Perspectives · Perspectives
"For the purposes of their theories, economists assume that people are maximizers of utility, driven mainly by rational calculations of their own self-interest. That is, economists assume people focus solely on outcomes. That assumption has migrated into much of management theory and practice. It has, for instance, become embedded in the tools managers traditionally use to control and motivate employees’ behavior—from incentive systems to organizational structures. But it is an assumption that managers would do well to reexamine because we all know that in real life it doesn’t always hold true. People do care about outcomes, but they also care about the processes that produce those outcomes. They want to know that they had their say—that their point of view was considered even if it was rejected. Outcomes matter, but no more than the fairness of the processes that produce them" (Kim & Mauborgne, 2003).The fair process approach is as follows:
Perspectives · Benefits Management
It is not the strongest of species that survives, nor the most intelligent. It is the one that is the most adaptable to change.
Leon C. Megginson, 1963
A few years ago in Ottawa (Canada’s national capital), the term portfolio management was regarded as one of the three dirty words in consulting, the other two being enterprise architecture and big data. No one seemed to be able to agree about what portfolio management meant. Portfolio management is now recognised as a critical method required by organisations to manage their change initiatives in a sustainable manner; still, it is a term that is often misunderstood. Failure to adopt portfolio management and the subsequent entropy resulting from this failure is one of the reasons why, when GPM Global conducts a PSM3 sustainable change delivery organisational assessment, we focus on the organization’s portfolio management competency. Portfolio management is a recognized facilitator of the organization’s sustainable management systems. The following is a fun clip with John Cleese, wherein Cleese explains the Dunning–Kruger effect. This is a cognitive bias where"relatively unskilled individuals suffer from illusory superiority, mistakenly assessing their ability to be much higher than it really is. Dunning and Kruger attributed this bias to a metacognitive inability of the unskilled to recognize their own ineptitude and evaluate their own ability accurately."In other words, if you are not an expert in portfolio management, you don’t know what benefits you may be missing out on.
“Portfolio management concerns the twin issues of how to do the ‘right’ projects and programmes in the context of the organization's strategic objectives, and how to do them ‘correctly’ in terms of achieving delivery and benefits at a collective level” (Cabinet Office, Kindle Locations 668-670, 2011).Negotiating with executives is required to determine what information they want based on confidentiality, integrity, availability, cost, and currency. Negotiating with operations is also necessary to provide this information. Further, getting the right information to the executives to allow informed decisions, then advising operations of those decisions, is paramount to portfolio management.
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Book Link:
Maizlish, Bryan & Handler, Robert (2005). IT (Information Technology) Portfolio Management Step-by-Step: Unlocking the Business Value of Technology. John Wiley & Sons, Inc.. http://www.amazon.com/Information-Technology-Portfolio-Management-Step-/dp/B0108DZ4OK/ref=sr_1_3?ie=UTF8&qid=1450767075&sr=8-3&keywords=IT+%28Information+Technology%29+Portfolio+Management+Step-by-Step%3A+Unlocking+the+Business+Value+of+Technology Moore, Simon (2010). Strategic Project Portfolio Management - Enabling a Productive Organization. John Wiley & Sons, Inc.. http://www.amazon.com/Strategic-Project-Portfolio-Management-Organization/dp/0470481951/ref=sr_1_1?ie=UTF8&qid=1450767141&sr=8-1&keywords=Strategic+Project+Portfolio+Management+-+Enabling+a+Productive+Organization OGC - The Office of Government Commerce (2012). Management of Portfolios. The Stationary Office. http://www.amazon.com/Management-Portfolios-Book-Best-Practice/dp/0113312946/ref=sr_1_1?ie=UTF8&qid=1450767204&sr=8-1&keywords=Management+of+Portfolios Perry, M. P. (2011). Business driven project portfolio management: Conquering the top 10 risks that threaten success. J. Ross Pub. http://www.amazon.com/Business-Driven-Project-Portfolio-Management/dp/1604270535/ref=sr_1_1?ie=UTF8&qid=1450767291&sr=8-1&keywords=Business+driven+project+portfolio+management%3A+Conquering+the+top+10+risks+that+threaten+success Project Management Institute (2013). The Standard for Portfolio Management–Third Edition. Project Management Institute. http://www.amazon.com/Standard-Portfolio-Management-Project-Institute/dp/1935589695/ref=sr_1_1?ie=UTF8&qid=1450767335&sr=8-1&keywords=The+Standard+for+Portfolio+Management Rad, Parviz & Levin, Ginger (2006). Project Portfolio Management - Tools & Techniques. IIL Publishing. http://www.amazon.com/Project-Portfolio-Management-Tools-Techniques/dp/0970827687/ref=sr_1_1?ie=UTF8&qid=1450767393&sr=8-1&keywords=Project+Portfolio+Management+-+Tools+%26+Techniques https://books.google.ca/books?id=PUavbSMdP7QC&pg=PA142&lpg=PA142&dq=project+portfolio+management+tools+and+techniques+pdf&source=bl&ots=yzZGArssbu&sig=lk-2eeMKmjJTYpk8VybDb8U4quY&hl=en&sa=X&ved=0ahUKEwiB86q_wfXJAhWEXR4KHRYICJAQ6AEIWTAH#v=onepage&q=project%20portfolio%20management%20tools%20and%20techniques%20pdf&f=false Rajegopal, Shan & McGuin, Philip & Waller, James (2007). Project Portfolio Management - Leading the Corporate Vision. Palgrave Macmillan. http://www.amazon.com/Project-Portfolio-Management-Leading-Corporate/dp/0230507166/ref=sr_1_1?ie=UTF8&qid=1450767483&sr=8-1&keywords=Project+Portfolio+Management+-+Leading+the+Corporate+Vision Teller, J., Unger, B. N., Kock, A., & Gemünden, H. G. (2012). Formalization of project portfolio management: The moderating role of project portfolio complexity. International Journal of Project Management, 30(5), 596–607. doi:10.1016/j.ijproman.2012.01.020. https://www.researchgate.net/publication/229811774_Formalization_of_Project_Portfolio_Management_The_Moderating_Role_of_Project_Portfolio_Complexity The Enterprise Portfolio Management Council (2009). Project Portfolio Management - A View from the Management Trenches. John Wiley & Sons, Inc.. http://www.amazon.com/Project-Portfolio-Management-View-Trenches/dp/0470505362/ref=sr_1_1?ie=UTF8&qid=1450767611&sr=8-1&keywords=Project+Portfolio+Management+-+A+View+from+the+Management+Trenches
Perspectives · Benefits Management
“Primum non nocere – First, do no harm” - Auguste François Chomel (Hooker, p. 219, 1849)
“The golden axiom of Chomel that it is only the second law of therapeutics to do good, its first law being this – not to do harm – is gradually finding its way into the medical mind, preventing an incalculable amount of positive ill” (Hooker, p. 219, 1849).
(Quote borrowed from Douglas Hubbard’s The Failure of Risk Management)
"Risk aversion" is a common phrase. Despite the familiarity, it inappropriately explains people's response to risks. Resources are seldom 'risk averse' though they are frequently 'change averse'. Individuals have different risk thresholds under different circumstances, such as times of the day. A more accurate phrase is that people are simply 'risk ignorant.' People often take dreadful and unnecessary risks without even realizing it (i.e. delaying, making uninformed decisions, etc.) (Bacon, Kindle Location 3744, 2013).
One of the challenges with risk management is that people evaluate risk by replacing the scientific discipline with experience. The challenges and flaws with this approach include the following:
"We're also not telling them what a change in the estimate would do to that probability. In other words, we're not showing the full range of choices in our estimates; we're usurping the decision maker's authority to decide how much risk to take on and what they'll accept as the probability of success or failure" (Thibault, 2010).Most things we DO know are better represented by ranges and probabilities – we don’t have to assume anything we don’t really know. This is represented as a “threshold confidence." Giving decision makers a complete picture of estimate uncertainties is vital to effective risk management. It'll take some extra tools: tools for analyzing and presenting uncertain data, tools for modelling and calculating with uncertainty, and tools for capturing and quantifying input uncertainty. A few examples are outlined next.
Terminology
Hazard: Potential source of harm to people, assets, the environment, and company reputation
Top Event: The incident that occurs when a hazard is realized
Threats: What could cause the top event to occur?
Consequences: What could happen if the top event occurs?
Barrier: What directly prevents or reduces the likelihood of a threat?
Recovery Measure: What prevents, minimizes or helps recovery from the consequence?
Escalation Factor: What could prevent the barrier or recovery measure from working as intended?
Escalation Factor Control: What prevents or minimizes the chance of barriers or recovery measures becoming ineffective?
To employ this methodology it is important to ensure that hazards and potential effects are known, understood and properly managed. This is referred to as risk being reduced to As Low As Reasonably Practicable (ALARP).
Managing Hazards through Risk Reduction
The general structure of a bow tie representation is outlined below.
Bow Tie Connections The flow and connectivity for a bow tie analysis is outlined below:Bow Tie Concept
The following is a graphical representation of what a bow tie analysis would look like.
Perspectives · Benefits Management
This post is intended to provide the foundational concepts around organizational sustainable risk management factors. This post also recommends adopting sustainable risk management as a core discipline within sustainable change delivery. This is part of a series that provides the foundation for understanding sustainable change delivery."It is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring" - Carl Sagan (1997).
(Quote borrowed from Douglas Hubbard's The Failure of Risk Management)
"... depicts expected business performance over time. In practice, performance is subject to risks that, if they materialize, could result in a range of performances ... This gives the potential risk ‘universe’ . It is clear that line AC is not desirable. However, it is not necessarily obvious that line AD also might not be desirable; extreme success might itself produce additional risks. Consequently, there is no tolerance for some outcomes (negative or positive). This is the area outside of the triangle AXY . The appetite for risk, however, is likely to be shown by a narrower band of performance outcomes, depicted in the triangle AMN . So tolerance becomes about absolute values, e.g. ‘We will not expose more than x per cent of our capital to losses.’ Risk tolerance statements become lines in the sand beyond which the organization will not proceed without board approval (although, of course, the board may grant it), whereas risk appetite becomes about what the board wants to do.
Perspectives · Benefits Management
This post is intended to provide the foundational concepts around organizational sustainable risk management competencies. This post also recommends adopting sustainable risk management as a core discipline within sustainable change delivery. This is part of a series that provides the foundation for understanding sustainable change delivery."It is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring" - Carl Sagan (1997).
(Quote borrowed from Douglas Hubbard's The Failure of Risk Management)
Perspectives · Climate Change
Perspectives · Benefits Management
On June 25th, during a plenary session of the UN Global Compact’s founding Executive Director Georg Kell stated, “I guarantee that within four years, the marketplace will have changed from within because sustainability and its reality is becoming a transformative force. ...finally, asset managers are waking up to the basic reality that sustainability pays off. Long-term financial success can only be assured if companies also good on governance, on social behavior, and environmental stewardship. Failure on any of these three pillars will make it impossible for companies to sustain success over time or to become successful.”This shift is important for six key business reasons.
Perspectives · Benefits Management
This post is intended to provide the foundational concepts around sustainable risk management. This post also recommends adopting sustainable risk management as a core discipline within sustainable change delivery. This is part of a series that provides the foundation for understanding sustainable change delivery."It is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring" - Carl Sagan (1997).
(Quote borrowed from Douglas Hubbard's The Failure of Risk Management)
Risk management is a core discipline in sustainability. The importance of risk management is magnified exponentially in change delivery initiatives.
The classic Machiavelli quote from The Prince sets the stage:
"...it ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new" (Machiavelli, Kindle Locations 477-479, 2015).
In short... a lot of risk. From an organizational perspective, sustainable change delivery offers the following, with sustainable risk management as an essential and integrated component:
"In stating risks, care should be taken to avoid stating impacts which may arise as being the risks themselves, and to avoid stating risks which do not impact on objectives; equally care should be taken to avoid defining risks with statements which are simply the converse of the objectives. A statement of a risk should encompass the cause of the impact, and the impact to the objective (cause and consequence) which might arise" (UK HM Treasury, p. 14, 2004).Exhibit 4 provides a helpful model for understanding the types of risks based on probability and outcome and context. There are a variety of risk management methods and processes. Exhibit 5 is a reasonable representation: The following list describes the steps in the risk management process:
Perspectives · Benefits Management
Perspectives · Benefits Management
"The systems that fail are those that rely on the permanency of human nature, and not on its growth and development" - Oscar Wilde.
This is an extension of the post, ‘A Project Manager’s True Purpose: Output, Benefits or Both?’ As previously mentioned, some approaches to project management focus on short-term output, as opposed to long-term benefits. The output perspective tends to focus almost exclusively on project output, including factors like time, cost, scope and the project team, with minimal focus on the organization and its operations. Though a key foundation and construct for the project management discipline, it relies on further building blocks to deal with the evolution of project management. The iron triangle often leads to the constraints perspective of pick only two:"You are given the options of Fast, Good, and Cheap, and told to pick any two. Here Fast refers to the time required to deliver the product, Good is the quality of the final product, and Cheap refers to the total cost of designing and building the product. This triangle reflects the fact that the three properties of a project are interrelated, and it is not possible to optimize all three – one will always suffer. In other words you have three options:
‘. . . no plan of operations extends with any certainty beyond the first contact with the main hostile force’ – Helmuth Karl Bernhard Graf von Moltke, 1871, ‘On Strategy’.This is often paraphrased as, ‘No plan survives contact with the enemy’ (Barnett, p. 35, 1963). In short, managing all projects using a controlled production process with pre-defined requirements, inputs and tasks leading to a predefined output with nominal change is unrealistic. Even PRINCE2 (PRojects IN a Controlled Environment) presumes a changing and dynamic environment. One of the PRINCE2 themes, aspects of project management that must be continually addressed, includes change. PRINCE2 is not an output-focused methodology.
‘The purpose of the change theme is to identify, assess and control any potential and approved changes to the baseline. . . Change is inevitable during the life of a project, and every project needs a systematic approach to the identification, assessment and control of issues that may result in change’ (OGC – PRINCE2, p. 91, 2009).GPM Global argues that project management maturity follows the transition outlined below in exhibit 7. The focus on output may be acceptable when starting out on simpler projects. With more complex projects, the attention should progressively evolve to include a benefits and organizational focus. The next evolution is the acceptance, adoption and integration of sustainability into the project management life-cycle, as outlined below in exhibit 7.
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