The P&L commands attention. The general mood of an organization is in tight correlation with the year-to-date, month-to-date or even daily numbers. When those are up, everyone’s happy, money flows, meetings seem to have an added bit of fun. If they shift in the other direction, it seems we can’t escape the comments along the lines of, “that’s nice in all, BUT…”
There is a good time to make some changes. When the business results are poor and the team’s collective actions (project execution) are also poor. The tough thing is truly knowing when project execution is poor. Just after the Great Recession, Alan Mulally spoke to graduate students at Stanford about his turnaround of Ford, at the time he came in Ford was projecting a $17 billion dollar loss on it’s P&L. After weeks with his leadership team showing chart after chart (300+ if I recall correctly) of the actions and projects in their area as green, Alan asks, “Guys, we’re going to lose $17 billion dollars, is there anything that’s not going well?” Although this gave the group a chuckle, it reminds me how often I’ve seen project reporting as all green when most everyone knows it’s not.
The relentless beatings come from the healthy scepticism Mr. Mulally describes. Since it’s common for ‘all green’ to be reported, when the business results are down, it’s natural to fire back at every project team that they must be hiding something. Maybe they are executing poorly, maybe they’re working on the wrong things, or maybe the project’s success is being evaluated on the wrong goals.
On the other side of this fault, is when that warm blanket of security takes a turn for the worse. Your business results are riding the wave of pure luck and the winds change. All of a sudden you’re going down and you don’t know why (titanic anyone!).
How do we fix this? Bring project execution into clear view, like the P&L is:
- Clear project goals – We all know SMART goals, and don’t stop reading, I’m not going to reiterate them! In my experience, the ‘R’ is misunderstood. It even changes names (Google “SMART goal images”, ironic if you think about it). Relevant is the key. Anyone can make something specific and measureable, just throw out an ROI and you’re done. In comes the relentless beatings or false sense of security. If all projects are tied to the P&L, then the P&L going up or down determines if the project execution is up or down. But that may not be the case. Take for instance brand awareness. You want to invest in your brand, so you set a project out for some ad spend and creative ideas. You decide counting impressions doesn’t have the oomph you’re looking for, so you tie it to sales. Busted! Who can prove where those sales came from? Was it the billboard? The Facebook campaign? The promo? Or that all-star salesperson? Relevant needs to mean both from the business perspective (it makes money) and the project perspective (it’s tied to the planned actions). Clear project goals are ones that have a tight correlation to the planned activity and are important enough to care about.
- Evaluate projects on their merit – Once you’ve done a good job of #1, hold project teams to that goal regardless of the outside business results. This may seem uncomfortable, but if you’ve done the upfront work of setting your projects to move the business properly, then there is no reason to compare back to outside influences.
- Look at the project portfolio for completeness – If #1 & #2 are done well and you’re still finding your business results lacking, then you may not have a complete perspective of what it takes to move the needle. Take a step back, and determine key projects to add in or take out.
Rob Darrow | Director of Change Management, Nivel Parts & Manufacturing Co., LLC.