The Resource-based view of the PMO

When we talk about forming, restructuring or reinventing PMOs, we tend to think in terms of delivering a standard set of services that PMOs are known for delivering. We may refer to best practice, such as P3O to help us decide which services we should implement. An alternative approach would be to work with the business to identify what problems exist that need to be solved. This may be done through a combination of SWOT analysis and Gap analysis.

But there is a third way - and it is one that is especially well suited to PMOs who are restructuring and improving their PMOs. The third way is to take a Resource-based view. 

The resource-based view (RBV) is an approach that can be used by businesses as part of their strategic planning process to achieve competitive advantage. The model was defined in the 1980s and 1990s after a series of papers, most notably Wernerfelt, B. “The Resource-Based View of the Firm”, Prahalad and Hamel “The Core Competence of The Corporation”, Barney, J. “Firm resources and sustained competitive advantage”. The premise of RBV is that businesses should look internally to find sources of competitive advantage instead of looking externally for competitive environments. But what does this have to do with the PMO? Everything! How often have you seen PMOs who seem hell-bent on imposing processes on a business that has no interest in following them? What about PMOs that introduce new tools and ways of working only to realize they don't have the skills to maintain and support them? RBV turns this on its head and instead asserts that the PMO would do well to look internally at the resources it has and work out how best to use them to help the business succeed. After all, it is much more feasible and sustainable to exploit the opportunities the team already has in a new way, then it is to acquire new skills. 

The Resource-based view of the firm.

The Resource-based view of the firm.

The resource-based view argues that your PMO should identify and utilize its VRIN resources to maximize the value it provides to the organization. VRIN resources are those that are Valuable, Rare, Inimitable and Non-subsitutable. 

  • Valuable - these are the resources in your PMO that are able to bring value to the organization. Resources can be either tangible (Software, tools, training guides, methodologies) or intangible (reputation, expertise, specialist knowledge, communication networks).
  • Rare - It is not enough for your PMO to have valuable resources - they should be resources that do not already exist in other areas of the business. If the rest of the business already has the resources that your PMO has - why should they come to you?
  • Inimitable - If your PMO is a temporary endeavor (Project or Program PMO, for example), then having resources that are Valuable and Rare may well be enough. If your PMO is strategic though, you need to focus your efforts on the resources that are inimitable - that is to say, the resources or skills that other areas of the business cannot easily complete themselves. These may be skills that your team have acquired that are not easily acquired in the market, or they may be areas that your PMO team can operate more efficiently than any other area of the business - making it inefficient for business area to undertake the work itself.
  • Non-substitutable - Strategic PMOs should also ensure their resources are not easily replaced by resources that are strategically equivalent. If, for example, your resources are all based on a single PPM tool, but there are other similar tools in use in the organisation, your PPM could easily be substituted for its equivalent, leaving your PMO team's value severely diminished.  

Once your PMO has identified the resources that it recognizes as VRIN, then it needs to organize itself around those resources - the resources by themselves will not offer any benefit to the organization. For PMOs to offer a long-term competitive advantage to the organisation, the  PMO team need to harness these resources and can maximize the value they offer to the business.

I encourage all PMOs to recognize their VRIN resources and consider how they can use them to maximum effect. What difference will it make to your PMO? What difference will it make to your organisation? Here are some examples of changes PMOs I have worked with have made once they recognized and focused on their VRIN resources:

  • PMO A recognized that its financial skills were not as strong as those in management finance team, and that the two-teams resources overlapped. They worked with the Finance team to hand off much of the financial analysis work, improving the quality of analysis whilst allowing the PMO to focus on its strengths.
  • PMO B identified its Project Management and Business training capability as unique in the business and something that was highly valued. They dropped some low value processes and services and focused on building their training capability and offering - helping the business build the expertise it needed to expand.
  • PMO C - saw that it had a unique oversight of project and systems dependencies across the business. This was a VRIN resource that was not being utilized effectively. The team defined new service offerings and reports to reduce business risk, improve workflows and better plan cross-silo projects.

What are the VRIN resources within your PMO? Let us know in the comments box below!