Transcript Slide 1

Crisis Project Management
in Troubled Times…Like NOW!
Paul Allen, CEO / Project Executive
Project Executive Group – Houston
Your Performance Multiplier
www.projectexecutive.com
February 2009
Paul Allen
• Paul Allen, former Adjunct Professor of Management at the Jones
Graduate School of Management - Rice University, taught strategic project
development in MBA and Executive Education Programs including:
advanced project management, corporate renewal & restructuring,
decision analysis and structured project finance.
• Allen is co-founder: PMI Risk Management SIG and the PMI Automation
Systems SIG where he is also the Chair. Additionally, he is a member of
PMI Troubled Projects SIG and PMI Houston chapter. He serves as PMIH
PMP Prep Risk Management Instructor and has for nearly a decade.
• He is a former member of the Turnaround Management Association
(TMA) and the Society of Naval Architects & Marine Engineers (SNAME).
• Allen is CEO/Project Executive of the Project Executive Group, a Houstonbased global professional services and training firm, and has over thirty
years of project development, financing and training experience.
Feb 2009
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This isn’t my FIRST RODEO…IT’S MY 6th !
1. 1973-75 – NYS (Oil Price)
2. 1981-82 – NYS (% Interest)
3. 1985-87 – Hou (Oil Price)
4. 1999-00 – Hou (Oil Price)
5. 2001-03 – Hou (9/11,$$$)
Enter Sarbanes-Oxley & WAR!
6TH - 2008-? - Houston
Ouch! THAT HURTS!
Experience Teaches Lessons
Ike & Economy – This one’s the BULL! Where’s the Rider?
Feb 2009
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+
Doing a Good Job?
+
The Right INTERNAL Politics?
+
The Right EXTERNAL
Politics & Client-Relations?
Feb 2009
Continuous Improvement
Education, Skill Sets & Certifications
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You MUST Sharpen the Saw to Survive!
Covey’s well-known book:
The 7 Habits of Highly Effective People
Habit 7: Sharpen the Saw
Sharpen the Saw means preserving and enhancing the greatest asset
you have – YOU! It means having a balanced program for selfrenewal in the four areas of your life: physical, social/emotional,
mental, and spiritual.
Feb 2009
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2007 - times were good, Houston, BUT…
Sustainable breakthrough performance requires a laser-sharp
focus on strategy execution.
– The evidence is overwhelming:
Strategy execution is the #1 concern of CEOs worldwide.
(Source: The Conference Board, 2007 CEO Challenge)
Only 12% of companies successfully execute their strategy.
(Source: Balanced Scorecard Collaborative & Cognos joint study, 2006)
• Strategies are EXECUTED through Projects! YOU! As a PM, you must…
• Optimize NPV – Eliminate Failure – Deliver Results – NO Excuses
Feb 2009
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New Strategies MUST be successful!
Today…
• You’re betting your company!
• An 88% FAILURE RATE in Execution is NOT ACCEPTABLE!
• Strategies are executed through projects. NO Failures allowed
• Strategy (Project) Execution MUST succeed for survival!
• Project Failures comes from any or combination thereof:
– Failure to LEARN
– Failure to ANTICIPATE
– Failure to ADAPT
Feb 2009
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What’s going on now - 2009 vs. 1929?
Causes and Effects of the Great Depression
• Most historians believe that a
combination of factors was responsible.
The most common factors included:
1.
2.
3.
4.
5.
6.
7.
8.
an uneven distribution of income
excessive use of credit
overproduction of consumer goods
a weak farm economy
speculation & margin buying in the stock market
restrictive government policies, such as high tariffs, and
global economic problems left from World War I
Soup Kitchens became a permanent fixture for years!
Does any of the above sound familiar? Think about it!
Feb 2009
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Black Thursday – October, 1929: FACTS
• The Great Depression in the United States, began on "Black Thursday"
with the Wall Street crash of October, 1929 and rapidly spread worldwide.
• The market crash marked the beginning of a decade of high
unemployment, poverty, low profits, deflation, plunging farm incomes,
and lost opportunities for economic growth and personal advancement.
• Although its causes are still uncertain, the basic cause was a sudden loss
of confidence in the economic future.
• The usual explanations include numerous factors, especially high
consumer debt, ill-regulated markets that permitted malfeasance by
banks and investors, cutbacks in foreign trade, lack of high-growth new
industries, and growing wealth inequality, all interacting to create a
downward economic spiral of reduced spending, falling confidence, and
lowered production.
Feb 2009
Source: Wikipedia
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Black Monday – October, 1987: FACTS
• The mid-1980s were a time of strong economic optimism. From August
1982 to its peak in August 1987, the Dow Jones Industrial Average (DJIA)
grew from 776 to 2722. The rise in market indices for the 19 largest
markets in the world averaged 296 percent during this period. The average
number of shares traded on the NYSE had risen from 65 million shares to
181 million shares.
• The crash on October 19, 1987, a date that is also known as Black Monday,
was the climactic culmination of a market decline that had begun five days
before on October 14th. The DJIA fell 3.81 percent on October 14,
followed by another 4.60 percent drop on Friday October 16th. On Black
Monday, the Dow Jones Industrials Average plummeted 508 points, losing
22.6% of its value in one day.
Feb 2009
Source: Wikipedia
PMI Houston Presentation
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Crash of 2008 – September 2008: FACTS
• On September 16, failures of large financial institutions in the United
States, due primarily to exposure to securities of packaged subprime loans
and credit default swaps issued to insure these loans and their issuers,
rapidly evolved into a global crisis resulting in a number of bank failures in
Europe and sharp reductions in the value of equities (stock) and
commodities worldwide.
• In the United States, 15 banks failed in 2008, while several others were
rescued through government intervention or acquisitions by other banks.
On October 11, 2008, the head of the International Monetary Fund (IMF)
warned the world financial system was teetering on "brink of systemic
meltdown“. The economic crisis caused countries to temporarily close
their markets. On October 8, the Indonesian stock market halted trading
after a 10% one day drop.
• The Times of London: "the meltdown being dubbed Crash of 2008.”
Feb 2009
Source: Wikipedia
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Subprime Mortgage Crisis: FACTS
• The subprime mortgage crisis is an ongoing financial crisis triggered by a
dramatic rise in mortgage delinquencies and foreclosures in the United
States, with major adverse consequences for banks and financial markets
around the globe. The crisis, which has its roots in the closing years of the
20th century (Clinton Presidency), became apparent in 2007 and has
exposed pervasive weaknesses in financial industry regulation and the
global financial system.
• No mention of the ARMs that accelerated this!
• Many USA mortgages issued in recent years were made to subprime
borrowers, defined as those with lesser ability to repay the loan based on
various criteria. When USA house prices began to decline in 2006-07,
mortgage delinquencies soared, and securities backed with subprime
mortgages, widely held by financial firms, lost most of their value.
• RESULT - a large decline in the capital of many banks and USA government
sponsored enterprises, tightening credit around the world.
Feb 2009
Source: Wikipedia
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Mexico City Opens the 1st of 300
Planned Soup Kitchens! – Jan 2009
• Unemployment and food prices are on the rise, prompting the
municipality to set up a feeding network. Officials hope to dish out 65,000
free or inexpensive meals a day. Mexico City - With her modest earnings
as a seamstress and her grown children out of work, Esperanza Jose is like
thousands of Mexicans finding it harder to make ends meet. And so she
decided to take advantage of the city government's new soup kitchen, the
first of 300 planned by March.
"The truth is that there are a lot of people that now don't have jobs, and
so if they're offering this, we should make the most of it," said Jose, 63.
"Many people are embarrassed to come; but, well, we come with dignity."
As Mexico slips into the profound economic crisis circling the globe,
unemployment is rising along with food prices. Inflation is running about
8% annually, but some basic "family basket" items such as cooking oil and
rice are going up about 200% a year, said Cesar Cravioto, head of the city's
Institute of Social Assistance.
Feb 2009
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Soup Kitchens in NY – Website Helps!
Source: AP - January 2, 2008
• New Yorkers interested in helping out at soup kitchens and food pantries
can now go online to search for volunteer opportunities.
• The New York City Coalition Against Hunger launched a Web site yesterday
that allows people to search by neighborhood or nearby subway lines for a
program that best suits them.
Feb 2009
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Soup Kitchens in LA
Source: Daily Herald – January 25, 2009
• Soup kitchens, which provide hot meals, and food pantries, which offer
groceries mostly to families, are the backbone of the current nonprofit
food system. Most are in the hearts of cities and rely primarily on
individual donations of food or bulk supplies from large food banks. They
also need money for overhead, all of which leaves them vulnerable during
economic downturns such as the current one, nonprofit leaders say.
• Operating soup kitchens during traditional business hours shuts out a
large group of hungry people. About 30 percent of households headed by
single mothers reported going without food at least occasionally in 2007,
almost four times the rate for single people, according to Feeding America,
an umbrella group for 200 food banks nationwide.
Feb 2009
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WTO Chief warns - looming political unrest
BERLIN (AFP) – The global economic crisis could trigger political
unrest equal to that seen during the 1930s, the head of the
World Trade Organization (WTO) said in a German newspaper
interview Saturday. (February 7, 2009)
"The crisis today is spreading even faster (than the Great
Depression) and affects more countries at the same time,"
Pascal Lamy told the Die Welt newspaper.
Feb 2009
Source: Internet Yahoo News
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What Does History Teach Us?
The initial effects of the stock market crash were not felt
immediately by most Americans, but forces were triggered
that would impact all social classes over the next decade, and
it would take a world war to finally bring the United States out
of the "Great Depression."
The SOLUTION was NOT government intervention!
Feb 2009
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Who Says Intervention Won’t Work?
MONDAY, JANUARY 12, 2009
• Marc Faber: “I Think it Might Be Far Worse [Than the Great Depression]
Precisely Because of the Interventions” by the Government
PhD Economist Marc Faber writes:
• Economic conditions may turn out to be far worse than in previous
recessions, including the Great Depression at the beginning of the 1930s.
Everybody seems to think that, thanks to the government's monetary and
fiscal interventions, this recession will come nowhere near the 1930s
slump. However, I think it might be far worse – and precisely because of
the interventions.
Feb 2009
Source: George Washington’s Blog
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Effect of the
Depression
N. America
Feb 2009
Source: Wikipedia
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Henry Fonda
In Grapes of
Wrath - 1940
Will they go to
California again?
The Grapes of Wrath is a novel
published in 1939 and written by John
Steinbeck, who was awarded the
Pulitzer Prize and the Nobel Prize for
Literature.
• Set during the Great Depression, the
novel focuses on a poor family of
sharecroppers, the Joads, driven from
their home by drought, economic
hardship, and changes in the agriculture
industry. In a nearly hopeless situation,
they set out for California's Central
Valley along with thousands in search of
land, jobs, and dignity.
•
Feb 2009
Source: Wikipedia
This film was the
most popular left-leaning,
socialistic-themed film of
pre-World War II Hollywood.
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Will we see Rosy the Riveter again?
Rosie the Riveter is a cultural icon of the
United States, representing the six
million women who entered the
workforce for the first time during
World War II, many of whom worked in
the manufacturing plants that produced
munitions and materiel.
• These women took the places of the
male workers who were absent fighting
in the Pacific and European theaters.
•
Feb 2009
Source: Wikipedia
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Or Wendy the Welder again?
• According to Colman's Rosie the Riveter,
there was also, very briefly, a "Wendy
the Welder" based on Janet Doyle, a
worker at the Kaiser Richmond Liberty
Shipyards in California.
A real-life "Rosie" working on the A-31
Vengeance bomber in Nashville,
Tennessee (1943)
Feb 2009
Source: Wikipedia
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Great Depression-WWII Timeline FACTS
Sources:
T.H. Watkins, The Great Depression: America in the 1930s (New York: Little, Brown and Company, 1993)
Kevin Phillips, Boiling Point (New York: HarperCollins, 1993)
Kevin Phillips, The Politics of Rich and Poor (New York: Random House, 1990)
The 1995 Grolier Encyclopedia (Entries: New Deal, Depression of the 30s, Roosevelt, Coolidge.)
The Encyclopedia Brittanica Online (Entries: New Deal, Great Depression.)
Donald Barlett and James Steele, America: What Went Wrong? (Kansas City: Andrews and McMeel, 1992)
Donald Barlett and James Steele, America: Who Really Pays the Taxes? (New York: Simon & Schuster, 1994)
James MacGregor Fox, Roosevelt: The Lion and the Fox (New York: Konecky and Konecky, 1956)
Elaine Schwartz, Econ 101½ (New York: Avon Books, 1995)
Peter Pugh and Chris Garratt, Introducing Keynes (Cambridge, England: Icon Books, Ltd., 1993)
Feb 2009
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Great Depression-WWII Timeline FACTS
1929 - Automobile sales decline 1/3 – 9 months before crash.
1930 - GNP falls 9.4 %. Unemployment climbs - 3.2 to 8.7 %.
1931 - GNP falls another 8.5 %; unemployment rises - 15.9 %.
1932
•
•
•
•
10,000 banks have failed since 1929 (40 % of 1929 total).
GNP has also fallen 31 % since 1929.
Over 13 million Americans have lost their jobs since 1929.
Top tax rate is raised from 25 to 63 %
1933
• free fall of GNP significantly slowed; dips only 2.1 % this year.
• Unemployment rises slightly - 24.9 %
Feb 2009
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Great Depression-WWII Timeline FACTS
1934
• Economy turns: GNP rises 7.7 % , unemployment falls - 21.7 %.
• A long road to recovery begins.
• Sweden becomes first nation to recover fully - It has followed a policy of
Keynesian deficit spending.
1935
• Economic recovery continues: the GNP grows another 8.1 %, and
unemployment falls - 20.1 %
1936
• Top tax rate raised - 79 %.
• GNP grows a record 14.1 %; unemployment falls - 16.9 %
• Germany becomes second nation to recover fully - through heavy deficit
spending in preparation for war.
Feb 2009
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Great Depression-WWII Timeline FACTS
1937
• Economists attribute economic growth so far to heavy government
spending that is somewhat deficit. Roosevelt, however, fears an
unbalanced budget and cuts spending for 1937. That summer, the nation
plunges into another recession. Despite this, the yearly GNP rises 5.0
percent, and unemployment falls - 14.3 %.
1938
• The year-long recession makes itself felt: the GNP falls 4.5 percent, and
unemployment rises - 19.0 %.
• Britain becomes the third nation to recover - as it begins deficit spending
in preparation for war.
Feb 2009
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Great Depression-WWII Timeline FACTS
1939
• GNP rises 7.9 percent; unemployment falls - 17.2 %.
• The United States will begin emerging from the Depression as it borrows
and spends $1 billion to build its armed forces. From 1939 to 1941, when
the Japanese attack Pearl Harbor, U.S. manufacturing will have shot up a
phenomenal 50 %!
• The Depression is ending worldwide as nations prepare for the coming
hostilities.
• World War II starts with Hitler's invasion of Poland.
Feb 2009
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Great Depression-WWII Timeline FACTS
1945
• Although the war is the largest tragedy in human history, the United States
emerges as the world's only economic superpower. Deficit spending has
resulted in a national debt 123 % the size of the GDP. By contrast, in 1994,
the $4.7 trillion national debt will be only 70 % of the GDP!
• The top tax rate is 91 %. It will stay at least 88 % until 1963, when it is
lowered to 70 %. During this time, America will experience the greatest
economic boom it has ever known. REALLY?
• Let’s take a look:
– at the FIVE Recessions from 1945 to 1963, and
– the rest.
Feb 2009
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Recessions Since the Great Depression
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Feb 2009
Recession of (1945) Duration: 8 months
Recession of (1948 - 1949) Duration: 11 months
Post-Korean War Recession (1953 - 1954) - The Recession of 1953 was a demand-driven recession due to
poor government policies and high interest rates. Duration: 10 months
Recession of (1957 - 1958) Duration: 8 months
Recession of (1960 - 1961) Duration: 10 months
Bond Inversion of (1965 - 1967) no recession materialized
Recession of (1969 - 1970) Duration: 11 months
1973 oil crisis (1973 - 1975) - a quadrupling of oil prices by OPEC coupled with high government spending
due to the Vietnam War leads to stagflation in the United States. Duration: 16 months
1979 energy crisis - 1979 until 1980, the Iranian Revolution sharply increases the price of oil
Recession of (1981 - 1982) Duration: 16 months
Early 1980s recession - 1982 and 1983, caused by tight monetary policy in the U.S. to control inflation and
sharp correction to overproduction of the previous decade which had been masked by inflation
Great Commodities Depression - 1980 to 2000, general recession in commodity prices (OIL PRICES FELL)
Late 1980s recession - 1988 to 1992, collapse of junk bonds and a sharp stock crash in the United States
leads to a recession in much of the West
Japanese recession - 1991 to present, collapse of a real estate bubble and more fundamental problems
halts Japan’s once astronomical growth
Asian financial crisis - 1997, a collapse of Thai currency inflicts damage on many of the economies of Asia
Early 2000s recession - 2001 to 2003: the collapse of the Dot Com Bubble, September 11th attacks and
accounting scandals contribute to a relatively mild contraction in the North American economy.
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History of Taxes – 1981-Now…
• 1981 - Congress enacts largest tax cut in history, $750 billion over 6 yrs.
• Oct. 22, 1986 – Pres. Reagan signed Tax Reform Act of 1986. Top tax rate
on individual income was lowered - 50% to 28%, the lowest it had been
since 1916
• Followed by yearly tradition of new tax acts - began 1986,
• Aug. 10, 1993, Pres. Clinton signed Revenue Reconciliation Act of 1993
• Pres. George W. Bush signed a series of tax cuts. Largest was the Economic
Growth and Tax Relief Reconciliation Act of 2001 - estimated to save
taxpayers $1.3 trillion over ten years, making it the third largest tax cut
since World War II. The Bush tax cut created a new lowest rate, 10% for
first several thousand dollars earned. Cut the top four tax rates (28% to
25%; 31% to 28%; 36% to 33%; and 39.6% to 35%).
THIS IS ALL GOING TO CHANGE…BE READY FOR IT!
Feb 2009
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What About NOW? - UK in 2009!
UK recession: It's now official
• The UK is officially in recession. Confirmation came this morning when
figures published by the Office for National Statistics showed the economy
shrank by 1.5 % in the final three months of last year.
• By Angela Monaghan - Last Updated: 2:48PM GMT 23 Jan 2009
Feb 2009
Source: Wikipedia
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What About NOW in the U.S.?
Wikipedia – Late 2000’s Recession
2008 - a recession throughout the industrialized world was suggested by
several important indicators of economic downturn.[1] Contributors: high
oil prices, high food prices, and a substantial credit crisis leading to the
drastic bankruptcy of large and well established investment banks as well
as commercial banks in many nations around the world. This crisis has led
to increased unemployment, and other signs of contemporaneous
economic downturns in major economies of the world.
• December 2008 - National Bureau of Economic Research (NBER), private,
nonprofit research organization, declared that the United States had been
in recession since December 2007, - several economists expressed concern there is no end in sight for the downturn.
This crisis has been called the Second Great Depression by some
observers, and the Great Recession by others.
Feb 2009
Source: Wikipedia
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What About Feb 11th – Yahoo Finance
Top Stories
Stocks Move Higher After Yesterday's Plunge - AP
A day after a steep selloff on Wall Street, investors are looking
for bargains but are still very cautious about the banking
industry and the overall economy. The gains aren't surprising
after stocks tumbled more than 4 % on Tuesday (Feb10th).
• Bankers to appear before dubious Congress- AP
• Negotiations intensify on final stimulus plan- AP
• Trade deficit drops to $39.9B; lowest in 6 years- AP
• World stocks fall on skepticism over US bank plan- AP
• Oil stays below $38 on bailout skepticism- AP
• Cuomo blasts Merrill executives on bonus plan- AP
• Toll Brothers 1Q home building revenue drops- AP
• GE Energy gets $1B Saudi Electricity contract- AP
• Bank of England says Britain in 'deep recession'- AP
Feb 2009
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Do We Have Your Attention?
Do we agree we’re in troubled times?
• WHAT MUST we as project managers DO during this time?
• What DECISIONS MUST we make to deal with this?
• How CAN we instill a TRUE Sense of Urgency in what we do?
Feb 2009
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What Actions Must Be Taken By PMs?
Some Suggested Quick “Pareto” Answers
• ACT as if every day, you are going out of business! – Maybe you are!
• PROTECT your Risk-Based Fully-Integrated Master Schedules & Budgets
ALL THE TIME!
– At the Project Executive Group, we instill a true sense of urgency in
everything we do. We fully recognize and respect the time value of
money and optimization of the NPV. Contact us for immediate
assistance when a SENSE of URGENCY is important to you AND when
TIME is of the ESSENCE in delivering RESULTS.
– We GUARANTEE our work. DO IT RIGHT THE FIRST TIME!
• TAKE OWNERSHIP – Behave as the CEO of the project investment!
• PROTECT the Buffers – Go into Crisis mode if you lose a day or $ of buffer!
Feb 2009
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A “MUST Do!”
Wake Up Call for Project Management Pros!
ELIMINATE
– Complacency and
– the False Sense of Urgency
in your projects and your company!
EXCEL in
– Learning
– Anticipating and
– Adapting
to a climate impacting your project and company.
Feb 2009
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What problems do PMs need to address?
1. Complacency can no longer be tolerated!
– The dictionary says complacency is “a feeling of contentment or self
satisfaction, especially when coupled with an unawareness of danger
or trouble
– Two Key Words: feeling and self
– Almost always, complacent individuals do not view themselves as
complacent. They see themselves as behaving quite rationally, given
the circumstances.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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Resistant to New Ideas? - YOU cannot afford to be TODAY!
Feb 2009
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The odds are overwhelming that
complacency is around you!
Where does complacency come from?
– Complacency is almost always the product of success or perceived
success. Complacency can live on long after great success has
disappeared. Perceptions DO NOT have to be accurate!
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The Complacent
How do they think?
– The complacent virtually never think they are complacent. “I’m doing
what’s right.” “Sometimes it isn’t easy, but I know what to do and I do
it – or if I can’t entirely do it, the problem is created over there (in that
department, by my boss, by competitors that don’t play fair, etc.).”
– The BLAME GAME! A “non-productive” exercise!
– Fix the problem, not the blame!
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The Complacent
What do they feel?
– At a very basic, gut level, the complacent are content with the status
quo. Sometimes they cling to what exists because they are afraid,
often irrationally afraid, of the personal consequences of change.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The Complacent
How do they behave?
– The best way to identify the complacent is by what they do instead of
what they say (though words can be revealing).
– The complacent do not alertly look for new opportunities or hazards
facing their organization. They pay much more attention to what is
happening internally than externally. They tend to move at thirty miles
an hour even when fifty is clearly needed to succeed. They rarely
initiate or truly lead. Most of all, they do what has worked for them in
the past.
– IS THIS YOU?
Feb 2009
Source: A Sense of Urgency – J. Kotter
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WHO can be complacent? The assembly
line worker, you, me, our bosses, anybody!
Feb 2009
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What is the other problem now?
2. False Sense of Urgency
– False sense of urgency is a condition that is very different from
complacency. While complacency embraces the status quo, false
urgency is filled with energy. While complacency is built on feeling that
the status quo is basically fine, false urgency is built on a platform of
anxiety and anger.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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What are the issues now?
Anxiety and Anger
– Anxiety and anger drive behavior that can be highly energetic – which
is why people mistake false for true urgency.
– The energy from anger and anxiety can easily create activity, not
productivity, and sometimes very destructive activity.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The odds are overwhelming that
false urgency is around you!
Where does it come from?
–
False urgency is almost always the product of failures, or some form
of intense pressure that is put on a group.
How do people think?
–
Those with a false sense of urgency do not think that all is well. They
may think that the situation they are in is a mess. They may think
their boss is applying ridiculous pressures on them.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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False Urgency
What do they feel?
– Those with a false sense of urgency tend to be very anxious, angry,
frustrated and tired.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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False Urgency
How do they behave?
– They behave in ways that can easily be mistaken for people with a real
sense of urgency because they are very active.
– But with a false sense of urgency, the action is more activity than
productivity. It’s frenectic! It is more mindless running to protect
themselves or attack others than purposive focus on critical problems
and opportunities. Run-run, meet-meet, talk-talk, defend-defend, and
go home exhausted.
– IS THIS YOU?
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
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WHO can behave with a false sense of urgency? The
assembly line worker, you, me, our bosses, anybody!
Feb 2009
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URGENCY
It all starts with a true sense of urgency!
–
–
–
–
–
–
–
–
A sense of urgency
The guiding team
Visions & strategies
Communication
Empowerment
Short-term wins
Never letting up
Making change stick
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The Problem: Lack of a True Sense of Urgency
The BIG Reason that a true sense of urgency is rare is that it’s
NOT a natural state of affairs.
Must be “created and recreated” in organizations
–
–
–
–
–
Surviving Older organizations have more complacency
Suffering Organizations can still have “business as usual”
Anxiety-filled activities can be mistaken as true urgency
Poor capacity to deal with continuous change, even today
Urgency tends to collapse after a few successes.
Feb 2009
Source: A Sense of Urgency – J. Kotter
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The GOOD News
A Changing World offers not only many hazards but wonderful
opportunities. Such is the very nature of shifting contexts.
To capitalize on the opportunities requires any number of skills
and resources. But it all begins with a high enough sense of
urgency among a large enough group of people.
Get that right and you can produce results that you very much
want and the world needs!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
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DO YOU ACT with a SENSE of URGENCY?
Feb 2009
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HOW ABOUT NOW?
Feb 2009
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Sorry…TOO LATE!
Picture: Bay St. Louis “Katrina’s” 30’ storm surge
Feb 2009
PMI Houston Presentation
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Look for RED Flags – Flag # 1
Instead of saying, “We have to deal with this as fast as possible
both to stop the slide and to position ourselves for the future,
“ and then behaving that way, the executive committee asked
the chief strategy officer to talk to respected consulting
companies and solicit proposals from them.
Four months later, after receiving and evaluating those
proposals, the committee selected a consultant to do an
analysis of the business and to recommend changes.
Nine months after that, the consultants produced a draft of a
new strategy for the enterprise.
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
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Wrong: Unacceptable Behavior
OR
Rule 1: Don’t
Put your head
In the sand!
Feb 2009
PMI Houston Presentation
57
Look for RED Flags – Flag # 2
THIRTEEN MONTHS after the PROBLEM was known…
After studying the consultant’s report, the CEO, with help from
his aides, created a task force of carefully chosen people to
roll out the strategy and put the company back on firm
footing.
Out of the top ten people in the firm, two were on the task
force.
The CEO was not!
(Strategy Execution: Remember 88% Failure Rate?)
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
58
Wrong: Lack of Fiduciary Understanding
CEO lacks Understanding of his / her Fiduciary Responsibility!
• The fiduciary duty is a legal relationship of confidence or trust between
two or more parties, most commonly a fiduciary or trustee and a principal
or beneficiary. One party, for example a corporate trust company or the
trust department of a bank, holds a fiduciary relation or acts in a fiduciary
capacity to another, such as one whose funds entrusted for investment.
• In a fiduciary relation one person justifiably reposes confidence, good
faith, reliance and trust in another whose aid, advice or protection is
sought in some matter. In such a relation good conscience requires one to
act at all times for the sole benefit and interests of another, with loyalty to
those interests.
• There is a Duty of Loyalty AND a Duty of Care. It’s not here!
Feb 2009
PMI Houston Presentation
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Look for RED Flags – Flag # 3
The members of the Task Force had difficulty coordinating
calendars to set up their first meeting. Four weeks after they
were charged with their tasks, they met for the first time.
At least 14 MONTHS after the problem was known!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
60
Wrong: Lack of Crisis Mgt Skills
The Task Force Does NOT Understand Crisis Management
Crisis management = Clear Your Calendar…we have a crisis!
– A crisis is a major, unpredictable event that threatens to harm an
organization and its stakeholders. Although crisis events are
unpredictable, they are not unexpected (Coombs, 1999).
– Crises can affect all segments of society – businesses, churches,
educational institutions, families, non-profits and the government and
are caused by a wide range of reasons.
– Although the definitions can vary greatly, three elements are common
to most definitions of crisis:
1. a threat to the organization
2. the element of surprise, and
3. a short decision time (Seeger, Sellnow & Ulmer, 1998).
Feb 2009
PMI Houston Presentation
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Look for RED Flags – Flag # 4
At that first meeting, the discussion of how to implement the
new strategy slid back and forth into a discussion of what
exactly the strategy was and whether it was the right one.
The Results – nothing!
No one came out and said,
– “We are floundering and we don’t have the time to do so.”
– “I’m not sure I understand the one-hundred page document from the
consultants, and you have to help immediately or I am useless on this
committee.”
– “Why am I on this committee?” or “What power games!”
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
62
Wrong: No One Took Charge & Led
No one took charge & Made It Happen
• The practice of crisis management involves
attempts to eliminate technological failure
as well as the development of formal
communication systems to avoid or to
manage crisis situations (Barton, 2001), and
is a discipline within the broader context of
management. (Risk Management)
• Crisis management consists of skills and
techniques required to assess, understand,
and cope with any serious situation,
especially from the moment it first occurs to
the point that recovery procedures start.
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
The Rudderless Ship of State
Crisis management consists
of methods used to respond to
both the reality and perception
of crises.
63
Look for RED Flags – Flag # 5
No decision was made at the first task force meeting except that
it must have another meeting. People were asked to pull out
their appointment books. Not everyone had his or hers. After
hemming, hawing and negotiating, the members set a time in
four weeks to meet again. Two people did not say so, but they
knew that would have to miss the meeting because of prior
commitments.
At Least 15 MONTHS after the problem was known!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
64
Wrong: Not Understanding Purpose
Different Meetings Need Different Conversations
• Different kinds of meetings require different conversations. If you're not
clear - then your meeting probably won't achieve a clear outcome.
• Some meetings are built around a "conversation for possibility." The group
acknowledges that it has come together to generate ideas, not to make
decisions. The goal is to maximize creativity. Other meetings are built
around a "conversation for opportunity." The goal is not to reach a final
decision but to narrow down a field of ideas or options.
• There are meetings that are built around a "conversation for action." The
goal is to decide, to commit: "We want to leave this room with our three
investment priorities for 2000.“ NONE for Info…do it via e-mail or Memo!
• Unless everyone understands distinctions, you run into familiar problems.
• If you call a meeting, make it clear to people what kind of conversation
they're going to have, and then impose a certain amount of discipline.
Feb 2009
PMI Houston Presentation
Look for RED Flags – Flag # 6
Between the first and second meetings, very little happened
except behind the scenes chatter about why those on the task
force were selected and why the specific consulting firm was
chosen.
Among some people, conversations began about who was to
blame for the firm’s eroding position.
No one acted on these conversations. They only complained!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
66
Wrong: When Hemorrhaging, Urgency!
Company Turnaround
Cash Management
Project Turnaround
Time Management
• Rescuer OR Grave Dancer
• CASH is usually the problem.
• Usurper OR PM Team Developer
• TIME is usually the problem.
Feb 2009
PMI Houston Presentation
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Turnaround: Outcomes, Phases, Timelines
Company Turnaround
Possible Outcomes
Project Turnaround
Possible Outcomes
1.
2.
1.
2.
3.
4.
5.
6.
3.
4.
Bankruptcy: 11,etc., even 7
Turnaround, no bankruptcy,
with management change
Turnaround, no bankruptcy,
no management change
Disposal of the company
Phases
1.
2.
3.
4.
5.
Analyze the Situation – days
Triage – Immediate – days
Develop/Implement Plan - weeks
Restructuring – months
Stability – over time as needed
Feb 2009
Adjustment to the project
Alignment to the project
Stop-gap measures
Partial salvage
Complete salvage
Abandonment
Timeline (Overlapping Phases)
Triage – 24-72 hours - MAX
Crisis Plan/Begin Execute < 2 weeks
Stabilization – 30-60 Days
Maintenance – as needed
YOU have a 2-WEEK Honeymoon!
PMI Houston Presentation
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Look for RED Flags – Flag # 7
At the second meeting, a sub-task force was created for
“communication of the new strategy.” Discussing who should
be on this committee took up most of the meeting.
One person asked, with a look of pure exasperation, “But what
exactly do we have to communicate?” The Task Force ran out
of time before this issue received much attention.
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
69
Communicate, Communicate, Communicate!
The process of strategic restructuring involves uncertainty, and a
realignment of the structure and management of an
organization.
The reaction to even the potential of change is resistance.
Five tips should help negotiate transition with Employees:
•
•
•
•
First: Do No Harm
Second: Be aware of the impact and not the intention
Third: Be prepared
Fourth: Keep your focus forward. You as the leader had better believe it,
and it had better be true.
• Fifth: Communicate, Communicate, And Communicate
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
70
Look for RED Flags – Flag # 8
SIX MONTHS after the second task force meeting, margins and
market share continued to slip. Some improvement had been
made in technological development, but not much, and
certainly not as a result of any actions by the Task Force.
A frustrated CEO began to meet with the task force head more
regularly, sought advise from another consultant, and spent
an increasing amount of time preparing how to explain all this
to his board of directors.
THIS IS at least 21 MONTHS after the problem was known!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
71
Wrong: CEO, Consultant, & TF Leader!
• No company plans to fail or to find its way into difficult situations - but it
happens all the time. Over the years, a range of companies facing the need
to turn things around have evolved. Sometimes it was on its own and was
not economic environment driven, i.e. recession, depression. The paths
that they traveled to reach such a desperate condition were varied but the
best ways out had a lot in common.
• Times of corporate distress present special and strategic challenges to
management, the board of directors, shareholders, employees and the
sources of financial resources so critical to a company’s success.
• At the extreme, a company may be in either bankruptcy or nearing
bankruptcy. Most often, there is a great deal of uncertainty arising from
one or a number of problems - with bankruptcy only the last option.
• IF the turnaround strategy is not QUICKLY formulated and implemented, it
usually spells the end for many organizations…bankruptcy, 11 or 7.
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
72
Turnarounds – the Top 3 Problems
Management, Management, Management
The first key to any corporate renewal plan is an accurate
assessment of the root causes of the crisis.
• ACTION is a Requirement…Fence Sitting is deadly!
• Separate the symptoms from those causes – identify root cause of crisis.
• Then figure out which of these causes lay towards the epicenter of the
crisis and which are merely symptoms of those causes.
Here are a few causes / symptoms:
•
•
•
•
•
•
Feb 2009
The Wrong CEO
The Wrong Board
Poor Strategic Choices
Poor Execution
Inadequate Controls
Insufficient Resourcing
•
•
•
•
•
•
Revenues Are Trending Downward
Inaccurate Sales Projections
High Operating Costs
Unsuccessful R&D Projects
Becoming Uncompetitive
Excessive Debt Burden
PMI Houston Presentation
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The Scenario
The problems throughout this Scenario relate to
– too much complacency,
– too much false urgency,
– too little true urgency.
Top Team Members should have
–
–
–
–
–
Had a greater sense of urgency
Focused on strategic issues…not relied on a consultant
Never waited nine months for a draft consultant report
Found time to meet as priority. CLEAR your calendar!
With a true sense of urgency…it would be different!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
74
Captain…Your Ship is Sinking!
Feb 2009
PMI Houston Presentation
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The Scenario Outcome
In this case the firm was hurt, careers were damaged, a number
of customers could not achieve their plans without the
projects they had been promised, and stockholders lost, on
average, about 35% of their investment.
It was a lose-lose situation. In the short-term, the only winner
was the firm’s number one competitor.
YOU Be Pro-Active…make sure you are a WINNER!
PM is managing CHANGE. Be a Change Leader NOW!
Feb 2009
Source: A Sense of Urgency – J. Kotter
PMI Houston Presentation
76
The Decision
PPT Presentations:
1.
2.
Convey information, or…
Get a decision – THIS IS WHAT THIS ONE IS!
Are you ready to MAKE the Decision to instill a True Sense of
Urgency into your organization starting first thing tomorrow?
A simple decision tree might help…
– Calculate the Expected Monetary Value (EMV) – using “take no action”
vs. “take action and instill a True Sense.”
– You might be very surprised at the outcome of this exercise
– Can you truly afford not to do this TODAY? I don’t think so!
COMMIT NOW to a Sense of Urgency in what you do!
Feb 2009
PMI Houston Presentation
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PMI Houston – PEG Collaboration
IN ADDITION…Sharpen the Saw!
Advanced Project Management Program
Eric Jenett, PMP#1, APM & PMP Re-certification Program
Starts March 9th – ten evening sessions (6-9PM)
REGISTER on PMI Houston website. Venue: PEG Offices
Advanced Project Risk Management Workshop
Two-Day Intensive Project Risk Management
First Workshop – Mar 11-12 (8:30AM – 4:00PM)
REGISTER on PMI Houston website. Venue: PEG Offices
Feb 2009
PMI Houston Presentation
78
Thank You!
Project Executive Group
Your Performance Multiplier
www.projectexecutive.com - [email protected]
10260 Westheimer, Suite 250 - Houston, TX 77042
Sterling Bank Building - Beltway 8 & Westheimer