Monday, June 28, 2021

The funnel and the pyramid!



In every book written about project management, the PMO is at the apex of a pyramid. Sometimes, as in Agile project methodology, the pyramid is flatter than most, but always there is an identifiable top figure.

Fair enough.

But Robert Gates, former Defense Secretary [and holder of many other government titles] writes that he often felt like the pyramid was inverted and thus took the look of a funnel. In the funnel model, the 'decider' is at the bottom of the funnel, with others pouring stuff in. 
 
Funnel v. Pyramid
How can it be that the top person is at the bottom, figuratively?

Gates explains: in the pyramid model, stuff is either pushed up for political cover, or because protocol demands that the decision lies higher, or because the apex person is pulling stuff up that they want control or inspection of

But in the funnel model, the top person is like the paper at the bottom of the bird cage: everything is pouring in from the top; and everybody on the project is busy doing the pouring. Fortunately, only a bit funnels all the way through, but gravity seems to be in charge. It's inexorable.

Filters in the funnel
Fortunately, the funnel can work like the pyramid, only with gravity. There can be and should be filters in the funnel. The minor stuff is trapped early and doesn't make it through. The top person -- at the end of the funnel -- can pull stuff "down", and there is some gravity effect: stuff naturally falls to the bottom for action.

And so for the PMO, the management points are:
  • In the funnel model, things move by default. There's an expectation on the part of anyone pouring stuff in at the top that it will eventually come to the attention of those 'at the bottom of the funnel'. Gravity is just the consequence of applying energy to get stuff up to the top of the funnel and pouring it in.

  • But in the pyramid model, gravity works against you. The default is: nothing moves to the top. If you want it to move up, there's work to be done!

If you like the idea of a funnel, how would you create it?
Just open your door! The funnel model is somewhat like "my door is always open" (even if virtual) ; anyone can "pour" something in. 
 
But, rather than "anyone can", you move to "everyone should" pour something in. As the 'decider' you don't have to pull very much in if you operate like a funnel; stuff will get to you. If you like the funnel effect, you say that's good.
Perhaps, but only if you have the methods, tools, discipline, and staff to sort it out.

If you don't, turn things upside down and operate like a pyramid. Gravity is your friend; a lot of stuff just won't rise to the top.




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Friday, June 25, 2021

Do you trust the other side of the transaction?



The other side: the counter-party
In a transactional relationship, the other party to -- or participating in -- the transaction is your counter-party.
 
In project situations, there are usually many counter-party transactional arrangements, such as contractors and suppliers with transactional relationships. And within the business there may be transactional relationships among business units and the PMO. 
 
Oh! And don't forget the money: there may be financiers of the business or project which have a counter-party relationship to the project.

Fair enough. But now comes counter-party risk: the risk that the other party to the transaction, or perhaps you yourself, will not be able to hold up their side of the transaction.
 
About counter-party risk
So, you are about to enter into a transaction with another party. What might be the risks?
  • Trust: you may not know the other party well enough to convey trust, a willingness to believe what they say without the protections of a written agreement.
  • Ability to perform their side of the transaction may be in question. Do they have all the requisite tools, resources, and experience? Is something required of you in order for the other side of the transaction to be completed?
  • Willingness to perform their side of the transaction when the whole deal comes under stress may require backup
  • Lead, or being led? Really, who's in charge in this relationship? Can you say you really understand what you are getting into?  Warren Buffet famously said words to the effect: 'I never invest in businesses that I don't understand' 
What is your strategy; what are your tactics; what -- or who -- can you trust?
  • You might be able to trust if you can verify: Observable, measurable evidence that your counter party is doing their end of the bargain
  • Your strategy should be to keep the counter-party fully engaged with intent to fulfill their side of the bargain.
  • Your tactics should be to put in place standard risk management tools: Written agreements with incentives and penalties, and opportunity to observe and measure; sober assessments of their track record on similar activities; and perhaps insurance for consequential damages if the counter-party fails.
  • Always have Plan B in-hand: what if the counter party fails? What then? Can you exist or terminate the transaction? 
  • Are the terms spelled out for mutual agreement? Is it 'liquid' or is there a timeline for exit that has to be accounted for in planning?



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