The acronym PMO stands for Project Management Office. POM means Product Operating Model. In this context, POS isn’t Point Of Sale but a more common term. Since I don’t use profanity, let’s say that POS is a Piece Of odorous waste. As a contrarian Agile professional from a non-traditional background, I am not easily impressed by new fads in the business world. I don’t get excited when another concept gets soldered onto the SAFe specification. Nor do I get hyped to put yet another certification on my resume. Making customers happy turns me on. In this two-part article, I’ll be dissecting two heretofore noncontroversial ideas. In this first half, I’ll explain why PMOs must be eradicated. Next week, I’ll explore the Product Operating Model (POM).
Here are the top ten reasons why many believe PMOs are the best way for larger companies to manage projects, along with a brief explanation on why each is wrong:
- Centralized Governance and Standards. It’s believed that having a set of standardized methodologies, processes, and tools across the company is valuable to reduce chaos and increase efficiency. Bah, humbug! A PMO is a bureaucracy. Regardless of the purity of initial intentions, a bureaucracy’s primary goal is to “perpetuate the bureaucracy.” A company should focus on its customers’ needs and design its products and services to meet them. It should organize itself around those products. Any other organization within the company becomes, at best, parasitic and, at worst, counter-productive. As long as you have a substantial budget and efforts not directly tied to a product’s P&L and strategy, you can never guarantee that projects will serve your customers properly and effectively. Decentralize.
- Strategic Alignment. Common knowledge says that PMOs ensure alignment with the company’s strategic goals by evaluating priorities, tracking progress, and terminating low-value projects. Malarkey! What’s better than having a steering committee coordinate with business leaders to coordinate alignment? No committee. Eliminate the PMO and use existing business leadership accountability to ensure alignment automatically. Do so, and you’ll save the company thousands of hours of reporting, coordination, and synchronization activities.
- Improved Resource Management. Many believe only a PMO can make the hard decisions about allocating resources and balancing needs. Poppycock! The best way to prioritize things correctly is to give stewardship to those already accountable for your company’s success, such as product managers or general managers. Suppose you have three competing projects to improve your sales channel communications; give them to whoever is in charge of your sales channel’s performance. She’s the best suited to make the hard decisions because she’s responsible for the outcome of that part of the business.
- Risk Management. Many claim that PMOs’ formal risk assessment and mitigation frameworks will identify and address risks proactively. Hogwash! PMOs do not have a monopoly on caring enough to employ diligence to care for initiatives. If you ever tell your company that these people are in charge of risk management, you are also telling everyone else that they don’t need to worry about it. That’s a bad message that leads to a worse culture.
- Enhanced oversight and reporting. PMOs will tell you they can give executives and stakeholders much better visibility into project performance. Balderdash! Does your CEO care more about a great Ghantt chart on an individual project’s progress or a product line’s profitability? You already have existing reporting structures based on your business objectives. Use those. Adding new reports and meetings will inject noise into the signal of corporate communications.
- Cost Control and Efficiency. Some claim that centralized budgeting and cost management help deliver projects within time, scope, and budget. Nonsense! What’s more important: finishing a project on time or fulfilling a corporate objective like profitability? With a PMO, you’ll need to implement an infrastructure of oversight and governance to ensure those are correlated with the rest of the company. It’s so much easier to use your existing people with their existing accountability. A VP of Product Management may very naturally push out or cancel a project when its perceived impact falls below expectations. In contrast, a PMO would never allow a project to slip without immense handwringing or excuse-making. Why create a body of unaccountable functionaries? That’s far from efficient. Put the control where it should be.
- Knowledge Sharing and Best Practices. PMOs act as a repository for project knowledge, facilitating lessons learned, best practices, and successful methodologies. Horsefeathers! This is the best argument for PMOs, but it’s not strong. If you want best practices gurus in your company, don’t centralize them and give them control. Distribute them throughout the organization. I’m an Agile Coach, so you might expect me to propose hiring many coaches. The best coaches are file managers. Instead of hiring an expert project manager, help your existing cadre to improve. Hire better talent. You may want a handful of coaches to train but do not take the responsibility away from your people. Remember how your father taught you to ride a bike? He didn’t ride it for you. He instructed. You climbed on it. He held it steady, ran alongside you as you peddled, and then let go. If you fell, he helped you understand what you did wrong. You both iterated with the goal of gaining mastery. Take the same approach to training in your company. Do not take pride in the quantity of your specialists. Make all your people cyclists. A PMO keeps the training wheels on forever.
- Scalability for Complex Organizations. In larger companies, the volume, diversity, and complexity of projects can overwhelm individual departments, whereas a PMO offers scalable processes and centralized coordination to handle complexity. Tommyrot! You might say that you are saving on headcount, but the requirements of governance, communications, and the risks of stuff happening that’s not directly tied to stakeholders far outweigh any perceived efficiencies. Why create new organizations when you already have existing structures? Do not deactivate or otherwise hurt the accountability in your system by feeding a new organization. I know of an F500 company with a marketing infrastructure product managed by the PMO called “TMP.” I asked what the acronym stood for. No one remembered, but the T represented “Temporary.” They had been using it for ten years. Once there was an approved budget, it took on a life of its own. By the time I arrived, TMP’s limitations were hurting the company, but no one dared suggest they replace it with an off-the-shelf solution that would have been better and much less expensive. The PMO wasn’t accountable for cost-effective real-world results–just scalability and management efficiency.
- Stakeholder Communication. I’ve heard that PMOs ensure clear, consistent communication between teams and stakeholders. Rubbish! It’s these additional communications that eat up time and cause confusion. If you put the work under the existing stakeholders, your existing communication channels will give you the same or better results without the extra costs.
- Driving Organizational Change. PMOs are supposedly the best way to instigate and support change management initiatives by coordinating efforts across teams and ensuring project alignment. Ridiculous! See the story bike-riding analogy above. Do you want to create change in your IT department? Make that change a defined objective, base the IT VP’s compensation plan on it, and you’ll see change. Again, you may need a few experts to teach and assist your people before they can take the training wheels off. Never, never, never rely on an organization to drive change from the side or the bottom. Real, effective change comes from the top. The only way to make it sustainable is to alter the culture. It needs to be deep and consistent.
In summary, stop thinking of projects as projects. They should be products. Manage them as such. Each of them should be well defined, have a live cycle, target customers (internal or external), and be designed to fulfill specific jobs that those customers need to do. A profit means you are fulfilling your customers’ needs at a cost below their willingness to pay, so it’s the best way to measure your products’ success.
You reply that you have a pure project like adding more office space or upgrading your accounting software to a new version. Your office and your software are really products with specific customers within your company. It isn’t an expansion project but adding capacity to an existing office product. It’s a new feature for your accounting product. How much should you spend? What should the deadline be? Launch your features to take care of your customers’ jobs and earn a profit. Don’t know how to generate an income statement for stuff like this? Ask your CFO. I learned how to do this way back when I was an undergraduate in a managerial accounting class. The techniques are well known.
Product thinking simplifies everything. You have defined customers with jobs to be done. You have a target profit margin. This gives your people all the tools they need to select staffing levels, determine the timing for the enhancements (not projects), and everything else within their sphere of leadership. Your boss cares about your customers being happy and you meeting your profit target. You should have the freedom to manage everything underneath to deliver your objectives, and so should your people. Can you see how superior this approach is compared to spending time and attention to coordinate with a 3rd party PMO for projects being done within your area?
If you are the CEO, you should see how converting every project into part of a product portfolio increases your odds of accomplishing your business objectives. Give your people more freedom to act within an active accountability culture, and you will be 10X better off than hoping your PMO will bring in your projects on time and budget without burdening your firm.
If you show me a company with a large PMO, I’ll show you a company with extreme dysfunction. The very best PMO out there can be described as a nice bandage over an open wound. It’s so much better to heal the patient and toss the bandage.
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