PM World Today Letters To The Editor
Letters to the Editor are comments on the Editorials, Viewpoints column or other project management notices that appear in issues of the Project Management World Today.
Thursday, March 20, 2003
Letter to the PM World Today Editor on the April 2003 Editorial - The Case of the Missing Domain
The PM World Today Editor on the April 2003 Editorial - The Case of the Missing Domain
Reference: http://www.pmforum.org/pmwt03/editorial03-04.htm
Executives are usually more concerned with the strategic ramifications of projects, and the Balanced Scorecard emphasizes the widespread tenet held among senior managers that financial criteria are but one of several kinds of essential criteria that should be considered by a strategy-focused organization. However, many senior managers often overlook the primary economic goal of their own organization, i.e. profitability versus revenue etc., which economists call the firm�s �objective function.�
Many senior managers do not realize that their firm has conflicting objective functions, and they do not realize how their enduring organization (cost) structure and their temporary project organizations are the realization of the firm�s strategy in practice, like it or not. There are myriad points of discussion one can explore related to this more strategic level of management, and the interface from these strategic points to the projects of the organization is a space that has fairly recently been dubbed portfolio management. This appellation was borrowed from the financial community and is being used more frequently now in the world of project management, although project managers often do not have experience in the toolbox of portfolio management concepts that they give lip-service to. The primary activities of portfolio management include: ensuring the portfolio of projects is aligned to business strategy, determining the appropriate mix of projects within the portfolio, managing risks to cash-flow that could prevent good project investments, managing the value of the portfolio, selecting the right number of projects for limited resources, and assessing confidence in plans. These �portfolio management� subjects elevate the dialog about project management because they move project management up the value chain.
�Product management� is also one of the �strategic conversations� that tends to get more air time with executives than project management, but we need to distinguish the product planning conversations that usually occur within Marketing (positioning products to be �cash cows� instead of �cash pigs�, and doing economic value added analyses) from the product development conversations that usually occur within the context of project management. The latter type of conversation is elucidated by the PMBOK Guide, which says that every project has a unique product, but many people fail to realize that the project management processes are used to manage the product development processes; hence, the project management processes of the PMBOK Guide are a universal project management methodology (practices), whereas the product development processes are unique to the type of product being created.
It is essential to integrate the project and product management methodologies as a business tactic, yet most organizations fail at this tactic at the expense of their strategic goals. Even if they succeed at this tactic, it is not enough to ensure successful implementation of their strategies, especially in today�s fast-paced and uncertain world. Not the least of worries for many organizations is improving time-to-market, which is a strategic imperative that has resulted in the promotion of a concept called the �Product Line,� which is a series of products based on a common platform. The common platform reduces development time. This �product development� concept is another reason why �product� tends to get more air time than �project� among executives, but as I have explained above, this is due in part because the dots have not been connected between the two types of methodologies and because executives often overlook the strategic objective functions of their organizations and fail to realize the ways in which their organizational structures are the realization of the firm�s strategies.
John Schlichter, MBA
404.728.0650
Reference: http://www.pmforum.org/pmwt03/editorial03-04.htm
Executives are usually more concerned with the strategic ramifications of projects, and the Balanced Scorecard emphasizes the widespread tenet held among senior managers that financial criteria are but one of several kinds of essential criteria that should be considered by a strategy-focused organization. However, many senior managers often overlook the primary economic goal of their own organization, i.e. profitability versus revenue etc., which economists call the firm�s �objective function.�
Many senior managers do not realize that their firm has conflicting objective functions, and they do not realize how their enduring organization (cost) structure and their temporary project organizations are the realization of the firm�s strategy in practice, like it or not. There are myriad points of discussion one can explore related to this more strategic level of management, and the interface from these strategic points to the projects of the organization is a space that has fairly recently been dubbed portfolio management. This appellation was borrowed from the financial community and is being used more frequently now in the world of project management, although project managers often do not have experience in the toolbox of portfolio management concepts that they give lip-service to. The primary activities of portfolio management include: ensuring the portfolio of projects is aligned to business strategy, determining the appropriate mix of projects within the portfolio, managing risks to cash-flow that could prevent good project investments, managing the value of the portfolio, selecting the right number of projects for limited resources, and assessing confidence in plans. These �portfolio management� subjects elevate the dialog about project management because they move project management up the value chain.
�Product management� is also one of the �strategic conversations� that tends to get more air time with executives than project management, but we need to distinguish the product planning conversations that usually occur within Marketing (positioning products to be �cash cows� instead of �cash pigs�, and doing economic value added analyses) from the product development conversations that usually occur within the context of project management. The latter type of conversation is elucidated by the PMBOK Guide, which says that every project has a unique product, but many people fail to realize that the project management processes are used to manage the product development processes; hence, the project management processes of the PMBOK Guide are a universal project management methodology (practices), whereas the product development processes are unique to the type of product being created.
It is essential to integrate the project and product management methodologies as a business tactic, yet most organizations fail at this tactic at the expense of their strategic goals. Even if they succeed at this tactic, it is not enough to ensure successful implementation of their strategies, especially in today�s fast-paced and uncertain world. Not the least of worries for many organizations is improving time-to-market, which is a strategic imperative that has resulted in the promotion of a concept called the �Product Line,� which is a series of products based on a common platform. The common platform reduces development time. This �product development� concept is another reason why �product� tends to get more air time than �project� among executives, but as I have explained above, this is due in part because the dots have not been connected between the two types of methodologies and because executives often overlook the strategic objective functions of their organizations and fail to realize the ways in which their organizational structures are the realization of the firm�s strategies.
John Schlichter, MBA
404.728.0650
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