The Poor Track Record of PMOs
There have been many studies that have attempted to explain the poor track record of PMOs. Some of these studies produce findings of fact that are backed by scientific research methods and large sample sizes while other less scientific studies offer inferences for consideration that are backed by allegorical case examples and reviews of industry literature. Though insightful, what most of these studies fail to capture is that all over the world, there is a consistent misunderstanding and misapplication of the PMO both as a business unit and as a solution to the project-related issues and opportunities that businesses and organizations face. Hence the poor PMO track record of performance.
All over the world, there is a consistent misunderstanding and misapplication of the PMO...
- 9 out of 10 new PMOs are not Business Driven in their initial setup
- 5 out of 10 PMOs undergo three churns in planning before becoming Business Driven
- 3 out of 10 PMOs never become Business Driven and are either shut down or continued as low-value support organizations
- 76% of leadership team members do not know the purpose and value of their PMO
- 82% of PMO managers have an incorrect view of the purpose and value of the PMO
Despite skills in project management and the abundance of industry advice for how to start a PMO, almost all new PMOs are at high risk the moment they are started. This warning is echoed by Seweryn Spalek2 “…there is a significant number of PMOs struggling to survive in their toddler age.” Spalek goes on to suggest that new PMOs can be broken down into two risk groups; the “startup through the first year” PMO and the “two to four years” PMO. This is consistent with PMO research conducted by this author which has shown that 50% of new PMOs fail. And by the fourth year of these PMOs, they will have been fundamentally re-planned and corrected or shutdown altogether.
When viewed through a project management lens, such PMO failure statistics can be hard to believe. But when viewed through a business management lens, these findings are much easier to understand and reveal a basic business management premise. Until the ends to be achieved of an organization are first well-established, there can be no sensible discussion of the means to the ends. Yet, all over the world this is precisely what happens in the initial setup and ongoing management of PMOs. An all too familiar outcome, defeat is snatched from the jaws of victory.
The PMO Mandate / PMO Practices “Magic” Quarter
That new and emerging PMOs are well-intended is of no debate; that they are well-planned is an entirely different matter. A good way to understand, examine, and prevent this phenomenon is through the use of the PMO Mandate / PMO Practices “Magic” Quarter.
Figure 1: The PMO Mandate / PMO Practices “Magic” Quarter
The PMO Mandate / PMO Practices “Magic” Quarter is a 2x2 analysis construct that depicts the degree to which the PMO mandate and the PMO practices to achieve the PMO mandate are established. The top-right quarter is the area of the grid that is magical. PMOs in this quarter have well-established PMO mandates, specific PMO practices to achieve those mandates, and almost always achieve and sustain a measurable PMO success. The other three quarters of this 2x2 analysis grid offer little magic. PMOs in these quarters experience execution difficulties and struggle with establishing and building upon a common view of PMO need.
As shown in Figure 1, PMOs often go through several phases before landing in the top-right “Magic” Quarter where they are truly driven by business needs. After a new PMO has been started, the first of these phases is the People-Process-Tools-Training phase (P-P-T-T). This phase is characterized by a rush to get things going. The business reasons that justified having a PMO have been, by default, set aside if not forgotten and the focus of the PMO is primarily to quickly staff the organization (people), document a project management methodology (process), implement a project management platform and supporting productivity suite (tools), and roll out a program to develop project management skillsets (training).
Hence, the position of the P-P-T-T phase of the PMO in the PMO Mandate / PMO Practices “Magic” Quarter analysis grid has moved to the right on account of establishing PMO practices, but not upward as the mandate for the PMO in terms of purpose, value of achieving that purpose, and success measures have yet to be established. The PMO setup tasks are completed and the honeymoon period of the PMO comes to an end. There is not a lot of fanfare or celebration, because the initial enthusiasm for the PMO has been replaced by frustration with the PMO on account of complex tooling and burdensome methodologies. Though such frustration is often unwarranted and it could be argued that the PMO has made progress toward a better state, the PMO manager is replaced nonetheless and the PMO enters the Q-W-B-S phase.
The Q-W-B-S phase of the PMO concerns itself with establishing quick wins, buy-in, and support for the PMO. The new PMO manager, often higher level and more experienced than the first PMO manager, makes and achieves a list of PMO quick wins and successfully promotes those wins to the key members of the leadership team. While this does reestablish buy-in and support for the PMO, it does little to advance a well-established PMO mandate. Again, the PMO has moved further to right in the 2x2 analysis grid, but has yet to make any upward progress. With renewed enthusiasm, the PMO gets another bite at the apple and enters the O-P-M-M phase.
The O-P-M-M phase of the PMO seeks to address organizational project management maturity. With the initial PMO setup activities around people, process, tools, and training all or mostly completed, the PMO manager pursues the industry thinking about PMO maturity, a thinking that views and measures PMO maturity in terms of project management capabilities exhibited but not business outcomes achieved. The PMO expends precious time, money, and executive capital assessing plan-driven project management skills and developing plans to improve those skills. For some PMOs, the areas of skill improvement are driven by specific and pressing business needs, but for most PMOs they are not. Rather, skill improvement areas are identified and driven by colorful radar charts aligned to the Knowledge Areas of the PMBOK Guide. As a result of this phase, the PMO has journeyed far to the right in the PMO Mandate / PMO Practices “Magic” Quarter analysis grid, but not much higher. Almost always, this phase doesn’t end well for the PMO manager.
Next is the N-G-V-D phase of the PMO. In this phase, a new PMO manager is hired and tasked with creating a Next Generation, Value-Driven PMO. The formal and rigid methodologies of the PMO are relaxed and in some cases redeveloped and the focus of the PMO is on being relevant and valuable to the business. PMO success is almost within grasp, but for far too many PMOs what follows next is a basic business management mistake. Consider the advice of the PMO practice of a leading, worldwide consulting firm that advocates to PMO managers that in order to establish a next generation PMO you must make your value proposition known and then compel its adoption. So rather than eliciting from the leadership team the specific value that they need and want their PMO to deliver and at this point in time, the PMO puts forth what it assumes is of value to the leadership team. Though PMO success has yet to be achieved, this phase of the PMO places the PMO higher up in the “Magic” Quarter 2x2 grid with leadership team discussions increasingly focused on purpose and value which positions the PMO for its next phase, the S-P-M-O phase.
In the S-P-M-O phase, the placement of the PMO is elevated within the organization driven by the thinking that the higher up in the organization the PMO exists, the more strategic and hence valuable it will be. In many respects, this thinking is quite right. PMOs that report to the C-level or that are placed high in the organization are inherently strategic and valuable because the people and functions they support are responsible for strategy execution and value delivery. But it would be a mistake to suggest that PMOs lower in the organization are merely tactical and therefore not strategic. To the contrary, lower level business-driven PMOs are almost always highly focused, strategic, and deliver value, but relative to the people and organizations they support. For example, a line of business PMO that resides in a division may be far more strategic, valuable, and important to the success of that division than any higher leveled EPMO, Strategic PMO, or Change Management Office.
As the S-P-M-O phase runs its course, it becomes apparent to all that the potential scope of the Strategic PMO and areas of strategy execution and value delivery for which the SPMO can be missioned are too much for any organization to simultaneously handle. Consider the following areas of improvement for which a Strategic PMO can be considered:
- Strategic Alignment
- Organization-wide Idea Capture
- Portfolio Management
- Strategic Project Execution
- Demand Prioritization
- Resource Allocation
- Program Delivery
- Benefits Realization
- Business Agility
- Change Management
Simply put, if everything is important then nothing is important. Trying to adhere to a theoretical Strategic PMO model that depicts the potential drivers for a PMO, the business process areas that the PMO could encompass, the services that the PMO could provide, and the benefits that the PMO might be able to realize becomes an impossible mission. Such a mission would exhaust the PMO and leadership team and lead to a state of frustration and entropy. The Strategic PMO is higher up in the PMO Mandate / PMO Practices “Magic” Quarter analysis grid, but it still must find a way to discover and codify what the leadership team wants to have accomplished. Acceptance of this challenge places the PMO in the B-D phase.
In the B-D phase, the PMO becomes Business Driven. The PMO no longer puts the cart-before-the-horse with well-intended ideas to pursue. Instead, the PMO elicits from the leadership team that which they want the PMO to do. This approach codifies a PMO mandate that is established by the leadership team itself, not the PMO. The leadership team selects the top, project-related issues and opportunities to be addressed, assesses the value to the business that this would deliver, and establishes the success measures that serve as fulfillment of the PMO mandate and as the accountability measures of the PMO.
The PMO no longer seeks to sell itself or convince others of its value. In fact, the PMO experiences an epiphany and recognizes that its efforts to sell the PMO and compel its adoption, though well-intended, are misguided and a tell-tale sign of poor business acumen and ineffective leadership. At this point, the PMO has found its way to the top-right quarter of the PMO Mandate / PMO Practices “Magic” Quarter analysis grid. The PMO mandate has finally been well-established and PMO practices to specifically achieve this PMO mandate are now developed and advanced.
…efforts to sell the PMO are a tell-tale sign of poor business acumen and ineffective leadership…
Though some PMOs avoid this arduous journey, most do not. Rather than being business-driven from the start, the vast majority of PMOs are driven by other rationale such as the latest industry buzz, the newest PMO model, or perhaps just a satisfying experience that a PMO manager had elsewhere. After a few churns, a few years, and regrettably a few PMO managers later, success is found. Important to note, the PMO phases that are depicted in the PMO Mandate / PMO Practices “Magic” Quarter analysis grid do not represent a roadmap or maturity model, just poor business management. But, it doesn’t have to be this way.
The Leadership Team Determined PMO Mandate: Nemawashi Technique
For highly collaborative environments, many management experts advocate the use of servant-leadership techniques. Arguably, a PMO is one of the most collaborative environments within an enterprise and a PMO manager, by default, is a servant-leader. Yet, though servant-leadership is a naturally fit for the PMO and PMO managers are typically aware of the techniques, few actually use them. Nowhere is this more evident than in the establishment of the PMO mandate.
For most PMOs planning is rushed. The PMO manager drafts a charter and reviews it with their superior. The charter is then wordsmithed and forwarded to the leadership team for signoff. At the next leadership team meeting, the PMO manager is given a small amount of time to present the PMO charter and field any questions. Permission to proceed is granted and the PMO is off and running. But is the PMO running in the best direction and has the leadership team been effectively involved?
A much better approach for PMO planning is a servant-leadership technique called Nemawashi. Made popular by Toyota in their managerial approach known as The Toyota Way, Nemawashi is a way of making effective, consensus-based decisions, thoroughly considering all options, and then implementing efficiently.
Figure 2: The Leadership Team Determined PMO Mandate: Nemawashi Technique
Using the Nemawashi Technique, the PMO manager acts as a servant-leader and facilitates the establishment of a leadership team determined and unanimously agreed to PMO mandate. The PMO manager doesn’t create the solution and sell it to the team; rather the PMO manager creates the environment from which the solution can be elicited by the leadership team itself. There are three steps to the process:
- The PMO manager meets with each member of the leadership team served by the PMO and obtains their individual input on (i) the top 3 issues that they would like the PMO to address, (ii) their vision of the PMO, (iii) their mission for the PMO, (iv) goals and measurable objectives that serve as successfully addressing the top 3 issues, and (v) an assessment of the value to the business that would be realized on account of addressing their top 3 issues.
- After all individual inputs are completed the PMO manager facilitates the leadership team in their discussions, sharing of ideas, and thorough review of all individual PMO mandate inputs.
- The PMO manager has neither an input nor a vote, but facilitates the consideration of all inputs and final consensus position which might be accomplished in one session or may take several meetings.
Naturally, no two leadership team members will have the same input and as a group they will bring a wide variety of competing ideas worthy of consideration of which many cannot be pursued. Hence, all the more reason to have not just a good decision for what will become the PMO mandate for the current report period, but a good decision making approach.
As shown in figure 3, consider the PMO mandate of a new PMO in a midsize enterprise. Using the Nemawashi Technique, the PMO manager facilitated a leadership team determined and unanimously agreed to PMO mandate. While it is unlikely that this mandate would be appropriate for any other company, it was exactly what this leadership team wanted.
Figure 3: PMO Mandate, Midsize Enterprise
With research studies and industry literature citing the poor track record of PMOs, especially in the first few years of the PMO, one can’t help but wonder why so many PMOs struggle with finding and sustaining PMO success. With three out of four members of the leadership team not knowing the purpose and value of their PMOs, one could argue the premise that there is a consistent misunderstanding and misapplication of the PMO. But a better argument is what to do about it.
Enter the PMO Mandate / PMO Practices “Magic” Quarter. This 2x2 analysis construct considers the degree to which a PMO mandate and practices to achieve the mandate are well-established. Viewing PMOs in this manner both positions and explains what it means to be a Business Driven PMO and, if not driven by specific needs of the business as determined by the leadership team, the various phases and experiences that PMOs are likely to have. And, it is not only that being in the top-right quarter where PMO purpose and practices to achieve that purpose are well-established is magical, but that being in any other quarter is not.
Collaborative environments offer special challenges and the collaborative, complex nature of PMOs with so many meritorious project-related issues and opportunities that could be pursued call for not just good decisions, but good decision-making approaches. To steward consensus building and effective decision-making, PMO managers must have not only good project management skills, but business acumen and leadership skills as well. To that aim, the Nemawashi Technique is a highly useful leadership skill for PMO managers to develop and use. It engages the leadership team and ensures that the ends to be achieved of the PMO are first well-established so that then, and only then, the means to the ends of the PMO can be advanced.
PMO managers, leadership teams, and those involved with PMOs that are experiencing a PMO success are in select company and deserve praise. Those that aren’t enjoying success are hardly alone and should not despair or give up on their PMO. Rather, they should try a different approach, the Business Driven PMO approach.
1 This whitepaper is based on books and articles by the author. See:
- Mark P. Perry, Business Driven PMO Setup – Practical Insights, Techniques and Case Examples for Ensuring Success (Plantation, Florida: J. Ross Publishing, 2009)
- Mark P. Perry, Business Driven Project Portfolio Management – Conquering the Top 10 Risks that Threaten Success (Plantation, Florida: J. Ross Publishing, 2011)
- Mark P. Perry, Business Driven PMO Success Stories – Across Industries and Around the World (Plantation, Florida: J. Ross Publishing, 2013)
- Mark P. Perry, Why PMOs Fail (August 10, 2017)
- Mark P. Perry, The Purpose of the PMO (August 11, 2017)
- Mark P. Perry, PMO Value, (September 8, 2017)
2 Seweryn Spalek, S. Do you really want your PMO to survive? (Newtown Square, PMI: 2014)