Wednesday, April 27, 2011

LOCH Christoph, MÄHRING Magnus, SOMMER Svenja
INSEAD Working Paper 2011/55/TOM

This study addresses the dilemmas and challenges facing senior executives who serve on steering committees or other supervising bodies of large and strategically important initiatives. They ultimately bear responsibility, but they are not in a position that allows them to understand all the details of what is going on. They do not have the time, they are distant from the actual work processes, and, after all, executives cannot be experts on everything. These initiatives are often cross-functional, involve breaking new ground, and bring together areas outside of executives’ normal expertise. Furthermore, since this these initiatives are temporary, normally in the form of a project, executives cannot rely on learning over time or draw upon established corporate practices. In this situation, how can executives provide the guidance and supervision these initiatives need? How can they avoid abdicating responsibility and becoming spectators to a project run by experts?

The management profession has a solid understanding of what project managers and their teams should do. But we do not well understand the challenge for the steering committee that supervises the project managers. The added difficulty comes from organizational distance: hidden information, multiple areas of expertise, non-aligned interests, and other changing circumstances. Some projects fail not because of project management itself, but because of failure of the supervisors to provide the necessary senior leadership and governance to the project. Thus, project supervision has a very important effect on project success. But supervising a temporary, one-off strategic initiative that enters new territory is very different from managing an ongoing business. When the setting is temporary, and separate from your regular executive role, how deeply should you delve into the project? How do you set targets, evaluate progress, align the initiative with the organization, and evaluate the people?

Based on interviews with 17 senior managers in three countries (Sweden, Germany and France), plus five investor-board members of start-ups in Shanghai, we make recommendations to senior managers on the composition of a good steering committee and how it should conduct itself. We find that the two dominant challenges of large projects are uncertainty as well as goal agreement among stakeholders. We discover strategies for shaping the steering committee, understanding the project, setting targets and measuring progress, getting the right information from the project, responding to surprises (which always happen in large projects), and for motivating and evaluating the people.