One of the biggest dilemmas faced by leaders is how to effectively mitigate risk. This is true across the whole organisation but is particularly difficult for leaders in the delivery space — how do they mitigate the significant risks associated with project and program delivery to avoid overspend, delay and ultimately, project failure.
Traditionally, leaders have applied risk controls to the delivery process — steering committees, PMO organisations, delivery stage gates and so on. Unfortunately, these rigid and inflexible approaches have not improved things.
A significant preposition of large delivery initiatives still fail. According to the Standish Group’s Annual CHAOS 2020 report, 66% of technology projects (based on the analysis of 50,000 projects globally) end in partial or total failure, compare this to the 2105 report which had a failure rate of 64%). The failure rate for project and program delivery has not changed in decades. As It becomes more and more business critical, what has changed is the cost of failure. With digital channels becoming the primary, and often sole, means for many organisations to engage with customers, a failed project can have catastrophic consequences for the business.
The traditional, inflexible, control based approaches to governance have clearly failed. What keeps organisations using them is the belief that there are no viable alternatives. What is needed is a new approach to governance that allows organisations to rapidly identify troubled projects and adapt to new information as it comes to hand.
Reducing delivery risk
The biggest risk for any initiative is that it won’t deliver. Whether it’s a new product, or an IT system upgrade or a strategic change initiative, the risk is that the organisation will spend a lot of money and receive nothing in return. Traditional approaches are poor at identifying this kind of risk — they focus on delivering value on long timescales and provide few opportunities to test benefit assumptions in practice. Information flow in traditional governance is also tightly controlled — managed through infrequent status reports and often massaged at various points in the information flow to soften or hide bad news.
Because the business has very little real insight into what is going on during delivery, it really doesn’t know whether the delivery will happen until it happens. We have all seen the last minute wrangling that goes on close to the delivery date. Delivery dates get shifted, scope gets dropped, quality gets compromised, and people suffer from burn-out.
Everything is a surprise to the business, because up until then it had been told that everything was going well. It is this failure to reliably deliver that has broken down the trust between the delivery side of organisations and the business side. No matter how many steering committees, stage gates or progress reviews the business insists on, because they are assessing progress against a schedule with no real deliverables to back it up (and by real deliverables I mean working stuff, not specs and designs), the situation never seems to improve. The business really has nothing more than the project manager’s assurance that things are going as planned. There is no real evidence to back that up.
What is needed is a governance system that promotes high visibility into the work through the regular delivery of value, and the regular reviews and metrics that go along with that. Adaptive governance builds transparency into delivery ensuring that the right information is provided to the right people, at the right time to ensure successful outcomes. This helps the business ensure that the project is on track and will deliver. Or, if it won’t deliver, providing very early warning, so the business can re-assess the project.
By contrast, an Adaptive Governance with its regular reviews, and metrics based on actual delivered value, gives the business far greater insight into the actual state of the project and hence much lower delivery risk. That’s not to say that dates aren’t going to be missed or scope isn’t going to be adjusted or dropped, but it shouldn’t be a surprise. In a well-run project, any changes to scope and dates should be flagged well in advance and made in consultation with the business, not presented as a fait accompli a few weeks before go live. If a project is going to fail to deliver, I would hope that we discover that after one or two weeks of assumption testing, rather than one or two years of expensive delivery.
Adaptive Governance is built on a foundation of transparency and fast feedback — sharing information and obtaining feedback quickly to allow changes of direction where needed. That’s a powerful strategy for reducing delivery risk.
The hidden delivery risk: Building the wrong thing
There is also another delivery risk that isn’t often considered — the risk that the project will deliver whatever it was supposed to deliver, but that the organisation will not get the benefits from that delivery. This is the worst delivery risk of all because at the end of the project, all the money is spent, there is no chance to pivot and change direction without requiring additional investment. This can happen for many reasons — the product fails in the market because it’s not what the customers want, or the assumptions were wrong, or conditions have changed. The benefits may have been oversold. There are dozens of reasons why a project fails to deliver benefits. Essentially, they all boil down to producing the wrong thing. Fortunately, Adaptive Governance helps with this as well.
The key of course is fast feedback and transparency. By producing value quickly and regularly, the business has a chance to test its assumptions early. That testing could be via internal review, or it could be with real customers, or focus groups, or whatever. Regardless of how the assumptions are being tested, the business isn’t flying blind. This ability to test assumptions and using feedback to make early and informed decisions to change direction when needed, allows the business to significantly reduce the risk of producing the wrong thing. Adaptive governance allows organisations to adapt their plans when conditions change or new information arises.
Navigating other risks with Adaptive Governance
But what about other risks? Technology risks? Governance risks? Compliance risks? Generally, the biggest risk with risks is that leaders are unaware of the risk’s existence. Either because the information gets lost somewhere and never reaches them — risks logged in a spreadsheet somewhere and never going any further, or for various reasons, no one tells them. Whether that’s through an oversight, a desire to not bother leadership with a risk that they may not fully understand the consequences of, to make their project look good. Or because the corporate culture is built around information silos rather than being open and transparent.
Alternatively, leaders may be aware of a risk but lack the right information to make the right decision about what to do. Many leaders have been undone by accepting a “low likelihood” or “low impact” risk that later turned out to be much more likely and impactful than they were told.
This is particularly true for technical risks, where leaders who are being asked to sign off on those risks often lack the deep technical expertise to look beyond what they are being told and ask the right questions. There are many serious technical issues — platform failures, data breaches and so on that are attributable to leaders not being given the full picture. All too often leaders are not getting the full story and the consequences can be massive.
Adaptive Governance built on a foundation of transparency and fast feedback is vital here as well — we saw above how transparency around the work leads to better visibility of delivery risks. It’s the same for other types of risk. Adaptive governance gives an organisation transparency which makes critical risks visible and therefore actionable.
In an organisation that embraces transparency, the right information gets to the right people at the right time for them to make informed decisions. That’s the best risk mitigation strategy an organisation can have — leaders with the right information about their risk profile with the right information to make informed decisions about mitigation.
Pillars for effective transparency at scale
Our Pillars of Agile Governance provides the framework organisations need to establish effective transparency at scale. Just providing information is not enough, Organisations must be able to respond to that information in a timely and effective way. Transparency must be coupled with performance data science to make use of the information for data informed decision making. Effective systems of work to allow the organisation to deliver value and the right leadership to allow the other pillars to thrive.
