Why Most Projects Fail—and How to Achieve Better Outcomes

Deals not just another payroll platform, it's when your team might actually enjoy. HR, IT, and payroll together finally. Built in-house, built for peace of mind. Visit d-e-l.com/hbrpodcast. Welcome to HBR on Leadership. These episodes are case studies and conversations with the world's top business and management experts. Hand selected to help you unlock the best in those around you. I'm HBR senior editor and producer Amanda Kursy. The guest in this episode you're about to hear says most projects don't fail because teams lack discipline or tools. They fail because leaders don't give projects the focus or sponsorship they require. It's a gentle reminder that in a project-driven organization, success comes down to where you as a leader choose to spend your time and attention. Welcome to the HBR IDA cast from Harvard Business Review. I'm Allison Beard. If the 20th century was all about operational efficiency and businesses, the 21st century is all about organizational change. And how do new initiatives, products, and services, strategies, or business models advance? Through project work. It's what our guest today calls the project economy and is estimated to generate $20 trillion in economic activity and employ 88 million people in project management-related roles by 2027. That's across every industry and size of company in every part of the world. And yet, research indicates that only 35% of projects are successful. At this increasingly critical business function, most of us are doing a pretty terrible job. So how do we get better at it going forward? Antonio Nieto-Verdriguez is the former chairman of the Project Management Institute, founder of Projects and Co, and the author of the HBR Project Management Handbook. He's here to talk about emerging best practices for companies and the people in them. Antonio, welcome. Thank you, Allison. This one is a pleasure to be here. Project management seems like a clear idea, but how do you define it and think about it in a way that might be different than what people assume? Well, I think one of the challenges with project management that I face personally in my career is that as soon as you talk project management, senior executives and people who are not experts in project management, they think, oh, this is something very technical, very tactical, is nothing for me. So I've been facing that kind of discontent or this interest in project management for 25 years. So for me, I want to move out from that project management term and move it up into projects. And we all do projects. And for me, the definition is anything that has to deal with change, that's projects. You can manage them through project management, agile methods, design thinking, product management. But I want to really, I think we need to elevate and say, well, all what goes around change, that's projects and we need to manage them. And how has project work changed over the past few decades? Well, project work has changed into big areas. One is on a macro level. I've been doing research. Of course, we all talk about the Marshall Plan after the Second World War and all the projects that came from US funding to develop Europe, reconstruct Europe, that was about 13 billion. Then we talk about the financial crisis in 2008 and then we were talking about three trillion dollars of projects. And now after the pandemic, we were talking about 15, 20 trillion of projects. I think the world will never see as many projects at what we're going to see in the next decade. We need to reconstruct countries, healthcare systems, economies. So that's from a macro perspective. From a micro perspective, from the way work is organized in companies, in businesses, it has evolved significantly in the sense that so far operations have been prime in most of the organizations. So over the past 80 years, that's what I say, the world driven by efficiency where most of the activities were around doing cheaper, faster, more automated, more volumes. Companies have been organized for that. That's why you have hierarchies. That's where cultures like Command and Control have been in place and so on. But since like a few years when artificial intelligence and robots are taking over a big chunk of operations. The type of work is shifted to project based. So I think the biggest, biggest disruption that happens in the world of projects is what we're experiencing now. A radical shift from operations to project based work. And that's because projects are about sort of discovering the new, innovating and the pace of change is such in every industry now that every company needs to learn how to do this well. Absolutely. And one of the challenges I have to admit, Alisson, I'm a big, of course, expert in project, a big advocate of project management, but our performance, like you mentioned in introduction, has been poor or appalling. I think project management has not delivered the expected results. We need to find better ways to address the change. The future 10 years ago maybe was five years from now, right? So you would have a project that would last for three years, expecting to get some benefits, maybe in three, four years, a digital transformation, a new M&A activity, a new business unit. But today the future is so fast. So your future is tomorrow, right? So that means the acceleration of project based work has to go faster. Let me give you a quick example here in Brussels. They were setting, creating a, establishing a hospital from scratch, Greenfield, the start of the construction in 2016, completion of the hospital in 2020. So four years of construction, state of the art. But to my surprise, the hospital was open in 2018, before it was completed. So I think there's no company in the work and wait four years to get any benefits from the projects. The future is now and we need to address that. That's why you see exploding the number of projects in organizations. I come across companies where they have more projects than people. And I do want to get to how to do it better. But first, that failure rate is so high. What are some of the most common challenges or problems that projects run into? Why are we getting it so wrong right now? Let me highlight just three. First, I think senior leaders, they don't have the competencies to be effective sponsorship over the years. They're not going to like hearing that. I'm sure, but I'm sorry. I always, I'm 100% honest on my thinking. But I think sponsors have not realized that the role is crucial in sponsoring projects. It's not about how many projects you sponsor that has been the kind of, I sponsor 20 projects. I'm the most important person in this company. Well, no, it's about less is more and it has been proven when you are an executive, the CEO, the VP, and you dedicate time to your project. Time means not just one hour per month, but a half a day per week. If this is the future of your business, I don't understand why senior leaders don't dedicate so much time. They're all driven by operations and they today urgency. So very few leaders make the space. And second, they don't understand the fundamentals of projects. Most of the second is come from a path marketing finance, operations strategy, and it requires for them to understand that projects are different. That you work in projects in a matrix that is not so much the hierarchical approach, but it's team working and collaboration. So it's hard to give you a number, Alisson, but I would say 30 to 40% of the success of the project is if the senior leaders is engaged and understands and drives the project. Alisson, the second point, I realized that in the area of change in projects, we are always running with all methods. It happened in the past with IT projects. I started implementing big ERP systems. We were trying to apply some very traditional project management. It didn't work. And Agile came and said, well, now we are going to use Agile for every project. And that we see today with digital transformations, AI implementations that doesn't work. The failure keeps there. The third reason, I think the role of the project manager, the project management profession has not taken ownership of the results. It has been very focused on process, very focused on documentation. It did make a lot of sense in the '60s, in the '50s, where you would do a lot of public sector projects, where you want to document everything. But I think the reason that the third reason for me is that project management didn't evolve to embrace the new reality and second project managers have been more a deliberate type of role. In project management, I think it's a great way to do it. management we always said, well, who's accountable for delivering the projects? Who's accountable for delivering the benefits? Right? Well, it's the sponsor. We project managers were responsible of delivering the project on time, on budget, on scope. And that has been the credo for project management for the last 40 years. And we've missed to focus on the outcomes, we've missed to focus on the benefits. We've missed to take accountability of the results. It's easy to make a project charter, but what companies are looking for is the delivering value, either financial, either social, either sustainability. So I'm asking my community a project manager to step up to take ownership, to say, no, it's not just the plan, it's not just the delivery on time. What matters actually even more is delivering the benefits, whatever they are, and faster, please. So for an organization that does have existing operations that need to be managed, but then also wants to pursue change and innovation through project work. How does that company change its structure or culture to be able to do both well? Yeah, well, great question, Alyson. I've seen so many companies struggling because I'm not saying, let's forget about what you're doing right today. Let's forget about that organization that you've built so successful for that word driven by efficiency with hierarchies, with yearly plans, with deep expertise, deep technical expertise. But how can we address change? And it changed that's going very fast. And our products are just lasting less and less in the past, we last five years, now five weeks or maybe five months. So how can we mix that? And it's a struggle. You cannot say, let's forget my hierarchy and let's move everything into flat teams and agile structures and project based in that doesn't work. So I think the challenge for the leaders, the senior leaders, the executives is finding that balance. And I always say, you need to experiment. You cannot just go and say, well, half of the organization is working without job descriptions. They're all working project based. I think my approach, my suggestion is, what are your top five projects? What are the five most important projects that your organization has to deliver? Extract those projects from your daily operations. Extract them. They should not be done by people working in operations. They should have a different structure. They should have a different culture. Put them aside. Put them like independent. They are on entities. And of course, strong sponsorship executives, you need to spend time on them by extracting for those five top projects already and moving out to that from that hierarchical structure, that operational activities that you can see already quite a lot of acceleration in the way you deliver projects. So often though it seems as if particularly project leaders do have operational responsibilities as well and then sort of they're expected to tack the project on top of that. So how are companies that you work with navigating that balance? Are they giving the executives that time to take away for the project work? Great, great question. This is really the core, one of the core problems I always raised when I do workshops with senior leaders is, how come you cannot extract people from your day to day job and put them in a project is one of the biggest challenges that I see. Even companies which have 10,000 people, they are not able to free up 50 people to carry out the project. The best projects I've seen in a research, one of them of course the iPhone, the first one which I researched very much in detail, at that time they were able to take the day-to-day people, the senior leader, the best people of Apple at that time and extract them for two years and a half to develop. And people who were in the operations also said, well I love to join this project but who's going to do to do my day-to-day activities? And we're saying, don't bother. Anybody can do your day-to-activities. You have a deputy when you said, we'll put those people, we'll promote them, we'll create more talent but you're the best person in these companies. How come you're not working in the most strategic project in the future of your work? Right? It doesn't make sense but companies struggle so much and there's nothing worse that you can do. Alisson that half-time people working in your projects. I work one hour per week, then I work two days per week, and it's a mess. It's not how you deliver great projects is at least try to get the best people around. I think that makes sense when you sort of have a clear idea of what the future is going to look like and you know exactly which five projects are the most important but isn't the issue in many cases that organizations sort of have 30 projects on the go and aren't really sure what's going to pan out and they can't take all of those people away from their day-to-day activities. So how do companies prioritize? I'm sure everybody that listening is they can relate to that point. Companies have way too many projects. I think if there's a core skill for leaders in current times is focus and priorityization knowing what is the big bad and unfortunately it's just very hard to see when you see more projects than employees and like you're saying how can they do their day-to-day job plus three four-time projects? That's where people get overwhelmed. I am sure that the big reset is linked to this. So many projects plus day-to-day activities it's just stressing everybody out and I think that when you work with companies where the priorities are clear where people know these are our top three they're top five and we know where we're going this is the focus that's where I think executives need to work on on really making the tough decisions. What are some best practices for putting project teams together? Well Alison the formula for engagement is super simple. So the most engaged people in a project you know which one is it? Volunteers. Let me put you an example maybe in HPR you are launching a new project. Why don't you ask who wants to join? It's so simple because there's different things that happen here. First if nobody wants to volunteer in the project that project is terrible. Don't start it. Don't start it because it's just people are going to be forced to do it. So ask for volunteers. Nobody shows up. Don't start it. You don't need a business case of three months hiring consultants to make you. He has this is if nobody jumps on it terrible. Don't even start it. It's just a five minute test and you save three months of work. Second if the project talks about business case very few people get excited. Who wants to work in a project that delivers 10% return investment? Yes nobody right? 15% nobody who wants to work in a project which is going to make a more sustainable world. Who's going to work in the come in a project who's going to increase the customer experience and make customers more happy and deliver better value to customers. Who wants to work in a project who's going to create our employees or make our employees more happy and make us a top company? Lots of people. So we have been when we were talking about some of the issues. I think project management has been focused on talking about things that don't matter to most of the stakeholders like a business case. Business case is super important. It's the return investment for sure but that's not what engages people. The purpose engages people. When you have volunteers they will dream about your project. They will do whatever they can to make it happen and it can be because of the purpose. It can be because they like to work with you. They see a big opportunity to learn of course as a project leader you need to balance that. But as simple as that, Alisson, who wants to volunteer? How does the rise of project-driven work relate to the gig economy? Is your sense that companies are hiring contractors and freelancers to get a lot of this done? Is it a balance? Or are they trying to handle most of it in-house? I think when we started to hear about the gig economy, I think yes one of the reasons was let's hire external resources to work in our projects because we're so rigid internally like I cannot free my from my 10,000 people. I cannot free 10 of them because they're so busy in day-to-day operations plus all the projects. It started like that. What I see now is that companies are finally taking the step of shifting resources to more project-based work. Again, when I use the word project I include agile teams self-directed. Very flat project-driven teams. That's happening to the point that I talk about. It is that companies are canceling job descriptions. We all had job descriptions like, most of the people listening probably they had a job description which tried to describe like where do you fit in this box? And just do those activities in this box in that operational field. That's your box. If you do it right in two, three years, you just go up in this structure. But many large companies and small companies are realizing that people don't work in boxes anymore and job descriptions are are not needed. It's a thing from that world driven by efficiency that together with the chief operating officer in this role So I think they will not last very long So I think the the project driven world is now being embraced by organization where companies like Alibaba or Other major players are really embracing this type of work Where yeah, they're looking for people who can have an idea who can develop the idea who can implement the project and who can Run the idea of the product or the business and generate value for the companies This is what I call end-to-end players or strategy implementation professionals We want this type of end-to-end players who can work transversally in organizations Are there lessons from your project management world that might be helpful for people doing more traditional ongoing work? I think project managers have been a bit not very Proud or about their work. They've been seen like okay, you are not very modern Agile teams are better or innovation people So I think as a project manager, you need to believe on what you're doing Second, I think we need to take a more ownership. I I've been working 25 years in this space and managing large transformation M&A and and I always was waiting for the sponsor I know the sponsor was very important for my projects, but I was kind of waiting and hoping that the sponsor will learn and follow training on how to do it or Make some times for my projects and I've learned learn the lesson is that the first thing I do in my projects is I go to the sponsor and Talk frankly with the sponsor listen. Are you ready to put time on this project? It's a very important. I need you and I'm happy to coach you. I'm happy to tell you how projects work and what do we need? To focus on but I need your time and I need a couple of hours per month Let's say an hour every two weeks. I need to talk to you. I need decisions from you So I'm very much proactive because I know that role is very important and these people are really busy So that's one of the biggest lessons learned was being proactive with my project the second maybe is I Talk to many project managers and we are very Technical to the point of sometimes difficult to understand slash boring, right? Who wants to talk to a project manager? Come on. Do you have something more interesting? No, but that's more interesting than I am mad than my sort of vision Yeah, you see you see and and because I don't talk about project management I don't talk about Ganchard's I don't I don't think that's my kitchen That's what I do when I need to think about making a plan, but you are interested on the bigger picture You are interested on how my ideas will contribute to our needs as an organization So I do this exercise with project manager tell your partner What do you do without mentioning the words projects and project management and they say oh? I'm struggling. What do I do and then they start talking about the value they bring and that's what people want to hear so I you cover this topic broadly in HBR but Talking, adapting, understanding the language of your stakeholders using it That's how you get their engagement. That's how you get their attention That's how they appreciate your value and and that's the second big learning when I did that thing change for me Senior leaders wanted to talk to me when I forced them to prioritize and Kid projects. They were saying Antonio. We want another meeting with you was the CEO of the bank because I forced them I Forced them to create value. I forced them to have strategic dialogue So I would say if you're listening you're working in this pace move on into that space Move on the value creation on your stakeholders and things will change very fast That was Antonio Nieto Rodriguez Speaking with HBR idea cast host Alison Beard and Thoney is the CEO of the consultancy projects and co his new book is Powered by projects leading your organization in the transformation age HBR on leadership will be back next Wednesday with another handpicked conversation from Harvard Business Review If this episode helped you share it with your friends and colleagues and follow the show on Apple podcasts Spotify or wherever you listen to podcasts While you're there consider leaving us a review and When you're ready for more podcasts articles case studies books and videos with the world's top business and management experts Find it all at hbr.org This episode was produced by Mary do and me Amanda cursi On leadership's team includes Maureen Hoke Rob Eckhart, Erica Trexler, Ramsey Kabaz and Bartholomew and Nicole Smith Music is by coma media