ACHIEVING THE IMPOSSIBLE?
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ACHIEVING THE IMPOSSIBLE? Running for fast-track project execution By Professors Carlos Cordon, Ralf Seifert and Research Associate, François Jäger (August 2007) IMD Chemin de Bellerive 23 PO Box 915, CH-1001 Lausanne Switzerland Tel: +41 21 618 01 11 Fax: +41 21 618 07 07 info@imd.ch http://www.imd.ch
ACHIEVING THE IMPOSSIBLE? | Running for fast-track project execution A new factory in less than a year! Impossible! In most organizations, projects play an increasingly prominent role and practitioners readily admit that companies are running more and more projects in parallel. These projects exist in a multi-faceted organizational context with many different stakeholders. Few organizations show a conscious effort to systematically improve performance in project management, to establish project management as a career path, and ultimately to compete on distinct project execution capabilities. We hear, “Our company is running more projects today than ever before”, “We have relatively little central visibility”, “50% of projects run without a special budget”, "Two- thirds of projects specify goals that are not explicitly measurable/quantifiable, etc.” Here we illustrate how Novo Nordisk Engineering (NNE) went through a fundamental re- thinking of its business through the development of fast track projects. Speed to market is decisive in the pharmaceutical industry. Patents protect drugs for 20 years. Yet, taking into account discovery, development and clinical trial time, the period of market exclusivity could go down to less than one year in some cases. The company succeeded in reducing the time needed to deliver a pharmaceutical factory from over three years down to 11 months winning the 2005 pharmaceutical Facility of the Year award at the New York Interphex exhibition. Not all drugs require the construction of a new plant, but when necessary, gaining two years because of shorter construction time offers significant financial returns. The challenge By understanding the business of its customers, NNE’s new CEO, Hans Ole Voigt, knew that reducing time-to-market was of significant value to both NNE and its customer. He pushed his organization toward a customer-driven strategy of being able to deliver a new factory in a very short time-frame – less than one year. This seemed like an impossible goal since plant construction took 30 to 36 months on average. As this seemed like an impossible goal, the majority of the employees thought he was ‘crazy’. Customers not ready to play NNE had to find a company willing to invest in a fast-track project. Both NNE and its client would be moving into unknown territory. There was significant risk. Although the project could go very well, it could also go really badly, which would mean costs up by 20% to 40% or delays in project delivery. IMD - www.imd.ch ACHIEVING THE IMPOSSIBLE? Page 2/5
ACHIEVING THE IMPOSSIBLE? | Running for fast-track project execution Fast-track projects meant a lot of pressure on the client, too, and some were just not ready to play. NNE would challenge a client’s specifications to stick to its process. The client had to adapt to these changes because many linked changing specifications to an increase in cost and time. To ensure fast decision-making and client agreement on proposed solutions, the Project Management Team (PMT) included an executive from the client company. The challenge was to build trust between NNE and the customer. In addition, there had to be a willingness from suppliers to take risks, a commitment to be part of the project team and a co-location with the rest of the project team. Simplify and speed-up Modular technology was used to simplify and speed-up the project. Modules were constructed in parallel and tested on suppliers’ premises. Although speed was crucial, it was not to be achieved at the expense of quality. Each project had a quality activity plan, describing the quality goals agreed with the client, as well as methods to achieve goals. The need for speed left no time for politics, and NNE adjusted its HR strategy accordingly turning Program Management in a function inclusive of a career path. Different PMTs managed each project within the fast-track process. An internal coach from HR led workshops to simulate critical situations. The focus was on communication training. From the beginning, project managers had to identify employees who could make a difference. The secret of success NNE continuously re-evaluated its process, gradually reducing the time needed to build a factory. In addition, they changed the way customers bought facilities away from the lowest bid approach. Project focus was shifted from specification-driven to time-driven. Trust had to be created with the customer by sharing risks. An investment in team building was made and a company culture focused on project execution. Customers and suppliers were made part of the implementation team fostering information sharing between all parties involved in the construction. Reflecting on how far they had come and how they had managed to overcome the employees’ initial skepticism, Voigt commented: “A lot of barriers in peoples’ minds are just not real. Our job is to push those barriers”. IMD - www.imd.ch ACHIEVING THE IMPOSSIBLE? Page 3/5
ACHIEVING THE IMPOSSIBLE? | Running for fast-track project execution Professor Cordon is Program Director of the Program for Executive Development (PED). He teaches on the Breakthrough Program for Senior Executives (BPSE) and the Orchestrating Winning Performance (OWP) programs. Professor Seifert is Program Director of the Mastering Technology Enterprise (MTE) program. He teaches on Mastering Corporate Resources (MCR), Building on Talent (BOT) and the Orchestrating Winning Performance (OWP) programs. IMD - www.imd.ch ACHIEVING THE IMPOSSIBLE? Page 4/5
ACHIEVING THE IMPOSSIBLE? | Running for fast-track project execution
RELATED PROGRAMS
PROGRAM FOR EXECUTIVE DEVELOPMENT - http://www.imd.ch/ped
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