Authors: Christoph Loch (INSEAD), Magnus Mähring (Stockholm School of Economics), and Svenja Sommer (HEC Paris)
Publisher: INSEAD Working Paper No. 2011/55/TOM
Date Published: April 2011
Major initiatives are often a cause of significant friction between the senior executives who oversee a project and the managers who are charged with implementation.
Often drawn from around the firm to sit on a supervisory steering committee, the senior executives are on the hook for a project’s success. Typically, though, steering committee members lack the time, the proximity, and the expertise to understand all the issues and details involved in a project — and many struggle to provide the right level of guidance and supervision.
For their part, the project managers, who are directly in charge of the effort, often complain that committee members procrastinate on crucial decisions, fail to grasp the big picture, and resort to bean counting. Too much involvement by powerful but uncertain senior executives can be even worse, however, resulting in poorly conceived ideas that can be pursued for too long, wasting resources and opportunities.
This paper provides a five-point framework for giving big, complex projects the senior leadership they require — not in terms of operational management, but rather in terms of strategic direction. By holding themselves to a clear process and guarding against possible traps, the authors write, steering committees can give project teams the benefits of top management’s perspective and experience without creating roadblocks.
The researchers interviewed 17 senior executives (three from construction and engineering, six from R&D or systems development, and eight specializing in organizational change and IT projects). All 17, some of whom were CEOs, had ample experience in both project “disasters” and successes. The projects they were overseeing were all innovative and complex (for example, introducing new electronics in a luxury car or developing a diagnostic test for cancer based on blood markers), giving rise to stakeholder differences or conflicts. To include the contrasting point of view of those who supervise startups, and have a much more direct role, the researchers also interviewed five venture capital partners.
Each interview lasted between 60 and 90 minutes. Afterward, the researchers independently analyzed the transcripts and recordings, and coded the executives’ responses to reveal patterns and themes.
The authors identified five areas on which steering committee members should focus to lessen tensions and increase effectiveness.
1. Steering committee composition and self-management. Steering committees should include important stakeholders, create their own governance systems, and work as a team. Too often, however, they are the bloated products of organizational politics, filled with representatives from too many parts of the business. One executive in the study described a misfiring steering committee that had some 20 members, compared with the ideal size of six to eight (with only one or two alpha personalities).
2. Goal agreement. Team members should clarify and agree on the project’s objectives, producing workable compromises. Although vague goals are easy to agree upon in the beginning, they often merely postpone unpleasant confrontations and create future pitfalls, the interviews showed. To avoid problems down the road, steering committees should begin their work by producing a detailed scoping document, with the help of subject matter experts, stating the business goals and translating them into operational aims. This document can also outline a rough budget for the project; highlight the major barriers, risks, and conflicts; and speculate about areas of insufficient knowledge and possible surprises. It should be detailed enough to serve as a guide, the authors write, and candid enough to function as an “internal work statement,” rather than as a political document “to impress outside parties.”
3. Relationship with the project team. Committee members should decide how to evaluate and motivate those charged with executing the project. Formal incentives can be dangerous because they set measurement standards that may turn out to be inappropriate. As one executive put it: “When you are doing new things in the organization, bonuses are terrible. Bonuses assume that you know where you are going.” The authors advise judging and rewarding the project team’s activities — how it schedules meetings, for example, or approaches problem solving — rather than its outcomes. To keep project teams motivated, steering committees should find a middle ground between micromanaging and dodging the tough calls.
4. Supervision and control. This area involves keeping the project team on track within the context of the company’s goals. Steering committees should question assumptions throughout the project, the authors write, and insist on translating technical jargon into business language whenever possible (in other words, can the marketing department sell what the technical department is inventing?). “Don’t take things at face value, and don’t stop questioning because it is inconvenient,” said one CEO.
5. Managing surprises and changes. The last point relates to the need to modify the project’s direction when objectives or opportunities shift — and they always will, at least to some extent. When large modifications are needed, small-scale experimentation, paradoxically, often leads to breakthroughs, the authors note. And when surprises occur, the best response is to get insight into why. Rather than focus on final results, the authors conclude, steering committees should make use of “intermediate insight milestones” to keep plans flexible and moving forward.
A five-point framework can help senior executives develop a better role for managing major initiatives. The guidelines foster strategic involvement and take aim at destructive meddling.