Episode 369: Growing Business Acumen and Business Awareness as a Project Manager (Premium)
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If you are a regular listener to The PM Podcast then you heard me say on many occasions that projects are the mechanism by which companies turn their vision and strategy into a reality. And it is us -- the project managers -- who are asked to bring these projects to a successful completion so that the business needs are met.
This means that we project managers need a great deal of business acumen and business awareness. But many of us are accidental project managers, who at some point in our career found ourselves to be quite shockingly thrust into the position of a project leader. We were taken by surprise back when that happened and now they suddenly tell us that we also need all this awareness?
Well, fear not because Bruce Harpham (https://ca.linkedin.com/in/bruceharpham and http://projectmanagementhacks.com) is here to tell you how to grow your business know-how as a project manager. In this interview we review what foundational skills you need, how to access internal business knowledge from your organization and how to look for information and trends in the broader environment outside the four walls of your company.
Our goal is to help you grow the situational awareness that you need day after day on your projects by adding business awareness.
Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: Hello and welcome to this Premium Episode number 369. I’m Cornelius Fichtner. Premium means that this interview is reserved to you, our Premium subscribers, so thanks for joining us today and for supporting the podcast with your subscription and don’t forget that you will get PDUs just for listening. Please visit www.pm-podcast.com/pdu for the details and of course tell your PMP friends about it.
If you are a regular listener to The Project Management Podcast™, then you have heard me say on many occasions that projects are the mechanism by which companies turn their vision and strategy into a reality and it is us, the project managers, who are asked to bring these projects to a successful completion so that the business needs are met. This means that we, project managers, need a great deal of business acumen and business awareness but many of us are accidental project managers who, at some point in our career, found ourselves to be quite shockingly thrust into the position of a project leader. We were taken by surprise back then, when that happened, and now they suddenly tell us we also need all this awareness.
Well, fear not, because Bruce Harpham is here to tell you how to grow your business know-how as a project manager. In this interview, you will review what foundational skills you need, how to access internal business knowledge from your organization and how to look for information and trends in the broader environment outside of the four walls of your company. Our goal is to help you grow this situational awareness that you, as a project manager, needs day after day on your projects by adding business awareness. And now, please open your third eye and enjoy the interview.
Cornelius: Hello, Bruce. Welcome back to the Project Management Podcast.
Bruce Harpham: It’s great to be here, thank you.
Cornelius: We want to talk about how to grow business awareness as a project manager but first, what is business awareness and why should any project manager care?
Bruce: Well, I think it is important for four broad reasons. It lets you better understand and anticipate risks that which could undermine or kill your project’s success; 2. It lets you become more effective in the area of procurement. Could you buy it differently or could you buy it from someone else, rather than just going to the same suppliers over and over again. Third, would be, sponsored engagements. An ongoing complaint I hear from executives is that your people are too buried in their weeds and and they don’t recalibrate when they talk to me. The fourth point would be personal career development where you want to be able to know what is going to be impacting the organization. Is your industry in decline? Might you want to make an exit early or is there a new trend that you could advocate for? Could you be the champion of Agile in your organization because Agile wasn’t very popular and is far from universal.
Cornelius: How important is business awareness to you personally on your own projects?
Bruce: I think it’s important because it lets me see why this project matter and it enables me to communicate that better. Projects I worked on include regulatory projects in the financial services industry and the business awareness there is that regulatory agencies from the government are less tolerant of this industry taking a lot of risk. My business awareness allows me to say it’s not just Regulation A or Regulation B. The overall message is that regulators are paying much more close attention than they were, let’s say, 10 or 15 years ago and we need to act with that expectation.
Cornelius: You know there’s this funny little side note here when I started the Project Management Podcast 10-11 years ago. That’s actually what I was doing-- regulatory projects in the finance industry. I had no idea that we have that in common.
Bruce: Oh, great!
Cornelius: Would it be fair to say that even though business awareness is important and our projects are shaped and heavily influenced by the business environment, many of us, project managers, don’t often enough act upon this.
Bruce: I think it’s a valid observation and I think the reason that occurs comes down to incentives. People are not just acting randomly. I think a lot of organizations whether that be managers or clients have in place, short-term incentives. “Deliver Project A for me three months from now. Let’s get it done and deliver it and then we keep going on”. The virtue of that is focus—which is certainly valuable. Where it can be problematic is that if the individual has no periodic efforts to step back and look at a broader perspective to say: What is our whole portfolio projects like? Are we doing the right kinds of projects? Have we really talked to executives about whether these projects are advancing the goals of the organization? I think there’s a short-term incentive to ignore these factors and as far as it goes, that’s reasonable, but I think that needs to be balanced with periodically taking that broader view.
Cornelius: To continue, we now want to delve into three dimensions of business awareness. Foundational skills, internal knowledge and also scanning the broader environment. But before we go into that, can you summarize each of these for us, maybe in a sentence or two before we do really a deep dive beginning with the foundational skills.
Bruce: Sure. I think particularly for PM, in a technology functioning or supporting function, they may be in a very specialized area. A foundational skill that I think is important is to understand how does money operate in the organization? If it’s a company, what are the most important products? How do we make money? It may not be immediately obvious if you’re in a specialized IT area. I think that’s important in the foundational skills.
Cornelius: And second, internal knowledge.
Bruce: Yes, I think this takes two sub-components: there’s formal knowledge—just understanding things like the org chart. It may sound basic but a lot of people still actually look at those in newsletters and announcements. And then an informal component around internal networking and as an aside on that front, I delivered a webinar on internal networking to projectmanagement.com over a year ago, and it has gotten something like 400 comments. Some people seem to get really excited about this internal networking concept and I think it’s part of business awareness.
Cornelius: And then, the third dimension, scanning the broader environment
Bruce: Right. This is based on an article that I wrote for my website. It’s called “The New Strategy”, which is that—how do you understand what is going on in the rest of your industry? I will actually deliberately choose only a limited number of publications that I read regularly and we can go into those later. I’m looking for both things that are directly related to my business. What is depressing about my company and our immediate competitors and periodically, also very broadly, what is happening to Google or Procter and Gamble? There’s something in the news today about how Procter and Gamble is scaling back on Facebook advertising because then, no one could consider it as effective. To me that’s an interesting trend because it suggests that this social platform which has a lot of attention may have some real business limitations.
Cornelius: Alright, so much for the high-level overview, now let’s delve a lot more in-depth here beginning with the business awareness foundation, understanding decisions and money in your organization. Can you please develop this summary that you gave us about this? What else is important for us to understand when it comes to the foundational skills?
Bruce: Sure. Understanding which products earn the greatest revenue is very important and why certain areas may be growing. To give an example here, to go back to the financial industry, since the financial crisis, I’ve seen a lot of banks increase the amount of wealth management business that they do as opposed to loans because it’s perceived as a lower-risk way to earn revenue and profit. To me, that’s an interesting pattern to look at. There’s growing interest there.
Another area that I think is foundational is to look at what is senior management emphasizing in terms of their statements or activities. For example, is the CEO constantly flying out to the office in China to talk up the business there? Or is the CEO perhaps more internally focused because there’s been some tumultuous developments internally? Looking at how the senior leaders are spending their time can be quite informative about what truly matters to them.
Two more areas are going to be: patterns for decision making and the key variable for me on this front is risk appetite. On one end of the spectrum you may have the kind of iconic start-up which has an eleven out of ten risk appetite. They’re willing to launch a product and have it fail and they shut it down and try something else. If you’re in that culture, then you can try a lot of new things very quickly versus if you’re in, let’s say, a hundred year old company that is more concerned about protecting market share. They may still need innovation but they need to have it presented to them through a governance process and I think the business awareness there is to say, if you want to bring that innovative idea in, you can’t just say, “It’s innovative, let’s go do it!”, because that would be perceived as threatening or not meaningful. You need to present it in terms that are going to be meaningful.
The financial health point is at a basic level—understand—is the company in the black or in the red? Meaning, profitable or losing money. If the company is losing money, then that is going to impact all kinds of project activities that are going to happen and it’s likely going to color what happens when you go and ask for another million dollars
Cornelius: Okay. Would you want us to observe senior management goals, analyze patterns for decision-making and learn the basics of our organization’s financial health? Help me here and let’s bring this down to the absolute, the lowest possible question I can ask here, “How on earth is this going to help me to be a better project manager?”
Above are the first few pages of the transcript. The complete PDF transcript is available to Premium subscribers only.