KEY CONCEPT

Time and expertise limitations can cause steering committees (SCs) in charge of major and complex strategic projects to make errors in judgement and decision-making. The result: such common but serious problems as being late and over-budget. Proactive steps and awareness can help SCs avoid the traps.

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IDEA SUMMARY

A company in the facility engineering industry took on a large and complex project that presented both technical challenges and was subject to legal regulations that affected customer requirements. Unfortunately, the steering committee (SC) in charge of the project never really understood the key trade-offs and risks in the project.  Unaware of the technical or legal challenges, they accepted a project plan that was, in truth, unachievable.  After the third schedule delay, the SC realized that the project was a ‘bottomless pit’, in the words of an executive connected to the project.

This example emerges from a research study on effective project governance by a team of researchers from Cambridge Judge, HEC and the Stockholm School of Economics. Strategically important projects are the most complex of projects and have the highest stakes, and yet the members of steering committees in charge of such projects are often hampered by two significant disadvantages: 1) they rarely have the time required to effectively manage the project; and 2) they don’t have the knowledge or expertise required to ask the right questions.

Based on in-depth interviews with 17 senior executives and chief executives covering 29 strategic projects, including successes and failures, the study identified five major themes of supervision challenges — or “traps,” to use the study’s term:

1. Steering Committee Composition. There is, for example, a tendency to put too many people on the committee, so that every important person or every person even remotely connected to the project is included.
2. Goal Agreement. Conflicts of interests among the stakeholders tend to be swept under the rug — or the goals are kept very vague simply to avoid those conflicts.
3. Motivation and Control. Many SCs either micromanage or go too far in the other direction, essentially abdicating responsibility.
4. Intelligence Gathering. As in the example above, many SCs don’t understand the key drivers or barriers of the projects, and don’t take (or have) the time to ensure that the information they have is valid.
5. Managing Surprises and Changes. Steering committees fail to take adequate action or make decisions in the face of changed situations or unexpected setbacks.

Given the time and expertise constraints cited earlier, is it possible for SCs to overcome the challenges in these five areas? The researchers are optimistic. Using lessons drawn from their interviews — each respondent had been asked to reflect on two difficult strategic projects, one in which the SC oversight had been successful, and one in which the problems had not been resolved — they generated specific recommendations for each of the five themes.

These recommendations are listed here:

Steering Committee Composition

• No more than six to eight people.
• Every member understands his or her own role.
• Negotiation and decision-making rules agreed on in advance.
• Relationship and trust building is key, and requires specific attention.

Goal Agreement

• Don’t let conflicts of interest among SC members surprise you. Identify them early and find workable compromises.
• Identify the measurable operational deliverables.
• Produce a detailed scoping document, covering everything from required actions and budget to trade-offs, barriers and risks, and knowledge gaps.

Motivation and Control

• For incentives, identify quantitative indicators as well as process goals that cover areas such as professionalism and resourcefulness.
• For motivation, strive for a balance that avoids micromanagement and complete trust. A culture of openness is imperative.

Intelligence Gathering

• Invest the time and effort to understand logic and risks and challenge assumptions. Don’t let ego prevent you from asking for the translation of technical issues into business issues. There are no dumb questions.
• Create a culture that ensures the dissemination of truthful information. Relying on outcome incentives is not good enough.
• Go outside of the project team for information, using field visits or external experts for opinions (although remember that external experts have their own biases).

Managing Surprises and Changes

• Preemptive action is vital: Establish steering committee problem-solving procedures from the beginning and insist on proactive reporting.
• When a major change occurs, understand why and what it means.
• Let the project team generate solutions, but then make a clear decision.
• Experiments can help explore available approaches.

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BUSINESS APPLICATION

An effective Steering Committee is vital for the successful, on-time, on-budget implementation of a strategic project. The recommendations from this study make clear that SCs can overcome any constraints of time and lack of expertise by taking proactive steps — from simple but important ones, such as limiting the number of SC members, to more sophisticated steps, such as putting in place process incentives. Achieving a balance is key: do not micromanage but do not abdicate. Perhaps the most essential element is awareness; if you don’t recognize the traps before you, you will not avoid them.

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REFERENCES

Supervising Projects You Don’t (Fully) Understand: Lessons for Effective Project Governance by Steering Committees. Christoph Loch, Magnus Mähring & Svenja Sommer. California Management Review (February 2017). 

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