Governance is a concept that means different things in different organizations. It is often perceived as a set of rigid rules used to manage projects from above. However, for adaptive, digital enterprises, governance is much more. In the first instance, it is a framework that acts as a set of guiderails ensuring decisions are made in a consistent, fact-based manner across the organization, while also allowing projects owners to exercise initiative and “local” control. Governance is also active, not a one-time set of decisions but rather a process of monitoring and intervention as needed. Those, who are accountable stay on top of the capital investment and adapt and adjust it. The absence of clear accountability suggests this type of fact-based but adaptive governance is an industrywide challenge.
TMT leadership roles require a broader spectrum of understanding of the inner complexities of the business, which is pushing some companies towards rotational leadership programs. They want their decision-makers to understand the full capital lifecycle not just from a financial standpoint.
Once again, getting it right brings tangible outcomes. Working closely with a telecom company on their program portfolio management, the importance of end-to-end visibility and management from planning to execution, became apparent. By actively looking at and prioritizing a portfolio of 2,000 projects, which accounted for around $400 million of spend, it was possible to increase productivity by 30%.
Integral to active governance is transparent communication, particularly between functions at the center, such as finance and strategy, and those in operations, whether it be at headquarters or “in the field.”. Asked to select from a list of priorities that would enhance effective communication on capital projects, respondent highlighted strong, top-down connectivity and clear upward communication of performance.
In at least one instance we have seen TMT companies fail multiple times to rollout new products, in large part due to the lack of leadership alignment and expectations, as well as failed training and buy-in from the field workforce.
In contrast, one leader in the industry was able to increase predictability and on-time delivery by up to 20% for large capital investments by having a strong governance and feedback loop enabled by technology between field operations functions and headquarter planning functions at each step of the lifecycle.