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There are a growing number of things outside the control of the project team in today's business environment. The project manager must monitor the industry and organization to assess the impacts. Risk management has expanded to include items outside the control of the project team.

Quick reference

Survey Business Environment

Business environment changes are occurring rapidly in most industries.  These changes can impact project goals, resources, and boundary conditions. The project team must survey the environment frequently to ensure their project is still relevant in the changing environment.

When to use

The business environment – both internal and external – can change at any time.  To effectively manage the changes, I recommend that you do a conscious survey of changes to the business environment at every major phase gate or after every sprint. 

Instructions

The frequent and rapid changes in the business environment create a risk management challenge for the project team.  The risk is not internal project issues, rather it is the external issues of changing goals and boundaries. It is impossible to predict all the changes that could occur.  So typically, we only predict changes that are consistent with recent history.  In essence, doing a linear extrapolation of current trends. 

If the project can complete in a very short time, this approach is appropriate.  But for most cases, the assumption is incorrect. In some cases, we can improve the assumption.  When conducting a project that is a quick fix to an existing situation, we can expect a rapid improvement and then a level off in performance as we reach a new normal. If the project is part of a stream of continuous improvement projects we can expect a compounding effect to create a rapidly improving business performance. What is most distressing is that often discontinuities occur in the business environment, such as a pandemic or supply chain shortage, which can create massive almost instantaneous changes which will also greatly impact project expectations and boundary conditions.

Boundary condition changes can either be to project goals or with the resource pool available to the project.  Goals can change because of changing corporate strategy or changing customer/market conditions.  These lead to new requirements for the project which may change the compliance landscape. When the corporate structure or resource pools change, there are often new policies and procedures that come into effect, again changing compliance requirements.

Changing business environment can impact government and industry standards in addition to customer needs and expectations. In particular, new competitors can change the entire nature of competition requiring different business capabilities and changes to the project requirements documents. While changing technology leads to new standards, and changing cultural norms can lead to changes in well-established business practices.  Many companies react to this environment with a strengthened project risk management approach and a shift to multi-generational planning.

Hints & tips

  • If your industry and organization are changing rapidly, you should plan on using an adaptive approach.   
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  • 00:04 Hi I'm Ray Sheen and I want to take a moment for a dose of reality.
  • 00:08 Projects are performed in an unstable business environment.
  • 00:12 This complicates project planning, execution, and compliance.
  • 00:16 Everything in nature and society tells us that change is inevitable.
  • 00:20 And yet we tend to plan as though everything will stay the same as it is
  • 00:23 right now.
  • 00:25 We plan linearly.
  • 00:26 Whatever trends exist today they will still exist tomorrow and
  • 00:29 be occurring at the same rate.
  • 00:32 That assumption is wrong, but
  • 00:33 the challenge is to predict how they will change.
  • 00:36 In the business world in which we operate today,
  • 00:39 change is happening all the time and it's often disruptive.
  • 00:43 Along with other challenges, this creates a compliance challenge.
  • 00:47 The standards or regulations that apply to our project and
  • 00:50 operation are based upon the past not the changing future.
  • 00:54 So complying with these, will sometimes be the wrong thing to do under the new
  • 00:58 conditions, although it was the right thing to do under the old conditions.
  • 01:02 Some examples of change are the rapid advance of digital transformation,
  • 01:07 which makes virtual meetings and operations the norm, but
  • 01:11 standards may have never considered the possibility.
  • 01:14 Also industry and business models are changing as new competitors enter
  • 01:18 the markets with a totally different set of operating principles.
  • 01:22 And some of these are global, so
  • 01:24 they're operating to a different set of country standards and company norms.
  • 01:28 This can create a confused state of compliance,
  • 01:30 since to be compliant in one country, you may need to follow standards and
  • 01:34 practices that make you noncompliant in another country.
  • 01:38 Then there's the further change of new team members and
  • 01:41 stakeholders coming onto the project with different sets of norms and standards.
  • 01:45 About the only thing you can count on is that whatever you thought you should do in
  • 01:50 the project plan, will need to change.
  • 01:52 This is one of the reasons that we emphasize a proactive risk management
  • 01:57 approach on the project to take advantage of opportunities that suddenly arise and
  • 02:01 to quickly respond to threats before they overwhelm the project.
  • 02:06 This is also the reason the adaptive project management methodology has become
  • 02:10 so popular.
  • 02:11 It has built in pivot points for reacting to changes.
  • 02:15 I want to take a second and go back to our linear world assumption.
  • 02:19 There are some ways to address the non linearity in our thinking.
  • 02:22 For instance, when making changes to correct or improve obvious issues,
  • 02:26 what is often referred to as low hanging fruit, we see a quick improvement and
  • 02:30 then level off at the new normal.
  • 02:33 When adopting a vibrant and active continuous improvement methodology,
  • 02:37 we often see slow increases in performance that accelerate over time as
  • 02:41 the improvements begin to compound.
  • 02:44 The really disruptive changes when we have discontinuities
  • 02:47 in the business environment.
  • 02:48 For instance, a pandemic may shut the business down for six months and
  • 02:52 then it returns to an even higher rate due to recovery activities.
  • 02:56 These are virtually impossible to predict.
  • 02:59 Whatever the changes are, we still need to maintain control of the project.
  • 03:03 So one thing to do is to regularly reassess with your stakeholders,
  • 03:07 the project boundaries.
  • 03:09 Do they still make sense?
  • 03:11 We often do these at phase gate reviews or sprint refinements.
  • 03:15 The goals may need to change as the strategy or customer expectations change.
  • 03:20 This moves the boundaries.
  • 03:22 And when we consider the compliance aspect of meeting customer expectations it
  • 03:27 means we need to maintain and update our set of requirements.
  • 03:31 Another change to project boundaries that can affect compliance is organizational
  • 03:35 restructuring.
  • 03:36 As the structure changes, different standards and regulations may apply, and
  • 03:40 different resource pools may mean different personnel policies and
  • 03:44 requirements.
  • 03:45 And as we mentioned on the previous slide, project risks both opportunities and
  • 03:50 threats, are changing.
  • 03:52 With these changes project boundaries may shift.
  • 03:55 Frequently the risk management activities are undertaken to keep the project within
  • 04:00 its boundaries.
  • 04:01 But when the time comes, the project risk management activities will
  • 04:05 escalate the risk and seek to change the boundaries.
  • 04:08 And of course, that may change aspects of project compliance.
  • 04:12 Finally, the industry environment changes, and that can change the standards and
  • 04:16 expectations that impact project performance and compliance.
  • 04:20 One area of industry change is the competitive landscape.
  • 04:23 Now there have always been changes occurring in our competitive markets.
  • 04:26 But what has made this significant for us on projects is that in the past,
  • 04:31 projects could normally be completed before a major shift occurred,
  • 04:34 because the changes in the competitive landscape were relatively slow.
  • 04:39 Now they occur rapidly, often faster than we can complete the project.
  • 04:44 So while the competitive changes are due to new actors,
  • 04:47 new technology changing the nature of competition, or
  • 04:50 geopolitical forces redrawing markets, the point is that a major project will likely
  • 04:54 need to make boundary changes that impact compliance before it is able to complete.
  • 04:59 That's why a wise project manager is always scanning the environment so
  • 05:03 as to be ready to make the pivot when the time comes.
  • 05:07 By the way, project management as a management discipline has not been
  • 05:10 standing still while all this is happening.
  • 05:12 In general,
  • 05:13 projects are focusing more on speed to completion than on staying under budget.
  • 05:18 The adaptive approach to project management has gained prominence because
  • 05:21 it's so well suited to this environment.
  • 05:24 And we have seen an increased emphasis on risk management and
  • 05:27 multigenerational thinking.
  • 05:28 Project management is adapting both in how we manage and how we evaluate projects.
  • 05:34 The business environment has changed significantly over the past few years, and
  • 05:39 it will likely to continue to change in ways we can't predict, but
  • 05:42 they will likely impact how to best plan and manage a project.

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