why do we source?, 2. Should Price Analysis