Categorising projects – what kind of project is this?

As I mentioned in my last post, I have been pondering how to apply some of the ideas from a book called “Stand Back and Deliver” to my own work.

One of the things I like about the book is that it provides pragmatic advice on understanding the value (or lack of value) provided by a project and using this to be more deliberate in structuring project teams to deliver that value.

I would like to take a similar approach to my own projects, but I have the approach based on my own views.

Some projects need to be done because they are compliance projects – we do them or we leave the industry. Other projects are aimed at differentiating us from our competitors in the eyes of our customers.  But how do we prioritise between these projects and the ones that lead to short term revenue or reduce the costs and complexity in the business?

The authors of “Stand Back and Deliver” make a distinction between:

• Parity projects – those that are needed to maintain your market share or stay in the industry; and
• Differentiation projects – those that are aimed at differentiating you from competitors.

For example, a project to replace all your back end infrastructure might be critical to the success of your organisation but will not really distinguish you from your competitors in the eyes of your clients.  In the words of the authors, you would not “Advertise this outcome by putting it on billboards to tell your customers”.  On the other hand, modifying your product to be unique in the market would be something you would advertise widely to your customers.

I think it is also useful to distinguish between:

• Those projects designed to make significant change to your organisation; and
• Those projects that aim to do something quick and beneficial in the short term (raise revenue, save costs, create a single ad campaign).

Combining these two sets of distinctions together, it is then possible to compare projects along two dimensions:

• Projects designed to stay in the game or improve the internal workings of the organisation (parity projects or operational excellence) from projects designed to change the game (differentiation projects); and
• Strategic initiatives from tactical initiatives.

Based on this I have come up with the following categorisation for projects:

• Parity projects require a significant effort effort and should result in either staying in business or a significant change in competitiveness. In other words we needed to do this to stay in the game or to get better at playing the game.
• Differentiation projects require a significant effort and should result in something long term that makes you different to your competitors. We have changed the rules of the game and we should tell our customers this.
• Continuous improvement projects will result in immediate benefits in cost savings, improved processes, less defects or a simpler support process.
• Opportunity projects will result in a short term gain. Generally this will be revenue but it could be something else visible to the customer, such as getting a lot of attention in social networking around grand final day, or becoming a green friendly company.

	Operational excellence	Innovation
Strategic	Parity	Differentiation
Tactical	Continuous improvement	Opportunity

Cool, I have my own matrix. But so what? – what is it used for?

I don’t think that all projects will fall neatly into one box, but I do think that having a discussion about where they fit will be useful.

Firstly, if you are unsure what type of project you are on, then you are likely to be working on conflicting goals, which may distract the team.

For example if a project is aimed at helping the organisation become more environmentally sustainable then it may result in an increase in expenses (using recycled paper versus cheaper paper). So if some of the steering committee are going to consider every decision on the basis of cost alone, the organisation will reject most of the suggestions that would make it more environmentally friendly and may as well have not started the project.

Secondly, if a project is aimed at a tactical opportunity then it might start experiencing unreasonable scope creep as people start to add ideas that slow down the project but contribute to a longer term goal. Or the short term opportunity might actually succeed and bring in money, but result in diffusing the brand, or undermining future sales.

So I am hoping the categories will help to clarify the goals and impact of the project and thus help the team in to focus on the real value represented by the project and also anticipate possible negative impacts of what they are doing.

I am also hoping that it will help teams to see the connection between large and small initiatives, which might help them to break large projects into smaller tactical wins that move in the right direction, or accept some distraction from strategy to make tactical improvements to the business.

In my next article I will see if I can apply my famous question compass to each type of project (famous to me anyway). I am hoping this result in some useful conversations about how to prioritise between projects and how to set them up better to succeed.