6   Environment: responding to external and internal influences

Formulation of MoV policy, strategy and plans needs to take account of external and internal influences as well as the scale and complexity of the projects to which they are likely to be applied. This chapter describes some of the influences to which it should respond. These may influence both the perception of value and the form of the MoV activities.

Figure 6.1 Structure of Chapter 6

Both external and internal factors will shape how organizations act, express desired outcomes and plan to achieve them (see Figure 6.2).

Figure 6.2 Interrelationship between internal and external environments

6.1     EXTERNAL FACTORS

All organizations should construct their business model in accordance with the external environment. The internal environment is shaped and influenced by it. Although this section touches on a wide range of issues, it should be read in relation to the approaches to implementation discussed in Chapter 5.

6.1.1     Political and legal influences

Political and legal influences arise from central and local government intervention as well as legal proceedings and case law. These comprise a huge range of subjects that will affect almost every activity undertaken.

Their influence will impact on perceptions of value as well as the need to adjust MoV plans to address the specific issues raised by these influences.

For example, emissions of carbon dioxide used to be regarded as an inevitable and unimportant consequence of doing business. Now, not only are unlimited emissions not permitted but they have a high value through the introduction of carbon emissions trading.

6.1.2     Environmental influences

Global climate change has kindled great interest in the so called ‘triple bottom line’ – ‘people, planet and profit’ is the descriptive phrase coined for Shell and widely used elsewhere. MoV addresses and enables reconciliation between the inherent conflicts in objectives combined in this measure by building consensus among stakeholders as to the best balance of benefits to be secured within available resources.

6.1.2.1     People

‘People’ refers to the social factors and to how the organization and its activities relate to the market, the community and its own employees. Maintenance of an organization’s brand can have a significant impact on its success and it needs to be well communicated and maintained. ‘People’ also includes the cultural aspects such as the organization’s perceived attitude towards demographics, employment, health and safety. Trends in social factors affect the demand for a company’s products and how that company operates. Nowhere is this more apparent that in the issue of sustainability. Some years ago, ‘green supporters’ used to be seen as a radical fringe group. Now everyone is keen to flaunt their green credentials. MoV provides transparency of value for its customers and ensures that their views are represented.

6.1.2.2     Planet

Organizations are becoming increasingly encouraged to minimize their use of unsustainable resources and cut pollution and waste. Nowhere is this more apparent than in the focus on carbon reduction. An organization’s attitude and practice towards minimizing its impact on the planet’s resources is now a major factor in enhancing the brand and will have significant influence on how it approaches projects. MoV policy will be shaped by the organization’s attitudes to using resources more effectively and generating less waste, as these will translate to value drivers at portfolio, programme and project levels.

6.1.2.3     Profit

Despite the pressures to invest in their people and minimize their impact on the planet, it is vital that businesses remain viable and sustainable organizations.

The emphasis that MoV places on reconciling conflicting requirements and balancing the use of resources provides a powerful way to enhance profitability and maintain economic sustainability, without sacrificing commitments to the people and the planet.

6.1.3     Technological influences

Changes in technology have always provided strong drivers for change. Responding to change effectively requires an innovative approach to how things are done. One of MoV’s strengths is the ability to stimulate innovation by considering alternative ways to deliver functions.

Changes in technology may also have a profound impact on the perceptions of value. This is nowhere more apparent than in consumer ICT products, where yesterday’s exciting breakthroughs become today’s performance differentiators and tomorrow’s basic requirements.¹¹

6.1.4     Interaction with other projects

Whenever an organization embarks on a new initiative, it must take into account what other organizations operating in the same space are doing. At portfolio level such considerations will shape the organizational strategy. At programme level the shape of the programme will be optimized to exploit opportunities arising and be constrained by the impacts from other organizations’ programmes.

With its emphasis on broad stakeholder involvement, MoV can help shape portfolio strategy and programme and project plans.

6.2     INTERNAL FACTORS

Having analysed the external situation, the executive board will reach conclusions on which parts have most impact and will respond with an appropriate portfolio strategy. It will then consider how to implement this strategy in the most effective manner to minimize disruption and in a timely manner.

6.2.1     Portfolio and policy considerations

The portfolio strategy will dictate the programme plans, which in turn will define the project plans. The MoV policy should reflect requirements of the portfolio strategy. Similarly, the MoV programme and project plans should be tailored to suit the project plans. This will require that the organization’s value profile is reflected in the programme and project value profiles, thus ensuring consistency in the perception of value and the manner in which it is optimized across all activities.

If MoV is applied to a single project, whether or not it forms part of a wider programme, one of the tasks of the MoV study leader, when setting up the MoV plans, will be to align these to the organization’s portfolio and programme requirements.

6.2.2     Alignment with organizational culture

The policy expresses how the company should operate and why this is desirable. This in turn will influence the culture. We have seen earlier how it is desirable to effect changes in culture, as necessary, to encourage people to collaborate in efforts to maximize the value of outputs, rather than simply deliver a service.

The MoV implementation strategy must take existing culture into account, and if the culture is significantly out of step with the need to maximize value, adjust accordingly.

One of the most effective ways to encourage participants in MoV to actively contribute to the quest for improved value is to offer incentives. If MoV is being applied across a programme of projects, developing competition between MoV study teams is equally effective.

People need to be convinced, rather than compelled, to change. Introducing something new can help make change happen and it needs total commitment and ownership by senior management in order to maintain momentum. (See Chapter 7 for more on this.) The role of reward for people who are good role models for the new ways of doing things is significant and should be built into the implementation of MoV.

6.2.3     Interaction with other projects

The considerations expressed in section 6.2.1 above should ensure that individual MoV project plans are aligned with programme plans and the organization’s portfolio strategy.

Application of MoV should be included at all levels as a series of planned activities. MoV should be integrated into programme and project activities rather than be seen as a bolt-on extra or afterthought.

When considering the implementation plan for value-improving proposals, study teams need to be made aware that what they are doing may impact other projects and act accordingly.

Within a portfolio of programmes or a programme of projects, MoV provides a method of prioritizing their importance so that if resources are stretched there may be a need to prioritize those projects to which MoV is applied (see sections 6.2.4 and 6.2.5).

6.2.4     Integration with other processes

If it is intended to embed MoV into an organization, it will be necessary to consider its integration with other processes that may have an impact on it or with which it may be combined.

One such process is the management of risk (M_o_R). There are many ways in which M_o_R is compatible with MoV and lends itself to integration. For example, opportunities identified by risk management may be fed into MoV and integrated with the value-improving proposals. When assessing whether to recommend the implementation of a value-improving proposal, the risks, or disadvantages, of so doing should be taken into account. When establishing the relative importance of value drivers or other attributes, sensitivity analysis should include consideration of the risks that assessments may be inaccurate.

The MoV senior practitioner should also be aware of other processes that may be being applied to improve aspects of an organization’s activities. MoV could be wasted if it conflicts with or is carried on in parallel with other such activities.

6.2.5     Resource and skill availability

The planned MoV activities may be constrained by the availability of resources with the appropriate skills and knowledge to lead studies. Such constraints could result in a need to prioritize demand (so that MoV is applied in only those projects that have the highest potential for value improvement) or the need to hire in external resource with the appropriate competencies.

6.3     PORTFOLIO CONSIDERATIONS

All change activities needed to achieve an organization’s strategic objectives are contained in its portfolio.

Therefore, every programme must relate back to and reflect the strategic intent of the portfolio.

6.4     PROGRAMME CONSIDERATIONS

6.4.1     Relation to other programmes

Implementation of an organization’s vision is achieved by putting in place a portfolio of programmes or projects. Where a programme is one of several, it will be necessary to apply MoV at portfolio level to coordinate approaches and identify the benefits across all programmes. The information to permit this will derive from the outputs of programme- and project-level MoV activities reported upwards through the MoV board to the executive board.

Feedback from this exchange of information will inform the programme MoV plan.

Each formal MoV study and appropriate follow-up activities should be represented on the programme and project master schedules. To maximize effectiveness, MoV activities should be planned from the outset in the end-to-end programme and project schedules rather than added in later. It is possible, however, that some unplanned studies may be required to address unexpected situations or divergences from the project plans.

6.4.2     MoV programme plan

The initial MoV programme plan will be informed by the portfolio strategy and feedback from other programmes described above. It will also be influenced by the ongoing activities within the programme itself as the projects report progress to the programme manager and this information is transferred to the other projects.

Feedback from all studies will be used to improve performance on other projects within the programme, particularly for lessons learned, and where necessary escalated to the programme board to inform decision-making. The programme manager will, via the MoV plan and studies, agree what measures are necessary (see Figure 6.3).

Figure 6.3 MoV applied at programme level

6.5     PROJECT CONSIDERATIONS

Within the project, one of the main considerations of MoV activities is to enable projects to deliver optimized outputs to specified quality within time, cost and scope constraints. MoV should be applied at all stages of the project (see Figure 6.4) as described earlier in this guide.

Figure 6.4 MoV applied at project level

The extent of MoV activity will include considerations of the project’s scale, complexity and type. Regardless of scale, the underlying principles and processes of MoV should all be applied. Modifications may be made to depth and duration of these; for example, the duration of a formal study may be shorter for a simple project than would be necessary for a larger one.

Time should be allowed in the project schedule for MoV activities and, if required, for training for participants.

Where a project spans different organizations (a bidding consortium for example) it is vital that consensus is reached between the stakeholders as to the best way to balance the variables to maximize value.

6.5.1     Internal influences

The project board is influenced by the programme board and by the priority of the project. Depending on the business imperatives of the organization, it may emphasize one type of value driver (for example speed of delivery) over another (for example capital cost). This will be reflected in the value profile but may also put pressure on the time allowed for undertaking MoV studies. Careful judgement is needed to ensure adequate time is given for MoV work.

6.5.2     External impacts

In the case of a project whose effects will be visible outside the organization, consideration should be made of the wider community and any relevant legislation taken into account. This may require subject specialists or external stakeholders to be brought into the team. Care may be needed to maintain or enhance the organization’s image or brand.

6.6     OPERATIONAL CONSIDERATIONS

There are two sets of circumstances in which operational MoV studies may be advantageous. Firstly, those ensuing once the project has delivered its output and been commissioned for use. In this case any MoV study will focus on improving and fine-tuning the operations under the new conditions. The second relates to improving existing service operations.

Both respond to internal and external influences by means of an operational improvement MoV study to align its operations with business objectives, which are themselves designed to respond to changing conditions.

6.6.1     Internal influences

Communication must be ensured between operational managers and those with strategic, programme and project responsibilities impacting the operation. An example could be where a project impacts several departments at once (for example, implementing an enterprise resource planning (ERP) system) as this will change the way in which people do things.

Both internal and external customers will be identified and their needs addressed in an operational improvement MoV study, although the needs of the end user must always be paramount. Without end users, any service is pointless and should be eliminated. Within this context, however, the internal customer has much valuable input to contribute to improving operations. Operational improvement studies are normally undertaken as recurring activities over a period of time. Each study may be considered as a separate project, subject to the same considerations as described elsewhere in this guide.

6.6.2     External impacts

Operational improvement MoV studies are normally commissioned to address a specific problem or area of low performance, or when circumstances have changed (for example, a change in the statutory duties to be performed by a local authority). They may be triggered from external survey reports indicating a need for improvement or change. They may also be brought on by the failure of another project to deliver all the expected benefits.

Whatever the circumstances, the MoV study leader should take account of the external influences and tailor the processes used, the stakeholders consulted and the members of the study team accordingly.

11  Reference to the Kano Quality Model put forward by Dr Noriaki Kano of the Tokyo Rika University in the late 1970s.