Companies of every size in every industry and part of the world are basing more of their work around projects. And yet research shows that nearly two-thirds of those efforts fail. Antonio Nieto-Rodriguez, who has studied projects and project management for decades, explains how we can do better. He offers advice on the right way to frame projects, how to structure organizations around them, and pitfalls to avoid. Nieto-Rodriguez is the author of the Harvard Business Review Project Management Handbook and author of the article “The Project Economy Has Arrived.”
ALISON BEARD: Welcome to the HBR Ideacast from Harvard Business Review. I’m Alison beard. If the 20th century was all about operational efficiency in businesses, the 21st century is all about organizational change. And how do new initiatives, products and services, strategies or business models advance? Through project work. It’s what our guest today calls the project economy, and it’s estimated to generate $20 trillion in economic activity and employ 88 million people in project management related roles by 2027.
That’s across every industry and size of company in every part of the world, and yet research indicates that only 35% of projects are successful. At this increasingly critical business function, most of us are doing a pretty terrible job, so how do we get better at it going forward? Antonio Nieto-Rodriguez is the former chairman of the Project Management Institute, founder of Projects & Co. and the author of the HBR Project Management Handbook. He’s here to talk about emerging best practices for companies and the people in them. Antonio, welcome.
ANTONIO NIETO-RODRIGUEZ: Thank you, Alison. It’s a pleasure to be here.
ALISON BEARD: Project management seems like a clear idea, but how do you define it and think about it in a way that might be different than what people assume?
ANTONIO NIETO-RODRIGUEZ: Well, I think one of the challenges with project management that I face personally in my career is that as soon as you talk project management, senior executives and people who are not experts in project management, they think, “Oh, this is something very technical, very tactical. It’s nothing for me,” so I’ve been facing that kind of discontent or disinterest in project management for 25 years. So for me, I want to move out from that project management term and move it up into projects, and we all do projects. And for me, the definition is anything that has to deal with change, that’s projects. You can manage them through project management, Agile methods, design thinking, product management. But I want to really, I think we need to elevate and say, “Well, all what goes around change, that’s projects,” and we need to manage them.
ALISON BEARD: And how has project work changed over the past few decades?
ANTONIO NIETO-RODRIGUEZ: Well, project work has changed in two big areas. One is on a macro level. I’ve been doing research, and of course we all talk about the Marshall Plan after the Second War and all the projects that came from U.S. funding to develop Europe, reconstruct Europe, that was about $13 billion. Then we talk about the financial crisis in 2008 and ’09, we were talking about $3 trillion of projects. And now after the pandemic, we’re talking about $15, $20 trillion of projects. I think the world will never see as many projects as what we’re going to see in the next decade. We need to reconstruct countries, healthcare systems, economies, so that’s from a macro perspective.
From a micro perspective, from the way work is organized in companies, in businesses, it has evolved significantly in the sense that so far, operations have been prime in most of the organizations over the past 80 years. That’s what I say, the world driven by efficiency, where most of the activities were around doing things cheaper, faster, more automated, more volumes. Companies have been organized for that. That’s why you have hierarchies, that’s where cultures like command and control have been in place and so on, but since a few years when artificial intelligence and robots are taking over a big chunk of operations, the type of work is shifted to project based. So I think the biggest, biggest disruption that happens in the world of projects is what we’re experiencing now. A radical shift from operations to project based work.
ALISON BEARD: And that’s because projects are about sort of discovering the new innovating, and the pace of change is such in every industry now that every company needs to learn how to do this well?
ANTONIO NIETO-RODRIGUEZ: Absolutely, and one of the challenges I have to admit, Alison, I’m a big of course, expert in project, a big advocate of project management, but our performance, like you mentioned in introduction, has been poor or appalling. I think project management has not delivered the expected results. We need to find better ways to addressing the change. The future 10 years ago maybe was five years from now, right? So you would have a project that would last for three years expecting to get some benefits maybe in three, four years, a digital transformation, a new M&A activity, a new business unit, but today, the future is so fast.
So your future is tomorrow, right? So, that means the acceleration of project based work has to go faster. Let me give you a quick example. Here in Brussels, they were setting, establishing a hospital from scratch, Greenfield, start of the construction in 2016, completion of the hospital in 2020. So four years of construction, state of the art, but to my surprise, the hospital was open in 2018 before it was co completed. So I think there’s no company in the world can wait four years to get any benefits from the projects. The future is now, and we need to address that. That’s why you see exploding the number of projects in organizations. I come across companies where they have more projects than people.
ALISON BEARD: And I do want to get to how to do it better, but first, that failure rate is so high. What are some of the most common challenges or problems that projects run into? Why are we getting it so wrong right now?
ANTONIO NIETO-RODRIGUEZ: Let me highlight just three. First, I think senior leaders, they don’t have the competencies to be effective sponsorship. Over the years …
ALISON BEARD: They’re not going to like hearing that.
ANTONIO NIETO-RODRIGUEZ: I’m sure. I’m sure, but I’m sorry. I always am hundred percent honest on both on my thinking, but I think sponsors have not realized the role is crucial in sponsoring projects. It’s not about how many projects you sponsor, that has been the kind of, “I sponsor 20 projects. I’m the most important person in this company.” Well, now it’s about less is more, and it has been proven. When you are an executive, the CEO, the VP, and you dedicate time to your project, time means not just one hour per month, but a half a day per week. If this is the future of your business, I don’t understand why senior leaders don’t dedicate so much time. They’re all driven by operations and day to day urgency so very few leaders make the space. And second, they don’t understand the fundamentals of projects.
Most of the executives come from a path marketing, finance, operation strategy, and it requires for them to understand that projects are different. That you work in projects in a matrix, that is not so much the hierarchical approach, but this team working and collaboration. So it’s hard to give you a number, Alison, but I would say 30% to and 40% of the success of the project is if the senior leaders is engaged and understands and drives the project. Alison, the second point, I realized that in the area of change in projects, we are always running with all methods. It happened in the past with IT projects, I started implementing big ERP systems, we were trying to apply some very traditional project management.
It didn’t work. Then Agile came and said, “Well, now we are going to use Agile for every project,” and that, we see today with digital transformations, AI implementations, that doesn’t work. The failure keeps there. The third reason, so I think the role of the project manager, the project management profession has not taken ownership of the results. It has been very focused on process, very focused on documentation. It did make a lot of sense in the sixties, in the fifties where you would do a lot of public sector projects where you want to document everything, but I think the reason that the third reason for me is that project management didn’t evolve to embrace the new reality. And second, project managers have been more a deliver type of role.
In project management, we always said, “Well, who’s accountable for delivering the projects? Who’s accountable for delivering the benefits?” Right? Well, it’s the sponsor. We project managers were responsible of delivering the project on time, on budget, on scope, and that has been the cradle for project management for the last 40 years. And we’ve missed to focus on the outcomes. We’ve missed to focus on the benefits. We’ve missed to take accountability of the results. It’s easy to make a project charter, but what companies are looking for is delivering value, either financial, either social, either sustainability. So I’m asking my community of project managers to step up, to take ownership, to say, “No, it’s not just the plan. It’s not just delivery on time. What matters actually even more is delivering the benefits, whatever they are, and faster, please.”
ALISON BEARD: So for an organization that does have existing operations that need to be managed, but then also wants to pursue change and innovation through project work, how does that company change its structure or culture to be able to do both well?
ANTONIO NIETO-RODRIGUEZ: Yeah. Well, great question, Alison. I’ve seen so many companies struggling because I’m not saying, “Let’s forget about what you’re doing right today. Let’s forget about that organization that you’ve built so successful for that world driven by efficiency with hierarchies, with yearly plans, with deep expertise, deep technical expertise,” but how can we address change? And change that’s going very fast and our products are just lasting less and less. In the past, we last five years, now five weeks or maybe five months. So how can we mix that? And it’s a struggle. You cannot say, “Let’s forget my hierarchy and let’s move everything into flat teams and Agile structures and project basing.” That doesn’t work, so I think in the challenge for the leaders, the senior leaders, the executives, is finding that balance. And I always say you need to experiment.
You cannot just go and say, “Well, half of the organization is working without job descriptions. They’re all working project based.” I think my approach, my suggestion is, what are your top five projects? What are the five most important projects that your organization has to deliver? Extract those projects from your daily operations. Extract them. They should not be done by people working in operations. They should have a different structure. They should have a different culture. Put them aside, put them independent. They are own entities, and of course, strong sponsorship. Executives, you need to spend time on them. By extracting for those five top projects already, and moving out to that from that hierarchical structure, that operational activities, that you can see already, quite a lot of acceleration in the way you deliver projects.
ALISON BEARD: Often though, it seems as if particularly project leaders do have operational responsibilities as well, and then sort of, they’re expected to tack the project on top of that. So how are companies that you work with navigating that balance? Are they giving the executives that time to take away for the project work?
ANTONIO NIETO-RODRIGUEZ: Great, great question. This is really the core. One of the core problems I always raise when I do workshops with senior leaders is, how come you cannot extract people from your day to day job and put them in a project? It’s one of the biggest challenges that I see. Even companies which have 10,000 people, they are not able to free up 50 people to carry out the project. The best projects I’ve seen in a research, one of them, of course the iPhone, the first one which I research very much in detail, at that time, they were able to take the day to day people, the senior leader, the best people of Apple at that time and extract them for two years and a half to develop.
And people who were in the operations side said, “Well, I love to join this project, but who’s going to do my day to day activities?” And we were saying, “Don’t bother. Anybody can do your day to day activity. You have a deputy when you’re gone,” said, “We’ll put those people. We’ll promote them. We’ll create more talent, but you, you are the best person in these companies. How come you’re not working in the most strategic project in the future of your work?” Right? It doesn’t make sense, but companies struggle so much and there’s nothing worse that you can do, Alison, than have half time people working in your projects. I work one hour per week, then I work two days per week, then it’s a mess. It’s not how you deliver great projects. At least try to get the best people around.
ALISON BEARD: I think that makes sense when you sort of have a clear idea of what the future’s going to look like, and you know exactly which five projects are the most important, but isn’t the issue in many cases that organizations sort of have 30 projects on the go, and aren’t really sure what’s going to pan out, and they can’t take all of those people away from their day to day activities? So how do companies prioritize?
ANTONIO NIETO-RODRIGUEZ: I’m sure everybody that’s listening this, they can’t relate to that point. Companies have way too many projects. I think that if there’s a core skill for leaders in current times, is focused and prioritization. Knowing what is the big path, and unfortunately, it’s just very hard to see when you see more projects than employees. And like you’re saying, how can they do their day to day job plus three, four time projects? That’s where people get overwhelmed. I am sure that the big reset is linked to this, so many projects plus day to day activities. It’s just stressing everybody out, and I think that when you work with companies where the priorities are clear, where people know, these are our top three, their top five, and we know where we’re going, this is the focus, that’s where I think executives need to work on. On really making the tough decisions.
ALISON BEARD: What are some best practices for putting project teams together?
ANTONIO NIETO-RODRIGUEZ: Well, Alison, the formula for engagement is super simple. The most engaged people in a project, you know which one is it? Volunteers. Let me put you an example. Maybe in HBR, you are launching a new project. Why don’t you ask who wants to join?
ALISON BEARD: Makes sense. It’s so simple, but it makes so much sense.
ANTONIO NIETO-RODRIGUEZ: It’s so simple, because there’s different things that happen here. First, if nobody wants to volunteer in that project, that project is terrible. Don’t start it. Don’t start it because it’s just, people are going to be forced to do it, so ask for volunteers. Nobody shows up, don’t start it. You don’t need a business case of three months hiring consultants to make you, “Yes, this is …” If nobody jumps on it, terrible. Don’t even start it. It’s just a five minutes test and you save three months of work. Second, if the project talks about business case, very few people get excited, yeah? Who wants to work in a project that delivers 10% return on investment? Yes, nobody. Right? 15%, nobody. Who wants to work in a project which is going to make a more sustainable world? Who’s going to work in a project who’s going to increase the customer experience and make customers more happy, and deliver better value to a customer?
Who wants to work in a project who’s going to create our employees or make our employees more happy, and make us a top company? Lots of people. So we have been, when we were talking about some of the issues, I think project manage has been focused on talking about things that don’t matter to most of the stakeholders, like a business case. Business case is super important. It’s the return investment, for sure, but that’s not what engages people. The purpose engages people. When you have volunteers, they will dream about your projects. They will do whatever they can to make it happen, and it can be because of the purpose, it can be because they like to work with you, they see a big opportunity to learn. Of course, as a project leader, you need to balance that. But as simple as that, Alison, “Who wants to volunteer?”
ALISON BEARD: How does the rise of project driven work relate to the gig economy? Is your sense that companies are hiring contractors and freelancers to get a lot of this done? Is it a balance or are they trying to handle most of it in-house?
ANTONIO NIETO-RODRIGUEZ: I think when we started to hear about the gig economy, I think yes, one of the reasons was, “Let’s hire external resources to work in our projects because we are so rigid internally, like I cannot free, from my 10,000 people, I cannot free 10 of them because they’re so busy in day to day operations plus other projects,” so it started like that. What I see now is that companies are finally taking the step of shifting resources to more project based work. Again, when I use the word project, I include Agile teams, self directed, so very flat project driven teams. So, that’s happening to the point that I talk about it is that companies are canceling job descriptions. We all had job descriptions like, Alison, most of the people listening, probably they had a job description, which tried to describe like, where do you fit in this box? Right? And just do those activities in this box, in that operational field.
That’s your box. If you do it right in two, three years, you just go up in the structure. But many large companies and small companies are realizing that people don’t work in boxes anymore, and job descriptions are not needed anymore. It’s a thing from that world driven by efficiency that together with the chief operating officer in this role, so I think they will not last very long. So I think the project driven world is now being and embraced by organization where companies like Alibaba or other major players are really embracing this type of work where yeah, they’re looking for people who can have an idea, who can develop the idea, who can implement the project, and who can run the idea of the product or the business and generate value for the companies. This is what I call end-to-end players or strategy implementation professionals. We want this type of end-to-end players who can work transversely in organizations.
ALISON BEARD: Are there lessons from your project management world that might be helpful for people doing more traditional ongoing work?
ANTONIO NIETO-RODRIGUEZ: I think project managers have been a bit not very proud about their work. They’ve been seeing like, “Okay, you are not very modern. Agile teams are better, or innovation people,” so I think as a project manager, you need to believe on what you’re doing. Second, I think we need to take more ownership. I’ve been working 25 years in this space and managing large transformation M&A, and I always was waiting for the sponsor. I know the sponsor was very important for my projects, but I was kind of waiting and hoping that the sponsor will learn and follow training on how to do it or make some time for my projects. And I’ve learned the lesson is that the first thing I do in my projects is I go to the sponsor and talk frankly with the sponsor.
“Listen, are you ready to put time on this project? It’s very important. I need you, and I’m happy to coach you. I’m happy to tell you how projects work and what do we need to focus on, but I need your time, and I need a couple of hours per month. Let’s say an hour every two weeks. I need to talk to you. I need decisions from you.” So I’m very much proactive because I know that role is very important and these people are really busy. One of the biggest lesson learned was being proactive with my project. The second maybe is I talk to many project managers and we are very technical to the point of sometimes difficult to understand, slash boring, right? Who wants to talk to a project manager? Come on. Do you have something more interesting? No, but that’s …
ALISON BEARD: You’re more interesting than I imagine, than my sort of vision of what the project manager is.
ANTONIO NIETO-RODRIGUEZ: You see? Because I don’t talk about project management, I don’t talk about Gantt charts, I don’t think that’s my kitchen. That’s what I do when I need to think about making a plan, but you are interested on the bigger picture. You are interested on how my ideas will contribute to our needs as an organization, so I do this exercise with project managers, “Tell your partner what you do without mentioning the words projects and project management,” and they say, “Oh, I’m struggling. What do I do?” And then they start talking about the value they bring, and that’s what people want to hear.
You covered this topic broadly in HBR, but talking, adapting, understanding the language of your stakeholders, using it. That’s how you get their engagement. That’s how you get their attention. That’s how they appreciate your value, and that’s the second big learning. When I did that, things changed for me. Senior leaders wanted to talk to me. When I forced them to prioritize in key projects, they were saying, “Antonio, we want another meeting with you,” was the CEO of the bank, because I force them. I force them to create value. I force them to have strategic dialogue, so I would say if you’re listening, you’re working in this space, move on into that space. Move on on the value creation, on your stakeholder, and things will change very fast.
ALISON BEARD: Well, Antonio, I learned a ton today. Thanks so much for coming on the show.
ANTONIO NIETO-RODRIGUEZ: It’s been a pleasure.
ALISON BEARD: That’s Antonio Nieto-Rodriguez. He’s the former chairman of the Project Management Institute, founder of Projects & Co. and the author of the November, December 2021 HBR article, The Project Economy Has Arrived. He’s also the author of the HBR Project Management Handbook.
If you like this episode and want to hear more, like my interview with Nobel Prize winner, Daniel Kahneman, on how companies can improve their decision making processes, please subscribe wherever you get your podcasts or find us on hbr.org. This episode was produced by Mary Dooe, we get technical help from Rob Eckhardt. Adam Buchholz is our audio product manager. Thanks for listening to the HBR Ideacast, I’m Alison Beard.
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