Supervising Strategic Projects
    RESEARCH
  • Governance

Supervising Strategic Projects

Effective governance of projects we don’t (fully) understand

 

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Sustainable business growth depends on the successful management of strategically important projects that are often technically complex and invariably involve balancing a range of stakeholder interests.

In a perfect world, such projects would be overseen by a governance team that was involved 24/7, was fully au fait with the stakeholder dynamics, had a deep knowledge of the technological aspects, and even understood the jargon.

In the real world, this rarely happens. Boards of directors or steering committees often have only a superficial or even peripheral view. Board members may be part-timers, very busy running their own businesses, or senior executives without close hands-on involvement or relevant technical know-how, so how can they effectively provide oversight and leadership given their limited time and incomplete expertise?

A new paper from Christoph Loch, Director of Cambridge Judge Business School, Magnus Mähring of the Stockholm School of Economics, and Svenja Sommer of HEC Paris, explores how board directors and senior executives on project steering committees can exercise leadership and effective oversight and can keep projects aligned, even with limited time, through focused understanding of the key logic and drivers of the project.

Steering committee members can often have a nagging and recurring sense of anxiety about some of the organizations’ most strategic projects – and be frustrated by their ability to influence such projects or even get useful information to begin with. So, how can they effectively manage the surprises and crises that inevitably arise in the life of a difficult project?

In this paper, the authors suggest a few simple rules that boards and steering committees need to follow. Based on interviews with 17 CEOs and other senior executives from various industries ranging from auto-making to pharmaceuticals to software (and involving both successful and failed projects), the study offers detailed and actionable insight into how steering committees can better carry out their important governance and oversight responsibilities.

Based on their research the authors identify these five major themes for addressing steering committee supervision challenges:

Steering committee composition

  • Key stakeholders represented, but not more than six to eight people
  • Every member understands his or her own role of what he or she can contribute
  • Agree on meeting rules and procedures for negotiation and decision making
  • Invest in relationship and trust building 

Goal agreement

  • Articulate conflicts of interest and produce workable and stable compromises: build win-win spirit
  • Translate desired business contribution into clear, measurable operational deliverables (measures to be developed later by the team)
  • Produce detailed scoping document. This a candid working document covering: required actions, rough budget, important conflicts and trade-offs among goals, required expertise, key barriers and risks, and areas of insufficient knowledge 

Project team motivation and control

  • The ideal project team has right competence mix and experience
  • Incentives: not only quantitative indicators but also process goals—professionalism, communication, and resourcefulness
  • Motivation: avoid both micromanagement and purely relying on trust (verify key trade-offs), build culture of openness, coach the project team 

Intelligence gathering

  • Invest in focused understanding: understand logic and risks, challenge assumptions, force translation of technical issues into business issues, have first-hand information
  • Get truthful information: maintain no-blame culture, do not rely only on outcome incentives
  • Get outside information: field visits, external visits, and so on, but be wary of external expert opinions (which have their own biases) 

Managing surprises

  • Establish steering committee problem solving procedures at the outset
  • Get informed quickly insist on proactive reporting
  • Understand and ‘get to the bottom of’ the reasons and consequences of change
  • The project team is responsible for generating solutions
  • Make a clear decision
  • Use experiments to learn and explore available approaches 

In the real world, in organizations of all types, projects fail for many reasons, but ineffective oversight and governance is very often the cause. From the typical ‘late and over-budget’ refrain to complete project collapse; whether failed re-organizations, product launches that bomb, or IT project calamities, negative headlines often flow from events or decisions that escaped the attention of otherwise-engaged members of the board – or were tackled by the board far too late.

This paper shows how strategic projects can be supervised effectively through proactive analysis, by working with the project team to generate solutions to problems as they arise, and by following the dictum: “there are no dumb questions in arriving at the smart answer.”

Access the full paper: ‘Supervising Projects You Don’t (Fully) Understand: Lessons for Effective Project Governance by Steering Committees;’ Christoph Loch, Magnus Mahring, Svenja Sommer; California Management Review, April 2017


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