Crisis Project Management in Troubled Times

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Crisis Project Managementin Troubled TimesLike
NOW!

• Paul Allen, CEO / Project Executive
• Project Executive Group Houston
• Your Performance Multiplier
• www.projectexecutive.com
• February 2009

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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.

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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?
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Doing a Good Job?
The Right INTERNAL Politics?


The Right EXTERNAL Politics Client-Relations?
Continuous Improvement Education, Skill Sets
Certifications
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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.
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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

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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

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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!

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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
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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
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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
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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.

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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.

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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.

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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
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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!

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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
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Effect of the Depression N. America
Source Wikipedia
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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
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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
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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
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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)

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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

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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.

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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.

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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.

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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.

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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.

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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!

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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

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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?

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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!

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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.

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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