Thought Leader: Welcome to the project economy

Every aspect of our lives is becoming a set of projects, so we need to know how to manage them, writes Antonio Nieto-Rodriguez, professor in project and strategy implementation.

Ideas without a project are wishful thinking. 

Good ideas are not enough to succeed in the business world. Value is created when ideas are put into practice. Focusing only on daily business – always doing the same things – will lead to failure.

Organisations need to invest in the future business, through projects, mergers, acquisitions, digital transformation, international expansion, systems implementation, capabilities building, operational improvements and compliance. The future growth and long-term realisation of organisations’ objectives are linked to the successful execution of projects.

Projects are becoming the essential model to deliver change and create value. 

All our conventional organisational and management models are being severely impacted, and traditional activities in organisations will soon be carried out via automation and robots.

We are witnessing the rise of the project economy. The so-called ‘gig economy’ is driven by projects. This massive disruption is not only impacting the way organisations are managed – every aspect of our lives is becoming a set of projects.

There are many reasons behind this and tremendous consequences to the disruption it is causing in our lives. Some leading organisations, governments, schools and universities have already embraced projects as the way to deliver on their strategy and their ambitions. Individuals and organisations must develop the competencies required to transform and thrive in the new digital and project driven economy.

Today, the people who are struggling with projects are at the top of organisations.

In the past, most issues around project management were raised by IT departments or project management offices; today they are raised by senior leaders.

The advice I give them is straightforward:

• Have a process to select projects.

• Say “no” to many of them.

• Focus on the key initiatives and allocate your best resources accordingly.

• Build project-management competencies, including among senior executives.

• Develop related career paths.

• Adjust incentives and training.

• Set up a project management office.

The main challenge is always in the implementation; where the CEO is behind a project, things tend to happen much faster and are more sustainable.

I predict that, by 2025, senior leaders will spend 60% of their time selecting and driving projects.

Project management skills will be a must-have skill for any job in the next decade. It will also be an accelerator of growth in underdeveloped areas of the world.

The number of projects initiated by organisations and governments has increased exponentially over the past decade, accelerating in the past five years – but the failure rate is 70%. Senior leaders recognise the challenge.

Today’s business and economic climate makes it vitally important to choose the right initiatives and to focus on implementing them quickly. Organisations cannot afford to run thousands of projects without prioritisation and a disciplined approach to execution. Many organisations and governments are becoming project based in order to remove old silos and become more agile.

Three key challenges that often cause projects to fail: 

1. Misalignment of the organisational model with changing reality

The power in a traditional organisation (resources, budgets, and decision-making) still resides with the department heads, but the most important, strategic projects have become cross-departmental, requiring the sharing of power in the pursuit of what is best for the business.

More often than not, management underestimates or completely ignores this, organisations fail to evolve as quickly as the business drivers and a large proportion of strategic projects fail.

2. An absence of appropriate governance to support strategy execution

Although the CEO and executive board are ultimately responsible for all company initiatives, most companies lack clearly assigned responsibilities for effective company-wide strategy execution.

During recent research, only 52% of the companies I observed had an established project management department and only 23% had a project portfolio management office, which is the body that should coordinate, prioritise and monitor the company’s entire strategic initiatives.

3. Lack of focus

Remaining focused is challenging and requires discipline. If a company’s top management is not focused, this significantly increases the possibility that the rest of the organisation is unfocused (and vice versa).

Research suggests that top executives often do not know their own company’s key strategic initiatives and so invest in many projects, thinking that they will increase their chances of success. This thinking leads to lack of understanding of the real priorities for the business.

In addition, most companies have trouble cancelling projects that are not doing well. In my entire career, I have only seen a few projects terminated and only because the company went bankrupt.

One reason is that companies don’t want to admit to the failure of a project, especially where a project has a senior executive as a sponsor.

The reluctance to admit to failure contributes to the increase in projects and gradual decrease in focus within the entire organisation.