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Crisis Project Management in Troubled Times

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Title: Crisis Project Management in Troubled Times


1
Crisis Project Managementin Troubled TimesLike
NOW!
  • Paul Allen, CEO / Project Executive
  • Project Executive Group Houston
  • Your Performance Multiplier
  • www.projectexecutive.com
  • February 2009

2
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 Houston-based global
    professional services and training firm, and has
    over thirty years of project development,
    financing and training experience.

3
This isnt my FIRST RODEOITS MY 6th !
  • 1973-75 NYS (Oil Price)
  • 1981-82 NYS ( Interest)
  • 1985-87 Hou (Oil Price)
  • 1999-00 Hou (Oil Price)
  • 2001-03 Hou (9/11,)
  • Enter Sarbanes-Oxley WAR!
  • 6TH - 2008-? - Houston

Ouch! THAT HURTS!
Experience Teaches Lessons Ike Economy This
ones the BULL! Wheres the Rider?
4

Doing a Good Job?
The Right INTERNAL Politics?


The Right EXTERNAL Politics Client-Relations?
Continuous Improvement Education, Skill Sets
Certifications
5
You MUST Sharpen the Saw to Survive!
Coveys 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 self-renewal in the
four areas of your life physical,
social/emotional, mental, and spiritual.
6
2007 - times were good, Houston, BUT
  • Sustainable breakthrough performance requires a
    laser-sharp focus on strategy execution.
  • The evidence is overwhelmingStrategy 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

7
New Strategies MUST be successful!
  • Today
  • Youre 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

8
Whats 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
  • 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!

9
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.

Source Wikipedia
10
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.

Source Wikipedia
11
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.

Source Wikipedia
12
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.

Source Wikipedia
13
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.

14
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.

15
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.

16
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.

Source Internet Yahoo News
17
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!

18
Who Says Intervention Wont 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.

Source George Washingtons Blog
19
Effect of the Depression N. America
Source Wikipedia
20
Will they go toCalifornia again?
Henry Fonda In Grapes of Wrath - 1940
  • 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.

This film was the most popular left-leaning,
socialistic-themed film of
pre-World War II Hollywood.
Source Wikipedia
21
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.

Source Wikipedia
22
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)
Source Wikipedia
23
Great Depression-WWII Timeline FACTS
  • SourcesT.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)

24
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

25
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.

26
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.

27
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.

28
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?
  • Lets take a look
  • at the FIVE Recessions from 1945 to 1963, and
  • the rest.

29
Recessions Since the Great Depression
  1. Recession of (1945) Duration 8 months
  2. Recession of (1948 - 1949) Duration 11 months
  3. 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
  4. Recession of (1957 - 1958) Duration 8 months
  5. Recession of (1960 - 1961) Duration 10 months
  6. Bond Inversion of (1965 - 1967) no recession
    materialized
  7. Recession of (1969 - 1970) Duration 11 months
  8. 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
  9. 1979 energy crisis - 1979 until 1980, the Iranian
    Revolution sharply increases the price of oil
  10. Recession of (1981 - 1982) Duration 16 months
  11. 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
  12. Great Commodities Depression - 1980 to 2000,
    general recession in commodity prices (OIL PRICES
    FELL)
  13. 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
  14. Japanese recession - 1991 to present, collapse of
    a real estate bubble and more fundamental
    problems halts Japans once astronomical growth
  15. Asian financial crisis - 1997, a collapse of Thai
    currency inflicts damage on many of the economies
    of Asia
  16. 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.

30
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 CHANGEBE READY FOR IT!

31
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 248PM GMT
    23 Jan 2009

Source Wikipedia
32
What About NOW in the U.S.?
  • Wikipedia Late 2000s 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.

Source Wikipedia
33
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

34
Do We Have Your Attention?
  • Do we agree were 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?

35
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!

36
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.

37
What problems do PMs need to address?
  • 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.

Source A Sense of Urgency J. Kotter
38
Resistant to New Ideas? - YOU cannot afford to
be TODAY!
39
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!

Source A Sense of Urgency J. Kotter
40
The Complacent
  • How do they think?
  • The complacent virtually never think they are
    complacent. Im doing whats right. Sometimes
    it isnt easy, but I know what to do and I do it
    or if I cant entirely do it, the problem is
    created over there (in that department, by my
    boss, by competitors that dont play fair,
    etc.).
  • The BLAME GAME! A non-productive exercise!
  • Fix the problem, not the blame!

Source A Sense of Urgency J. Kotter
41
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.

Source A Sense of Urgency J. Kotter
42
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?

Source A Sense of Urgency J. Kotter
43
WHO can be complacent? The assembly line worker,
you, me, our bosses, anybody!
44
What is the other problem now?
  • 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.

Source A Sense of Urgency J. Kotter
45
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.

Source A Sense of Urgency J. Kotter
46
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.

Source A Sense of Urgency J. Kotter
47
False Urgency
  • What do they feel?
  • Those with a false sense of urgency tend to be
    very anxious, angry, frustrated and tired.

Source A Sense of Urgency J. Kotter
48
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. Its 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?

Source A Sense of Urgency J. Kotter
49
WHO can behave with a false sense of urgency? The
assembly line worker, you, me, our bosses,
anybody!
50
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

Source A Sense of Urgency J. Kotter
51
The Problem Lack of a True Sense of Urgency
  • The BIG Reason that a true sense of urgency is
    rare is that its 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.

Source A Sense of Urgency J. Kotter
52
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!

Source A Sense of Urgency J. Kotter
53
DO YOU ACT with a SENSE of URGENCY?
54
HOW ABOUT NOW?
55
SorryTOO LATE! Picture Bay St. Louis
Katrinas 30 storm surge
56
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.

Source A Sense of Urgency J. Kotter
57
Wrong Unacceptable Behavior
OR
Rule 1 Dont Put your head In the sand!
58
Look for RED Flags Flag 2
  • THIRTEEN MONTHS after the PROBLEM was known
  • After studying the consultants 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?)
Source A Sense of Urgency J. Kotter
59
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.
    Its not here!

60
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!

Source A Sense of Urgency J. Kotter
61
Wrong Lack of Crisis Mgt Skills
  • The Task Force Does NOT Understand Crisis
    Management
  • Crisis management Clear Your Calendarwe 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
  • a threat to the organization
  • the element of surprise, and
  • a short decision time (Seeger, Sellnow Ulmer,
    1998).

62
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 dont have the time to
    do so.
  • Im 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!

Source A Sense of Urgency J. Kotter
63
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.

The Rudderless Ship of State
Crisis management consists of methods used to
respond to both the reality and perception of
crises.
Source A Sense of Urgency J. Kotter
64
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!

Source A Sense of Urgency J. Kotter
65
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
    Infodo 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.

66
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 firms eroding position.
  • No one acted on these conversations. They only
    complained!

Source A Sense of Urgency J. Kotter
67
Wrong When Hemorrhaging, Urgency!
  • Company Turnaround
  • Project Turnaround
  • Cash Management
  • Rescuer OR Grave Dancer
  • CASH is usually the problem.
  • Time Management
  • Usurper OR PM Team Developer
  • TIME is usually the problem.

68
Turnaround Outcomes, Phases, Timelines
  • Company Turnaround
  • Project Turnaround
  • Possible Outcomes
  • Bankruptcy 11,etc., even 7
  • Turnaround, no bankruptcy, with
    management change
  • Turnaround, no bankruptcy, no management
    change
  • Disposal of the company
  • Phases
  • Analyze the Situation days
  • Triage Immediate days
  • Develop/Implement Plan - weeks
  • Restructuring months
  • Stability over time as needed
  • Possible Outcomes
  • 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 lt 2 weeks
  • Stabilization 30-60 Days
  • Maintenance as needed
  • YOU have a 2-WEEK Honeymoon!

69
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.

Source A Sense of Urgency J. Kotter
70
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

Source A Sense of Urgency J. Kotter
71
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!

Source A Sense of Urgency J. Kotter
72
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
    companys 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 organizationsbankruptcy, 11 or 7.

Source A Sense of Urgency J. Kotter
73
Turnarounds the Top 3 ProblemsManagement,
Management, Management
  • The first key to any corporate renewal plan is an
    accurate assessment of the root causes of the
    crisis.
  • ACTION is a RequirementFence 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
  • 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 RD Projects
  • Becoming Uncompetitive
  • Excessive Debt Burden

74
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 issuesnot 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 urgencyit would be
    different!

Source A Sense of Urgency J. Kotter
75
CaptainYour Ship is Sinking!
76
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 firms number one
    competitor.
  • YOU Be Pro-Activemake sure you are a WINNER!
  • PM is managing CHANGE. Be a Change Leader NOW!

Source A Sense of Urgency J. Kotter
77
The Decision
  • PPT Presentations
  • 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
    dont think so!
  • COMMIT NOW to a Sense of Urgency in what you do!

78
PMI Houston PEG Collaboration
  • IN ADDITIONSharpen the Saw!
  • Advanced Project Management Program
  • Eric Jenett, PMP1, 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 (830AM 400PM)
  • REGISTER on PMI Houston website. Venue PEG
    Offices

79
Thank You!
  • Project Executive Group
  • Your Performance Multiplier
  • www.projectexecutive.com - pallen_at_projectexecutive
    .com
  • 10260 Westheimer, Suite 250 - Houston, TX 77042
  • Sterling Bank Building - Beltway 8 Westheimer
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