Relationships

Leadership is about building and sustaining healthy relationships. Today I'd like to introduce some concepts I find quite different and extremely powerful.

Let’s begin with a simplistic business model.

Gross Revenues – Production Costs – Transaction Costs = Profit

In this model, Transaction Costs are the costs of building and maintaining effective relationships.  This variable has always been there, but because traditional accounting systems were built to track and analyze production costs, true transaction costs (relationships data) have generally been absent.  Relationship data that is gathered is considered “soft”, and gathered retrospectively, making it of marginal / limited predictive value.

Now let me introduce some underlying tenants regarding the value of relationships:

1. Businesses (and projects) leverage relationships to produce goods and services which are marketed and sold to customers, again leveraging relationships.
2. Thus, one might appropriately conclude that, from a variety of perspectives, relationships (both internal and external) are an organization's (and a project's) greatest resource.
3. Healthy relationships are more beneficial and less costly than unhealthy relationships.
4. Healthy relationships reduce transactions costs - while transaction costs associated with unhealthy relationships can be exorbitantly high. Thus, organizations and individuals (market entities) successfully establishing healthier relationships are more efficient and, therefore, more viable in a free market than entities with less healthy relationships.
5. Relationships based on or motivated by power, self-interest, greed, and benefit for one at the expense of the other are more costly, and thus irrational in a free market.

So it might be reasonably concluded that to keep project costs and cycle times down, our goal as project leaders should be to establish and maintain healthy relationships (with core team members, sponsors, stakeholders and customers).  

But what are the criteria for healthy relationships?  Relationships are complex and you might expect that the criteria for successful relationships might be very long and dependant on many variables.  Well, you're going to find this surprising. There are only two, the relationship must have;

1. Mutual, and approximately equal benefit to the parties involved, and
2. Mutual pleasantness

And, what is even more surprising is that there are just four causal conditions for healthy relationships.  There must exist;

1. Intersection of purpose - the parties must share a common or intersecting purpose
2. Mutual respect
3. Mutual trust
4. A means to conduct the relationship

Over the next few weeks, I will provide some conclusions from this cutting-edge research on relationships. In this posting I will introduce only one of the underpinnings; respect.

Respect is the result of 4 important attributes:

1. Competence (both technical and interpersonal)
2. Integrity (moral virtue, values, and consistent / aligned behavior)
3. Responsibility (commitment of necessary resources, dependability)
4. Charity (genuine, active concern / desire for the welfare and success of others) 

Competence: The project leader and team members must demonstrate consistent competence in their roles and facilitate learning within the team. Competence is adequacy, sufficiency, qualification, appropriateness and mastery.

 

Integrity: Those working on the project must demonstrate high levels of integrity. They must honor commitments, act predictably, maintain high values, perform to high standards and always be forthright.

 

Responsibility: Project team members / leaders must demonstrate commitment and dependability. Respect has much to do with predictability.

 

Charity: Good leaders (and team members) are perceived as genuine. They demonstrate sincere concern for others through frequent appropriate small actions / deeds. Demonstrating charity is showing true concern for the welfare and success of others.

 

Just as we are able to manage production costs, we are able to manage transaction / relationship costs.  More in the weeks to come . . . .

 

I'd really enjoy hearing your reactions!

For The Newcomer

Projects are conducted in a world outside the world of "Production Management" or the "Hierarchical" organization with which you are so familiar.  Thus, at becoming a project leader, you enter a new world.  This transition can be quite difficult and many are unable to successfully navigate it.  The rules in the "Hierarchical" organization, may not apply here.  During your service as a project leader, you need to retain a memory of and ability to work with the hierarchical world, but recognize several significant differences;

1. Risk - in the "Hierarchical" organization, we avoid risk-taking behaviors and even create policies (rules) discouraging it.  In the "Matrixed" organization (your project core team), you need to encourage and reward risk-taking.  You have entered a world of unknowns, and as such, you will be defining things as you go which includes risk-taking.  In the project world, it may be easier to get forgiveness than permission.  Make risk-taking a matter of discussion within your core team and be alert for opportunities to reward it.
2. Rank - in the hierarchical organization, you are expected to recognize and respond appropriately to rank (called "political savvy").  Decisions require approval up through the chain of command.  All of this requires "time" (your most precious resource as a project leader) of which you have very little.  In the project world, core team members must check their rank at the door.  You will be required, most times, to go to where you can get the most authoritative / quickest / most efficient response irrespective of the chain of command.  You will need to heighten communication with the hierarchical organization to minimize negative consequences associated with rapid response.
3. Rules - the hierarchical organization is replete with policies, procedures and rules. These have been refined over time into "best practices" and become institutionalized. By definition, a project is to produce a "new" product / service or process. "New" suggests that rules are defined as you go. Unlike the hierarchical organization, these rules facilitate the effective / efficient execution of a prototypical product / service / process and may thus only work in your unique project environment. The most efficient path in one world may not work in the other.  Here again, heightened communication efforts are necessary to minimize negative consequences for core team members.
4. Results - in the hierarchical organization we tend to focus on bottom line impacts.  In the project environment there is a distinction between means -vs- ends.  Means are the resources used to produce the desired ends.  Our focus must be on developing the means (in project work this is the team) to produce our desired ends (the desired results or deliverables / tangibles) and provide our team the freedom to create.  As project leader, your responsibility is singular; to protect the means or your core team. The core team has the responsibility is to produce the results.  When your focus slips to the ends, the team typically suffers, thus negatively impacting the resulting ends.

This is by no means meant to be an exhaustive list of differences, but by paying attention to these four critical distinctions, a leader in the hierarchical organization can survive and even thrive in the project environment.  We'd love to hear your comments.

Leading Virtual Teams

Virtual teams (teams composed of individuals who are not co-located) are becoming the norm. They present a variety of advantages over traditional teams, but come with their own set of problems and limitations. Recognizing both positives and negatives of virtual teams will improve your ability to leverage strengths and mitigate some of the potential problems.

Strengths: Geographical customer perspectives represented, global agility, improved execution of global products / services, enhanced diversity, improved ownership of output by global stakeholders, improved customization for regional customers.

Challenges: Communication, core team ownership, change management, core team meeting effectiveness & efficiency, coordination of execution, homogenization of global stakeholder expectations.

Leveraging Strengths: Having team members residing where ideas and perspectives originate can produce a large advantage. Team leaders should therefore ensure virtual team members are engaged in the creative processes associated with the initiation phase of projects. Virtual team members are also in place for roll out or execution of finished products / services and can obtain first-hand feedback from remote or local customers / stakeholders. Team leaders should leverage this information availability by meeting with team members regularly. Virtual team members typically have differing perspectives and thus diversity becomes a strength. Team leaders should leverage this diversity in the early, creative stages of projects. Virtual team members are more adept at getting buy-in from their local stakeholders, so team leaders should leverage them throughout the process to ensure input, commitment and ownership by local stakeholders. Finally, virtual team members can represent regional or local expectations allowing products and services to reflect these needs and perhaps take on regional characteristics. Bottom-line: Team Leaders must recognize and leverage the strengths of virtual teams to ensure the advantages play out in their projects.

Overcoming Challenges: By far the greatest challenge is communication. We suggest that at the beginning of each major project you set aside time and money to allow for at least one face-to-face meeting with all virtual team members. This can initiate good communication and encourage familiarization with other team members, minimizing communication issues further into the project. It “greases the skids” for future communication. At this first meeting the core team should conduct the work breakdown structure or create the project plan. This starts the project with the ownership typically lost in virtual teams. It will bind the team together as they part and go to their respective work locations. As changes occur, team leaders need to draw input from other team members, ensuring that ownership and commitment are continued. Meeting agendas published in advance do much to ensure meeting efficiency and effectiveness. Following the same format each meeting and keeping them brief and on task also helps. The work breakdown structure or project plan creation process also helps maintain coordination of tasks and assists by clearly defining responsibility for each task. Minutes distributed to key stakeholders by their local virtual team members will help homogenize expectations globally. Bottom-line: Team Leaders must ensure that virtual team members participate in the creation of the project plan / work breakdown structure, gain ownership and then meet regularly. Doing these things will mitigate a majority of potential problems.

As you can see, virtual teams come with challenges, but we hope you see that recognizing the strengths and potential problems associated with them is the first step to leveraging the strengths and mitigating the challenges. This is a relatively new phenomenon and so definitive answers do not always exist yet. If you have experiences with virtual teams and ideas or suggestions that may help others, please submit them to us at the e-mail address below and we will revisit this topic again in the near future.