Back in late 2016 I wrote an article for the APM’s Project journal about how projects that adopt values-led approaches to leadership, rather than traditional controls-based approaches, were more likely to be a successful and positive experience for all concerned. Given how long ago 2016 now seems, I wanted to revisit what I wrote then to see if it still holds in 2021.

The article opened with the statement:

Increased stakeholder visibility, combined with more uncertain political and economic environments, means that project managers need to adopt different strategies to ensure a greater chance of project success.

Five years on this is truer than ever. We live in a world defined by uncertainty, with increasingly influential stakeholder voices. The UK’s exit from the European Union and a single term Trump presidency in the US have contributed to political uncertainty. The increasing recognition of (but as yet inadequate response to) the complex causes and consequences of the global climate emergency, together with an ongoing global pandemic, have brought significant economic uncertainty. But there is also an opportunity to “build back better” with a green recovery that focusses on a just transition to a net zero economy and builds resilience to climate change. What this will look like, and whether it will happen, is still unclear. However, even establishment voices are calling for a change in the way we do business. Blackrock CEO Larry Fink believes that companies should have a sense of purpose and a responsibility to stakeholders beyond just “generating profit”. The former Governor of the Bank of England Mark Carney wants economic value to be connected to society’s values and believes that conflating market value with intrinsic value has led to the crises of credit, covid and climate. The very idea that continuous economic growth is a requirement for a successful economy is also now becoming more widely challenged, for example by the economist Kate Raworth in her 2017 book “Doughnut Economics”.

Pressure from society and consumers for business to respond meaningfully to the climate crisis, and to do business ethically and sustainably, is increasingly being reflected in new regulatory requirements and supply chain expectations.  Access to finance (lending, equity, government grants and green bonds) is starting to increasingly depend and be preferentially awarded on clearly demonstrated Environmental, Social and Governance (ESG) performance, including effective management of climate risk. There is an increasing demand for corporate reporting that focusses on value and impact, for example using the integrated reporting framework offered by the Value Reporting Foundation. Adopting new strategies for both business and projects based on a shared organisational understanding of value and values will be essential for all businesses to survive and thrive.

Values, value and purpose

Values are like fingerprints. Nobody’s are the same but you leave ’em all over everything you do.

Elvis Presley

Values are deeply held principles, expressed in actions and behaviours, that people adhere to when making decisions; effectively judgements about what is important in life. Values and behavioural norms together build an organisational culture, values are the thread that holds organisations together. Our values inform and direct our actions.

Value is a judgement about the importance, worth or usefulness of something. Value management originated in the US during the Second World War as a collaborative approach to secure the best functionality for limited resources. In this context value is defined in terms of objectives and aspirations from the stakeholder and end-user perspective, teasing out what are needs (imperatives) and wants (preferences). It may consider either product or process. This is in contrast to the term ‘value-based management’, popular within management accountancy since the late 1990s, which defines value solely in terms of the financial benefits for shareholders. As Mark Carney observes in his book “Value(s)”, value is built on values, and the way we allocate value reflects and reinforces what we value. If we only consider value as defined by economic or market criteria it means that we risk narrowing our ideas of what is important and make decisions in a moral and social vacuum that fail to include material information. Carney refers to this as a “flattening of value”.

Values-led leadership approaches recognise the importance of both values and value, and that a well-defined purpose can bring them both together. Larry Fink describes purpose as “a company’s fundamental reason for being – what it does every day to create value for its stakeholders”. EY defines purpose as “an aspirational reason for being that is grounded in humanity and inspires a call to action” and notes that there is an increasing shift towards an outward looking expression of purpose that addresses multiple stakeholders and recognises key global challenges such as the climate emergency and digitalisation. Purpose provides the connection between “why are we here” and “how do we make an impact”.

What does success look like? Problems with traditional approaches.

Growth of what? For whom? At what cost? Paid by whom? What is the real need here, and what is the most direct and efficient way for those who have that need to satisfy it? How much is enough? What are the obligations to share?

Donella H. Meadows, “Limits to Growth: The 30 Year Update” 2004

Historically, project success has been defined in terms of the ‘iron triangle’ of scope, budget and schedule, while business success is heavily anchored in ideas of growth of sales, profits, or market share.

Critical success factors (CSFs) are defined as the essential factors that must be performed well in order to achieve missions, objectives or goals in a project or business and have been used since the 1960s to bring a key focus for measurement, control and decision making. Research has sought to establish generic CSFs for project or business success, mostly focusing on procedural, organisational or behavioural factors.

But without purpose (the “why”) these traditional approaches to defining the “what” and the “how” lack strategic context and coherence. Failure to engage with the views of the stakeholders, whose assessment of project or business success is likely to matter more than any internal assessment in terms of future opportunities, is unwise. CSFs tend to be static indicators that do not recognize inter-relationships between different success factors and lack the agility to reflect changing priorities in response to changing environments. Combined, these approaches to defining success and how to achieve it risk driving an excessive emphasis on processes for financial and management control and governance, and these processes can become an end in themselves. An increasing move towards ever-tighter controls does not however bring improved outcomes. Requirements to follow numerous procedures can place a high cognitive load on people, leaving less energy available to deliver the thing of value. Overspecified processes close off thinking and dilute individual agency.

Using purpose to enable success: a values-based approach

Three quarters of executives of Purposeful companies reported that the integration of Purpose creates value in the short-term, as well as over the long run for their companies

EY

Organisations in uncertain and unpredictable environments need to adopt a new model to improve their chances of success.

Strategy needs to start with a hard discussion about values, value and purpose. This needs to be an inclusive and collaborative exercise across the organization in order to get the most benefit from diverse views and insights, and to build alignment, understanding and buy-in across groups and individuals.

Research suggests that personal action is driven by beliefs about the expected outcome, and by the opinions of influential colleagues. Progress may be measured in ‘hard’ decisions and deliverables, but is dependent on behaviours and decision-making driven by ‘soft’ culture and values.

Decide where you’re heading

Establishing a clear purpose at the heart of business or project strategy creates a framework for effective collaboration, drives operational excellence, provides a foundation for managing value, opportunities and risks, and improves the way in which organisations respond to new information.

Get your bearings

• Define and agree the intended benefits of the project or product or service at the outset through a robust facilitated discussion between all stakeholders.
• Use this process as a way of surfacing and being explicit about the inter-relationship between values and value. Explore perspectives from different stakeholders, and identify the impact of external factors: regional, sectoral, national, global.
• Agree where these value objectives sit on the matrix (shown above). Differentiate between needs and wants and use distance along each axis to identify the relative importance of each objective.
• Make all project decisions consistently against the agreed project value drivers – this will reduce friction and save time and energy later.
• Always make sure the focus is on adding value rather than reducing cost – look at opportunities to collaborate across the supply chain or across teams or projects.

Communicate your direction

• Rather than seeking to define all project activities (the ‘what’), project leadership needs to start by defining the purpose (‘the why’) to set a clear project direction.
• Clearly communicate the purpose and how the organization or project generates value and for who – this ensures that decisions at all levels are technically and commercially coherent
• Allow teams to identify and prioritise activities by how much value they add. Take small steps and keep checking your bearings. This iterative mindset allows the project to use the most appropriate processes and techniques to navigate changes and uncertainties along the way, while maintaining a clear direction.
• Leadership also needs to be about the ‘how’. Build and sustain a project culture to encourage behaviours that support the team’s ability to meet the project objectives.

In practice: an example

On a recent multinational infrastructure development this structured approach proved an effective way of surfacing, clarifying and reconciling the disparate (and in some cases conflicting) requirements of the main stakeholders at the project outset. As a result, everybody was clear on what success looked like, avoiding friction or later disappointment. The agreed project value objectives were developed into a simple decision-ranking tool that was used for design studies across all disciplines.

There was a significant improvement in the consistency and quality of decision making across the project, and the decision-making process was smoother, quicker and generally more pleasant for all parties. Technical and decision integrity was improved, with easier passage through key project stage gates.

In conclusion

Traditional approaches to defining success tend to be based on static success criteria that do not reocgnise all stakeholders, ignore stakeholder perspectives on value and fail to recognise context and complexity, while approaches to achieving success are too focused on processes. This can lead to poor performance; but in times of change, unpredictability and uncertainty, this oversimplification can lead to disaster.

A values-led leadership approach establishes an organisational purpose that identifies what is of value, considering both stakeholders and wider external context, and allows leaders to set a clear and true course that remains unaffected by changes in circumstances. Focussing on an overall purpose gives managers, teams and individuals the freedom and flexibility to use the best routes available to them, rather than trying to map an exact path through a landscape that may be uncertain and changing.