In speaking with bank executives, we see a high degree of frustration in their inability to deliver value from projects. One of the key reasons, in our experience, is that clarity of objectives tends to decline over time—a gap forms between the reason for undertaking an initiative and what is ultimately implemented, and it tends to widen over the course of the project.
Why does the gap occur?
Thoughtful analysis reveals that the cause of this gap is rooted in how organizations plan, implement and measure progress.
Features and functions drive requirements. Let’s look at an example from the credit process. A bank initiates a project to implement a new system that will reduce time required to process and approve loan applications. A critical project requirement, therefore, should be a target time for processing applications.
Typically, the project sponsor will hand a business case to a project team that, in turn, gathers requirements for the system and process. This team will develop a list of features and functions and start work on a plan to fulfill those specifications. At this stage, focus shifts to those features and functions rather than cycle time; therefore, what was once the clear project objective is not necessarily the clear priority.
Teams monitor progress based on cost and time. Project managers are trained to gauge project health using earned value technique, which considers consumption of resources (cost) and when those resources are consumed (time). Cost and time are tied to features and functions, while testing and evaluation are monitored with quality metrics such as on-time performance, budget control, defect frequency, etc. While these measures are important, they emphasize product specification as opposed to attaining operational excellence.
In the case of the loan process project, the team needs to track milestones for completion of the system, deployment of the technology into the process, and turnaround time for loan approval. If the steering committee, project team, and stakeholders monitor project performance solely based on cost of building the system to specifications and amount of time spent building the technology, they are only measuring part of the work required to improve processing time.
Specifications, features, and functions crowd out benefit-related activities. Project teams often run out of money and time just in creating project specifications. As a result, activities that drive business objectives—such as training, user support, and technology adoption—are cut from the plan. This is where confidence in the project begins to wane, and stakeholders (who see money spent without a clear line of sight to business results) resist requests for more money. All they hear about in status meetings is features and functions.
Keep the gap from widening
There will always be a gap between what the team is doing and why the team is doing it. The key is to keep that gap manageable. There are three things you can do to “mind the gap” and keep tasks connected to business objectives.
Focus on the goal. A project team must ensure that the initiative’s business goals are clearly defined and describe an “end state” that accomplishes the business goal—and then convert that information into requirements. In the loan cycle example, improvement is more about lending operations and seamless information delivery from the borrower than it is about IT specifications. Deliverables, therefore, should describe operating results and the time at which they will be attained, and they should involve all aspects of the bank’s lending process, from the front line to IT.
Work toward project objectives. Project plans based on achieving benefits look completely different than what most people expect; they are holistic and have more tasks focused on driving change and performance. In our loan example, key project outcomes might include:
- The new system is fully functional
- Processes are focused on speed rather than systems
- People understand and use new processes
- Process stakeholders are charged with improving speed and measured against a concrete goal
- There is a reliable and consistent way to measure loan turnaround time
Note that these deliverables are less about system features and process maps and more about a measurable and tangible outcome.
Keep your eye on the ball. Most projects fail because the bulk of the money and time invested goes towards satisfying specifications. Specification changes (which often have little to do with overall project objectives) are approved along the way, but the project sponsor caps the project cost. Instead, compare every project scope change to overall objectives, and make sure that project leaders use defined control procedures to alert executive sponsors to the impacts of change. If decision makers remain focused on the end goal, then the odds of spending time and money wisely increase dramatically.
It’s a matter of focus and discipline
Research shows a clear link between project failure, unclear project direction, and erosion in project success. The cause is a gap between project goals and the work actually done—and that gap tends to widen over the duration of an initiative. Managing the gap requires a clear understanding of and focus on the objective and end result, as well as planning and measurement discipline that enables project teams to remain focused on the end goal.