Focusing on projects ruins your business

I have seen product development projects used as tool to extract results from the organization. It has been chosen to solve an organizational problem. It worked in certain conditions, but when the organization grew and outside competition became harder yesterday’s solution became today’s problem.

I try to explain my point with a lifecycle of an imaginary organization. My real life example companies vary from 15 people to thousands.

Startup phase

Once upon a day a group of engineers started to develop a product. In the beginning everyone knew each other and there was fluent informal communication. The techno-cultural foundation was laid. The business started to grow.

Growth and the first coordination crisis

Money comes in and the organization grows. There is more coordination work, so some developers become managers. The organization develops “naturally”, creating specialized roles and competences. There are more customers and releases. Ownership of the product gradually becomes scattered. There are bottleneck resources.

At some point the “professional project management” steps in. It is solving the coordination problem, one project at a time. The project manager has permission (by role) to demand results. She becomes powerful member of the organization, getting credit for creating order and bringing money in. Often the personality of the project managers support this specialization. Portfolio management still works or is less important. Business does well.

This is a critical bifurcation point, a leadership crisis of unrealized significance . There is still an opportunity to start a Lean evolution. My example goes to the mainstream way. From the psychological perspective this is the easiest solution. It requires least personal change from the most of the people.

Gradual Scattering of the organization

Eventually there are several parallel and sequential programs going on at the same time. Each project is re-built and re-learned every time, because they surprisingly are different from the previous one. The projects becomes a separate powerful dimension of the organization.

The projects become a kind of device extracting money out of the complex and uncontrollable organization. The business management alienates from the R&D, because the real value seems to come from the project device – the development can be replaced, off-shored, outsourced. Long term development of the R&D is seen risky and difficult. Frustration and distrust grows at both sides.

You may recognize one or more of the following characteristics:

Short term rules. Quick fix. Avoid conflict. Nonproductive feedback. Gap between business, customer and development. Continuous reorg. Exploit development. Specialization and separation of responsibility. Cling to nonfunctional ERP. Clear social classes within the organization. Big power differences. Command and control. Waiting. Big plans. Wish for predictability. Slow and vague feedback. Learning and improvement don’t work. Projects compete of resources. Cost management. Number management. Measure hours. Maximize resource utilization. Knowledge and power seems always to be elsewhere.

Market saturation and the productivity crisis

Now the product (family) is growing old. And there is competition. The business management is facing a situation where the portfolio management is very difficult because of the complicated product and organization; lack of transparency and flexibility.

Even in this situation, I have seen the management to grab the tool that used to work, trying desperately to improve the project management. This is very painful for the project managers.

My point here is, that in product development you may do excellent “conventional” projects, and fail. Even fail because the projects have been successful.

My vote for the one word root cause would be overspecialization.

Please comment and share experiences, I have not emptied this subject.


9 Comments on “Focusing on projects ruins your business”

  1. Scott Duncan says:

    An interesting book on the progression of organizations and management style from starup to maturity is Miller’s “From Barbarians to Bureaucrats.”

  2. Hi Ari,

    love your post, and would love to see your suggestion to not fall in to this trap, which probably involves “change your people or change your people” – the inverse of Martin Fowlers’ change your organisation or change your organisation.

    I have seen and experienced your characteristics as well. Portfolio management is a rare phenomenon and it does not have to be difficult – it can start as simple as an old fashioned planning board with people, projects and days/weeks/months (depending on how big or small you want your projects to be) with a small weekly meeting. In fact, often it is even worse – many organisations I walk into don’t even know what their projects cost (ask a project manager the cost of all the salaries in his or her project: most of them don’t know), let alone what their projects are worth.

    I guess your posts suggests (as Scott’s Comment) that an organisation needs to change its culture over time as it co-evolves with its market. Once you’re aware of this, it’s easy to spot, but going from not being aware to being aware is not obvious…

    Looking forward to see you again at Scan-Agile this year,


  3. Ari Tikka says:

    Thanks for the feedback and expectations to say something about the root causes. I hope to have time to keep it short 🙂
    See You at Scan-Agile!

  4. Klondike says:

    Wow, that’s a really clever way of thkninig about it!

  5. Reminds me of and also of Motorola (originators of Six Sigma and now to be taken over by Google) . When everything is a project, and projects must have deadlines and ROI, trouble must surely follow.

  6. It seems that this is a perfect example of the adaptive cycle in a business context (see or
    More accurately it is an account of the front loop of the adaptive cycle. According to the underlying panarchy model, it is natural for systems (organizations) to evolve to a more connected state while potential (value) is increasing. Ultimately this also leads to a less resilient system (organization). So projects need not necessarily be the culprit here. It’s just natural that organizations evolve into a less resilient state. Any thoughts on this?

  7. Oh yes, and I agree … we should start thinking about projects as temporary flows instead of stocks.

  8. Anonymous says:

    I wanted to hate this theory because I am so tired of random theories on project managent from Internet bloggers to organised religions sorry qualifying organisations. But much to my surprise, despite the use of the word “bifurcation” (I cannot be arsed to even look this ridiculous word up) the thing is ultimately I think you are right.
    What I read into your statement is that project management is a parasite that attaches itself to a successful business organism and effectively tries to control it and bleed it dry of resources on projects that may or may not be beneficial to the host organism but in any case use vital resources that would otherwise be used for the benefit of the organism itself.
    So what to do, what to do?
    Projects must become more beneficial to the host organism or else be detrimental to the organism and therefore expunged completely.
    The question we should therefore be asking ourselves at every turn is how is this project adding benefit to the business? And I don’t mean through the successful delivery of someone else’s business idea, I mean how does the project add value in it’s own right? Did you save money? Did you cut running costs? Did you improve efficiency? Did you get more bang for your buck? Basically do something that wouldn’t have happened if you had not been there because if you didn’t please don’t kid yourself, businesses have been around since before Christ and they don’t need PM’s so if you’re going to play a role please figure out what it is.

  9. […] take a look at this blog post by Ari, who has quite a long experience in product companies: “Focusing on projects ruins your business“Photo credit: Dunechaser @ […]