Editorial Board of “Holistic Marketing Management” (A refereed journal published four times annually by the School of Management-Marketing of the Romanian-American University)
Editor-in-Chief Theodor Valentin PURCĂREA
John L. STANTON Léon F. WEGNEZ
William PERTTULA Levent ALTINAY Dana ZADRAZILOVA
Managing Director EuroHandels Institute Retail, Germany; President of EuCVoT; President of European Retail Academy; Member of the Astana Economic Scientists Club; Chairman of the Advisory Board of EuroShop; Chairman of the Board of the Orgainvent; Trustee of EHI Retail Institute at GLOBALG.A.P. Association of Management and International Association of Management, USA; Australian Graduate School of Entrepreneurship, the Faculty of Business and Enterprise, Swinburne University of Technology; Member of France’s National Academy of Scientific Research (CNRS) Professor of Food Marketing, Erivan K. Haub School of Business, Saint Joseph’s University Philadelphia, USA; Director, Institute of Food Products Marketing, Editor, Journal of Food Products Marketing Secretary General, International Association of the Distributive Trade, AIDA Brussels; Member of France’s Academy of Commercial Sciences Internet Marketing Professor, College of Business, San Francisco State University, USA Professor of Strategy and Entrepreneurship, Research Area Leader, Oxford School of Hospitality Management, Faculty of Business, Oxford Brookes University, UK Dean of Faculty of International Economic Relations, University
of Economics, Prague, Czech Republic Riccardo BELTRAMO University of Turin, Italy Sinisa ZARIC University of Belgrade, Yugoslavia Gabriela SABĂU Memorial University, Grenfell Campus, Corner Brook, Canada Hélène NIKOLOPOULOU University of Lille 3, France Vasa LÁSZLÓ Szent Istvan University, Hungary Peter STARCHON Comenius University in Bratislava, Slovakia John MURRAY Faculty of Business, Dublin Institute of Technology, Ireland Faculty of Economics,University of South Bohemia in Ceske Kamil PÍCHA Budejovice Deputy Head of Department of Business Economics, University of EcoIrena JINDRICHOVSKA nomics and Management, Prague, Czech Republic Faculty of Business, Marketing Department, Cape Peninsula University of Norbert HAYDAM Technology, South Africa Constantin ROŞCA President of Romanian Scientific Society of Management- SSMAR Hans ZWAGA Kemi-Tornio University of Applied Sciences, Finland
Roxana CODITA Dumitru MIRON Valeriu IOAN-FRANC Iacob CĂTOIU Virgil BALAURE Gheorghe ORZAN Luigi DUMITRESCU Marius D. POP Petru FILIP Ion VOICU SUCALA Virgil POPA Alexandru NEDELEA Olguța Anca ORZAN Ana-Maria PREDA Ileana PONORAN Ovidiu FOLCUȚ Doinița CIOCÎRLAN Marius Dan DALOTĂ Mihai PAPUC Gheorghe ILIESCU Alexandru IONESCU Olga POTECEA Oana PREDA Nicoleta DUMITRU Monica Paula RAȚIU Costel NEGRICEA
Technische Universität München, TUM School of Management Academy of Economic Studies in Bucharest National Institute for Economic Research, Romanian Academy; Romanian Marketing Association; Romanian Distribution Committee Academy of Economic Studies in Bucharest Academy of Economic Studies in Bucharest Academy of Economic Studies in Bucharest Lucian Blaga University of Sibiu Babes-Bolyai University, Cluj-Napoca Dimitrie Cantemir University, Bucharest Technical University of Cluj-Napoca, Management and Economic Engineering Department; University of Glasgow, UK, College of Social Sciences, School of Social & Political Sciences; Managing Editor, Review of Management and Economic Engineering Valahia University of Târgovişte Ştefan cel Mare University of Suceava Carol Davila University of Medicine and Pharmacy Bucharest Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University
Associate Editors Irina PURCĂREA Dan SMEDESCU
Art Designer Director Alexandru BEJAN
“Holistic Marketing Management” (A refereed journal published four times annually by the School of Management-Marketing of the Romanian-American University) Volume 4, Issue 1, Year 2014
Theodor Valentin Purcărea - Editorial: Knowing and trusting each other’s know-how in spending time in an intelligent manner, becoming more innovative in managing change
Léa LE FAUCHEUR - The Impact of Human Ressources Management in Project Success Charline DELBAUCHE - Information Sharing in Project Management Eva-Maria MÜLLER - Self-Managing Teams in Agile Project Management – Pain or gain? Maxime LE BRAS - How to Deal with Project Risk Management Effectively in Your Organization? Elodie RAMEL - How External Stakeholder Impact Project Management Success?
Léon F. WEGNEZ - Innovate to Survive
Alexandru BEJAN - A Key Challenge, Marketing Resource Management, a Holistic System
The responsibility for the contents of the scientific and the authenticity of the published materials and opinions expressed rests with the author.
Editorial: Knowing and trusting each other’s know-how in spending time in an intelligent manner, becoming more innovative in managing change As we said in our message at the end of the last year, the soul of the three years old “Holistic Marketing Management” journey was the liberty of thinking and writing and moving forward because it is the journey that matters in the end. And paraphrasing James Madison we added that such a long journey, during a mild season, through a pleasant field, in easy stages, was the best medicine in the academic world, also remembering some words of wisdom belonging to Marcel Proust: “We don’t receive wisdom; we must discover it for ourselves after a journey.” For this reason, we invited you to participate in our holistic marketing management planning process to build new academic bridges while benefiting from your holistic expertise in ensuring long-term brand performance by contributing at delivering the emotional connection needed to build brand equity. We argued that organizing special issues of our “Holistic Marketing Management” journal on such a challenging theme such as “project management” is a version of an innovative project management as a proper way of managing change by improving understanding of how the young “knowledge workers” interpret project management environment expectations for value created for the customers, understand the pathways to value and choose to act with hope and conviction in studying situations in a holistic way, preparing to apply the new understanding to novel situations while engaging with managers, and becoming more innovative, knowing and trusting each other’s know-how in the interaction in which the academic knowledge takes place. At the end of the last year we also remembered that Professor Ovidiu FOLCUȚ, the young Rector of the Romanian-American University, was awarded the “Diploma of Excellence” on the occasion of the celebration of 170 Years of Economic Higher Education in Romania and the 100th Anniversary of the initiation of the First Congress of Romanian Economists. This celebration took place on Friday, November 22, 2013, being hosted by the historical Aula Magna of the Bucharest University of Economic Studies (ASE). The “Diploma of Excellence” was handed over to Rector Ovidiu FOLCUȚ by Professor Gheorghe ZAMAN, Vice President of the Economic, Law, and Sociological Sciences Section of the Romanian Academy, Director of the Institute of National Economy, Romanian Academy, President of the General Association of Economists from Romania (AGER), President of the Scientific Council of Romanian Scientific Society of Management (SSMAR), Member of the Board and Chairman of the Group of Experts of the Romanian Distribution Committee (CRD). Professor Ovidiu FOLCUȚ, Rector of the RomanianAmerican University, internationally recognized for “the diligent dedications that he always brings forth for Romanian-American University”, is one of the coordinators of the Anniversary Volume launched within the context of the celebration that took place on November 22, 2013. Two years ago we underlined1 that Universities are also best placed (as responsible “project 1 http://crd-aida.ro/RePEc/rdc/v2i3/5.pdf 5
managers”) to support character formation, and to develop these universal human values, while awakening the social consciousness beyond the confusion between the real values of life, and the material values elevated to the status of absolute values, reconciling individuality and solidarity, re-emerging community and re-imagining its future. Which implies making decisions based on informed judgments within this pressing priority, considering the systems’ and managements’ inability to deal with and the need for education to further improve our techniques and understanding of how to take much more active responsibility with respect to properly managing in addressing the complexity and in creating a communications climate that drives motivation through openness. And considering the interaction between the result of the education of creating and reception of values (culture, and its challenging adjusting with public and politics ), on one hand, and the result of the practical organization of transforming the cultural values (civilization), on the other hand, we also have to remember one of the most significant messages that Nicholas Georgescu-Roegen� had given us: “We must get to realize that an important prerequisite for a better life represents a substantial amount of leisure time spent in an intelligent manner”.
Theodor Valentin PURCĂREA Editor-in-Chief
THE IMPACT OF HUMAN RESSOURCES MANAGEMENT IN PROJECT SUCCESS Léa LE FACHEUR ESC RENNES SCHOOL OF BUSINESS
ABSTRACT In this fast growing system, many organizations increasingly resort to project management to all of their activities needs, need of change, of launching new products, of replacing the IT system. If top management start to really value and focus their effort on good project management, none organizations already master this science which involved many knowledge fields and one in particular, the Human Resources Management. Project management is not just about tools, on the contrary human nature belongs to the most important issue of project management. People are the clients who will judge the success or the failure of the project, people are the project actors who work collaboratively for the project success. Human Resources Management allows in many ways to avoid some common causes of project failure. Also, Human Resources is not only the issue of HR Department, it’s the most important one of project manager, whose profile is increasingly close to the one of leader. Key words: project management, project success, HR management, leadership, communication JEL Classification: M12, L20
Many projects, one only aims: succeed.
“A temporary group activity designed to produce a unique product, service, or result.” That is the definition the Project Management Institute (PMI) gives us about a project. This definition suggests that project is launched to respond to customer’s need, but also time bounded and unique, which allows us to here distinguish projects from processes which are defined as on-going work and repeatable. Regarding project management, the PMI defines it as the “application of knowledge, skills and techniques to execute project effectively and efficiently” into five stages: initiation, planning, executing, controlling and closing. Consequently they draw the ten areas which are involved in project management knowledge: integration, cost, human resources, stakeholder management, scope, quality, communication, time, procurement and risk management. 7
So we see that project management covers many fields of knowledge, and this number of fields is proportionally linked with the importance of mastering such activity for companies which nowadays evolve in a world where most of organizations are project-driven even more they do not all realize it. Project management has become a strategic competency largely because they must launch and complete projects which results are linked with their business goals. This link between projects results and business goals is the reason why organizations nowadays focus at this point on project management, and on good project management which rise chances to succeed in these projects. How to define the success of a project? In the mid of 1980’s, M. Barnes defined three objectives which are still used to measure the success of failure of a project: time, performance and cost. That is to say: did we deliver the project respecting the delay? Does the product in accordance with the requirement? Did we respect the allocated budget? These three objectives had built the Barnes’ triangle of objectives. R. Kliem and I. Ludin (1997) and then D. Lock (2007) had make this triangle evolved, in particular by adding at the center of this triangle the variable “people”. Defining an idea or a term is often done by defining its antonym, and the antonym of success of a project it’s the failure of this same project. When do we consider that a project has suffered a failure? And which are the main causes of this last? If the variable people are on the center of this triangle of objectives, in which ways human resources management plays a key role in project management?
I. Main reasons of project’s failure
We consider a project as a failure when the team project has not delivered what was required, in accordance with expectations: expectations on time, on quality and on cost. Explained in this term, the success or failure seems easy to measure, but actually it’s not just about results on tangible facts. Many studies are regularly used to clarify the main problems that project team management are facing in their search for success. Some of them are lead on particular sector as the Bull Survey (1998), the KPMG Canada Survey (1997) or the Chaos Report (1995) realized by the Standish Group, which focus on IT project failures, others don’t. But in all cases, we can note that recurrent and main problems remain the same, no matter what sector and activities it is linked to. I decided to divide the main reasons of project failures in two categories, which are the reasons linked with methods problems, and the ones more focused on human resources.
a. Project management is facing some methods’ problems.
What I mean here by methods, it’s assets and processes that are linked with the business, but not directly linked with the human resources of project planning and implementing. Concerning these methods that can sometimes prevent a team from the success of its project, we can first discuss on methods linked 8
with requirement issues. Indeed, projects can fail just because the business requirements have not been addressed, and maybe forgot or be bad understood, and at the delivery the wrong product or service is purposed to the client. It can be at times explained by a bad communication between project actors, and a loss of the project objectives. Incomplete requirements were underlined in the Chaos Report (1995) as the main reason why projects failed, and had been sometimes cancelled. These methods problems are also linked with an incorrect estimate. It could be a bad project planning with unrealistic deadline, an irrelevant match between available resources and delay given to produce the final work. Incorrect estimate could also be here understand as poor risk management: a project is a temporary activity, but this period can vary around more or less one year, and we now that our society is quickly growing and moving. So between the launch of the project and its delivery the environment could have been changed, and the project could have turned obsolete. This last failure’s reason had been identified as one of three main causes of project failure in the KPMG Canada Survey (1997): they explained that project fail more often because of schedule overruns than budget overruns. The Bull Survey confirmed this conclusion, identifying that concerning the projects they studied, 75% of failures were concerned by missed deadlines, for 55% by exceeded budget. To solve it, some companies or organizations are divided theirs projects of more than one year lifecycle into several projects, shorter.
b. Failure is at times linked with a poor HR Management
Any project involves many actors, or stakeholder: sponsor, project team, clients… Project management asks a certain level of leadership and involving of senior management members. Indeed, sometimes projects suffer from poor governance: lack of decision making, lack of recognition by project actors, resistance to change… In all of these cases, defining a sponsor who could make the change happen, take decision and represent the project at senior management level, is seen as a good solution but unfortunately it’s not used. Projects are merely linked with the people who run them. The well working of a project depends on the team that is constituted to produce it, and that makes human nature but also politics one an inherent part of project management processes. Since people respond to authority, you need a good project sponsor, often a high-end executive: an executive with the power to get people involved into their work. Some call this management buy-in, others call it management by force. The engagement of the sponsor is not the only issue. Others stakeholder engagement is also to be considered as a big issue: on some project we see that people lose the focus on the project’s benefits and it directly impact the project success (by impacting the respect of requirements of the process as previously seen for example). Human nature of reasons of project’s failure relies also on team issues: a poor communication is unfortunately considered as a regular matter. The Bull Survey (1997) indicated besides that this last item is the main cause of project failure during the lifecycle of the project. Indeed, 57% of projects which failed in their study suffered from a bad communication between relevant parties. Communication in project manage9
ment is a really tricky issue and it concerned communication between many project actors: communication with the project members, with external providers, with the top management, with clients and users, with the environmentâ&#x20AC;Ś Communication has consequently to be improved, both on goal and on vision. To make the change happen with a project, every project actor and stakeholders has to been provided with all information, all incomes and outcomes. Besides, before these goal and vision are shared, they have to be decided, and here again we go back on the problems of the sponsorship and of decision making.
II. Human Resources Management to avoid risks of failure
We previously saw that project teams face a lack of communication, but they are not the only one: within the company, there is often a lack of communication between departments that would be more efficient if there were better working together. And this is at times the case for HR Department and operational, whereas as we saw many causes of project failures are due to human relationships nature on which the HR Department is expert, and could provide to operational a good support.
a. Avoid risks with recruitment
Itâ&#x20AC;&#x2122;s no longer sufficient to lead a project with methodology. Nowadays, organizations have to launch real project management strategies, and so capitalize on co-workers strengths and objectives achievements. But in such an objective context, the profile of the best applicant is harder to define. Nevertheless, Human Resources Management works on this point and start to create innovative recruitment processes that allow them to judge on the interpersonal skills of the applicant (the technical ones remain particularly judge by technical). Even if they succeed in defining a profile, and attracting them towards the company and so the project, that is in this period of War of Talent (Hankin, 1997) a tricky issue, it remains a last problem with which the HR Department is often facing with: they have a poor decision power in the process. They are more used as consultant in general.
b. Avoid risks with skills management
As we said, determine criteria to describe the perfect project actor is not always an easy task. In the same way, organizations are facing with a lack of evaluation criteria, or measurable criteria, to evaluate the skills of team member already in the team. A project actor would often be judge on the success of the project he had been working on. Nevertheless, and by definition, a project success is a collective success: a project is rarely held and ensure by one only person. Also the multiplicity of actors in a project management process induces a multiplicity of evaluators: but with the lack of objective criteria, and in case of disparate evaluation feedbacks, how to judge which opinion is 10
the most realistic one? Are the manager, too close with the project and which sight is biased, really the best to judge on the qualities of their members? Don’t the HR Department with its need of objectivity and its knowledge and view on many other project management situations, a good consultant?
c. Avoid risks with career management
Make employees growth and develop themselves is one of the aim of each HR Department. To do so, they often resort to training and learning solutions to help them co-workers to improve their skills. Here again, their expertise on the formation field help them to define in accordance to project managers the best things to purpose to employees. On the same field, HR Department is often responsible for launch project of knowledge management and transmission between senior and junior, and so they are actor of the change management. HR experts are also present to re-ensure all team members of a project about their future in (and sometimes out of) the company. Indeed, projects are temporary and when the project arrives to its end, team members are often worried about their future. They are defined by a project, so what would they become when the project would be over? It can be a source of discouragements and tensions within the team, and we saw that the good working atmosphere is essential for a project success. HR experts by helping them to have a longer vision, on others projects, on others job they could apply in the company, to capitalize on their strength and work on their development areas, allows to reduce this phenomenon. Baron (1993) explained the difficulty for team members and above all project manager to go out from their actual job, actual scheme. It could be really for them to develop and access top management jobs. Nowadays, companies are often blamed to overstate leaders place in company and neglect more technical profiles (as project manager), that’s why HR Department work on the promotion and development at higher decision level of these kinds of managers. III. The role of the project manager
a. First affected by Human Resources Management of the team
As one of the team members, the project manager is concerned by all the issues explained previously. He’s also linked with the Human Resources Management department because he is part of the company, he has been selected and recruited. Besides, defining a profile for project manager is probably one of the main issues for the Department in recruiting the team. They resort in many cases to internal recruitment: it allows to already know the person, its interpersonal skills and experiences, and this person can at times already share the vision of the company and to easily define the one of the project. Nevertheless, which skills could we define as necessary for a project manager? Which others skills would make the difference between two applicants? I would say that a project manager has two main qualities: he is good communicant and he has some technical background. Someone who knows his colleagues work and so can easily understand them, and communicate with them. JL Müller (2002) said that we better recruit “generalist” project manager than 11
a “highly technician” because this last would be less opened to the dialogue, and the risk is to be too directive with his teammates and so prevent any form of creativity. Also, and including because of the lack of sponsorship, I would focus on the social capital (P. Bourdieu, 1986) of the applicants: an important network is often revealing the interpersonal skills and experience of one person, and it could be very useful in some project’ situation ( ask for sponsors, need to call for somebody to replace of team members, …). The project manager is also the first affected by the Human Resources Management of the team because as the line manager, he is the first link between HR teams and project team members on all subjects previously defined. And that’s why the human orientation is also one of the big issues to define a good project manager. b. Value the project manager as a leader Leadership could be defined as being able to lead people where you want them to go, while at the same time you make sure that these same persons want to get involved. The project manager’s role is defined as we saw on a temporary way (due to the temporary aspect of the project) and he has consequently to win his leadership in few times. But the question is how to get leadership? Part of the leadership could be awarded thanks to experience in a specific field, other part could be linked with personal skills. Human Resources Department is the one who identify and develop these high potential in organizations. On which abilities do they base their judgment? Is it just intuition? T. Juli (2010) trust that the key factor to improve chances of success in project management is to develop a project leadership that would give the direction for project management. According to him, there are five leadership principles which influence the potential of success of a project. These principles are: ● “Build a vision”. Build a vision and share it with his colleagues, is actually a strength that is commonly used to define leader profile. Building a vision is part of the personal skills we saw, and in particular the one of interpersonal communication. A project manager must well share and explain to his teammates the objectives and vision of a project, in order to get them involved in the project, sharing with them his passion, but also to ensure himself that his colleagues well understand the direction of the project, and consequently what they have to do to make it works, the meanings they have to put in place to reach this direction. The knowledge of the project purpose has to be shared by all the project members. ● “Nurture collaboration”. A project is by definition a group activity, and in any kind of teamwork collaboration is a key factor of success. A good project manager knows the value and the potential of a teamwork, and so of the collaboration between its team members. Moreover, he knows that is responsible for creating this collaborative atmosphere in the project: as a manager he has to bring all the actors working together. Here again it’s linked with communication skills. Collaboration is about sharing information, feedbacks but also work tasks: a project manager would benefit from a better reputation if he directly got involved in the work, the same way that all members do. Building a transparent, trustful and collaborative atmosphere in work ask the manager many efforts and time, nevertheless the return on investment is high because it really impacts on the project delivery potential. ● “Promoting performance”. Collaborate and share a vision is great, but could never replace the performance of the project actors to ensure the quality of the project results. Create a good working atmosphere and get the project members involved pass besides by the promotion of the performance within the team, at 12
both individual and team levels. Different issues on which the project manager can impact are relative to the performance promotion : for example to do so he has first to be a model for the team remaining, he also has to be able to develop his team, knowing it, its strengths and weakness, to learn how he can help it, trust his team and delegate her some power to get her involved, give feedbacks to his members, and reward them. ● “Cultivate learnings”. A project leader is both a partner and a coach for his team members. He is consequently responsible for learning and information sharing. Some members can be more junior on some subjects, all are facing the fast growing and moving society in which we live and in which every process, every technology, never stop to be improved and replaced, and so a society where there is always something new to learn. A project manager has to create an environment where creativity is encouraged. Some companies purpose to reserve some timeslot each week, each month, to make all the group gather a meeting where one of them has to introduce and explain a novelty in the field they work, about a technology they could use, … to his colleagues and make all brainstorm about it. ● “Ensure results”. The project leader is obviously, and by definition of project management, here to guide his team to deliver the projects ‘results. Ensuring results it is in some ways the sum of all the last four principles. In conclusion, a project manager has consequently to be both human and results oriented and he is therefore close to the profile of a leader. Human nature in project management is in some ways more seen as a resource in general. Nevertheless we saw, through this whole research paper, that human aspect in project management has to be considered equally as an income and an outcome. “Project success starts and ends with project leadership” (T. Juli, 2010) , but it also starts and end with Human Resources Management as we saw : from the recruiting of the relevant team to the development and rewarding of each of team members to make them volunteers to get involved in the next project : because as we saw, in today’ situation many organization are project driven, and each project done will be soon replaced by another one. It’s more or less a process of project: an on-going work where temporary activities follow one another.
References Briner, W., Geddes, M., & Hastings, C. (1993). Le manager de projet: un leader. France: Afnor Gestion. Lock, D. (2013), Project Management, 10th edition: Grower. Kliem, RL and Ludin, IS ( 1992 ) The people side of project management, Gower, Aldershot. Campbell, M. (2012) Communications Skills for Project Managers, AMACOM. Kerzner, H. (2013), Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 11th edition : Wiley Herniaux, G. (1998). Gérer la communication du projet. Communication et organisation, Retrieved from: http://communicationorganisation.revues.org. Stöterau, J. (2012) “White paper: Lean Project Management”, Retrieved from: http://www.sqs.com/degroup/_download/White_Paper_Lean_PM_EN.pdf Buttrick, R. (2009), The Project Workout: The Ultimate Handbook of Project and Programme Management, 4th edition: Financial Times/ Prentice Hall. The Standard for Program Management — 3rd Edition, Retrieved from: http://pmi.org Sollish, F (2007), The procurement and supply manager’s desk reference: Wiley. Juli T. (2011) Five Leadership Principles for Project Success, Retrieved from: http://www.pmhut.com/ five-leadership-principles-for-project-success Réseau Anact (2006), L’organisation et le management par projet, Retrieved from: http://www.anact.fr/portal/pls/portal/docs/1/298337.PDF Baron, X. (1993), Les enjeux de gestion des salariés travaillant dans les structures par projets, Retrieved from: Gestion 2000, n°2. Müller JL (2002), De la gestion de projet au management par projet, Afnor. Hankin S. (1997), The War of Talent (study done for Mc Kinsey).
INFORMATION SHARING IN PROJECT MANAGEMENT Charline DELBAUCHE ESC RENNES SCHOOL OF BUSINESS Abstract: The present paper aims to understand the main forces in the exchange of information in the context of project management. The culture and structure of the organization within which the project occurs affect it in different ways, by the transparency policy, the compensation system, whether it has invested in easy-to-use and effective information and communication tools. Team members are also very important. Their ability to build trustful relationships, to go beyond their individual ego and fear to be dismissed impact their willingness and competency to effectively share and be receptive to knowledge. All these factors have a deep impact on the level and quality of information exchanged within and across projects, but also between project team members and the external forces they need to keep contact with. The analysis will not include either a study of the impacts of knowledge management on project efficiency, nor a weighted model of forces that influences the different types of information exchanged in a project.
Keywords: knowledge management, organizational structure, relationship management, teamwork. JEL Classification: D80, M54, 022.
One of the new trends in Business Management researches is the management of knowledge. Actually since material, financial or human resources have all been deeply studied, knowledge as a resource remains to be fully understood to optimize its value for the organizations. The difficulty for them is that this asset that comes from within individuals must be transferred throughout the organization by fighting emotional and ego-related issues. That explains why Ahern, Leavy, Byrne (2013) view information management of complex projects as a form of complex problem solving. Yet well-designed information sharing frameworks â&#x20AC;&#x153;help the project managers take correct decisions, implement the right strategies and finish a project on time and within budgetâ&#x20AC;? (Alexandra-Mihaela, Dumitrascu D. Danut, 2013). If building the right one is a critical task, measuring the quality and analyzing the communication processes within a project helps enhancing the whole efficiency of the project management, 15
thus its performance (Pop Alexandra-Mihaela, Dumitrascu D. Danut, 2013). Those internal communication analysis models are a real help in understanding both internal and external factors that influences the level and quality of information sharing during projects, as well as how to face the specific issues raised by the rise of virtual teams.
Organizational factors influencing quality and level of information shared within projects
One of the first influences over the quality of exchanges within a project is the selected project team. Even if the project manager is not always able to choose his coworkers, understanding this will help him easing the information flow within its team. Several factors influence the capability of a team : if a high degree of diversity in terms of background and experiences tends to benefits the expertise and inventiveness of a project, it could also make it harder for team members to exchange information considering their use of different technical languages and their differences of level in their technical fields. Another aspect to be balanced is the degree of experience in working together. If Kumaraswamy, M., Ling, F., Anvuur, A. and Rahman, M. M.’s (2007) study of PPP projects have them thinking that the longer the members have worked together the more trust there will be among them - introducing the concepts of “sustainable relationships” in creating synergies thus increasing the overall performance – Katz (1982) highlights that information flows within a project are not only internal but also with external important sources. He proved that performance can decline in long project if no new members are brought in because the project team will become isolated from these external sources of information. Finally, the most important member of the project also has a major impact on the information flow: Henderson (2008) showed that the project manager communication skills will have an impact on both team’s satisfaction (with a good decoding message competency) and team’s productivity (with a good encoding message competency). A project, even if managed differently from its ongoing activities, is always part of an organization and because of that the ways its information are shared are influenced by the culture and the processes of the organization it belongs to: “Dense team networks enhance understandings, then new knowledge. But to create them leader must understand that process of knowledge transfer within the organization affects the overall culture of the project” (Naftanaila. 2010). Zou, Kumarazwamy, Chung and Wong (2013) found out three main aspects of the organizational structure that positively impacts the relationships within a project: the “commitment and participation of senior executives”, the definition of the objectives of each relationships and the level of integration of the organization (as opposed to its departmentalization). R.E. Landaeta (2008) studied information flow from a project to another in order to optimize knowledge spreading processes within an organization across time and teams. His findings are that three processes must be carried out carefully: first the information needed must be identified, second it should be verify before any application and third it must be spread to the project members who can apply it. Those key members called “knowledge broker” must be chosen among those capable of understanding the knowledge and who have good relationships with members of both the initial and the second project to spread it. The whole organization transparency and view of its employees are collaborators will help building trust among team project members which is essential for them to be willing to exchange their knowledge. Yet “team-based 16
self-esteem” and “team identification” strengthen trust and information sharing among team members (Z. Ding, 2013). These two elements are built by the project manager from the very beginning of the integration of the members to the project by the creation of a context of cooperation and team playing. Because both team members and organizational structure influence information sharing in project management, the organization must have a real control over its turnover rate. Information has different level of specificity that happens when the value of the information is “restricted to its use and/or acquisition by specific individuals or during specific time periods”. This has two impacts: firstly it explains why a newly hired employee required a probationary period to fully perform in the project: at the beginning he lacks the knowledge specific to the project; secondly it shows that a high turnover rate leads to information loss, that can be reduced with good processes of stocking and/or transferring knowledge in a project (Zhang, 2012). So because of information specificity in a project the information sharing processes are even more important than in the ongoing activities: it may endanger the good time management of the project and the expertise it developed to perform. The organization can also set up specific compensation programs for the project team members. Actually Chakravarti, He and Wagman (2013) built a compensation model that foster both creation and sharing of knowledge, based on incentives decided by other team members.
Virtual exchanges and other it tools: new information flows to be dealt with
The spread of information technology in companies has revolutionized the processes of stocking and exchanging knowledge. A recent study showed that 68% of teams use knowledge portals because it allows accessible, easily transferable and simultaneously usable information (Thomas, Bostrom, Gouge, 2007). Contrary to the fear of the beginnings of virtual teams, the degree of virtuality doesn’t impact negatively either encoding or decoding competencies: nowadays geographic dispersion of project team is often required, and team members see it as a business necessity (Henderson, 2008). Researches even proved that this technological step ahead has several positive impacts on project management. First, the spread of Project Management Information Systems (PMIS) enhance information sharing and decision making among project members. Actually those softwares designed for complex project management allow not only effective and safe flow of information but also to better perform the planning, scheduling and controlling processes: they are a real asset for the whole project management (Braglia and Frosolini, 2012). Second, the use of information technologies optimizes the project costs by enabling not only easy communication among team project members, but also by keeping the knowledge built among time and reusing it later: it saves both time and money for the company setting projects, and decrease the information loss due to turnover rate (Landaeta, 2008). Finally, virtual exchanges also have the asset of being more inclusive for minorities, thus improving team building and team satisfaction. If a face-to-face meeting is often recommended before the use of computer-mediated-communication during the project, Maria, Kirkman and Wagstaff’s 2011 study proved that using virtual exchanges first will have women felt more included in the project and this during its whole duration. So, the reluctances about the intensive use of communication technologies must be balanced with the recent findings on their multiple assets in the exchange of information in project management. 17
Individual reluctances to share knowledge
Despite of all these organizational aspects that must be taken into consideration in order to improve information sharing within projects, a major aspect still remains to be understood: the unwillingness to share knowledge at the individual level. “Scientia potentia est” (Hobbes, 1658), or “knowledge is power” is a common thought on the workplace. The hidden idea is that having knowledge that most people ignore is a competitive advantage over the peers. It will lead to better performances and will decrease the risk to be dismissed by owning a specific knowledge necessary to the organization objectives. The fear behind this reluctance is to become useless for the organization if the information become available through other flows, pushing the informed employee to keep it for himself. Another major individual reluctances project managers have to deal with is a pride-related one: creative people can tend to be unwilling to share their knowledge in order to remain or become the idea maker. Actually it’s a real satisfaction to be the one having found the core idea of an innovation, but this can only happen when having enough information to understand the needs and requirements that will make the idea a market success. This is why some team members pride will have them not acting like team player in order to mark themselves out. These difficulties in the exchange of information at the individual level must be dealt with at the team level. One of the solutions is to increase the project team members’ commitment to the project and to their team. Many studies have shown how to increase group member’s commitment to the team they belong to, for example by increasing the unit differentiation, and it has be shown that the higher the team commitment, the more team members are willing to share knowledge and the better is the team performance (Yumen, Robert, Keller, Shih, 2011). This phenomenon is explained by the fact that employees’ intention to participate and contribute to the team performance depends on the satisfaction they think they will have by doing so. If the members believe they will be better perceived by their team, improve their self-image, or even obtain rewards from their contribution – either financial or non-financial ones- they will be more willing to exchange their knowledge (Tong, Wang, Tan, Teo, 2013).
Optimizing the level and quality of exchanges in a project will have many impacts on its overall performance: actually it influences its return on investments, its time management and its technical outcomes, but also the project team engagement and satisfaction. Many main factors have to be taken into account when trying to effectively manage information sharing in project management, but a real model of information flows linking them and using both virtual and face-to-face communication remains to be drawn.
Alexandra-Mihaela, Dumitrascu D. Danut, 2013. The measurement and evaluation of the internal communication process in project management. Annals of the University of Oradea. Arjun Chakravarti, Chaohua Hey, Liad Wagman, 2013. Inducing knowledge sharing in teams through cost-efficient compensation schemes in Knowledge Management Research & Practice. Braglia, M., Frosolini, M., 2013. An integrated approach to implement Project Management Information Systems within the Extended Enterprise, International Journal of Project Management. Hobbes, T. 1658 De Homine. I. Naftanaila. 2010. Knowledge transfer methods in project-based environments. Review of General Management. Kumaraswamy, M.M., Anvuur, A.M., 2007. Selecting sustainable teams for PPP projects. Building and Environment 43 (6), 11. Kumaraswamy, M., Ling, F., Anvuur, A., Rahman, M. M., 2007.Targeting relationally integrated teams for sustainable PPPS. Linda S. Henderson, 2008. The Impact of Project Managers’ Communication Competencies: Validation and Extension of a Research Model for Virtuality, Satisfaction, and Productivity on Project Teams. Project Management Journal, Vol. 39, No. 2, 48–59. Maria del Carmen Triana, Bradley L. Kirkman, Marı´a Fernanda Wagstaff, 2012. Does the Order of Face-to-Face and Computer-Mediated Communication Matter in Diverse Project Teams? An Investigation of Communication Order Effects on Minority Inclusion and Participation in Journal of Business and Psychology 27:57–70. Rafael E. Landaeta, 2008.Evaluating Benefits and Challenges of Knowledge Transfer Across Projects, in Engineering Management Journal. Ralph Katz, 1982. The effect of group longevity on project communication and performance, Administrative science quarterly, 27. Thomas, Robert P. Bostrom and Marianne Gouge. Making knowledge work in virtual teams in Communication of the ACM, nov 2007, vol.50, n11.M. T. Ahern, et al. 2013. Complex project management as complex problem solving: A distributed knowledge management perspective, International Journal of Project Management. Weiwu Zou, Mohan Kumaraswamy, Jacky Chung, James Wong, May 2013. Identifying the critical success factors for relationship management in PPP projects. Y. Tong, X. Wang, C-H Tan, H-H Teo, 2013. An empirical study of information contribution to online feedback systems: A motivation perspective. Information & Management 50 562–570. Yuwen Liu, Robert T. Keller and Hsi-An Shih, 2011. The impact of team-member exchange, differentiation, team commitment, and knowledge sharing on R&D project team performance. R&D Management 41, 3. Z. Ding, et al., 2013 A parallel multiple mediator model of knowledge sharing in architectural design project teams, International Journal of Project Management. Zhang, Lifeng, Information Specificity, Employee Turnover and Information Loss (July 11, 2012). Available at SSRN: http://ssrn.com/abstract=2103531
SELF-MANAGING TEAMS IN AGILE PROJECT MANAGEMENT – PAIN OR GAIN? Eva-Maria MÜLLER ESC RENNES SCHOOL OF BUSINESS
Abstract Due to an increasingly dynamic global environment with a high unpredictability, the classical project management approach in software development changed. New agile methods were introduced which promise a faster, cheaper, and better software development with on-time, and on-budget delivery of the agreed scope. Core of the agile approach are self-managing teams, where the team members are empowered to manage their tasks themselves. The new form of team organization promises many benefits. Based on a literature review, the paper provides an insight into the basics of self-managing teams. It furthermore provides an evaluation of the approach, considering benefits and limitations. The aim of the paper is to come to a final judgment, if self-managing teams in agile project management should be considered as pain or gain. Key words: Agile Project Management, Self-Managing Teams, Empowerment JEL Classification: M15, M54, O22 1. Introduction Business projects nowadays are characterized by a high complexity due to an increasingly technical sophistication and interdependency across functions and organizations (Ayas, 1996, p. 136). In order to stay competitive and to satisfy the customers in face of globalization, a change in the traditional project management approach is required (Roper & Phillips, 2007, p. 33). A team-based organizational structure (Roper & Phillips, 2007, p. 33) and an information-based approach are possible solutions to increase project efficiency (Ayas, 1996, p. 136). Also information system departments need to adapt to an increasingly dynamic and unpredictable global environment (Elmuti, 1997, p. 233). They are required to “develop, deliver, and support information systems more responsively, with higher quality” using less human resources (Janz, 1999, p. 171). To meet the needs, it is suggested that software teams self-organize or self-manage (Moe, et al., 2010, p. 481). Up to the 1990s the common approach in software departments was a “plan-driven product line approach” (Anderson, 2004, p. xxvii). It was highly emphasizing on a standardized methodology that 20
facilitates an increased optimization, control, and prediction of the development process (Moe, et al., 2010, p. 480). Change came along with a growing customer dissatisfaction due to long lead times and a loss of quality (Anderson, 2004, p. xxvii). New methodologies, claiming to enable “faster, cheaper, better software development with on-time, on-budget delivery of the agreed scope” emerged, referred to as agile methods (Anderson, 2004, p. xxvii; Chow & Cao, 2008, p. 961). The term ‘agile’ transports the flexibility and responsiveness of the methodology (Moe, et al., 2010, p. 480). In 2001, exponents of different streams of agile methodologies agreed on some common principles of agile software development, anchored in the ‘Manifesto for Agile Software Development’ (Williams, 2012, p. 72). The manifest states its four central values and contrasts them to the traditional development approach: (I) “Individuals and interactions over process and tools”, (II) “working software over comprehensive documentation”, (III) “Customer collaboration over contract negotiation”, and (IV) “Responding to change over following a plan” (Agile Manifesto, 2001). In order to implement these values in agile project management, the work is autonomously organized and coordinated by self-managing teams (Moe, et al., 2010, p. 480). Self-managing or self-directed teams are according to Wellins et al. (1991): “small groups of people empowered to manage themselves and their work on a day-to-day basis…members…not only handle their job responsibilities, but also plan and schedule their work, make production related decisions, take action to solve problems and share leadership responsibilities“ (Williams, 1997, p. 219). As a direct result of the higher involvement and responsibility of the team members in an empowered project team, the effectiveness and quality are increased (Roper & Phillips, 2007, p. 23). Besides this a higher focus on consumer needs can be attained (Sheffield & Lemétayer, 2013, p. 259). Furthermore the probability of project success is found to be 20% higher when using agile methods (Strasser, 2013, p. 39). These examples support the potential benefits of employee empowerment in self-managing work teams. This paper wants to provide the foundations of self-managing teams in agile project management. A critical examination of the literature should provide an overview of potential benefits (gain) but also downsides and restrictions (pain) of the approach. If a company considerers the introduction of agile project management and employing self-managing teams, the paper can serve as a practical support and basis for decision-making. 2. Methodology The literature contains many findings on self-directing work teams and employee empowerment. However, they are often focusing on industrial settings. In the field of agile project management, the topic of self-directed teams is mentioned but does not seem to be a major issue (Janz, 1999, p. 172). Other contents like the processes and methodology are more present in the field of agile project management literature. For the literature review in this paper, general sources on self-directing work teams as well as specific resources referring to agile project management have been employed. Besides books and peer-reviewed journal articles, also some practice oriented conference publications have been consulted. Based on the literature review, the paper will first address the issue of how teams in agile project management settings are organized and how they work. Afterwards findings in literature about the benefits and limitations of the approach will be considered. Finally a conclusion will be drawn by considering implications of the findings. 21
3. Teams in agile project management 3.1 Concept of empowered, self-directing teams In general a team can be described as a small number of people who pursue and achieve a common objective while each member is contributing complementary skills (Katzenbach & Smith, 1993; Moe, et al., 2010, p. 480). As the members have a common purpose and are mutually accountable, they develop energy and commitment to achieve their defined goals (Ayas, 1996, p. 132). In a team also the individual performance is promoted, which in turn enhances the team performance (Moe, et al., 2010, p. 481). Due to each member´s contributions, a team can have more talent, experience, diversity and make better decisions than one individual (Roper & Phillips, 2007, p. 26). Software development relies highly on the team performance (Moe, et al., 2010, p. 480). The basic concept of project teams in agile software development lies in the empowerment of the team (Sheffield & Lemétayer, 2013, p. 469). Due to empowerment, former subordinates get control and responsibility and are for instance involved in the decision making (Elmuti, 1997, pp. 233-234). Self-directed teams are according to Wellins et al. (1991): “small groups of people empowered to manage themselves and their work on a day-to-day basis”. In order to become self managing, the teams need to be autonomous, inspired and to see beyond the end of their noses (Imai, et al., 1985; Ayas, 1996, p. 132).
3.2 Team-structure and team work Agile project teams are organized as self-managing teams (Moe, et al., 2010, p. 480). The overall concept of self-managing teams is, that members themselves organize and optimize their work (Anderson, 2004, p. 115). Throughout the working progress members of self-managing teams contribute a diversity of skills and capabilities (Janz, 1999, p. 172). Due to their empowerment they also carry out managerial functions (Kezsbom, 1993; Williams, 1997, p. 219). Managerial functions are for instance the assignment and scheduling of tasks, choice of work methods, and installation control and monitoring instances (Janz, 1999, p. 173). They are also preparing their own budgets and inventory management (Williams, 1997, p. 219). To sum up, Kezsbom (1994) states that “members…not only handle their job responsibilities, but also plan and schedule their work, make production related decisions, take action to solve problems and share leadership responsibilities” (Williams, 1997, p. 219). To ensure the effectiveness of self-managing teams, teams generally comprise 2 to 25 members, the majority has an average size of 10 (Roper & Phillips, 2007, p. 24). Furthermore a right people mix needs to be considered. Essential skills are members’ expertise in a technology or function, their skills in problem solving and decision-making, and their interpersonal skills (Roper & Phillips, 2007, pp. 23-24).
3.3 Team leadership The concept of empowered teams also leads to a new definition of the project manager´s role (Williams, 1997, p. 219). The previous responsibilities of a project leader to supervise, schedule and control the tasks are now carried out by the team (Anderson, 2004, p. 59). However, the demand for leadership has not disappeared in empowered project teams. The members still need an authoritative instance they can contact in case of questions and difficulties and to which they report (Elmuti, 1997, p. 237). Furthermore a leader is needed to monitor, supervise and coordinate the project proceedings and to report relevant events to the senior management (Anderson, 2004, p. 59; Roper & Phillips, 2007, p. 25). The focus of leaders of self-managing teams however should be the design of the team (Ayas, 1996, p. 132). This can be achieved by empowering the members and supporting their learning process (Ayas, 1996, p. 132). The empowerment can be fostered by facilitating the development of self-controls (Nauman, et al., 2010, p. 641). To attain the commitment of the team members, the leaders are advised to define a broad vision on which the team can focus (Elmuti, 1997, p. 237). Roper and Philips (2007, p. 30) conclude that leaders can “help to equip a team with sufficient knowledge and skills, membership stability, and performance-enhancing norms, [...] training and resources” in order to enhance the effectiveness of a self-managing teams.
3.4 Organizational context An agile project team is not simply formed by declaring a group as “self-managing” and to expect that its members know how to organize effectively (Moe, et al., 2010). Instead, it is imperative that the organizational structures are adapted to the requirements of the new approach (Ayas, 1996, p. 131). Change has to take place throughout the organization: in their “practices, values and beliefs” (Elmuti, 1997, p. 236). Obstacles to empowerment rooted in the organization are for instance controls through hierarchy or stage-gate processes (Sheffield & Lemétayer, 2013, p. 460). Therefore organizations have to be reshaped and become more horizontal (Elmuti, 1997, p. 234). To build heterogeneous self-managing teams the organizational structure should focus on “formalization, socialization, training, and decentralization” whereas the management strategies should pursue “communication, shared values, and trust” (Elmuti, 1997, p. 237). Changing an organizational structure is a challenging task. When pursuing the idea of establishing agile project teams, companies have to be aware that the process demands time, training and resources until the teams are delivering the desired results (Elmuti, 1997, p. 233). 4. Evaluation of self-managing teams in agile project management 4.1 Benefits Self-managing teams are promising various advancements. Roper and Phillips (2007, p. 24) describe the benefits in three categories: (I) “improve quality of work environment”, (II) “increase overall performance of the organization”, (III) “provide an environment that focuses on the well-being of the employees as well as the organization´s performance”. The impacts of self-managing teams on the work environment (I) are for instance their ability to provide a good cultural ground for information sharing and knowledge creation within an organization (Ayas, 1996, p. 132). Also the working-conditions are valued more positively (Elmuti, 1997, p. 234). Fur23
thermore the speed and responsiveness to events and changes can be increased (Nauman, et al., 2010, p. 638). The positive implications are also sensed by external stakeholders who perceive a better team performance (Janz, 1999, p. 184). The overall performance of the organization (II) is increased due to the fact that employees in self-managing project teams are striving to produce a high quality product or service, as they are directly responsible for it (Elmuti, 1997, p. 237). Additionally the overall improved working conditions lead to an increased “productivity, market share, pricing and cost-reduction” for the organization (Elmuti, 1997, p. 234). The empowerment of the team members leads to a higher commitment to the whole organization, which can also be valued positively (Nauman, et al., 2010, p. 640). The benefits of the approach that are gained from focusing on the well-being of employees and on performance (III) are highlighted by many researchers. The fact that the increased motivation of individuals in self-managing teams is enhancing the organizational productivity is often referred to (Elmuti, 1997, p. 233). Due to a higher autonomy, responsibility, and control, the members of empowered teams are more motivated, their job satisfaction increases and all these factors lead to a better performance in their jobs (Janz, 1999, p. 172). The enhancement of the well-being of employees is reflected in the fact that members of self-managing teams are more satisfied, have a lower turnover and a lower absent rate (Moe, et al., 2010, p. 481). The environment also motivates the creativity and entrepreneurship of the team members (Williams, 1997, p. 221). 4.2 Limitations Besides these promising benefits, some critical aspects of empowered self-managing teams are raised in literature (Williams, 1997, p. 220). For instance a lack of strict scheduling of tasks and holistic planning could lead to implausible aims (Elmuti, 1997, p. 235) Furthermore the employees are not experienced in decision making and might lack judgment which could lead to bad decisions and inefficiencies (Elmuti, 1997, p. 236). Consequently managers are required to have a higher tolerance towards mistakes (Thamhain, 1993; Williams, 1997, p. 220). Considering the risk of empowered teams, Williams (1997, p. 220) points out that the effects on project risk are not adequately represented in literature on empowered project teams. Literature would suggest that empowerment reduces risk, which he opposes by stating that this would not be supported by evidence (Williams, 1997, p. 220). More findings reflect on the downsides of empowered teams for the employees. A central discussion is the relationship between the individual autonomy and the group level autonomy. Some authors hold, that the high level of autonomy in the group does not necessarily go along with a high autonomy on the individual level (Moe, et al., 2010, p. 481). This refers to the sociological concept of the “iron cage” by Max Weber. It is considered as a challenge to incorporate autonomy for the individuals and the group in the same work group (Moe, et al., 2010, p. 481). This is supported by Janz (1999, p. 172) who holds that the empowerment of a team offers new forms of autonomies for the members. However, in the same time the individuals have to adhere to certain norms of the group. If the norms of the group are higher than the gain of individual autonomy, this is described as a “decrease in job freedom” (Janz, 1999, p. 172). Finally the choice of agile team members is crucial, as an unmotivated employee might have a negative on the whole team (Elmuti, 1997, p. 236). It has to be considered beforehand if an individual wants to be empowered, which means an increase of responsibility and workload, and if the employee is a team player. 24
5. Conclusion Considering the findings of this paper, it becomes obvious that the empowerment of teams in agile project management can be a highly beneficial approach in project management. Agile project management is adapted to an increasingly dynamic global environment that is less predictable. It enables software developers to be more responsive to changes. This flexibility is very much enabled by the self-managing project teams who autonomously organize their work and strongly focus on customer needs. By employing self-managing work teams especially the quality, performance, and employee satisfaction can be considered as gains. The highest risk and pain of self-managing teams can be seen in the negative impact of group autonomy on the individual autonomy which can lead to a decrease in personal job freedom. In order to profit from the benefits of introducing self-managing project teams, it is up to the management to minimize the “pain” by adequately encountering the risks of the approach. They should for example carefully select members of an empowered team beforehand and make sure they are fitting to the approach. To prevent the establishment of too strong group norms, a leader who is balancing the empowerment and control of the group has to be installed. If the management is able to address this challenge adequately, self-managing teams in agile project management can be of great benefit for the whole organization. References Agile Manifesto, 2001. Manifesto of Agile Software Development. [Online] Available at: http://www.agilemanifesto.org/ [Accessed 11 November 2013]. Anderson, D. J., 2004. Agile management for software engineering : applying the theory of constraints for business results. Upper Saddle River, NJ: Prentice Hall Professional Technical Reference. Ayas, K., 1996. Professional project management: A shift towards learning and a knowledge creating structure. International Journal of Project Management, 14(3), pp. 131-136. Chow, T. & Cao, D.-B., 2008. A survey study of critical success factors in agile software projects. The Journal of Systems and Software, Volume 81, pp. 961-971. Elmuti, D., 1997. Self-managed work teams approach: creative management tool or a fad?. Management Decision, 35(3), pp. 233-239. Imai, K., Nonaka, I. & Takeuchi, H., 1985. Managing the new product. In: K. Clark, R. Hayes & C. Lorenz, eds. The Uneasy Alliance. Boston: Havard Business School Press. Janz, B., 1999. Self-directed teams in IS: correlates for improved systems development work outcomes. Information & Management, Volume 35, pp. 171-192. Katzenbach, J. & Smith, D., 1993. The discipline of teams. Harvard Business Review, 71(2), pp. 111-120. Kezsbom, D., 1993. The rise of the self-directed team: the changing role of the project manager. Drexel Hill, PA,USA, Proceeding of the 24th Annual Symposium PMI ‘93, Project Management Institute, pp. 269-273. Kezsbom, D., 1994. “Self directed teams” and the role of the project manager. Oslo, Proceedings of the INTERNET 12th World Congress in Project Management, pp. 589-593. Moe, N. B., Dingsøyr, T. & Dybå, T., 2010. A teamwork model for understanding an agile team: A case study of a Scrum project. Information and Software Technology, Volume 52, pp. 480-491. Nauman, S., Khan, A. M. & Ehsan, N., 2010. Patterns of empowerment and leadership style in project environment. International Journal of Project Management, Volume 28, pp. 638-649. Roper, K. O. & Phillips, D. R., 2007. Integrating self-managed work teams into project management. Journal of Facilities Management, 5(1), pp. 22-36. Sheffield, J. & Lemétayer, J., 2013. Factors associated with the software development agility of successful projects. International Journal of Project Management, April, 31(3), pp. 459-472. Strasser, D., 2013. Agiles Projektmanagement - eine Übersicht. Wissensmanagement, May, pp. 38-39. Thamhain, H., 1993. Self-directed project teams: Techniques for faciliating the process. Drexel Hill, PA, USA, Proceedings of the 24th Annual Symposium PMI ‘93, pp. 304-311. Wellins, R., Byham, W. & Wilson, J., 1991. Empowered Teams: Creating Self-directed Work Groups that Improve Quality, Productivity and Participation. California: Jossey-Bass Inc. Williams, L., 2012. What agile teams think of Agile Principles. Communications of the ACM, April, 55(4), pp. 71-76.
HOW TO DEAL WITH PROJECT RISK MANAGEMENT EFFECTIVELY IN YOUR ORGANIZATION? Maxime LE BRAS ESC RENNES SCHOOL OF BUSINESS Abstract The management of risk inside a project should follow different steps to be more effective. According to the authors, the number of steps varies as well as the approaches, so according to the structure of an organization one process or one approach would match better. Project risk management is seen differently by senior managers or project ones, and is well perceived by the project managers whereas senior managers assume that issues coming out from a project are mainly the fault of its leader than a bad management of risks. Talking about differences, we also distinguish the operational risks from the strategic ones. We note that most of risks are operational, so short-term view. The project risk management takes another dimension when we display it in a project portfolio. In this case, processes (steps) are close to the risk management at a project level, however the impacts and influence are getting bigger, therefore should be dealt with even more attention. Key words: risk management, project management, risk overview, success, processes JEL Classification: D81, G32, H43
Introduction We first start with a definition from the Project Management Institute (PMI, 2008), which defines thatâ&#x20AC;? Project risk management has the objective to decrease the probability and/or impact of negative events in the project and to increase the probability and impact of positive eventsâ&#x20AC;?. According to this definition, companies have interests in using carefully project risk management. Basically, the risk management establish a ranking of the risks according to their level of influence on the project, frequency to happen, level of impact. The final objective is to determine the decisions to choose and the action to do in order to control the identified risks (Didraga et al., 2012). Indeed, risk management is a key part of the overall project management. During my last experience in Salomon S.A.S, I have been in charge to organize a business meeting for the clients of my Export department. My job was mainly to coordinate the different mangers to make sure that the product presentations will be ready for the D-day, and to take care of the logistics part such as booking hotel, restaurants, transportation 26
etc. Be the project manager of this event has shown me different key aspects of project management, and particularly risk management. What should I do if one of our partners flies away or if we face some delays in the preparation, how to make sure that everything will be ready for the event? These are few examples of questions that I asked myself running the project. I have found interesting to give an overview of key aspects of project risk management, because some managers don’t know much about it, or don’t consider risk management as a critical part of project management. Instead of focusing on one precise aspect or relation which have already been studied and analysed by many authors, I have chosen to give you all the different keys to well understand project risk management and successfully implement it in your projects in the future. We will first discuss the different approaches and steps that have been already defined by many authors. Then we will note some key variables that should be analysed in the risk management process. We will also compare the different views of project risk management among the managers, and finally we will see the risk management at project portfolio level.
The different steps of Risk Management Many authors such as Gemmer, Ropponen & Lyytinen or Kutsch & Hall (Didraga et al., 2012) globally agree that risk management could be analysed trough 5 important steps which are identification, analysis, response, monitoring and control. However, according to the Project Management Institute (PMI, 2008) and Besner and Hobbs (2006) (Didraga et al., 2012), there are 7 main practices of risk management: Risk management planning, risk identification, risk registration, risk analysis, risk allocation, risk reporting and risk control. Risk Management Planning Firs, it’s definitely not about writing a list of risks How the project team is going to deal with risks? What would be the tools? Risk Identification Designation of risks thanks to previous experiences, brainstorming sessions, focus groups, externs’ point of view (e.g. experts’ interview) Risk Registration The objective is to establish a list of risks. To create a ranking of the risks is a good additional task. Risk Analysis This step is needed to estimate the probability, impact and consequence of each risk. Risk Allocation Different project members are named responsible for the different risks. This way, management of risk is divided to make sure that each risk is taken into consideration by someone, at least. 27
Risk Reporting The aim of risk reporting is to give update to stakeholders about the nature of the risks, and the possible impact on the project or the company. Risk Control Meet the stakeholders to present them the current project situation and to take decisions about the actions to implement to prevent risks or solve them. (Bakker et al., 2010)
Kwak and Stoddard (2004) assume that the identification of risks is the most essential activity in risk management. At this time, identifying and analyzing known risks are well done by most of companies, but the organizations are still not effective to detect the hidden risks or uncertainties, which are not obvious. Most of them still react to some issues instead of face them proactively in their early stages (Smith & Merritt, 2002). Here is a key challenge for the companies to improve their risk management. Because our business processes and projects are getting more complex, we better realize the different connections of risk variables in our systems. Many companies have developed their own systems to manage the risks or uncertainties they are used to face. Different well-known tools are used by the companies to identify the risk factors, such as review meetings, brainstorming or focus groups (Thamhain et al., 2006).
Project risk management approaches Different approaches to project risk management exist, we define the main ones: the evaluation approach, the management approach and the contingency approach. Evaluation approach: The aim of this approach is to determine the risks factors and causes of project failure. Itâ&#x20AC;&#x2122;s essentially based on previous experiences. Basically, with this approach you determine which risks happened in past projects. There are three main aspects in the evaluation approach: - Risks factors, which have been recognized, contribute to the project - The project risk management process enables the project team to get information that collects about potential risks and failure of the project - The existing list of risks is updated thanks to the new identified ones This approach is based on past researches and presumes that learning about risks and its causes in previous projects will bring have some positive effects on the running of the project. According to Bakker et al. (2010a), the aim of this approach is to create project predictability in new projects by using information regarding risks and causes of project failure gathered from previous projects. It is interesting to notice that results from this approach help you in future projects and not in the current one. So, we can suppose that it gets better over time and project experiences. Management approach: The objective is to understand how we can manage risks to avoid project failure. This approach to risk management is defined as rational. It means that it determines likely events, situations which 28
can happen during a project, and can have some effects on the initial plan or process. Then, thanks to this approach you find some solutions or alternatives to keep the project going well. Contingency approach: According to this approach, the success of a project depends on the capacity of the project team to deal with uncertainties linked to the project. The contingency approach establishes that risk management is not a separate management process but is part of the different processes and steps of the project. After seeing the different approaches of risk management, let us move to essential variables affection this management.
Key variables affecting risk management According to Thamhain, three basic variables should be at least taken into consideration while studying risks: - Degree of uncertainty - Complexity of project - Impact
In order to make the best decision, organizations should well understand these variables to implement the risk management method which will solve the issues. The Degree of uncertainty variable includes variations, contingencies, accidents, unknown-unknowns (Thamhain & Skelton, 2007). Variations could be cost, timing, or technical requirements for example. The level of uncertainty, the probability of an issue to happen and the potential impact on the project determine the possible risk of the project. “The contingencies are known events that could occur and negatively affect project performance” (Thamhain, 2013). Managers can hardly know when these events would happen and how they would impact the project. However, the real issue is that they usually don’t anticipate them for different reasons. Either the impact could be too high and it’s hard to find an alternative, or they consider that the time spent on these issues is not worth. Here are few examples: customer changes, design failures or supplier issues. Events, which are easily defined but are very difficult or almost impossible to predict are the accidents. In this situation, companies have a very small interest in planning a contingency plan as this one would have very low significance and wouldn’t be a real solution. An example could be the possible earthquakes in seismic regions. Companies know that it could occur, but can’t prevent it. Finally, we talk about unknown-unknows for the events which were defined as impossible or were not known to happen in the project scope, but finally occurred. You can only react to this variable as you consider it is impossible to happen. Unknown-unknows are sudden bankruptcy of a strong key partner or a competitor’s breakthrough innovation (Thamhain, 2013). 29
The project complexity is a variable which focus on the complexities around the project. Basically, we could think of the PESTEL1 analysis for the external dimension. An internal analysis about the dynamics and changes in the company is also needed (Cicmil & Marshall, 2005; Cooke et al.). The Diamond Model (figure1) suggests characterizing project complexity through four dimensions which are structural complexity, novelty, pace, technology (Shenhar & Dvir, 2007). Each dimension affects the project management a different way, as you can see on the figure 1.
Figure 1: Diamond model (Shenhar & Dvir, 2007)
“Complexity affects the project organization and the level of bureaucracy, and formality needed to manage” (Shenhar & Dvir, 2007). The novelty aspect is about the time taken to meet product requirement and match with marketing data. The autonomy of the project team, the support and reactivity from the top management to major issues and the planning are the aspect affected in the pace dimension (Shenhar & Dvir, 2007). Technology influences the time needed to get the good design and the technical skills the project team should have. The last variable is the impact of risk on project, company. The impact could be at different levels; Thamhain and Skelton have defined four ones: - Little or no impact on project: delayed contract delivery, technical issue, project team members’ conflicts... - Limited impact on project: same kind of issues seen in the previous point, which may require more time 1 PESTEL : Political, Economical, Social, Technological, Environmental and Legal 30
but are not critical regarding the project performance. Generally, it concerns local problems affecting cost or quality of the project. - Significant impact on project: test failure on an essential activity, or issues that have “cascade effects”2 - Significant irreversible impact on project and even on overall organization: important issues that have effects on the whole project but also on other projects and even the company globally. It could be a Brand image going down because of some illegal actions done by a manager on a project.
The different views of risk among the managers Senior managers mainly think that negative results in project management are the results of bad management from the project manager and not the results of bad management to anticipate the different risks. They have a different vision than the project managers. For example, they consider less the relation between contingencies and project success than the project managers. Talking about project managers, they generally put most of their efforts on solving problems after they have impacted performance, than preventing them; therefore they are more reactive than proactive which is not good to deal with risk management. As recommendations, Project managers have to identify the likely risks and should know when they will most likely happen during the project life cycle (Thamhain, 2013). Another distinction is the difference of point of view between the top management and the project management. The top managers have more a strategic view, while the project managers have more an operational view. We briefly see these differences in the next point.
The distinction between strategic and operational risks To start with this point, some surveys have shown that risk elements in a project are composed of 90% of operational risks and only 10% of strategic risks, therefore, organizations have huge interests to deal with the operational ones. From this operational point of view, the objectives are short-term objectives. It means that organizations focus on direct results and the achievement of tasks or activities which are under the control of the project manager. Krane, Hans Petter et al. (2012) also mention the “future operations”. These operations have longer term objectives than “project operations” (project operational point of view) but are still considered as operational. The other objective view is strategically. We distinguish 2 different objectives levels, the short-term strategic one and the long-term strategic one. The effects or consequences of a project in terms of gains to the top management of a company or the organization itself are related to the short-term strategic view. The long term-strategic view takes care about “societal effects and project sustainability” (Krane et al., 2012). Among the 10% of strategic risks, almost all of them are seen as short-term. Some risks are trickier as they could be the combination of both operational and strategic factors. Risks may also change through the different project steps; this way an operational risk could get more importance 2 A problem having negative consequences on another aspect, which has then some negative effects on another one, and so on. 31
and become a strategic one, on the contrary, a strategic risk could lose some impact and become an operational one. Globally, companies or organization focus mostly on operational risks, and don’t make any link with the strategic view. It has some negative effects on the quality or the significance of strategic objectives, because they achieve the operational goal, but not in the most efficient way, or without adding value to the company Now, we move to another dimension to analyse the project risk management at the portfolio level.
The portfolio Risk Management According to the Project Management Institute (PMI, 2008) “portfolio risk management is the management of uncertain events and conditions as well as their interdependencies at the portfolio level that cause significant positive or negative effects on at least one strategic business objective of the project portfolio and thus influence project portfolio success”. The Project Management Institute suggests that management of project portfolio risks should go through four process steps: 1. Portfolio risks identification 2. Portfolio risks analysis 3. Risk prevention 4. Risk monitoring
The number and nature of steps varies from an author to another one, as we have seen previously for project management risk. According to Juliane Teller and Alexander Kock (Teller, Kock, 2012), there are six steps, which are: “risk identification, risk prevention, risk monitoring, integration of risk information into the project portfolio management, formalization of portfolio risk management and risk management culture.”
How to measure the success of a project portfolio? Cooper, Edgett, Kleinschmidt (2001), Martinsuo and Lehtonen (2007), Meskendahl (2010), and Müller Martinsuo, Blomquist (2008) think of 6 aspects in their approach: average project success, average product success, strategic fit, portfolio balance, preparing for the future, and economic success (Teller & Kock, 2012). Respect of the established budget, planning, as well as the quality expected and the customer satisfaction are some criteria to measure the average success of all the projects of the portfolio. The average product success includes business results such as the return-on-investment, the profit, the goal-achievement on all the projects. Strategy of each project must respect the corporate business strategy. Then, resources are allocated according to the strategies. Portfolio balance is about the relation between risk and profit. Companies should analyse carefully what will be the benefits regarding the risks taken. We are used to say that the more risks you take the more profits you make. There’s also a notion of short term and long term; this difference of time brings different 32
levels of risks. So, managers have to balance these two variables in all the projects of the portfolio in order not to have too many risky projects. Preparing for the future is the ability of a company to take advantage of any results or opportunities after the end of a project. â&#x20AC;&#x153;Economic success addresses the short-term economic effects at the corporate level, including overall market success and commercial success of the organization or business unitâ&#x20AC;? (Teller & Kock, 2012). In addition to these 6 criteria, Turner & Mueller underline another factor to lead well and get success in a project: interactions between key stakeholders. In this case we mainly talk about the sponsors, the project manager and the project team, of each project. Good relations and interactions between these actors are essential to agree on some guidelines, to take decisions at the overall company level, etc. (Turner & Mueller, 2004).
Conclusion Through this overview of risk management in a project or portfolio projects, we have seen that dealing with risks is about method, whatever the approaches. Different processes co-exist, however we can assume that some steps are essential in every approach, such as the identification of risks. As we have noticed in this paper, managers are currently good to identify the known risks but are still too reactive instead of being proactive. A great management of risks should lead to prevention of most of risks. There is a kind of reluctance regarding management of risks. Indeed, many managers consider that this management is based only on subjective analysis and canâ&#x20AC;&#x2122;t be trusted, which is untrue, because some methods to identify, analyse, monitor and prevent risks do exist. Risks have different natures and are influenced by some key variables we have seen in this paper (degree of uncertainty, project complexity and impact). Risks are source of negative or positive effects on the project or the overall company in the extreme cases. The growing complexity of projects interactions between each other makes the risks more widely spread inside the company. A good project team should be able to determine the probability of the diverse risks to happen and estimate the consequences. To conclude, a company or an organization, which is able to use a relevant and efficient risk management approach when risk events happen, will more easily assess the results of the project regarding the planning, the cost and the quality. The evaluation of the project success, and its communication to the stakeholders, is getting better thanks to the project risk management.
Bakker, K.D., Boonstra, A., Wortmann, H., 2010. Does risk management contribute to IT project success? A meta-analysis of empirical evidence. International Journal of Project Management, 28(5), p493–503 Didraga, O., Bibu, N., Brandas, C., 2012. Annals of the University of Oradea. Economic Science Series. Vol. 21 Issue 1, p1014-1020. Cicmil, S., & Marshall, D. 2005. Insight into collaboration at the project level: Complexity, social interaction and procurement mechanisms. Building Research and Information, 33(6), 523–535. Krane, H.P., Olsson, N., Rolstadås, A., April 2012. How project manager–project owner interaction can work within and influence project risk management. Project Management Journal, Vol. 43 Issue 2, p54-67 Kwak, Y.H., Stoddard, J., 2004. Project risk management: lessons learned from software development environment. Technovation 24 (11), 915–920 Project Management Institute, 2008. The Standard for Portfolio Management - Second Edition, 2nd ed. Project Management Institute, Newtown Square, PA. Shenhar, A., & Dvir, D. 2007. Reinventing project management: The diamond approach to project management. Boston, MA: Harvard Business School Press Smith, P. G., & Merritt, G. M., 2002, Proactive risk management. New York, NY: Productivity Press Teller, T., Kock A., 2012. International Journal of Project Management, Elsevier Thamhain, H., April 2013 Project Management Journal, Vol. 44 Issue 2, p20-35. Thamhain, H., & Skelton, T., 2006. Managing the sources of uncertainty in technology projects. Proceedings of the 2006 IEEE International Engineering Management Conference, Salvador, Bahia, Brazil (pp. 473–477) Turner, J. R., & Mueller, R. 2004. Communication and co-operation on projects between the project owner as principal and the project manager as agent. European Management Journal, 22(3), 327–336.
HOW EXTERNAL STAKEHOLDER IMPACT PROJECT MANAGEMENT SUCCESS? Elodie RAMEL
ESC RENNES SCHOOL OF BUSINESS
Abstract: By the light of past literatures about clients and sponsor implications and their roles during a project, I will intent to identify in what way they can be identify as external stakeholders and how should they be managed in order to have a successful project. I will first define what a successful project is. Then it will be explain in what way sponsor and client are similar in term of implications and roles. And finally I will identify the key aspect to manage as a project manager when focusing on external stakeholders. Key words: Project management, project success, external stakeholders JEL Classification: M14, L20
Introduction Through the literature about stakeholder participation and role, this review will identify in what way external stakeholders should be manage differently than people directly involved in the project implementation. It will define if there is in some extend limits in their implications. However they are necessary for the success of project. According to the way they are involved into the project they can impact the quality of the delivered project. In other word, this paper tried to identify how project manager should manage external stakeholders to achieve a successful project from all perspectives.
Literature review What is a successful project? When project management is consider, it is important to keep in mind that it is a temporary assignment 35
performed by a group of people for the benefice of a permanent organization (Erling S.A., 2012). The project can be internal to the organization or external to the organization in the case of the consulting sector for example. In the first case, the project will be implemented within the organization; the sponsor and the client are also member of the organization. In the second case, the project manager is working for a company which offer is competencies in managing project in a certain domain. Usually the sponsor and the client is the same person but not necessary the end-user. The project objective is inherent in the organizational perspective, and for its success, stakeholders have to understand the project’s most important purpose (Erling S.A., 2012). According to Lim and Mohamed (1999), it is difficult to define what criteria for a successful project are. It can be identify two level of success evaluation. The macro evaluation takes into consideration the satisfaction of users or clients in term of performance, acceptance and integration on a daily basis. The micro evaluation which is more focus on tangible objective such as meeting the financial and planning objectives. This level of evaluation is more internal stakeholder focus. What makes a project successful is complicated because both stakeholder types judge success in response to the project’s fulfillment of agreed (Thomson D., 2011). Most admit method to evaluate a project focus on three dimensions to achieve. According to DeLone and McLean (1992) framework for measuring success is based on a “triple constraint” notion of time, cost and performance. By time they mean, is the project realized respectfully of the planning schedule and is the project suffer from delays. Costs are linked with the respect of the planning because any delays with necessarily implies more costs. But in a wider perspective the constraint focus on meeting the financial requirement fixed by the sponsor. And regarding the performance constraint, it takes into consideration if all project objectives are meet. If it is a process or a system, does it operate correctly, or more generally, are the quality requirements are meet. This framework is a micro evaluation as it takes into account only project management requirements. It can be integrated a fourth dimension which is a macro evaluation criteria, it is a satisfaction constraints. This constraint focus on the individual experience, often it is the user or the client. Apart from all the micro requirements, it focuses on external stakeholder satisfaction. User/client satisfaction is link to micro constraint success but it is partially independent (Thomson D., 2011). A successful and well integrated project to the corporate strategic management allows achieve highest returns and optimize the use of available resources, including time, money and people (Svetlana J.K., 1997). Project management allows more independent decision making and to a certain extend more effective decisions and realization. As project management realizations are temporary projects it is easier to set up objective and manage time. Moreover as the project manager centralized all stakeholder requirements and he is not directly involved with the project repercussions, he has a better sense of prioritization and a global interest point of view. Project success is depended from many factors to be a success. The intrinsic success which can also be perceived through the micro evaluation is different from the user/client satisfaction because both parties do not have the same requirement and perspective. In order to understand in which way external perspective can differ from involved project stakeholder, we need to first understand what is an external stakeholder?
What is an external stakeholder? First, it is important to define what a stakeholder is. Freeman (1984) defined stakeholders as “groups or individuals who can have effects on, or are affected by, the objectives of an organization”. In other word stakeholders have different degree of influence in a project but are not necessarily impacted by this project. It is however widely accepted that all stakeholders have an interest either direct or indirect in the project and the related activities he is involved in (McElroy 2007, Starik 1994 & Kolk 2006). Stakeholder can be divided according to Calvert (1995) in two categories. Internal stakeholder whose are members of the project coalition such as the project management team or those who provide finance. And external stakeholders who are directly affected by the project in a significant way, they can be the client, the end-user but also the sponsor, it depends on the structure of the project organization. Then we need to clearly know what a sponsor is and what a client is. The simplest definition of a project sponsor is “the person or group that provides financial resources for the project” (Kloppenborg T.J., 2011). Many authors suggest that the responsibility of a sponsor goes further than the project financing. A project needs from an active sponsor involvement specifically during project planning (Fretty, 2005; Gary, 2005, Hartman). Regarding these definitions it seems the sponsor would rather have a internal stakeholder position. But sponsor can been seen as external and internal stakeholder (Kloppenborg T.J., 2011). In a survey conduct by Bryde (2008), project sponsorship can be classed in both categories. In one hand, they can be external focused, sponsors represent interests and activities of clients. In the other hand, they can be inter-focused by supporting and monitoring activities within the project team and development. But in either case, the greater the project sponsorship effort is, the greater is perceived the level of success. As it has previously been said the effectiveness of executive sponsor, is frequently a predictor of project success. Through its involvement and commitment, a sponsor must have “enough clout to make the changes that are necessary to successfully complete a project” (Perkins, 2005). Some use the term project sponsor and project owner as synonyms, but they are based on different perspectives (Erling S.A., 2012). The role of the project owner is extended to cover many tasks beyond providing financial support for the project. The project owner is the person who on behalf of the base organization is responsible for the project (Erling S.A., 2012). For more clarity in this paper, I will consider that the role of the project owner is embodied by the project manager. The other external stakeholder is the client. The literature is less extensive on clients than on sponsor. It may be explain by the fact that client influence varies a lot according to the project. But in any way in order to achieve a successful project at a macro level, client satisfaction is needed. The client could be the same person than the sponsor or only a user. In the following lines, I will develop different project structure focusing on external stakeholder. When a project is internal to a company the sponsor and client is the top management but end-users can be also seen as the client but to be more precise they are rather customers. If the project does not fit their needs, it will conduct to a failure at least on the macro level. When a client is the end-user and finances the project, the client is both sponsor and customer. He is 37
the higher decision maker, project manager would not have much influence or power to change or orient his opinions. It can be really difficult to manage if the two parties do not have the same vision in order to achieve the project objectives. In few words, an external stakeholder is a person or group influenced by the project and who rather focus on macro level success than micro level. They have a role within the project development but it may lack of definition, and varies a lot. They certainly do not directly work on the project but they can be really useful to set up requirements and expectations. It can result two principals consequences from the situations previously described. The first one is due to stakeholder with rather high power on decision making. They may have little knowledge on the project constraints and challenge and so set up unachievable objectives. They may tend to be unrealistic and/or not practical. It can result from it a lack of clarity and unachievable demands. The second consequence that may occur is the lack of consideration of an external stakeholder, generally the end-user because he is often excluded from the project design or not enough integrated.
What to manage carefully regarding external stakeholders? The main risk in designing and implementing a project is the poor understanding and identification of the client/customer/end-user needs and client/end-user requirements and expectations (Svetlana J.K., 1997). Project managers have to take into consideration not only micro level requirements but also make sure that the project definition is coherent with the customer need. In order to success, it is advised to involve customers into the project design process and keep them informed. Keil (1998) have noted, the most common risk factors are remarkably consistent across projects: o lack of top management commitment to the project; o failure to gain user commitment; o misunderstanding the requirements; o lack of adequate user involvement; o failure to manage end user expectations. It is clear that those risks are mainly due to poor consideration of external stakeholdersâ&#x20AC;&#x2122; opinion and expectation. So project managers need to not neglect external stakeholdersâ&#x20AC;&#x2122; importance even if they may not have much influence on decision making. But it is also difficult to manage external stakeholders because they may be groups or individuals with very different opinions about how the project should be. In any project situation, there is always someone (the client, customer) who has a unique need (Svetlana J.K., 1997). As they are not involved in the everyday work, they may not perceive every constraints and obligation. External shareholders may sound vague, have intangible expectations about tangible outcomes. Mainly because they do not have the require knowledge and resources to conduct the realization of the project design and may not have all the understanding to take decision about specific constraints of time, money and specifications. 38
This situation leads to some other risks that Jones (1994) describes as the following: o excessive schedule pressure; o low quality work as a result of undue pressure; o cost overruns What results from those risks is that project managers should highly consider external shareholder opinions concerning outcomes of a specific project because they will be the most impacted. However regarding micro level constraints, they should have the last word and the possibility to adapt to the means the sponsor is willing to use for the project realization. Clear communication need to be established between all stakeholders in order that each one would be able to adapt their expectations and redefine their needs according to the means dedicated into the project. I n certain sectors clients can be particularly pluralistic (Tzortzopoulos et al., 2006). Compromising between stakeholders who seek to use the project outcome and those interested only in the micro level constrains (Hartmann et al., 2008) is challenging to achieve. These goals often conflict. Because they compete in different system of values, there is diversity within the project and internal complexity (Landin 2005, Olander, 2007, Thomson D., 2011). This complexity lies in the definition of needs and requirements for the best compromised by focusing on the respect of the resources the sponsor is willing to immobilize in order to achieve the project objectives. Agile project management may make easier to manage this complexity in specific times but in order to achieve the global objective project managers have to be connected with all the level of stakeholders regardless their level of influence which is time consuming.
Conclusion It is clear that external stakeholder is a blur notion, but they influence the success of a project in a tangible way. Depending of the situation some categories of stakeholder sometimes are external sometimes are not. They are external when they do not take part directly in the project management operations, when they only set up requirements about what the need or what they can provide. Once the concept of external stakeholder is clearly defined and they are identified in a specific project, project managers need to consult them carefully to be able to answer their needs and requirements and set up limitation to the project boundaries in order to achieve the objective qualitatively and within the resources allocated. The recommendation I would make is to integrate all level of stakeholder in a information system which allow them to raise questions and concerns but also which help them to understand what is feasible or not, and to anticipate disappointment.
References Bryde, D. (2008), “Perceptions of the impact of project sponsorship practices on project success”, International Journal of Project Management, Vol. 26, pp. 800-9. Calvert, S. (1995),Managing Stakeholders: The Commercial Project Manager, McGraw-Hill, New York, NY Cervone H.F, 2006, Project risk management, International digital library perspectives, Vol. 22 No. 4, pp. 256-262 Erling S.A., 2012, Illuminating the role of the project owner, International Journal of Managing Projects in Business, Vol. 5 No. 1, pp. 67-85 Freeman, R. (1984),Strategic Management: A Stakeholder Approach, Pitman Publishing Inc, Boston, MA Fretty, P. (2005), “Empowering executive decisions”,PM Network, Vol. 19 No. 10, pp. 23-6. Gary, L. (2005), “Will project creep cost you – or create value?”,Harvard Management Update, Vol. 10 No. 1, pp. 3-5. Hartman, F, (2002), “Project management in the information systems and information technologies industry”, Project Management Journal, No. 3, pp. 5-12. Jones, C. (1994),Assessment and Control of Software Risks, Prentice-Hall, Englewood Cliffs, NJ. Keil, M., Cule, P.E., Lyytinen, K. and Schmidt, R.C. (1998), “A framework for identifying software project risks”,Communications of the ACM, Vol. 41 No. 11, pp. 76-83. Kloppenborg T.J., 2011, Investigation of the sponsor’s role in project planning, Management Research Review, Vol. 34 No. 4, pp. 400-416 Kolk, A. and Pinkse, J. (2006), “Stakeholder mismanagement and corporate social responsibility crises”,European Management Journal, Vol. 24 No. 1, pp. 59-72 McConnell, S. (1996),Rapid Development: Taming Wild Software Schedules, Microsoft Press, Redmond, WA McElroy, B. and Mills, C. (2007), “Managing stakeholders”, in Turner, J. (Ed.),Gower Handbook of Project Management, Gower Publishing, Aldershot, pp. 757-777 Olander, S. (2007) Stakeholder impact analysis in construction project management. Construction Management and Economics, 25, 277–87. Starik, M. (1994), “The Toronto conference: reflections on stakeholder theory”,Business and Society, Vol. 33 No. 1, pp. 82-131 Svetlana J.K., 1997, Critical factors of effective project management, Vol 9 n° 6 pp. 390–396 Thomson D., 2011, A pilot study of client complexity, emergent requirements and stakeholder perceptions of project success, Construction Management and Economics, 29, 69–82 Tzortzopoulos, P., Cooper, R., Chan, P. and Kagioglou, M. (2006) Clients’ activities at the design front-end. Design Studies, 27, 657–83. Von Meding J. & McAllister K., 2013, A framework for stakeholder management and corporate culture, Built Environment Project and Asset Management Vol. 3 No. 1, pp. 24-41
INNOVATE TO SURVIVE Prof. Dr. h. c. Léon F. WEGNEZ
ABSTRACT Innovation is a social process capable of creating the conditions for business success, being centrally important for business competitiveness, but it needs to be properly managed by combining a supportive culture and an integrated process in order to create a sustainable competitive advantage. Innovation is an ongoing, multifaceted challenge involving a constant questioning of our policies, our strategies, our methods, our individual actions. It affects the future. Research, innovation and development therefore appear as an imperative for human society as a whole. For successful innovative management there are fundamental components. Key words: Innovation, Research & Development, Successful Innovative Management JEL Classification: L20, M20, O31
QU’EST-CE QU’INNOVER ?
L’aptitude à innover est, sans aucun doute, une des spécificités les plus originales de l’être humain et une des facultés les plus déterminantes de l’homme pour assurer son avenir. Cette capacité d’innovation s’est exprimée, sous des formes très diverses et fort évolutives, dès le début de l’humanité. Elle a constitué et constitue un levier fondamental pour la naissance et le développement des civilisations. Quoi d’étonnant, dès lors, que dans le contexte mondial actuel, qui se caractérise à la fois par une interdépendance et une interpénétration toujours plus grandes des économies des peuples de la Terre, et par une accélération spectaculaire des progrès technologiques qu’ils réalisent, l’avenir 41
même de chacun d’eux dépende de plus en plus de la faculté d’innovation qu’ils portent en eux, et de ses fruits. Mais, qu’est-ce qu’innover? On pourrait dire que c’est faire en sorte que quelque chose qui n’existait pas, existe; ou que quelque chose qui existait, existe différemment. On pourrait dire aussi que c’est concevoir, et ensuite concrétiser, une idée nouvelle qui donne naissance à un nouveau procédé, à un nouveau produit ou à un nouveau service. On pourrait dire encore, que c’est beaucoup plus qu’inventer car l’invention peut n’être que statique alors que l’innovation implique l’action. Mais, en réalité, ce qu’il faut surtout retenir, c’est que le champ de l’innovation est sans limite et que toute innovation, pour qu’elle soit vraiment telle, doit être menée jusqu’à son aboutissement, c’est-à-dire jusqu’à sa concrétisation effective par sa mise en application dans la pratique.
INNOVATION, RECHERCHE ET DEVELOPPEMENT
Quant à l’origine de l’innovation, elle peut certes être fortuite, résultant du hasard, ou être le fruit de longues recherches; mais dans l’un et l’autre cas, elle sera, pour l’homme, découverte et source de développements nouveaux. La recherche, l’innovation et le développement apparaissent dès lors comme une nécessité impérative pour la société humaine dans son ensemble, pour le monde, mais aussi au niveau de chacune de ses composantes. Et c’est dans ce contexte que doit s’inscrire la politique de recherche et de développement de nos entreprises. L’Europe a été, dans l’histoire de l’humanité, une des sources les plus fécondes d’innovation, mais elle s’est essoufflée quelque peu au cours des dernières décennies et elle éprouve à présent bien des difficultés, face au dynamisme américain et asiatique dans ce domaine. Et pourtant, ce défi est fondamental pour notre avenir, car si nous ne parvenons pas à réactiver de façon déterminante nos potentialités d’innovation, nous serons confrontés à moyen terme à une grave régression économique et sociale. Nous ne manquons ni de capacités scientifiques et techniques, ni de ressources financières. Notre potentiel économique et intellectuel est considérable. Mais nos efforts sont trop dispersés et nous ne sommes pas suffisamment motivés par cet impératif qui est le nôtre, de mobiliser toutes les forces vives de nos entreprises pour assurer l’avenir.
INNOVER: UN DEFI PERMANENT
L’innovation est donc, pour nos entreprises, un défi permanent. Elle est un défi à multiples facettes qui s’impose à tous les échelons de l’entreprise, à toutes les fonctions, à toutes les définitions d’objectifs, à tous les moyens mis en œuvre pour les atteindre. Elle implique une remise en cause permanente de nos politiques, de nos stratégies, de nos méthodes, de nos actions ponctuelles. Elle conditionne l’avenir. Elle est la clef, trop souvent ignorée, de la réussite. C’est pour toutes ces raisons que l’incitation à l’innovation et sa gestion effective doivent faire partie intrinsèque de la culture d’entreprise. 42
Cette démarche s’inscrit dans l’option «recherche et développement» à laquelle les dirigeants sont de plus en plus acquis. Mais plus qu’une démarche fonctionnelle, c’est bien d’une authentique philosophie d’entreprise qu’il s’agit. Ceci veut dire que le rôle de l’innovation est si important pour la survie même de l’entreprise, que le dirigeant a pour obligation fondamentale, non seulement de l’encourager si elle s’exprime dans le chef de ses collaborateurs, mais aussi et surtout de la susciter de façon constante. Il lui incombe, en effet, d’inculquer à tous ceux qui travaillent dans l’entreprise une véritable «mentalité innovatrice».
UNE CAPACITE D’INNOVER SOUVENT MECONNUE
Les entreprises sont, bien souvent, plus riches que leurs dirigeants ne le pensent, de par la capacité d’innover et de gérer que détiennent les hommes et les femmes qui les animent. Il faut donc qu’une prise de conscience intervienne de ce potentiel de créativité et d’action. Mais une fois admise comme condition fondamentale de survie des entreprises, toute politique d’innovation doit encore être conduite avec réalisme et compétence. Elle ne peut s’accommoder d’aucun laxisme. Elle doit être mélange d’audace et de pondération, de liberté d’initiative accompagnée de responsabilité effective. Il faut que chaque collaborateur, au niveau de sa fonction, soit, à la fois, imprégné de la volonté d’innover, conscient de ce qu’il est encouragé à le faire, convaincu de sa responsabilité personnelle au niveau des décisions qui résulteront de ses choix innovateurs. Les composantes suivantes sont donc fondamentales pour que réussisse une gestion innovatrice: la conviction du dirigeant que l’innovation est facteur déterminant de survie pour son entreprise, la volonté de celui-ci de communiquer à son personnel cette foi et la volonté d’innover, l’encouragement de toutes les initiatives prises aux divers échelons dans le cadre de cette stratégie d’innovation, la prise de conscience de la responsabilité de chacun quant aux résultats de ses initiatives, le droit à l’erreur; toute cette démarche étant également assortie d’une responsabilité collective inhérente à la structure de fonctionnement de l’entreprise, laquelle aura établi les procédures d’analyse, de sélection et d’application des idées nouvelles.
A Key Challenge, Marketing Resource Management, a Holistic System Alexandru BEJAN Abstract The relatively new field of expertise of Marketing Resource Management (MRM) is still challenging, especially within the context of the constant increase of channels availability. There is a whole debate about the interference between MRM and CRM with the modern digital age the customer lifecycle starts from the point when the campaign lands in the prospect’s Inbox. In today complex environment marketers need to embrace integrated marketing solutions that manage brands and campaigns as well as resources and performance. Key words: Marketing Resource Management, Customer Relationship Management, Multi
Channel Campaign Management, Integrated Marketing Management
JEL Classification: M21, M31, M37
Marketing Resource Management, a holistic system
The relatively new field of expertise of Marketing Resource Management (MRM) was challenging me from the very beginning. I was attracted and passionate by the possibility of ensuring information flow to and from my CMO with our Leadership, my Colleagues and our Key Support Groups, of contributing to facilitate our marketing team in our work meetings regarding different projects. I was directly involving in scanning the business environment for cross-functional collaboration opportunities, connecting, communicating, and staying in tune with prospects and customers, sharing insights with my CMO and my Colleagues, and identifying the best practices in managing and allocating Marketing Resources. Youtube let us know that: „Marketing Resource Management is a completely integrated software application for managing your entire marketing activities, along with the resources and management processes required to get your promotions to market. MRM is a scalable marketing solution, equally powerful and easy to use, whether you have 5 marketers or thousands across the globe”. [Youtube.com] On the other hand let us take a look at a well-known definition of MRM [mrm-explained.com]: “MRM is a holistic system, capable of serving the whole of the Marketing Enterprise (including both internal and external Agencies), which manages all aspects of Brand Management and the associated production of Marketing Collateral.” This approach is underlining the so-called “Magnificent 7” which differentiate MRM as an entity from the ad-hoc solutions which solve specific Marketing issues, by providing functionality managing: “the Planning and Budget processes; Process Management, allowing the appropriate people to update progress and to view the planned collateral; approval of collateral, using electronic transmission of images and comments complying with the defined management hierarchy; an integrated DAM storing all multimedia collateral, and associated documentation providing the required level of functionality to promote and support the re-use of existing collateral; Competitive Procurement to reduce costs and ensure consistent quality; the print and delivery functions; comprehensive, self-selection reporting on all aspects of the services man44
aged, including marketing efficiency, and the basis for marketing effectiveness.â&#x20AC;? According to the same approach there is a proper diagram which matches this definition, and convey the necessary understanding:
Figure no. 1: Marketing Resource Management Diagram Source: MRM Explained, www.mrm-explained.com/MRM/mrm-explained/MRM-Definition.htm
According to Gartner, Inc. (the worldâ&#x20AC;&#x2122;s leading information technology research and advisory company) [Gartner, Inc.], quoted by Jeanett Heller, Product Marketing Manager, Dynamics Microsoft Danmark, [Heller 2013] MRM is a set of processes and capabilities designed to enhance a companyâ&#x20AC;&#x2122;s ability to orchestrate and optimize internal and external marketing resources, MRM applications enabling enterprises to: plan and budget for marketing activities and programs (strategic planning and financial management); create and develop marketing programs and content (creative production management); collect and manage content and knowledge (digital asset, content and knowledge management); fulfill and distribute marketing assets, content and collateral (marketing fulfillment); measure, analyze and optimize marketing performance (MRM analytics).
Figure no. 2: What is Marketing Resource Management Source: Jeanett Heller - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm
The maturation of Marketing Resource Management On August 1, 2006, Jessica Sebor [Sebor 2006] highlighted the maturation of MRM, an opinion posted on destinationCRM.com [destinationcrm.com] dedicate to the Customer Relationship Management (CRM, as a key strategy for creating enhanced customer value across many industries including technology, communications, finance, retail, advertising, and healthcare) user marketplace. Sebor showed that known as marketing operations management, MRM solutions have enabled enterprises to see more clearly into their marketing processes and to better hone their practices, and now MRM streamlines the marketing value chain by automating the tracking of costs and projected budgets, connecting all numbers and information through a common platform. And within the context of the constant increase of channels (email, traditional mail, telephone, social networks, text messaging, television, print, or online ad marketing) availability, MRM provides the capability to bring together all these available channels. It is considered that when you are in a down economy, it brings you efficiencies, and when you are in an up economy it can help you grow your business, MRM helping enterprises to facilitate marketing campaigns more quickly by performing real-time spending and resource reallocations needed to launch a campaign. On this way is becoming easier for these enterprises to create and produce a unified image and to continue to communicate that message when executing target marketing, thanks to bringing together all remotely operating avenues of a marketing or advertising campaign. [Sebor 2006] In 2013, Jeanett Heller [Heller 2013] attracted our attention that to be successful in the today complex environment (the explosion of new channels, emerging markets, and shifts to online and digital customer engagement) marketers need to embrace integrated marketing solutions that manage brands and campaigns as well as resources and performance. She underlined that the new term for what used to be called “enterprise marketing” is now Integrated Marketing Management (IMM) which unites the people, processes and tools across the entire ecosystem. MRM, CRM, MCM, the IMM Solution There is a whole debate about the interference between MRM and CRM (Customer Relationship Management). According to CRMAdvocate (formed in 1995 as a market research firm for an infant CRM market; Chief Customer Advocate: Gary Lemke) CRM is defined as: “the core of any customer-focused business strategy and includes the people, processes, and technology questions associated with marketing, sales, and service. In today’s hyper-competitive world, organizations looking to implement successful CRM strategies need to focus on a common view of the customer using integrated information systems and contact center implementations that allow the customer to communicate via any desired communication channel. Lastly, CRM is a core element in any customer-centric eBusiness strategy.” [crmadvocate.com] As regarding MRM, it is considered [mrm-explained.com] that MRM is differentiating by being concerned with managing all aspects of the production of marketing collateral. If CRM, for instance, “will control when a campaign is required, MRM will manage all aspects of creating a brochure to promote this campaign and then the CRM system will be used to select which of the customers is to receive the brochure.” In addition, MRM, as an integral part of managing the marketing collateral, “is concerned with Brand Management which will determine the look, feel and even the content of marketing collateral used to deliver messages to customers.” It is worth to remember that according to the distinguished Professor Kevin Lane Keller [Keller 2008] channel strategy to build brand equity includes designing and managing direct and indirect channels to build brand awareness and improve the brand image. The key is to mix and match channel options so that they collectively realize the goals of selling products in the short run, and maintain and enhance brand equity in the long run. Subodh Rane [Rane 2013] remembered recently the words of the well-known father of modern advertising John Wannamaker, who famously once said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” And this within the context in which Rane underlined that: - with the modern digital age the customer lifecycle starts from the point when the campaign lands in the prospect’s Inbox, and Marketing Algorithms are bound to evolve further to harness the vast consumer information; the key factors driving marketing automation are: rationalize marketing content; align sales and marketing (enterprises 46
are adapting to Revenue Marketing, where Marketing teams are made more accountable for the dollars spend in campaigns vis-a-vis contribution to the lead conversions and sales pipeline); track and measure Marketing ROI; - the engine of Marketing Automation is Automated Campaign Management (enterprises having the possibility of engaging with their prospects, tracking their activities on the internet, providing the right content at relevant time, and nurturing the prospect and qualify the leads), the second most important aspect being Lead Management, Marketing Automation taking into account the behavioral aspects of the prospect along with the profile of the prospect for lead scoring; Marketing Automation is using social media to engage with prospects, listen to their buying intentions and create social brand advocates, with Marketing Automation becoming easy to attribute the revenue to a particular campaign and give credit of the revenue to the campaign where it is due, also considering the important aspect of the delivery of content over mobile phones. As noted above, today Integrated Marketing Management (IMM) unites the people, processes and tools across the entire ecosystem. Jeanett Heller showed that three areas comprise an Integrated Marketing Management Solution: Multi-Channel Campaign Management (MCM)
Figure no. 3: MRM, MCM and CRM, three areas comprise an Integrated Marketing Management Solution Source: Jeanett Heller - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm
Jeanett Heller, Product Marketing Manager, Dynamics Microsoft Danmark, argues that Integrated Marketing Management has emerged as a critical strategy for companies who want to focus on streamlining marketing for profitable growth. She highlights the end to end solution with MarketingPilot (considered the most powerful, tightly integrated solution available for allocating the marketing resources better, seizing the insight you need to make campaigns more effective, and driving real-time ROI across every channel) and Microsoft Dynamics CRM. It was shown that the combination of these two tools offers businesses a complete IMM solution that provides insight into ROMI (Return On Marketing Investment is a derivative of the ROI) and campaign performance like never before. [marketinpilot.com] Heller underlines that MarketingPilot includes all of the elements necessary to deliver true Integrated Marketing Management across the enterprise.
Figure no. 2: MarketingPilot is IMM Source: Jeanett Heller - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm
And finally, please allow us to mention that on January 21, 2014, in New York, on the special occasion of the Announcement by Intel Corporation the winners of its coveted Marketing Innovation Awards, MRM agency (a global customer experience-marketing agency, part of McCann World group, an Interpublic company) [mrmworldwide.com] won an unprecedented number (three) of Marketing Innovation Awards (the awards called Sparkyâ&#x20AC;&#x2122;s are given to agencies in recognition of creativity, leadership and fresh thinking). For example, MRM agency won for a pro-bono, anti-litter campaign created in conjunction with sixth-grade students at Millcreek Elementary school.
References What is Marketing Resource Management Software? An Introduction, www.youtube.com/watch?v=Vd2DlRCZtCc MRM Explained, www.mrm-explained.com/MRM/mrm-explained/MRM-Definition.htm www.gartner.com/technology/about.jsp Heller, Jeanett - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm Sebor, J. - The Maturation tion-of-MRM-43009.aspx
www.destinationcrm.com/About/About_Us Sebor, Jessica - The Maturation of MRM, www.destinationcrm.com/Articles/Editorial/Magazine-Features/The-Maturation-of-MRM-43009.aspx Heller, Jeanett - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm www.crmadvocate.com/company.html www.mrm-explained.com/MRM/mrm-explained/MRM-activities.htm Keller, Kevin Lane – Strategic Brand Management, Pearson Education, Inc., Third Edition, New Jersey, 2008, Pearson Prentice Hall, p. 219. Rane, Subodh - Marketing Automation in the Digital Age, www.crmadvocate.com/idb/41598b.html Heller, Jeanett - Microsoft Dynamics CRM, April 17, 2013, available at: www.microsoft.com/dynamics/crm www.marketingpilot.com/solutions MRM Takes Home Three Intel Marketing Innovation Awards, www.mrmworldwide.com/newsroom