Operations | Organisation | Process | Strategy
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All improvement is change, but not all change is improvement. Organisations typically change because they want to improve their competitive advantage. How do we give ourselves the best possible chance of success?
[Listen to audio version, read by David Hodes]
Change resides in the domain of projects and project management. We most often think of the word project as a noun. But treat the word as a verb and we get a more accurate rendition of what projects are there to do—that is, to project a vision of an improvement into the future.
Even the simplest of businesses have many projects running at any given time, whether formally recognised or not. Larger organisations encompass marketing, business development, product and service development, technology, capital, business improvement, finance, HR and the list goes on. More sophisticated organisations govern many, if not all, of these initiatives through a Project Management Office, or PMO. These PMOs are usually organised along the lines of an accepted Project Management Body of Knowledge (PMBoK) and will cover areas such as scope, cost, schedule, communications, HR, risk, quality, procurement, stakeholder engagement and integration.
For what they do, PMOs are neither good nor bad; it depends on the capability of the executives charged with the managerial leadership of the function, and how much authority they have to define and fulfil its mandate. My experience, though, has taught me that the whole idea of a PMO is a necessary but not sufficient condition for delivering value. Those charged with running PMOs easily get side-tracked into getting better and better at their technical proficiency in planning and executing projects while losing sight of the value such projects are there to deliver. Or, as one wit put it, ‘great landing, wrong airport’.
“A PMO is a necessary but not sufficient
condition for delivering value”
Since all TOC implementations are projects, I have long wrestled with the conundrum of how TOC fits into the world of project management. On the one hand there is the obvious connection to Critical Chain Project Management, but on the other, there is so much more: Drum Buffer Rope, The Replenishment Solution, the Logical Thinking Process, Constraint Accounting. And then there is the deep question of how to bring these innovations in productivity into the day to day—how people learn how to use the methods and tools and what kind of organisational design liberates the full flow of value contained in the science of the theory.
Delivering value at scale
A few years ago, I developed a new model for the traditional PMO and called it the Value Management Office, or VMO. The primary purpose of the VMO, as its name implies, is to deliver value. Its architecture is designed to be scalable. At the highest level, it defines and governs global processes for all initiatives and projects. As the ultimate repository of value initiatives, it provides the framework, processes and capabilities required to ensure that the right initiatives are chosen and prioritised from amongst the many, and that they are successfully led and managed to their conclusion.
Importantly, the conclusion of any given initiative may not be the delivery of the end-product or service. Within the VMO resides the governance mechanism to define the stage-gates which articulate deliverables for each stage and ensure cancellation or delay if circumstances prove the initial assumptions invalid. Stage-gates are where projects go to die when they are no longer able to carry the burden of their initial expectations.
Furthermore, a critical part of the VMO is the idea of benefits tracking—that is, ensuring that what was promised as an improvement is actually delivered; and if not, then why. In a fundamental way, the VMO is an instrument of organisational learning and systems thinking that looks not only to improve on the given way of doing work, but to ask the question about how to continuously innovate for better ways. These better ways can be achieved through questioning assumptions about existing methods or inventing new methods based on a vision of what the future can teach us.
At Ensemble, we have designed the VMO with twelve interacting panels—akin to the instrumentation of a complex piece of technology.
These twelve tiles are grouped together under four major themes:
- Definition: defining demand for your capabilities in and across time and place
- Preparation: preparing your resources to supply the capability to meet that defined demand
- Optimisation: optimising the proposed resources in good time, for the duration of the work
- Performance: performing work, addressing both its planning and execution in a coherent and synchronous fashion
In a final grouping together, these four pillars of the VMO resolve into the central idea of ‘Plan the Work’ and ‘Work the Plan’.
Let’s take a closer look at the individual tiles and try to understand them through the questions each tile is designed to resolve:
Value Management Office
| Phase | Tile | Questions |
|---|---|---|
| DEFINITION | Governance & Standards | - Who’s in charge? - Under what authority? - How do policies get set, implemented and changed? |
| Context, Purpose & Scope | - How does the project fit into the bigger picture? - Why do it at all? - What’s in and what’s out? |
|
| ICT Management & Version Control | - What technology will help you plan and perform the work? - How do you control files, code and other project artefacts? |
|
| PREPARATION | Learning, Leadership & Culture | - How will you inspire your teams to learn together? - How will new ways of working be accepted into your culture? |
| Mindset & Behaviour Analytics | - How can you objectively assess team performance? - How do high-performance teams think, feel and act? |
|
| Accountability Hierarchies | - From CEO to frontline, who carries the can? - How do you give people ownership, yet keep control? |
|
| OPTIMISATION | Planning, Scheduling & Process Management | - How do you decide who works on what? - By when? - How do you define and control the development of processes? |
| Resource Management | - What capabilities do you need in your project pool? - How will people come on and off the project? - At what cost? |
|
| Scenario Testing | - Scope, cost, schedule? How do you decide the best trade-offs? - Which scenarios are most relevant to the business needs? |
|
| PERFORMANCE | Ways of Working | - How do you keep everyone in sync? - What are your meeting rituals? - Who attends? - When, and why? |
| Reporting & Analytics | - How do you instrument and control the creation of value? - How do you use data to improve performance? |
|
| Requirements & deliverables tracking | - How do you map completed work to required outcomes? - How do you manage changes to the baseline plan? |
To systemically improve production, Theory of Constraints itself is necessary but not sufficient. To harness its power, it’s best to systematically address all the core ideas contained in the tiles, which represent an operating system for your organisation. By design, you would want an overarching VMO that acts as the repository of standards, processes, governance and knowledge for the organisation as a whole. The architecture of a VMO should allow for strategic business units to have their own satellite VMOs, responsible for maintaining systemwide standards, but developing documentation and guidelines specific to those units where deemed necessary.
Standardisation is not about everyone marching in lockstep within a mechanical system but rather about serving the higher objectives. Think of it as moving up a ladder of capability. You want to put foundations in place that can apply to the next project so people don’t have to reinvent that part of the system every time. Musicians build their technique through scales, arpeggios and etudes but the goal is to use them to help make music. Formalising elements of the operating system expressed in the VMO tiles creates better soil in which ideas and people can learn and grow.
One of the problems of trying to organise work is that of classification. It exists in every sphere of life. Think of a library of books. You can store them by author, by title, by year published, by genre, by language, by number of pages, by the colour of the cover, by the type of paper it’s printed on, by the font used, by author’s birthday, by popularity, by physical size, and on and on it goes. To store and retrieve books in a consistent, universally usable way was a problem largely solved in the nineteenth century by Melvil Dewey and his Dewey Decimal Classification.
“The VMO turns theory into practice
while measuring tangible business benefits”
Unfortunately, there’s no universal agreement on the perfect way to order the world of work. I view the system of the VMO as a constant work in process. If your processes are too rigid and try to cover every eventuality, the organisation becomes sclerotic, unable to improvise when a new situation inevitably occurs. But if you put off the work of defining standards, you lurch from one crisis to the next, never leaving the realm of the chaotic. Jazz musicians typically decide in advance on structure and tempo by choosing a tune and counting it off. They are then free to create something new together.
Building the learning organisation
As I wrote above, the VMO is an artefact of the learning organisation and is therefore subject to the well-worn rhythm of the plan-do-check-act cycle. It’s a theory of how to organise a better way to do better work. And, as the doyen of systems thinking, W Edwards Deming, put it: ‘Experience by itself teaches nothing. […] Without theory, experience has no meaning. Without theory, one has no questions to ask. Hence, without theory, there is no learning.’
The VMO turns theory into practice while measuring tangible business benefits, such as the realisation of value through increased throughput, lower operating expense, superior ROI, faster speed to market and more reliable delivery to promise.
To take the first step down this route, you could get together with a colleague or two and go through all twelve tiles. Simply ask yourselves the questions, noting how you currently address these issues—and how consistently successful your organisation is at handling them.
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What’s next?
The change from standard thinking to Theory of Constraints (TOC) is both profound and exhilarating. To make it both fun and memorable, we use a business simulation we call The Right Stuff Workshop.
We’d love to run it with you. To learn more:
- download the brochure (no email required)
- schedule a call
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“Try not to become a man of success,
but rather try to become a man of value”
—Albert Einstein
