The economic consequences of Covid-19 are substantial. The World Bank predicts a 5.2% drop in global GDP, the deepest global recession in decades despite national governments extending trillions of dollars in aid. If outbreaks continue with restrictions on movement extended, more businesses will fail, the numbers of unemployed will soar, and recovery could be extended for years.
Consumer behavior – the way customers interact with businesses – will reflect the consequences of Covid-19 for years, if not longer, and include:
- Reduction in consumption. The exposure to job losses, cutbacks in healthcare access, and the need to draw on personal savings and retirement accounts encourage debt reductions and savings increase, preparing for the next disaster. McKinsey expects consumption to fall 15% over the next three years.
- Increase in distributed workforce and contract workers. Fresh from the losses incurred to pay for facilities and people, employers opt for work-at-home workers and replace people with smart machines.
- Decrease in public interaction. Aware of health risks associated with large groups, consumers prefer take-out food and entertainment for in-house consumption.
- Increase in online activities. The movement away from site visits to online ordering and store-to-door delivery continues. Providers of personal services such as personal care, pet care, and physical training occur in residences.
Marketplace changes from the pandemic threaten market leaders to a higher degree than their smaller competitors due to massive investments in systems and assets focused on the status quo. Embedded processes and bureaucratic management slow, and sometimes prohibit, effective response to new conditions. At the same time, companies that can quickly recognize the new paradigms, understand emerging opportunities, and create new solutions have a once-in-a-generation competitive edge.
Opportunity and Challenge
When times are hard, changemakers- entrepreneurs, executive managers, and project leaders – are indispensable, but in short supply. McKinsey reports that while 90 percent of executives believe the COVID-19 crisis will fundamentally change their business over the next five years. Seven of ten say it will create significant new opportunities for growth, but only 21 percent say they have the expertise, resources, and commitment to successfully pursue that new growth.
What is the source of the missing skills?
The genius of entrepreneurs is thinking outside the box and the courage to pursue an end despite all odds. Businesses lionize entrepreneurs, idolizing them for their ability to “disrupt.” Their role in Joseph Schumpeter’s creative destruction is continually pushing economic evolution ahead, permitting society to grow more productive and more affluent.
Yet most entrepreneurs fail. Despite their founders’ grand vision and determination, only about one-half of new businesses last past five years, primarily because there was not a need for their product or service. As much as their nerve is admired, their aggressiveness and over-confidence is a significant fault.
Successfully realigning a business to the 2020 market and beyond requires more than a good idea – the proof of achievement is actual results.
Enlightened leaders can set an agenda for change and sponsor new initiatives, but the quality that sets them apart is their ability to motivate and rally employees around the company’s macro goals, according to Marcus Buckingham of ADP Research. While executive leaders and project managers share some skills, the scope of their responsibilities is different.
Top executives do not feel personally responsible for coming up with strategic innovations at most companies, focusing instead on facilitating the innovation process. According to Michael O’Brochita, CEO of Zozer inc, their executive responsibilities and constraints, real and imagined, and limited understanding of project management discipline prohibit direct participation in projects by even the most enthusiastic leaders.
If they were on Broadway instead of corner offices, executive leaders would write the plays, set the scenery, and provide the props while others play stage roles. While coordination and cohesion are critical to success, the more critical factor is the individual actors’ performance.
The skills of project management are especially necessary during times of significant change. Long-standing customs and relationships are under unprecedented pressure. Failure to do the right things quickly invariably leads to lost revenues, added costs, and shrinking margins. Project management is essential because it
- aligns results with an organization’s long-term vision. Slow down to speed up is the key to making the right decisions in a chaotic environment, especially in the business environment following Covid-19. Project management skills of data use, analysis, and process avoid strategic missteps and wasted resources.
- delivers real value against the business opportunity. Project leaders focus on producing tangible, measurable results directed to a specific goal, ensuring that the benefit exceeds the cost.
- ensures the quality of the work. Doing the right thing poorly or incompletely is often worse than doing nothing at all. Project failure leads to unrecovered costs, low executive morale, and disengaged employees.
- consistently delivers the targeted result on time within budget. The decision to select one strategy over others typically rests on an outcome with higher benefits than cost. Projects that never end or consume unplanned resources waste competitive advantage, deplete financial coffers, and spread doubt through an organization. Business confidence multiplies when projects meet their objectives as planned.
- promotes a learning organization. Peter M. Singe, author and a senior lecturer at the MIT Sloan School of Management, believes that every company must become a learning organization made up of employees skilled at creating, acquiring, and transferring knowledge. Project leaders actively seek to involve, educate, and energize people for a focused purpose.
- fosters employee engagement. A skill shared by entrepreneurs and successful project leaders is the ability to “sell the dream.” No successful company is the product of a single man’s effort, rather the combined energies of many committed to success. More than seven of ten business executives considered employee engagement as the factor most likely to bring success, according to a Harvard Business Review Analytic Services report.
Role of Project Leaders in Business Transformations
Redesigning an organization’s strategy, services, and culture is more complicated than creating a business initially, especially for companies that have been successful in the past. The challenges range from identifying new market requirements to reconfiguring or abandoning practices that are no longer effective. Transformative projects span a company’s infrastructure, necessarily confronting entrenched corporate fiefdoms, upsetting traditional relationships, and testing cultures.
The skills of project management are especially needed in environments where work and responsibility are remotely distributed. Without assistance, the ability to communicate, innovate, and create across time and space can be significantly impaired. Aligning projects with corporate objectives, creating and managing remote teams, and ensuring that projects progress as planned are a skillset of every professional project manager.
In-house or Independent Project Management
Many organizations employ project managers, either embedded in specific operating units or functioning as separate departments serving the company’s defined corporate departments. In-house project leaders have specific strengths as well as weaknesses:
- Specialized organization knowledge. Project leaders in companies that produce or provide complex products or services have technical expertise through experience. An independent PM may need to acquire similar knowledge before being effective.
- Experience with company culture. Successful companies typically develop a unique culture through trial and experience over the years. The claim, “We’ve always done it this way,” is a typical response when resisting change. An in-house project manager who has been part of the culture may have difficulty overcoming cultural resistance.
- Lack of independence. Employees are known quantities that develop relationships with kindred personalities throughout an organization. The relationships and loyalties may encourage acceptance of new ideas and processes by some but are just as likely to stimulate resistance by others. The tendency to reject new conditions is less potent when change is led by an impartial outsider unaffected by internal company alliances.
- Lower cost. In-house staff typically cost less per unit than qualified, independent consultants. At the same time, employees represent fixed costs that are not easy to reduce when demand declines or ends. Independent consultants, though more expensive in the short term, are more economical in the long term.
- Resource limits. Few companies employ sufficient qualified and experienced project leaders to handle the scope of projects required to design and implement significant transformations. Non-PM staff may lack the skills to deliver project results as planned.
- Myopic perspective. Company PMs naturally focus on their employer’s events and existing needs – limiting their experience – and may lack a long term, broader view of markets and societal trends that are opportunities or threats to the company. While independent consultants are likely less informed about a specific company, they generally bring a more robust view of the current forces affecting an industry or company and potential solutions to emerging issues.
- Resistance to new PM responsibilities. In recent years, a project leader’s role has expanded beyond guiding staff to manage specific projects to conclusions with the right results, budget, and schedule. Today, project managers seek to identify solutions and projects that align correctly with an organization’s vision and deliver quantifiable benefits more than their costs. Most importantly, they educate and encourage teams and employees to be innovative and proactive.
Integrated Consultant and In-house Teams
Many organizations consider project management as an “either-or” decision. Others have discovered a middle ground that provides a better transformation approach: in-house project manager-led teams managed and coordinated by an independent professional project leader. The arrangement retains much of the advantages of an in-house team and adds the qualities of creative, independent expertise at reasonable costs.
The view that external project management is only available through large firms with layers of multi-experienced professionals is wrong. There are smaller project management firms like HotPMO. They specialize in working with company project management teams to “deliver projects aligned with organizational vision and customer need through organizing company teams for rapid delivery.
Specialized project management consultants are adept at eliminating bureaucratic resistance, breaking through structural barriers, and shaking up the status quo, all necessary to complete a company transformation. As outsiders – though with the full support of senior management – the new version of project leaders combines an entrepreneur’s vision and an executive’s ability to motivate with the experience and skills of a leader who “get things done.” They teach and inspire those on a team. When the project is complete, the team is prepared for future projects while the consultant’s costs end.
While the rewards for a successful transformation are great, the risks are significant. Successful transformation and innovation require (1) superior solutions, (2) low risks and costs of change, and (3) employee buy-in. Waiting to see how the new norms of customer experience will affect a company’s profitability and competitive edge is not an option for most organizations. The time to begin is now.