The making of an agile organization with projects

I like to contrast the old and new ways of working by comparing two extremes: a hierarchical tayloristic organization and a fully agile organization. As extremes they don’t have much in common. Consequently, transitioning from one to the other is quite an effort and requires a lot of fundamental change including drastically different mindsets. But there is an interim step: the project-based organization.

Let me start with very briefly outlining the two extremes. Note that these are conceptional extremes. Most organizations will be somewhere in the middle.

Tayloristic organization – the old ways of working

Tayloristic organizations were created to efficiently mass-produce for wide global markets. MNCs are their perfection and they served us well for decades. They operate top-down and outside-in by establishing clearly defined roles. They believe in causality and establish themselves by asking What? How? Who?

In our current VUCA times the top-down, outside-in approach increasingly leads to strategy execution failure. Ie. the plans simply do not work and (change) initiatives may run out of steam before achieving something. Because things have changed when they were planned 12 months ago, something was forgotten, or someone was overlooked.

These organizations are optimized for stable and efficient operations. So they are usually changed from the outside by the stereotypical McKinsey-led strategy project every 5 years.

This aggravates strategy execution failure as no change ownership is created and resistance is strong.

Agile organization – the new way of working

In response to VUCA conditions we are seeing a new way working emerge that is based on discovery rather than causality: agile ways of working. Agile organizations are better suited to find, develop, exploit and excel in tight global markets that are so common now.

They operate outside-in from the customer by asking „why“, work backwards to establish the What and then hand over to cross-functional teams (Who) to decide themselves about the best way to do it – the How.

As the teams operate independently to serve their customers and markets, their coordination may become a challenge which might results in execution strategy failure. Scaling agile organizations has its limits.

As the teams own their „How“ they are empowered to adapt their ways of working to continuously respond to external change. So the ability to change is built-in and internalized.

Change ownership is established by default. Resistance to change is absent.

Project-based organization – the middle ground

The project-based organization is a useful intermediary step from the old the new ways of working especially relating to how change is managed and internalized.

The project-based organization leaves the old line organization untouched and creates a new temporary „shadow“ organization to own the change.

The permanent part of the project organization is a Program Management Office (PMO) that defines the project management methodology, guides and tracks projects along the project life-cycle from business case creation and initiation to closure and benefits realization. A pool of internal project managers, often organized as an community, provide the necessary capacity to manage projects internally. Being a project manager is often an additional responsibility and qualification for existing staff, provides career advancement opportunities, and retains top talent.

Whenever possible, the project teams are also staffed with your own people. To enable this, the organization will need to add some excess capacity/head-count. This may be seen as a cost driver but if your PMO manages a continuous stable stream of projects e.g. using project portfolio management this might be less costly than the sporadic big bang externally sourced strategy mega projects.

Even better: the more of your own staff participate in projects, the more you train your change muscle and are on your way to internalize change.

In summary, here are the key benefits of a project-based organization:

  • Learn how to instil change with projects
  • Build internal capabilities and capacity
  • Learn team-work with projects

Getting started

Starting a project-based organization is not difficult. Project management is a well established field of practice. Trainings and external help is readily available.

No big bang approach is needed. You can start with one project and take it from there.

So, what are you waiting for? Take charge of your own projects and become more agile today.

Want to know more? Reach out if you like. I and my colleagues from Thrive8 are happy to help with our many years of experience in setting up project-based organizations and executing projects.

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