PMO Basics: Building Your Lessons Learned File

Posted on February 27, 2012 by Chris Niccolls

Ask different project managers and get different reasons why project management and the PMO is important. For me, communication provides PM’s greatest value, and building a lessons learned file is one of the most valuable (and overlooked) communications practices. Project management has been around for a very long time and the Pyramids of Egypt (hundreds built and 80 still standing after nearly 5,000 years), the even larger pyramids of Mexico and South America, the Roman baths (thousands were built around the world), and the endless dams and water control systems of ancient China… were built long before modern project management was developed. Yet, we’re still figuring out how these incredibly well known projects were performed. What about failed projects? Consider Percy Bysshe Shelley’s poem, “Ozymandias.” The stumps of a statue’s legs, abandoned in a forgotten desert, once pointed towards a great city but now faces only desolation. On the base is inscribed, “Look on my works, ye mighty, and despair!” That’s not teenage irony, that’s a PM’s best argument for building a lessons learned file. Empires collapse,  leaders fall and mighty civilizations can disappear without a trace. Success leaves artifacts behind, but the  lessons of failure are too often buried with the failed project. Today’s blog is about the lessons learned file and how it can help us learn from the past.

When a project works out, we have an incentive to leave behind critical information so that our success can be replicated. Even so, there are new projects waiting and we want to move on to these projects rather than write up materials on a closed project. When the project stalls or fails… well, we think we’ll eventually get around to writing everything up, but we don’t.  The reality is that everything you add to the lessons learned file is a force multiplier. Do something very clever on a project and the project gets better, but document that clever idea and you can benefit many projects. A very large part of this problem is that human memory is very tricky, and unreliable. When we’re in the middle of a huge problem, it may look like there is no solution. But we started to think about the problem weeks (or months) ago, we may have worked on similar projects in the past, and perhaps developed a partial solution. As all of these bits and pieces move around in our heads, the “AH-HA moment” may sneak up on us as all the information in the back of our heads suddenly slides into place. A few weeks or months later, when it’s time to write up lessons learned, it now seems that the idea was “obvious” and it never occurs to you to document it.

OK, we all agree that sharing information is important, but how important? Let’s take an extreme example. Every day, people die. But we are often affected most when it’s children who die. Years ago, a child diagnosed with Leukemia (the most common childhood cancer) was not expected to survive to adulthood.  In the early 70’s the 5-year survival rate rate was 68%, but for some forms of Leukemia the survival rate was in the low 30’s. Today, the 5-year survival rate rate has risen to 90%. Of course the diagnostic process has improved and treatments are more effective, but adult recovery rates are only 66%. At a conference, I recently met a Pediatric Oncologist who offered an explanation. He told me that his profession had undergone a revolution… doctors were talking to each other. If you know anything about medicine, that seems like a strange comment. Perhaps more than any other profession, doctors have conferences, they write articles for journals, they work in teams, etc. They talk a lot! But this new revolution was driven by mothers who pressured  doctors to talk to each other to get information on new drugs, to check with peers about using a combination of drugs, or deal  with children with unique issues. Normally information is provided at a yearly conference or through reports in journals that take years to research and write; now doctors were talking to each other and having video conferences about difficult cases, greatly speeding up information exchange. They were building and sharing lesson learned files. Treatments improved, lives were saved.

Most of us work in industries and professions where the sharing of information within a group is inconsistent, sharing throughout the entire firm is unusual, and sharing between peer firms is very rare. Yes, some groups and organization do share data, but for the vast majority we think of the formal sharing of information as an optional activity rather than a core function. It’s not part of our DNA and we don’t  know how to move best practices beyond the PMO. Because every PMO is different finding the right way to deal with lessons learned will also be different. However, here are some recommendations…

Involve The Team: Some PM’s believe that the best way to build a lessons learned file is to do it themselves, since they have the best training to identify and document processes. PM’s should develop many of the materials, especially detailed documentation of technical processes, but the rest of the team needs to participate as well, preferably creating documentation as part of their personal development.

Debrief: The best way to identify key learning’s is to follow the military’s example and debrief. At the end of the project, pull the project team together to develop 2-3 key points on what happened, what went right and what went wrong. You will often find that rest of the team has a different idea on each of these subjects. That’s not too surprising when you consider the range of skills and background on the team. Some questions to ask:

  1. What did you learn: This may help you to “on-board” future teams.
  2. What was your biggest challenge: Look for team patterns for this project, vs. other projects.
  3. What went wrong/right: Here’s your chance to fix problems and replicate best practices.

Research Your Results: What appears to be a best practice may be a misinterpretation, and a real best practice can be misapplied. Before you do a full write up on lessons learned, test the idea  using the TREZ methodology. This was developed in Russia during World War II to accelerate the speed of innovation in engineering.  One TREZ concept is that most solutions already exist. Check Google and other resources to see if anyone else has developed a similar solution. Just because no one else is talking about your proposed best practice, doesn’t mean that it’s not a best practice. But it anyone else is discussing it, you may be able to pick up bits and pieces that someone else knows… add it to what you know… and end up months or years ahead. Just like the pediatric oncologists.

Update Old Beliefs: Your new best practice may affect previous best practices. Take some time to verify if previous best practices are no longer true or at least not entire true. If you need to, update or eliminate some old documents in the lessons learned file.

Publish: Go beyond the basic documentation. Write up an article or a blog. Find if your firm has a newsletter or website for internal information. Go to Linked In and publish an article for one of the GROUPS or go to ANSWERS and see if you can get some external feedback on your ideas. Of course, any time you go outside of your organization make sure that you get corporate approval (check with Marketing, or HR or other groups). Also, some firms may have confidential data they don’t want released and you need to understand rules. You don’t want to get your team excited about a soon to be released article on your project, that gets canceled by the firm at the last minute!

Train: Are you sharing your lessons learned file with you training department? Training may have courses that might incorporate some of your information, specific information and PMO functions might be worthy of a training class and the process of collecting and refining best practices might make a good class.

The power of a good lessons learned file is enormous! The more documentation you have on best (and worst!) practices, the more effective your projects will be. Of course, if you have a really good lessons learned file you may be able to completely avoid projects that will never come to completion, or never produce the desired effects. The lessons learned file is a force multiplier and take hard-won  knowledge from a single project and expands it across many projects. Put the time and effort into a good lessons learned process and your entire firm will benefit. And that’s my Niccolls worth for today!

Posted in Best Practices, Improvement, Continuous or Not, Learning and Development, Project Management Office, Uncategorized | Tagged , , , , , | Leave a comment

PMO Genius: Massive Savings Hidden In Documents

Posted on February 20, 2012 by Chris Niccolls

Today’s best solution often cause tomorrow’s biggest problem. Consider the baby diaper, the humble nappy. Pampers, the first practical disposable diaper, was introduced in 1961. Like any new product it was a less than perfect solution. They used wood pulp for  moisture absorption, making them bulky and leaky, and requiring a LOT of storage space for just a few days of diaper changes. However, technology evolves and diapers quickly became: smaller, more reliable, higher capacity, and lower cost.  The next generation of parents overwhelmingly switched to disposables. The price of success, unfortunately, was landfills overflowing with diapers. Solve one problem and make another! While today’s Blog does not solve the problem of baby’s diapers, it does solve a mess that is even bigger and… well… just as… ahem… urgent. Today we’re going to take a peek inside of corporate documents and see how big the problem is, and then show you how to clean up this mess! Take a deep breath and let’s dive in!

When parents first tried to go diaper-less, corporations were making their first attempt at paperless. In the early 60s, IBM introduced the video monitor, which quickly spread through corporations. We could now read and edit documents on a monitor… and later in color and with video… the idea began to develop that we didn’t need to print to paper. Add rising concerns about the environmental, and reducing the mountains of paper reports naturally leads to visions of a paperless office. But as usually happens with a revolutionary idea, the revolution didn’t turn out that way we expected. What used to be one paper document becomes hundreds or thousands of electronic documents. When the paperless office was first envisioned, color was a rare and incredibly expensive commodity. Today we spew document versions as we endlessly edit… fonts, colors, formatting, embedded audio and video, and our distribution lists when we email our completed documents. E-docs have been so successful that we are drowning in documents, and the number of e-docs continues to rise!

According to The Radicati Research Group, we each send 50 emails a day and read another 100 emails; another study places our daily load at 105. The U.S. post office delivers about 215 billion pieces of mail annually; Radicati Research estimates that we receive 300 billion email DAILY.  Pause for a second and think about that. When were we all given time to go through 100+ emails a day, and the documents embedded in these emails? Multiply that times every single worker in your organization. Are you beginning to see the size of the problem e-doc have created? The problem comes from two properties of e-docs. First, they are very easy to create and replicate. It takes much more effort to send a physical document to a thousand people rather than one; an e-doc takes little effort or cost, especially if the thousand recipients are in a single distribution list. Second, e-docs are not subject to the physical limitations of paper documents. With paper, when you run out of filing cabinets you need to archive documents offsite or destroy unneeded documents. E-docs have no physical space limits. A page of plain text is about 2,000 characters. A 3 TeraByte (TB) hard drive holds 1.5 billion pages, or 3,000,000 reams of paper, or 450,000 cubic feet of storage space. A dozen of these drives can fit in your backpack! Not surprisingly, we treat storage space as free, and we keep infinite version of our documents and send to endless recipients on email. The massive number of e-docs has a profound but deeply hidden cost for every corporation. Yet, most firms act as if we can neither measure the cost of e-docs nor provide solutions for the e-document monster. However, we can solve this problem! Let’s break this down, measure the problem and develop solutions…

CORPORATE PROFILE: Corporations vary, both in size and in cost structure. No estimate will fit every firm, but each firm has the same cost elements. For example, there are about 1,000 US firms with 10,000 or more workers (Walmart leads with over 2,100,000 workers); another 3,000 firms have 5,000-10,000 workers. Of course there is a similar number of large European and global firms. Most of the readers of this Blog work in firms of this size. The cost of an employee varies dramatically, depending on industry. In an Investment Bank, the average employee makes over $400,000. The base salary in a large law firm is over $160,000, not including bonuses and other compensation. Neither example includes the cost of taxes, benefits, space, software and contracted services. While the average American salary is around $50,000, compensation in the largest corporations is much higher (especially in knowledge-based  firms). For our purposes, a cost of $100,000 per employee is very conservative.

EMAIL: We use email inappropriately and too often. A previous Blog detailed the inefficiencies of email. In short, ATOS (an $11 billion European firm) researched its own email and found that the average worker manages 100 emails a day (similar to Radicati’s findings), 85% of email time is unproductive, 15-20 hours per week are consumed by email, and most of us work more than 40 hours per week… at least partially because of email. A few calculations show that 25-30% of ALL work time is spent on “useless” email. That means that every worker is your firm is paid $25,000 to $30,000 a year to manage “junk” emails. Time for solutions…

  • Education: The ATOS study also found out that communications form the CEO about this waste immediately reduced email traffic by 20%. I’ve personally seen the same thing happen at several other firms. And, a week or two later everyone goes back to their old habits. Without follow-up and accountability, the change does not last. Why not add accountability? Put an organization in place to  monitor email patterns (not the content of emails), educate internal spammers, and identify further projects to fix email limitations. At a minimum if you can maintain the 20% reduction in junk email, it would be worth $5,000 per user or $50,000,000 for the firm. A more aggressive program, obviously, could yield much more.
  • Expiration: We not only read emails, we archive them and read them again later. Many emails either have no value after a short time, or should be destroyed as part of your records retention rules. If just a few documents expired or automatically followed your firm’s document retention rules, you could reduce waste email time by another 10%, or a savings of $2,500 per worker, or $25,000,000 for the firm.
  • Transport: We use email to move around files when we have no alternative, creating duplicate files. We further duplicate files because it’s easy to make new versions and ask for old emails we can’t find… “Can you send that file again? I don’t know what I did with it! What version of Word is this… I can’t open it? Can you make a new version of that file, or can you…””). Provide an alternative (document management tools?) and you wasted email time can be reduced by another 10%  ($2,500 per worker, or $25,000,000 for the firm).
  • Benefits: Benefits do require some expense. So, let’s provide a budget of $10,000,000 for staff and new software to ensure these benefits, leaving a net benefit of $90,000,000.

LEGAL: When a large firm is sued courts identify the types of documents that are relevant to the case; the defendant then finds the documents (wherever they are), collect them and literally review every document to identify the specific documents that will be provided to the court. This process is incredibly expensive, with costs rising as more documents are reviewed. Because of the growth of corporate documents, legal department budgets are driven by document reviews. Larger investment banks have legal budgets (including contracted legal services) of a billion dollars or more. Other large firms (especially those with high-value  assets) have similar legal costs. Between 30% and 70% of all legal costs are due to document reviews and litigation. Here’s how to bring down these costs…

  • Fewer Documents: Reduce the documents and you reduce the cost of litigation. Let’s assume a conservative $100,000,000 legal budget. By reducing emails and having document management (above), we might reduce the number of documents by a modest 20%, or $20,000,000.
  • Technology in Reviews: Lawyers are very conservative and tend to trail the available technology. As a result, the document review process is very manual. In another Blog, steps for developing a pilot program for Technology Assisted Reviews (TAR) are provided. Your firm will adopt TAR tools. It’s just a question of when. If you set up this pilot, you will start saving years sooner. A TAR reviews cost far less than half that of Linear (i.e. “read everything manually”) reviews. Conservatively that’s $40,000,000.
  • Fewer Lost Cases: Talk to your legal department about how many cases were lost or had to be settled out of court because of emails and documents that should never have been in your systems, or should have been removed as part of your document retention policies. How much? Let’s just leave it as, “millions and millions of dollars.”

IT SERVICES: A huge part of the cost of operating an IT department is the cost of documents and emails. For a firm of 10,000 the cost of an IT department will vary between $100 million and $1 billion a year, with as much as a third of the budget devoted to: storing and archiving documents and emails, maintaining backup sites, building network and internet bandwidth for email, and of course restoring lost files.  Let’s be very conservative and say it’s just $10,000,000.

EVERYTHING ELSE: The “normal” discussion of document management covers: copy centers, marketing materials, document centers, print sourcing, document warehousing, outsourced printing, sourcing of printing and print supplied, etc. If you firm consolidated these services there is a potential for huge savings. However, I’m not going to add any of these savings to this analysis because your firm is probably aware of these opportunities and is discussing different approaches. This is a potential of many million more… but we’ll leave it out of this discussion.

Our conservative analysis yields a modest $160 million cost savings for our “small” corporation of 10,000 employees. A more aggressive approach to documents could more than double these savings, and larger savings are possible in a larger firm. These are low risk projects (that can be tweaked for even lower risk) that are simple to execute, and have a phenomenal payoff. Is your project portfolio filled with document projects? Do they provide similar savings? If not, isn’t it time to talk to a few departments around your firm and see if you can help them to develop new projects? Whatever comes out of these discussions will add significantly to the value of your PMO’s project portfolio. This problem of e-documents has been building for a long time, but this could be the year that your firm starts to take control and tame the e-document monster. At least, that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Improvement, Continuous or Not, Project Management Office, Uncategorized, Unique Ideas | Tagged , , , , , , | Leave a comment

PMO Genius: Developing A TAR Pilot Project

Posted on February 14, 2012 by Chris Niccolls

Project managers are taught that the most expensive method of resolving a dispute is litigation. Yet the number of corporate lawsuits keeps rising, as does the number of documents in each lawsuit. If you’ve never worked with a legal review team, the process sounds a bit like black magic. Lawyers argue in front of a judge about relevant documents for the case and the judge announces which documents must be produced. Today, “producing” documents means searching through servers and data archives to identify files that meet the description (responsive documents) and then remove the documents you are not required to provide (privileged documents), such as emails with your lawyer. The process of identifying responsive documents while excluding those that are privileged, is people and cost intensive. The document review process is inefficient and outdated. In today’s blog we’re going to show PMs and PMO Directors the basics of eDicsovery, opportunities to develop a more cost-effective process, and how to discuss this opportunity with your Legal department. Ready? Let’s dive in!

We’re going to focus on the document review portion of eDiscovery. However, since our mission today is to demystify eDiscovery, let’s start with a high level review. You can divide up the stages a number of different ways, but this is pretty much the standard model:

  • Identification: The process of interpreting instructions from the court to identify specific documents that must be provided to the court and the opposing legal litigators.
  • Preservation: Copying a file is not good enough. Electronic documents are more than just what you can print. You need to preserve all data (including the file date), avoid accidental damage and backtrack anomalies (such as virus-infected  files).
  • Collection: You now gather together the documents where they can be accessed by other members of the team. A 3rd party provider may be used to “host” the data, providing reliable 24×7 remote file access.
  • Processing: Many documents are exact duplicates: emails sent to many users, the same document saved by multiple users, etc. Most document reviews use some form of automated “de-duping” to reduce the total number of documents. The documents may be put into smaller collections for easier document reference and assignment of work.
  • Review: Up to hundreds of reviewers may be needed, which then need to be given instructions on what to look for (responsive documents), and what to hold back (privileged). They then… read each and every document. Typically, a document reviewer can check 40-50 documents per hour. 85% of eDiscovery costs occur in the review stage.
  • Analysis: As data arrives from the review, new patterns may be found that lead to new instructions to the reviewers and perhaps some keyword searches to verify that the collection has all the documents it should and reviewers are correctly identifying responsive and privileged documents.
  • Production: The responsive documents are put together, the privileged documents are removed from the pile and the data (made available on the host site, on a hard drive, etc.), and perhaps a hard copy is given to the court and to the opposing litigators.

It’s not quite magic, is it? It’s all about finding the right documents while not releasing documents that are not required. Given all the technology to sort through large data repositories and find specific data, why is this process so people intensive? Well, lawyers are conservative by nature. They have been waiting for the courts to state which technologies are acceptable and which are to be avoided. According to Judge Andrew J. Peck, a speaker at the January Legal Tech conference, specific technologies are rarely “authorized” by the court. In a typical linear review, key word searching (via computer) is common, but Judge Peck stated that no court ever authorized key word searches. It made sense so people just went ahead and did it. Judge Peck believes that other technologies will move ahead in the same way, and first movers will reap a huge advantage. In fact, Judge Peck questioned why lawyers were not using the rule of reasonableness to force the use of TAR.

When a litigant is asked to do something unreasonable, they can propose an alternative. If you were sued for $100,000 it would be unreasonable for the court to require a “traditional” document review costing $150,000. When linear review is excessively expensive, it is reasonable to propose Technology Assisted Review (TAR) instead. Firms selling TAR solutions can provide you with documentation supporting their high rate of accuracy. For further support of your request, you can produce data on the low accuracy of “linear” reviews (i.e. people reading documents). Maura Grossman’s, “Technology-Assisted Review In E-Discovery Can Be More Effective And More Efficient Than Exhaustive Manual Review”, provides extensive data on just how poor the results of linear review can be.  Simply put, if two lawyers on the same team are given the same documents to review, they will agree on what is responsive and what is privileged less than 50% of the time, and the high number of false positives raises costs for both teams of litigators. It is not uncommon for new information may come to light later in a review, or you may find that reviewers misunderstood or omitted instructions, or you just come up with a great idea for a search. It is both cost and time prohibitive to re-run a linear search (i.e. read all or most of the documents gain), but it usually costs very little and takes a few minutes to run a new TAR search. That provides the judge and both legal teams with much greater flexibility.

Now we all know how linear and TAR reviews work. We also know that the main roadblock to greater use of TAR is the lack of a clear direction from the court, and the conservative view of lawyers. If we can develop a method that addresses these two points, and can be applied objectively your organization can take advantage of the 50-70% lower cost of TAR.

Risk vs. Cost: The law does not require a special need to use TAR. But let’s act as if it did. Estimate the cost of a linear review; for cases where the review is close to the cost of losing the case (say 75%), you have a simple justification for requesting a  creative alternative. This also applies if you are the injured party. Lower cost means you can pursue cases that would otherwise be too expensive to win. Feel free to tweak the risk/cost ratio, but keep it below 100% (there are other litigation costs).

The Judge: Different judges have different opinions, but both their court rulings and their opinion in legal journals are available for your review. Your legal team will have an opinion on which judges are for and against TAR (many will be neutrals). Make a list of judges against TAR, and leave them out of your sample. These judges might take offense at your request for TAR if their position is well-known, and that could negatively impact your case or influence future court decisions. You can be more conservative by selecting only those judges known to support TAR, but that might be a too small a sample. The risk of a negative outcome from a neutral judge is much smaller, since you’re just proposing an alternative for the judge’s consideration. If he says no, you just go back to linear review and wait for your next opportunity.

The Opposition: The opposing legal team might object to a TAR. But they are less likely to do so if the judge has supported you. Also, they will not be able to provide hard data that linear is a superior process, it’s just a more frequently used process. If they do raise an objection, respond to them. TAR can be good for both sides. If the judge accepts the “reasonableness” argument, he may support you with an alternative that is even more objectionable to your opponents (limiting the scope of the review?). On the benefits side…

Complexity: If the search is especially complex, and is therefore likely to benefit from additional late-stage  searches and refinements that cost-effective in a TAR. Present the benefits for both sides to the judge and the opposing litigators.

Timetable vs. Scale: Linear reviews can have big teams. It takes time to bring on the reviewers, train them, get computers and licenses in place and then perform the review.  TAR can be set up in less time, and can process the work faster. A typical reviewer can check 40-50 documents per hour. TAR depends on the specific setup, but one Cloud based provider quotes 500 documents per minute, and the search of virtually any size collection in under 1 minute. That’s equivalent to a team of 2,000 reviewers, or a team of 20-25 reviews working for three months. If the alternative to TAR is to extend timelines on the case, both the judge and the opposition may support TAR.  

Free Review: TAR providers are developing innovative pricing models. Traditional pricing is by document, page, GB, or processing hours for the entire collection. A new model is to pay by result. You can load the entire collection (free), search repeatedly (free) and just pay for the documents that you want to extract. At Legal Tech, I spoke with PowerSearch, which follows this model. They encourage you to follow your current process, and then send your collection to them for reprocessing, as a second level of security. Process a collection of 1,000,000 documents (free!) takes a day and a half. Once processed, they claim that searches of any complexity will take about under two seconds.  Try doing that with linear review!

And that’s it! You now have a basic understanding of the eDiscovery process, and a more in-depth understanding of the advantages of linear vs. TAR. The objections of your legal department to aggressively pursuing TAR are understandable, but they are also addressable. You now have a low-risk  approach for discussing a TAR pilot program, with your Legal department and some information on the potential cost benefits for the firm. Making a shift from linear to TAR will reduce costs by millions, possibly hundreds of millions of dollars annually. The rising number of documents and the associated costs will eventually make TAR the default for eDiscovery. Early adopter firms will develop a competitive edge from TAR efficiencies. Start having those conversations, and begin reaping the rewards… and that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Project Management Office, Unique Ideas | Tagged , , , , , , | Leave a comment

PMO Genius: How To Smartsource Outsourcing Programs

Posted on February 12, 2012 by Chris Niccolls

In the last blog, we discussed the limits of cost based outsourcing: after initial savings three is little or nothing left for the next contract, “fractures” in processes develop between the client and the vendor that damage productivity and a focus on “managing to the contract” to keep costs down kills innovation and future savings. “The Paradox of Productivity,” which studied outsourcing programs and observations of these programs confirm that these three forces limit the value of cost based outsourcing… or dumbsourcing. Today, we’ll look  at dumbsourcing and see what we can do to invigorate these programs and convert them to into smartsourcing! But first, let’s take a look at another report by McKinsey & Co., the world’s largest consulting firm.

McKinsey’s study, “Understanding Your ‘Globalization Penalty,’” looks at data from 600,000 employees and 500 firms, and compares top performing locally focused firms with global focused firms. This study was not specific to outsourcing, but covered firms that buy, sell and work locally vs. globally. Consistently, firms focusing on local markets performed better. What was the penalty for the global firms: less coordination and control, weaker capabilities and significantly less innovation. We shouldn’t be too surprised that when you work in multiple cultures and countries, different team have different assumptions, skills in one location are missing in another, and in trying to establish control over this dispersed organization extra controls are put in place that limit initiative and innovation.

What’s truly amazing about McKinsey’s findings is that in the late 80s, McKinsey (along with General Electric) literally invented offshoring, and triggered the wave of knowledge outsourcing to India. Corporations today are still designing outsourcing programs based on this early model rather than current information, which may explain why so many of these program are failing. Over the years I’ve been invited by McKinsey to visit their operations in India and other locations. McKinsey is quite up-front about the limits of global outsourcing, as demonstrated in “Globalization Penalty.” Some firms can still benefit from outsourcing to India. Other firms might gain more by restructuring outsourcing with a larger local or nearshore component.  Still other firms might revitalize their outsourcing program by returning some staff to their headquarters, with improved management and more effective automation.  McKinsey’s new study reflects data that has been piling up for years: outsourcing “fractures” weaken these programs, over dependence on offshoring causes productivity problems in mature programs and a decade of dumbsourcing has drained innovation from many programs.

A cost-based outsourcing program, whatever its limits, provides you with a simple savings target. But how do you measure the value of innovation? Let’s look at commercial products, such as computer hard drives. This intensely competitive field requires intense innovative. Every year the cost of storage drops dramatically, because of innovation. Drives also become more durable, faster, smaller, and use less power. Innovations created these benefits, and the benefits translated into lower cost. In 1983 a 10 MB hard drive cost $10,000. In 1986 a 20 MB drive cost $500. Today a 3 TB (or 3,000,000 MB) drive costs less than $250. A GB of drive space in 1983 would cost $10,000,000 and costs $0.08 today. Innovation is very easy to measure!

The only remaining question is, “How can my firm develop an innovation based outsourcing program?” It’s not that difficult. Everyday technology firms launch products that redefine existing markets or create new markets.  They start with a high level definition of a product or with the identification of a gap in the market. They have design session to move from a set of specifications to the design of an actual product, that maybe constrained by cost or current technology.  When they have a product design and market information they determine the benefits of a product launch, the conditions of success and failure, and decide whether they will proceed. If we applied these same processes, it would look like this:

ACCURATE METRICS: Work volumes rise and fall, distorting the real cost and other metrics of a service. Before you can measure benefits you need to be sure that you are tracking the right metrics. For example, for document production the cost per hour for workers is not very meaningful; the cost per page of work is a better indicator. For an existing program, you should already receive reports on unit price, production volumes, quality levels and overall cost. If you don’t already have these reports, especially the unit cost, you need to collect these before you begin negotiating a new contract.

COORDINATED VIEW: Introducing one product can affect other products. Outsourcing programs attach to the corporation… somewhere. What’s on the other side of the program? Imagine a corporate library that introduces a product to  reduce work in the marketing department. Overall cost to the firm drops, but the cost of the library is unchanged (or even rises slightly). By limiting your view to just the library you miss the large benefit to the firm. The benefits of innovation rarely start and stop in just one group; a coordinated view of the firm allows you to identify benefits that cost focused programs miss.

MARKET RESEARCH: You now know your unit price, and other key numbers. Ask your outsourcing vendor, perhaps several vendors, what they believe are best-in-class  metrics. Ask if they think they can exceed best-in-class  numbers… if they weren’t constrained by current procedures or product definitions. Let your vendors be as creative as possible, and understand the potential benefits. You can always remove unacceptable options later in the process, but first you need to understand the value of these features and the alternatives.

INNOVATION DELIVERABLES: Dumbsourcing focuses on cost, and has cost deliverables: fixed cost per hour, maximum staff positions, no overtime, etc. If you want innovation, start by defining innovation deliverables. Don’t focus on a specific product, since neither you nor the vendor yet knows what it will look like. Instead, focus on product features. For corporate services, consider: delivery time, unit cost, volume, and other metrics. Account for benefits anywhere in your firm. Use market research as a baseline for innovation, and look for the best possible metrics achievable.

INNOVATION PARAMETERS: The greater the level of innovation (and benefits), the greater the changes to the end product. Compare a 1960s style home phone… heavy, black, with a dial, wired to the wall and just one ring tone… to an iPhone. The marketplace tells us that the iPhone is the superior product, but you can imagine how difficult it would be for 60s product managers to even recognize the iPhone as a phone product.  Don’t be surprised that what appears to be a mandatory feature, isn’t very important. Follow the benefits of innovation, and then test if all current product features are needed, and if new features can provide new benefits. Be open to reductions or elimination of quality control, administration and management positions wherever they are in the firm, as well as elimination of little used (but problematic) product features. Review client complaints and management reports to develop questions for your brainstorming session.

PRODUCT MOCK-UP: Have a brainstorming sessions with vendors to design new products. You can play an active or passive role in new product development. This is where the vendor has an opportunity to pull together the best features from all of their programs and combine them into a coherent program. Ideally, this program should offer more than you want or would accept. Design of the final product should focus on removing the proposed new features that offer the least benefit, or have significant negatives or are least likely to be delivered.

PARTNERSHIP BENEFITS: The launch of a commercial product affects more than just the manufacturer. There are retailers, channel partners and other distributors who want to share in the benefits of a product launch. You have outsourcers and perhaps other vendors that you want to strongly incentivized to deliver this new product. If the outsourcer is your partner, are you willing to share benefits with your partner? Your vendor may enthusiastically deliver a product that aggressively reduces their revenues, but that’s not what usually happens. Aligning your interests with the vendors interests just makes sense.

  • Product: When you developed your product mock-up, did you develop a clearly defined product with very specific benefits?
  • Savings:  With this design, have you identified the dollar value of the new program?
  • Scale: If the size of the program expands, you will  benefit from the economy of scale (read this to estimate benefits). Go back and examine where the program attaches to the firm; is there an opportunity to merge staff into one program?
  • Incentives: And now the hard part. If a $10 million program was expanded to $20 million, and unit cost was reduced by 20%, you get a $2 million benefit. How much of this benefit are you willing to give to the vendor as an incentive? Start with a 50/50 split, and negotiate from there. If you fail to allow sufficient incentives for the vendor, you may not receive any benefits. If your current program delivers no additional benefits in the 2nd or 3rd contract, why wouldn’t you provide a high incentive for a higher probability of increasing productivity?

COMMIT: You know the changes you need to make, how you need to share benefits and how much freedom the vendor needs to be successful. If the program makes sense… and can deliver more benefits than another contract of cost-based outsourcing… it’s time to commit to a smartsourcing program.

If you want the benefits, you need to make changes and promote innovation. A true partnership with our vendors can turn functional fractures into bridges that expand the benefits of the program. If your firm is not ready to work in a real partnership and pursue innovation in outsourcing, what are your alternatives? If you stay with cost-based outsourcing, how will your unit price improve in a year, three years, five years? Smartsourcing can revitalize your outsourcing programs and provide a much needed injection of innovation. And that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Improvement, Continuous or Not, Project Management Office | Tagged , , , , , , , | 2 Comments

PMO Basics: The Downward Spiral Of Cost Based Outsourcing

Posted on February 2, 2012 by Chris Niccolls

Business is changing. Look at the number of books published about the economy’s move from atoms to electrons. Don Tapscott’s wrote an excellent example, “Wikinomics: How Mass Collaboration Changes Everything.” The title says it all. The Internet has connected everything to everything. That “connectedness” has transformed outsourcing from a niche solution to something that touches every function in the corporation. Now add the unprecedented string of economic disasters… the collapse of the tech bubble, 9/11, the end of cheap oil, the collapse of the real estate bubble, and the global financial collapse… and outsourcing is suddenly everywhere. Not surprisingly, the increasing pressure to deliver savings has changed the direction of outsourcing from long-term productivity to short-term cost savings. Stripped down outsourcing has delivered savings, but it’s running out of gas and mature programs are becoming more of a drag on corporate performance than a benefit. Is the transformation of outsourcing into “Dumbsourcing” a threat to corporate profitability? Today’s blog will walk you through the issues and explain the hidden risks and costs of dumbsourcing.

Dumbsourcing doesn’t mean that you made a dumb decision to focus purely on cost. In the middle of a financial crisis you have limited options. Before the decade of crises, outsourcing programs had time to identify core and non-core functions, time to understand the benefits and risks of outsourcing location, and time to develop a program that leveraged outsourcing to move business objectives forward. Dumbsourcing delivers cost reductions, but over-reliance on the lowest-cost  option created long-term risks. When a cost focused contract is renewed, even an aggressive renegotiation may not deliver new cost savings. Many outsourcing programs are in their 3rd generation, and are feeling pressure from rising labor rates and offshore inflation. Recent government talk of penalizing offshoring may further diminish the value of cost focused programs.

It takes years to accrue and analyze enough data to understand what works and what doesn’t. One study that examines the results of cost focused outsourcing is, “The Outsourcing Productivity Paradox: Total Outsourcing, Organizational Innovation, And Long Run Productivity Growth.” This study analyzes the rise of IT outsourcing from $3 billion to $250 billion, between 1989 and 2006. The primary conclusion is that cost focused outsourcing ultimately damages corporate productivity. The Productivity Paradox is that focusing on cost alone and ” undertaking to deliver a pre-specified set of services to the client for a set price and quality…  [delivers a] short-term cut in the wage bill…  [but can] have a negative impact on long run productivity.”  Alternatively, programs that focus on integrating outsourcing (working as a partner and not just as a service provider) along with a real focus on innovation deliver higher productivity. Let’s take a deeper dive into a typical cost focused outsourcing program to understand how it undermines productivity.

  1. Contract Price: When a work process moves outside your firm, the fundamental mechanics of talent acquisition fundamentally changes. When your HR department looks for new workers they pay the market wage or higher to get the best talent. When your Procurement department negotiates a service contract they pay the market rate or lower. Procurement departments often negotiate a “most-favored nation” agreement, guaranteeing that if any other account receives a lower rate, your rate is also reduced. By itself this clause does not define your program, but together these contract conditions will define how successful your program can be. Let’s move on.
  2. Innovation Budget: Everything has a cost, including innovation. Does your firm have an R&D budget? Does the training department provide courses to develop innovation?  Does your firm hire consultants and experts to identify and support innovation? Firms that don’t budget for innovation, probably (but not always) end up with less innovation. Your outsourcing contract may require line items for facilities, staff costs, telecommunications, but no contract that I’ve seen in the past 5 years explicitly budgeted for innovation. But in the late 90’s contracts regularly offered innovation incentives. Such as…
  3. Performance Bonuses: During contract negotiations the client usually asks for penalties, if performance falls below service levels. Fair enough. The vendor usually counters with a request for a bonus when they exceed service levels. Dumbsourcing always rejects bonuses (”Why would I pay for higher quality than I contracted for?”) If we slightly change the wording, the vendor asked you if will reward them for delivering higher productivity (faster turnaround, higher quality, reduced labor, fewer errors, etc.).  Alternatively, when this service was internal, workers who performed above the standard were promoted, bonused and generally recognized for superior performance.
  4. Program Management: In many “total outsourcing” programs, one (or a few) individuals remain on the client side. These individuals either become contract managers or perform similar functions. If you have these positions, look at the job description. Does this position have authority beyond managing conformance to service levels? In dumbsourcing, they have no authority to authorize vendor innovations. In fact, making any changes to the program may require unanimous agreement between the business group, Procurement,  Legal, IT, Corporate Security, Compliance and other groups. Far more authorizations than when the function was internal. Typically, innovation will not thrive when you increase the required number of authorizers.
  5. Program Scale: Dumbsourcing is  opportunistic, leading to the creation of program fragments, rather than a single well thought out function. For example, outsourcing just a copy center or a document production function is not a coherent program. “Documents” start in the heads of workers, are edited by these workers plus secretaries and other workers, stored on IT servers, printed on copiers (Procurement, Facilities?), managed in a document repository (IT?) and archived in some external location. A whole program benefits from economies of scale. Program fragments have few benefits of scale, even when they are outsourced to the same vendor, even when as a group they account for many workers. Economies of scale follow concrete economic rules (see “A Tale Of Efficiency… Why Bigger Is Better“). Imagine a heavy sleigh that requires two 1,500 lb draft horse to pull it. You could substitute sleigh dogs for horses but smaller animals  have less pulling power. It takes 6,000 lbs of dogs to provide the same pulling power. That means managing a team of over 100 dogs! THATS why economies of scale are important!
  6. Knowledge Sharing: When innovation occurs, will it take root? I once managed a document center in an investment  bank. We developed tools to automate document editing. Bankers saw how efficient these tools were and asked for them, which we provided. When I managed a vendor’s document center, the team was not permitted to discuss tools or program improvements with clients. I demonstrated these tools to various client managers, but no one on the client side felt they had the authority to pursue issues outside of the contract, and innovation discussions ended. The client also developed innovations, including a directory which could have helped us to update clients on their work, but it requires an employee ID to use; while the client managers agreed it would improve productivity, again no one had authority to move the issue forward. Cost focused outsourcing creates fractures, which prevent processes from fully integrating and innovation from spreading, reducing performance across the firm.
  7. Corporate Fractures:  According to The Productivity Paradox, these fractures present a hidden danger. Just like a bone fracture, a corporate fracture creates weak points that can break under pressure. Cost based outsourcing creates many opportunities for fractures throughout your firm.  When the volume of business rises or there’s a change in business direction or there are additional cost pressures… these fractures can break up and disrupt business. These fractures are where outsourcing programs lose productivity and decrease their value.

Innovation is a primary driver of value creation in corporations. For more than a decade an increasingly challenging economic environment as pressured corporations to give more weight to cost savings than innovation when developing an outsourcing program. The focus on cost cutting can deliver short-term savings, but by the time you renew your contract your program may have run out of benefits. When outsourcing does not allow for innovation, is not a true partnership between the client and vendor, and is not integrated into the function of the firm “corporate fractures” appear that diminish the benefits of the program and eventually rob your firm of  productivity. There’s a long list of reasons why cost focused outsourcing damages productivity, but that doesn’t mean that it’s too late to turn around your program.  Today we defined a “dumbsourced” program; in our next blog we’ll review how your outsourcing program can be converted into full-featured smartsourcing. But that’s my Niccolls worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Improvement, Continuous or Not | Tagged , , , , , | 1 Comment

PMO Genius: Time To Open The “Office of Email”

Posted on January 27, 2012 by Chris Niccolls

Not too long ago we looked at Atos, an $11 Billion IT firm that decided to kill email. They did considerable internal research and concluded that rather than contributing to profitability, email is a massive drain on profitability and needs to be replaced by newer technology, probably a “super-Facebook” like social network portal. Atos shared some frightening numbers: 85% of time spent on emails is “waste”, workers spend 15 to 20 hours per week on email, workers spend time at home and at work on waste emails. At a glance, this looks like every firm I know. Your organization might be a bit different, you might have some workers who don’t sit at a desk and read email, but for most Fortune or FTSE 500 firms this should look familiar. Still… kill email? When you don’t have anything to replace it today? Maybe that’s a bridge too far for a PMO project. Let’s scale back our ambitions to just taming email, and then see what we can accomplish!

Let’s start by converting this waste to dollar values. Atos included work at home, so let’s say that their workers have a 50 hour week. We take 85% of the 15 to 20 hours wasted on email, which yields 25% to 35% of all work hours. Let’s take the lower number and say that every single person in your organization (OK, any person with email) would have 25% more time to do work if email was efficient.   If the cost of a fully loaded worker is $60,000,  that’s a potential improvement of $15,000 per worker. That doesn’t even take into account the lower cost of… IT management, Internet bandwidth, internal investigations, legal discovery, etc. … if there were fewer emails to deal with. In many big corporations, this average is going to be much higher. At the top end of the scale eFinancialNews quoted the average salary for investment bank employees (not including benefits and others costs) at $406,000 with Deutsche Bank in at $497,000. Obviously, top executives earn even more, and every one of these highly paid executives has an email account. That gives you some idea of how expensive wasted time can be.

We now have a bit of a handle on what email waste costs, but without taking truly radical steps (i.e. risky, time-consuming and costly) what kind of results can you expect? Atos tried an experiment. High-level executives sent out emails that essentially said, “cut it out” and got a 20% reduction in email. Interestingly, I’ve worked at firms that did exactly the same thing and had similar reductions in email traffic. Pretty good! You may have had the same experience in you firm. Maybe something went wrong with an email, and senior executives reprimanded staff… sent out new rules, or training on email etiquette… and there was immediate improvement. But after just a week or a month, everyone went back to their old habits. because of this experience we think, “You just can’t beat email! People go back to do what they like do, even when the CEO threatens to fire them if they can’t follow the rules!”

As a project manager, I take away a very different message. Whenever a process problem is identified, and the proposed solution is to tell people, “Stop doing that”, the BEST result you can hope for is a short-term improvement that quickly fades away. Email is an ongoing function. You need an ongoing group to define and control the quality of that process. Defining and controlling email quality would be the responsibility of an “Office of Email.” Did I hear someone say, “Email is too diverse, too personal and too ambiguous to be centrally managed? We can’t have our personal emails examined by other people, think of the security issues! Besides, isn’t the IT department in charge of email? If they couldn’t fix the problem how can you?”

Let’s start addressing these issues by understanding what IT does today to manage email. IT rarely manages the content of email. Instead, they manage the servers, storage space, and licensing of the email system.  IT does actively manage the system, checking utilization and removing expired ID, ensuring that the system grows as use grows. HR also has a role in email, periodically providing instruction about inappropriate email, reviewing information on sexual harassment and other HR disputes, and providing training on reducing hostility in emails. However, none of these group’s deals with managing email as a function that is necessary to the operation of the firm.

Let’s look at what a new Email Officer would do, and you will see that this position can bring tremendous improvement, without violating personal privacy or requiring the Email Officer to have deep knowledge of each department’s operations.

  1. Set a baseline:Before you start making any changes, get a good snapshot of the email systems. If possible, get snapshots at different times, different days and different months to understand seasonal changes. From the following
    • Total number of emails, emails per person, range of emails per person (ex.: 10% of users exchange 10 or fewer emails a day, 6% exchange 500 or more emails per day).
    • Compare internal vs. external email (what is the count for each?)
    • Top users for sent email vs. top users for received email.
    • Identify the average time to read a simple “few line” text email, a long text email, an email with an attachment, etc. so that you can convert emails into time used.
    • Total emails deleted without being read (a real indication of completely wasted emails). Another variation is looking at a number of emails with HUGE distributions… what percentage of recipients deleted without reading. Any patterns?
  2. Create monitoring emails: You don’t want to look at individual emails, but you do want to identify the large email distribution groups in your firm and (with permission) create IDs for these groups. Many low or no value emails are those that are sent indiscriminately to large groups. If the group is too large for the senders to know who is in it, then it would be hard to imagine that this is a “secure” or private communication. Still, be careful about which groups you choose to monitor.
  3. Send a message: Make sure that the tone is level and respectable, but firm and from a very high level officer… especially one that doesn’t often communicate to the entire firm. Focus on improving everyone’s life, not punishing bad email users.
  4. Measure: There should be a very noticeable drop in email, comparable to the 20% drop at Atos. If a mild and generic message to the firm can produce this change, you should be able to maintain this improvement level, and probably exceed it.
  5. Analyze: You are going to find patterns in the data. The ideal pattern is a group with highly paid staff that exchange a lot of emails. If this group also deletes many emails before reading them, then you’ve found a great group for an improvement pilot. Find out what types of emails are sent to 100 or more users, 1,000 or more users. Find out if similar groups in different locations exchange a very different number of emails.
  6. Communicate: An  email to the firm from a high level officer works once or twice, but if you want to keep the momentum going to you need a targeted and meaningful communication. The metrics you have gathered will allow you to approach a specific manager and say, “This is an example of an email that costs the firm $50,000. Your department produces two of these every week. This may be an excellent use of funds. I just wanted to review this with you to be sure that you understand the costs, and agree that it is appropriate.”
  7. Train: A lot of emails are sent to the wrong audience, sent to a larger than planned audience, or could have been less time-consuming for users if advanced email features were used. Focusing training (with some macros and scripting) on individuals who create high-volume  emails could dramatically reduce email waste.
  8. Innovate: Email has become a system for transporting documents, running surveys and many other functions that email is not well suited for. Identifying inefficient uses of email will produce a wealth of valuable PMO projects.

Tackling the issue of low and no value emails could be the most significant improvement project that your firm can launch this year… possible this decade. Creating an Office Of Email with a staff of 1-5 people (depending on the size of your firm) provides the resources to initiate and maintain that first 20% reduction in email waste, and then begin the development of projects to mine the remaining 80%  (or $12,000 per employee) of wasted email time. A typical Fortune/FTSE 500 firm can free up tens to hundreds of millions of dollars in  productivity. If you don’t have a higher potential project in your PMO portfolio, RUN… don’t walk… to your PMO office and start writing a plan to open an Office Of Email! And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Improvement, Continuous or Not, Project Management Office, Unique Ideas | Tagged , , , , , , , | 1 Comment

PMO Genius: How To Negotiate like a PAWN Star

Posted on January 25, 2012 by Chris Niccolls

Project management is all around us. We see it all the time, but it doesn’t necessarily register as project management. One of the most common elements of project management…. Or just plain old management… is negotiation. Very few of us have been formally trained in how to negotiate. We pick up some tips here and there, we learn from a mentor, but it always seems that some people are great negotiators and some…. are not. Yet, negotiation is a learn-able skill.  If you doubt it, take a look at a popular reality show, “Pawn Stars.” The show is about three generations of a family run  pawn shop in Las Vegas make their living buying and selling antiques and oddities. Each generation learned the trade on the job, and the latest generation is… well… still learning the trade and making mistakes. Each episode has two or three negotiations and (most of the time) a sale. This is the prefect series to see how negotiations work in the real world. Let’s dive in!

When you need to negotiate it’s because two or more parties on your team have a different opinion on whether something is worth doing (what it costs, the timing, priority of other projects, changing assumptions), and if it is worth doing just how high a priority it is (something lowered the project value, something raised the project value, something has made the project irrelevant, etc.). Essentially, the conflict that needs to be negotiated arises from a difference in perceived value. How did this difference arise and how do the parties resolve it? Let’s walk through how conflict arises and the stages of negotiation in a typical episode… 

  1. Discovery: At the beginning of every episode, someone comes into the shop with… something. It could be treasure or it could be trash but almost always the owner isn’t quite sure what they have. Before there can be conflict, each side must first establish their position. If the owner found this in granny’s attic, they want to believe that this is a family treasure… even when evidence to the contrary builds up. We The same happens with project work. Some team members have flexible points of view or are simply not invested in any given view. Other team members are experts with well-defined points of view, have powerfully vested interests in the project outcome or have had intense experiences that define their view-point. You don’t yet know if there will be a conflict, but depending on the viewpoint, you begin to see hints of where the conflicts will arise.
  2. Information: When someone wants to pawn old coins or a car or a guitar, they know the history, the current market value and who they can sell the item to. Why? Because they deal with these items over and over again. PMO’s also have core project types that repeat and types that are “one-offs.” Projects that are rarely (or never before) seen are much more difficult to estimate and plan. And much more likely to lead to different opinions, and conflict. Just as on Pawn Stars, the skilled negotiator is quick to say, “I need to call in an expert.”
  3. Confirmation: When the expert arrives, the opinion may be that the item is worth a lot more or a lot less than expected. How everyone responds to this is always interesting. The seller hears the high-end value and tends to ignore “details” such as the cost of restoration, fees for certifying authenticity, and perhaps action fees. Buyers hear the low-end value, and they are thinking about how their sticker price will be negotiated down, how “hot” markets boom and bust, the cost of holding on to an item  for months or years, or even “Sure, the collection is worth $10,000 but I would have to sell it as 500 individual lots, and that’s a lot of labor cost.” . Both sides now have the same information, but as they filter this information through their individual viewpoints they may be farther apart than when they started.
  4. Conflict: The first three steps were pre-conflict, that define the terms of the true conflict. On Pawn Stars, the conflict may be minor difference in estimating (I think this is worth $5,000 and you want $6,000), or fundamentally  different viewpoints (I heard, “it’s a great piece of art,” you heard, “in a rapidly falling market”). Outside factors also influence negotiations (Granny TOLD me that it was real!). While every episode of Pawn Stars has a conflict, the show only provides a small window into all the deals that come into the pawn store. According to their own statistics, only 17% of potential sales are completed, leaving 83% of the conflicts unresolved.
  5. The Gap: Each side has taken their position. Is either side willing to move? Both sides need to talk out their positions, and explain why they’re taking that position. When the gap between positions is fairly wide, you will always see the Pawn Stars stop to acknowledge the other side’s position, even (ESPECIALLY!) when the other side is basing their position on points that are irrelevant to you. When you don’t do this, you can offend the other party and never come to an agreement. Watch for signs that the other party is powerfully influenced by outside factors. The same is true with project management.  A team member, even a project sponsor, may have agreed to a project earlier on but is now having “buyers regret” for not thinking through all the implications.
  6. Small Wins: When the negotiation gap is too big, or you cannot directly address the conflict, you can instead offer small wins elsewhere. If an owner wants $1,000 but the price is too high, maybe they will accept $1,000 in-store  credit or a direct trade (did they want the money to buy something?). By approaching the conflict indirectly you may be able to reach an agreement.
  7. Bottom Line: At some point negotiations have to end, and you need to make a final offer. Long before you make that offer, you need to know your bottom line. On Pawn Stars their motto is, “Every deal has got to make the shop money.” For your PMO you may have a different motto, but you’ve got to know your own bottom line and you can’t negotiate below it. If the negotiation undercuts  the value or the usability of the project, it may not be a deal that you can make.   There may be times that the best deal you can make is to walk away.
  8. The Big Picture: In addition to negotiating individual deals with owners, the Pawn Stars also need to negotiate deals with professional authenticators, mechanics, painters, cleaning services, and restoration professionals. The quality, cost and degree of innovation on today’s project is often based on a relationship that has been built up over many years. Your PMO probably has a lot more repeat customers than the Pawn Stars. You can’t make a lot of losing deals and hope to remain in business, but you also need to think about more than winning the negotiations on every project; you also need to think in terms of winning every relationship. When you work with the same individuals over and over again, relationships can be more important the individual projects. It can be very difficult to balance current projects against the long-term relationship, but both are always in play.

We live in the age of Reality Shows. They are everywhere, and they don’t necessarily showcase the best of human nature. But there are a few shows that can teach us valuable lessons about human nature, what motivates us and our thinking process. If you regularly need to negotiate deals and agreements, you can learn a lot by watching a few episodes of Pawn Stars. Every PM and PMO Director needs to negotiate, and not every negotiation will be successful. If you keep your losses low and remember to value the overall relationships with key project sponsors and team members, you too can be a PMO Star! At least that’s my Niccolls worth for today!

Posted in Common Sense Contracting, Decision Making, Project Management Office, Unique Ideas | Tagged , , , , | 1 Comment

PMO Genius: Top 10 Ways To Deliver Influential Presentations

Posted on January 18, 2012 by Chris Niccolls

If you run a PMO, you need to know more than just project management. You need to be able to influence the top decision makers in your organization, and drive change. Some of this influencing is informal, and achieve in one on one meetings and discussions. Formal influencing usually happens in a meeting where you provide some sort of documents and or a presentation. Even if this are just routine meetings,” you cannot treat a PowerPoint Presentation as if you were reading an email to a group. These presentations have a lot of information, and can just as easily create resistance as they can create agreement. If your presentation is for more than just a routine meeting, you need to be sure that your influencing skills are working at their peak. Consider the following presentation: annual budget meetings, a meeting with senior management over a failing project, winning over a mandate to create a PMO. High stake meetings need to do more than just present data, they need to influence people with the ability to authorize your requests and move the agenda of your PMO forward.  Let’s dive into this issue.

First of all, if you never had the opportunity to develop your presentation skills, or if you’ve seen effective presentations and you know that your presentations don’t look like that, you should read some of the books by Edward Tufte. Tufte has been writing about what to do and what not to do in presentations for decades. He’s a brilliant statistician from Yale and also a graphics editor for the New York Times. The titles of this books sound like an academic snooze fest, but they are very readable and often funny books on how to create compelling graphics. Tufte explains how information needs to be presented graphically to be understood. Furthermore, using his years of experience at the New York Times, Tufte shows you how to present distorted and self-serving data while making it appear to be unbiased. Not that you would ever do anything like that; of course not… Project Managers are above such base chicanery!  However, once you understand how these distortions work, you will develop super-vision that allows you to see through clever deceptions in management reports, and spot distortions that can impact projects. Neat, huh? Read, “The Visual Display of Quantitative Information” and “The Cognitive Style of PowerPoint.”

OK. Now that we’re all up to speed, let’s look at some simple tips that will help you to develop presentations that will help support the development of your PMO!

  1. Call To Action: What is the purpose of your presentation? Generally, it is to: inform (the following has happened), instruct (this is how to enter data in the new CRM), order (going forward, you must use the new Travel Request form) or influence (I want to do “X,” will you let me?). While meetings may combine elements of each meeting type, your meeting needs a primary goal. If you want to influence an individual or group to provide approval for a project, make sure your presentation clearly states this. Don’t be afraid to have a slide that expressly says, “On Januray 1st  the PMO intends to do the following. We need the written approval of department X by December 10th in order to proceed.” A clear “call to action” is more effective than approvers guessing what needs to be done.
  2. Follow Templates: Critical approvers may receive information from your PMO from various projects. If the general style, elements… even color scheme… of your presentations are consistent, approvers will be able to read and comprehend them more easily. It will also speed up the creation of presentations made by your entire team.
  3. Bullets, Not Sentences: Don’t take long memos or reports and merely convert the sentences into bullet points. A few words on a line are more effective and more memorable than a sentence. That doesn’t mean that you can’t have one or two full, grammatically correct sentences in a presentation… just don’t make a habit of it.
  4. 15 Minute Limit: Research tells us that after 20 minutes of a learning task, the human brain tends to drift off. Add the temptation to check your Blackberry for emails and voice mails and you have a small window of attention from a senior manager. Time your presentation to take no more than 15 minutes, preferably less. That also leaves time for Q&A, before the senior managers leave your presentation.
  5. The “End” Deck: We all overbuild our presentations because we think someone MIGHT ask a question. We are especially tempted to add these pages if we have a clever graphic that makes a point. That adds up to a lot of extra pages or a lot of clutter on key  pages. Simply take all of this info and… place it AFTER the last page in the presentation. If anyone asks a question that one of these pages answers, you simply jump to that page. However, don’t show the page unless it is needed.
  6. Presenters Role: It is tempting to create a presentation with every last item on it, and then just read it in the meeting. That puts your audience to sleep. Presentations need presenters, and the presenter has a role. The presenter links together what is on the screen and adds emphasis to key points. The presenter’s script can be stored in the “Notes” section of a Power Point presentation, which does not appear on the screen, but is linked to each page of the presentation.
  7. Independent Review: Have someone who has not seen the presentation look at each screen… for three seconds… and ask what they saw? If they see something that’s not on the page, CHANGE the page. If they don’t know what they saw, then the page is too crowded… SIMPLIFY the page. Only if they see and comprehend what you want to communicate do you have a good presentation page.
  8. Target Approvers: This is a really important one! Take your key slides, print them as index card size (4″ x” 6″) and put the print out on the floor. Then stand on a chair and read the slide. Can’t read it? Neither can the top decision maker in the room. That decision maker is probably 50 years old, or older, and wears bifocals. Make sure your key approval can read what you are presenting!
  9. Pre-Approval: For a critical or controversial project, schedule one-on-one meetings to review a draft of the presentation with the approvers. Ask them if they agree with the presentation. For key approvers who do not approve, ask them what changes are required. You need to decide if you can live with these changes (and if they will create resistance from other approvers). It is much better to know where you stand on a critical presentation before the meeting.
  10. END Page: After the last page in your presentation, put up a page that says “Thank You” or “End of Presentation.”  Don’t let the audience guess if the presentation is over. This also gives you a chance to ask for questions, or (if your “read” of the room calls for it) inform the room that there are other detailed pages that you can review or email to them, if they want them.

Any two presentation experts will focus on different issues to prepare you for your next presentation. My “top 10” focuses on influencing decision makers. The more you know about presentation, and how they are interpreted by senior managers, the greater your ability to influence critical decisions by your firm. Read a few books from Edward Tufte, practice a few rules from this list and watch our influence expand! At least, that’s my Niccolls worth for today!

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PMO Genius: Quantifying The Benefits of Happiness – A Focus On SECRETARIES (PART 2)

Posted on January 12, 2012 by Chris Niccolls

In our last blog we looked at how secretaries evolved into administrative assistants. This transition was driven by changes in technology (word processing, email,  voice mail, etc.) and changes in the labor market (women with college degrees didn’t want to be secretaries). The rise of the service economy created more knowledge workers, who typically receive secretarial support. More customers, fewer secretaries and new technologies drove the transition of secretaries to admins, but almost no corporations had a plan to guide the transition. Today, major corporations do not have a high level “head of secretaries” to guide the ongoing transition of admins. While other groups (IT, HR, procurement, facilities, etc.) have consolidated, and are driven by metrics, you won’t be able to find a report that tells you what admins produce, their level of utilization, the quality of their work, and all too often… how many admins does the firm employ! Without a high level manager with responsibility for these workers, there is no training program, no one drives new applications, work quality never rises, and arbitrary changes in their functions infuriate their customers. Without the ability to understand their work or quantify their value, senior managers assume that admins add little value and are planning to outsource or automate away these positions. It’s not a great time to be an Admin, is it? Or a customer.

To turn around this bad situation, we need to know how many admins are employed and which titles they use. So, second of all you need to collect some information. Ask your HR department how many secretary/admins work for your firm. Don’t be surprised if HR’s answer is, “Can you describe an admin?” Hmmm… So, FIRST of all, you need to define a secretary/admin. This exercise will take a few iterations. Ask HR for a full dump of all titles used in the firm. Then, build a spreadsheet with five headings: Title, Number, Not Secretary; Secretary; Part Secretary.

  • Title: Enter (in full) all titles that HR provides. You will probably see very similar titles… admin, senior admin, admin level 1, etc. For now, don’t worry too much about what the titles mean.
  • Number: HR may or may not be able to tell you how many individuals re in each position, or they may not be able to separate out contact, and part-time workers. You don’t need to worry about this just yet.
  • Not Secretary: Managers and revenue producers go here. Other support positions like clerks (in accounting), or interns, or junior sales reps also go here (these “support” positions were never secretarial).
  • Secretary: Any title with secretary or admin in the title probably goes under “secretary.” In a UK office the term PA (personal assistant) is common, so look for “assistant” titles. However, a title like “head of administration” may be a real manager, and should be in the “Not Secretary” column.
  • Part-Secretary: Receptionists and conference room admins are not really secretaries, but have taken over the “coffee and care” duties of a secretary. Put them under “partial.” A few management positions are exceptions, such as “office manager”, which has some responsibility for secretaries. Definitely a “partial”.

When all titles are entered into the spreadsheet, look at the titles that are tagged “Part Secretary.” Divide this column into three more columns: “Mostly,” “Sort Of” and “Not Much.” After a relatively quick discussion with HR, you should have enough information for re-tagging thee positions. You can repeat this process, until  you have the level of granularity you want. If HR can provide you with the “number” data, you will be able to make informed statements such as, “Admin functions are performed by  X number of individuals, with an additional Y number of workers whose duties are 75% or more secretarial, and Z number of individual who have a minor secretarial role.” This is a pretty good start!

Now that you have a high level understanding of admins, you now need to dig into individual functions. Your company-wide list of positions may have dozen of titles….. or more. But what functions does each position perform? Ask HR if there are job descriptions or position profiles; if there are, use this information to add further columns to your spreadsheet. Look for functions such as: memos, itineraries, T&E, CRM input, phone messages, paper document filing, electronic filing, transcription, scheduling meetings, etc. However, don’t be surprised to discover that the functions admins perform varies considerably from what is in their job descriptions.

Looking at the functions for each title, you will see that they are often not complimentary. For example, phone skills (verbal communication, listening skills) are different than document skills (typing, proofreading) or CRM skills (sales knowledge, research skills). Very few people are good at diametrically different  functions. Even when the functions are similar, the more function someone must perform, the less likely that they will be good at all of them, especially for positions that are low paying. Long ago, in industrial work, everyone performed all the same functions. After functions became specialized, the products they produced became better and productivity rose dramatically. If you just did what you’re good at, productivity rises. If you did enough of the same work, you would improve. No big surprise there. The icon of process improvement, Edward Deming, said that industrial productivity increased 50 times (5,000%) during the 20th Century, largely due to specialization. Let’s take a lesson from industry and deconstruct some common administrative functions…. And maybe we can make everyone a bit happier!

Presentations: Every firm makes presentations. Investment Banks make so many presentations that they created dedicated presentation centers decades ago. Legal firms are 10-15 years behind the banks. Large legal firms have presentation centers. Smaller firms have “helper” centers (that handle a minority of presentations) or admins and their (junior level) customers produce the documents. Because “centerizing” presentations can deliver HUGE benefits, many firms are seeking outsourcing solutions halfway around the world… without first understanding how to do the work the right way locally. If you aren’t working with someone who really understands admin work, you need to have numerous pre-projects… ex. designing and agreeing to standard document formats… before you can start designing a new center. From the first “this is a great idea” to a fully operating offshore center can take 3 to 5 years.

Transcription: The other end of the spectrum is transcription, a common function in legal firms and other corporations. Transcription is just the typing of a voice recording and some simple formatting (memo, meeting minutes, etc.). Good transcriptionists are fast typists (70 to 90 words per minute), with good listening and proofing skills. Today, admins are rarely fast typists, making them inefficient and often unhappy in this position. If you identified existing admins with the best transcription skills, a dedicated transcription center will be far more efficient…

  • Transcription is usually performed out on the floor with  constant noise and interruptions, making it difficult to hear recordings. Ringing phones and other distractions further slow the work.
  • Using quality headphones, dictation software that speeds up and slows down recordings, and a foot pedal to start and stop work (leaving both hands free to type) further raises efficiency.
  • An admin typically takes 9 minutes to transcribe a 1 minute voice recording, compared to about 5 minutes in a dedicated center.
  • If you incorporated speech to text software, you can further improve productivity.
  • For cutting-edge  customer satisfaction, you can also incorporate smart phone transcription applications. This allows customers to use smartphones to record, submit and monitor their work. Completed work is emailed back to your phone or desktop.

Approvals: Approving paperwork, such as T&Es, always generates customer frustration. T&E programs focus on completing paperwork, rather than getting a check to the customer. Some executive secretaries are very good at this, because they know the tricks and traps to get their boss paid. Most admin lacks the experience to overcome obstacles, and too many reimbursements wait in limbo over obscure issues. One department (often sales or the equivalent) are responsible for the lion’s share of… travel bookings, T&E’s, or the like. One of these concentrations of customers would make a great pilot project! A small group of well-trained processors, working with the PMO, could set up a continuous improvement project to identify and drive out firm-wide problems. Customers would be very happy about that!

Email: Customers may read their own messages, but admins organize the emails and file the attachments. The quality of the work is limited by the training admins receive and the degree of quality control. Unfortunately, training is poor and quality control is generally non-existent.  That’s bad enough for customer satisfaction, but there’s worse news. The largest firms spend hundreds of millions of dollars a year on legal services. And much of this money is spent searching the firm for documentation needed for lawsuits. And this information is usually… emails. If email management was “centerized”, customers could more easily retrieve emails and the firm could cut the cost of litigation by tens or hundreds of millions of dollars.

Document Management: How many documents does your firm store in Iron Mountain? Documents… physical or electronic…  need to be filed, archived, and in many cases destroyed. If this function was handled centrally and under a standard process, it could be vastly more effective. More management at the front end (following correct taxonomy, quality control, file destruction policy, etc.) means far less cost less on the backend. Once again, savings in the tens or hundreds of million is possible. That would fuel some pretty big projects!

This could go on and on, but I think you all get the idea. These five functions could drive a number of projects to develop dedicated service centers. If the job(s?) of the admin are carefully deconstructed, not only would these functions work better, but workers would have jobs where they could be good at what they do and  finally PROVE that they are adding value. Is this a big task? Yes it is! But it doesn’t have to be done in a day. Specific, actionable programs like the one shown here can do the job. Over the coming weeks I’m going to develop more projects that will further decompose the admin function. Remember, even though this is a big job, we can do it because… we’re Project Managers dammit! And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Uncategorized, Unique Ideas | Tagged , , , , , , | 2 Comments

PMO Genius: Increase Happiness AND Productivity… Look At Secretaries (PART 1)

Posted on January 11, 2012 by Chris Niccolls

Secretaries… do you still use that term?

Years ago, when “secretary” became synonymous with, “We’re paying you less because you’re  a woman”, the title became an insult. Corporations changed the title to “administrative assistant,” but not much else changed. This began as a face-saving strategy, but over time changes in the workforce and new technologies made a euphemism into a job description. As corporations rapidly evolved in the 80s and 90s, new processes and applications popped up, and many responsibilities were thrown to the admins, with little planning or training. Thousands of admins work in every big firm, there was no transition plan guiding the move from secretary to admin. Other corporate functions with many workers consolidated their operations (IT, procurement, facilities, HR, sales, etc.) but admins were forgotten. They don’t report to a single “head,” there is no plan that maps their future, job profiles are similar but vary by department and location, pay is inconsistent, production metrics don’t exist, there isn’t a management report showing what they do, there are no quality controls for their work, and as senior managers have begun to look at these workers they see no value other than an opportunity to automate or outsource. As admins stagger from one set of functions to another, their “customers” are increasingly unhappy about the services they do (and don’t) receive.

If you were an admin, would you be happy? Admins have become the “department of ‘Other’!” They take care of the odds and ends, and take care of all the things that no one else does (or can). Some used to be secretaries, and others started out in the post-secretary world. It really is just a mess, and no one is really in charge. We don’t live in the “Mad Men” world of the 60s. Executives can answer their own phones and do their own typing. In fact executives perform impressive feats of telephone management on their cell phones, and some are faster typists than their admins. Yet, as extremely highly paid executives take on what used to be secretarial tasks, few firms have asked, “Is that a good thing? Is it really productive to have a top lawyer, or banker, or CEO answer his own email?” It’s an interesting question. The answer could have a massive impact on your bottom line! Today, we’re going to start a two part Blog that looks into some of these issues. We’re going to look at how secretaries evolved into admins, what went wrong along the way, and how you can add some powerful projects to your PMO portfolio that can restore efficiency to your firm while making admins and customer much happier!

The “modern” secretary arrived in the corporation in the early 1900s, replacing the older all male position (such as secretary of state, secretary of the treasury, etc.). When secretaries were executives, they were responsible for disseminating information for the corporation.  When the number of corporations exploded after the Civil War, one individual couldn’t do it all, and the position transitioned to a new labor market (women) and was assisted by new technologies (phones, typewriters, carbon paper). And so it went, until the 70s and 80s when large numbers of women graduated from college and wanted to be more than secretaries. The traditional source of secretaries was drying up, and technology (word processing, voice mail, email, etc.) forced new changes. By the late 80s, the total number of secretary/admins reached it height, and has been on the decline ever since, while the knowledge workers who were eligible for support have been rising every year.  Secretarial functions were now  “hollowed out,” out”, and the euphemism of “administrative assistant” came true: admins couldn’t take dictation or shorthand and were no longer expert typists. Their new duties were not carefully thought out, and customer satisfaction has been dropping fast. Consider these four points:

  • Ratios: Many secretaries used to have one-to-one or one-to-few relationships with their customers, admins have one-to-many relationships, typically serving 5, 10 or 20 customers. Admins do not have an opportunity to know their customers or any given work function, as well as a secretary. Customers have different priorities, requiring frequent renegotiations by admins, leading to one or more disappointed customers. Managing multiple functions for multiple customer’s results in very small slices of uninterrupted time. With as little as 2 or 3 minutes between interruptions, few tasks can be performed well. Yet, the obvious impact of customer ratios goes virtually unseen as firms move to outsource these functions.
  • Functions: Admin roles change from department to department, and change over time as new applications roll out. Admins must be proficient in 10 or more functions: email, document management, T&E systems, CRM, proprietary reports, word processing, Excel templates, PowerPoint, voice mail systems… to name the most common. The more function a position must perform, the less likely that an individual can perform all tasks well.
  • Training: If admins have too many tasks to know them all well, training could help. But corporations devote only a tiny fraction of training resources to these workers. Corporations may provides a course in “How to use MS Word,” but doen’t offer “Improving customer satisfaction by developing MS Word templates.” Sales people are taught how to use a sales reporting tool, but they are also taught… how to sell! Admins are not taught how to perform their jobs because no high level manger has sat with the Training department to discuss their needs.
  • Management Reports: Finally, there are no management reports for admins.  Ask for a report on secretaries… there isn’t a firm wide report, is there? Without a manager with responsibility for admins,  no one knows what their units of production are, and the critical metrics to report. Instead admins are seen as “universal widgets”, that support other functions (which?) and are some sort of general overhead. But firms don’t accept the “overhead” argument anymore; senior managers want to know where these costs come from and the value it produces. When no one can answer this question, senior management concludes that is must be waste.

This is where we are today. We have a large workforce that uses the same (or similar) title, but performs different functions in different departments. This group has few, if any, metrics on the work they do and senior management sees them as just an unneeded cost. It’s not surprising that these individuals are unhappy, and that their customers are dissatisfied with their work. Just properly quantifying this issue could be of significant value to your organization. That’s good PMO management, but it falls a bit short of PMO genius. Genius would be finding a way to convert this problem into a series of actionable projects for your PMO portfolio. And that is what we will do, in Part II. Our next Blog look at options for improving performance in the workplace bringing back a little happiness. But for today,  that’s my Niccolls worth!

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