4. Identify Which Part of the Problem or Opportunity the Initiative Will Address

Note: In this framework, the term initiative refers to programs and projects. The term work execution unit refers collectively to programs, projects, phases, releases, and work packages, all of which are considered temporary organizations.

The Fallacy of Oversized Work Execution Units

A frequent and significant contributor to initiative failure is the concentration of too much work and excessive complexity into a single work execution unit, whether a project, phase, release, or work package. Such undertakings demand extensive time and present considerable challenges in planning and execution. While a massive organizational problem might seem to warrant a correspondingly massive response, this approach is counterproductive. The most effective strategy for confronting large-scale challenges is to address them incrementally, one piece at a time.

Organizational goals are typically too complex and far-reaching to be achieved by a single effort. Success requires a portfolio of programs, projects, and operational changes working collectively toward the desired outcome. The key to avoiding work execution units that extend indefinitely is to shift focus from single, monolithic units to a multi-layered management structure that breaks down work into logical, manageable units.

A Framework for Effective Change

A program is a structured group of related projects, phases, and operations designed to achieve a strategic objective. Within this framework, the roles at each level of the hierarchy are distinct:

• Programs: Coordinate a collection of projects and operations to achieve a strategic objective and deliver benefits outlined in the business case. They allow for strategic adjustments; if there is a variance between expected and realized benefits, new or modified projects can be introduced to correct the course.
• Projects: Deliver the specific components, capabilities, or outcomes required for change. A project’s success is measured by its own distinct criteria, such as on-time delivery and budget adherence.
• Phases or Releases: Represent distinct stages or increments within a project, often culminating in a major deliverable or integrated outcome. Decomposing a project into phases or releases creates manageable segments with clear start and end points.
• Work Packages: Constitute the lowest level of breakdown, defining the specific work to be performed by a team or individual to create a particular deliverable.
• Operations: Utilize the components delivered by the projects to implement the desired change and deliver the intended benefits on an ongoing basis.

Example: Equipment Installation Program

An initiative to install new equipment costing €100,000 is expected to reduce operating costs by €45,000 annually over five years.

• Ineffective Approach: A single, five-year project to assess the success of the equipment, conflating delivery with benefit realization.
• Effective Program Approach: A program composed of a one-year project and a four-year operational phase.
• Project (1 Year): Focuses solely on installing the new equipment. Its success criteria are tangible and immediate: timely delivery, adherence to requirements and budget, satisfaction with the project team, and the operational readiness of the new equipment.
• Operations (4 Years): Focuses on operating the equipment to demonstrate and capture the annual savings of €45,000.
• Program Outcome: The program as a whole is responsible for delivering the financial benefits envisioned in the business case, while the project remains focused, achievable, and time-bound.

Deconstructing Complex Problems: A Case Study

To illustrate the importance of defining the specific aspect of a problem a project will solve, consider an organization aiming to double its customer retention rate within three years. This goal originates from a larger profitability problem that is too vast to be solved in a single effort. The decomposition process is as follows:

1. High-Level Problem: Profitability issues are broken down into their core components: declining revenues and rising costs.
2. Component Focus: The focus shifts to declining revenues, which is further broken down into issues with sales volumes or realized prices.
3. Sub-Component Focus: Attention is narrowed to sales volumes. This is still a substantial issue and can be attributed to challenges in acquiring new customers or insufficient purchases from existing customers.
4. Specific Area: The analysis centers on existing customers.
5. Root Cause Identification: Problem-solving techniques reveal that the primary cause of customer attrition is dissatisfaction with customer handling, not the quality or price of products.

With this granular understanding, the organization can set a specific strategic goal: increase customer retention from 35% to 50% in one year and to 85% within three years. Further analysis pinpoints the exact sources of customer dissatisfaction:

• Prolonged order delivery times
• Lack of transparency regarding order progress
• Constant phone congestion at the customer service desk
• Unnecessary questions from operators to identify customers and orders
• Defensive and unfriendly responses to customer complaints
• Inconsistencies in accounts receivable management

Each of these smaller, identified problems can be addressed through a single, manageable work execution unit, such as a project, a project phase, a release, or a set of coordinated work packages. By methodically resolving these individual issues, the cumulative effect will be the achievement of the desired outcome, namely increased customer retention and, ultimately, improved profitability. This targeted approach does not preclude the need for other work execution units (projects, phases, releases or work packages) to address different areas like cost management, pricing, or new customer acquisition.

Managerial Capacity and Sizing Work Execution Units

When defining the work to be performed for any work execution unit, it is crucial to account for the finite capacity of the managers responsible. This principle applies at every level of the hierarchy, from programs down to work packages.

• A full-time manager has approximately 2,000 working hours in a year.
• An established rule of thumb suggests a ratio of one manager for every six full-time equivalents (FTEs) they are coordinating.
• This translates to a capacity limit: a single manager can effectively oversee approximately 12,000 hours of work per year (6 people x 2,000 hours).

If the estimated effort for a work execution unit exceeds 12,000 hours in a year, the manager will require a subordinate layer of management. This delegation model allows capacity to scale. For instance, a project manager overseeing six team leaders, who each manage work packages performed by six individuals, can effectively coordinate 72,000 hours of work (36 FTEs). Recognizing these capacity limitations is fundamental to scoping manageable and successful work execution units at all levels.

Core Principles for Scoping initiatives

In deciding which aspect of a larger problem an initiative should address, several critical factors must be considered to ensure success.