The Three Levels of Project Success
If you do not know how to ask the right question, you discover nothing. W. Edwards Deming
As stated in the previous chapter, project success occurs when the results of the project add value to the organization, and results are a combination of output, outcome, and impact.
This can be roughly translated to three levels of project success:
- Project delivery success: Will the project delivery be successful? Essentially, this assesses the classic triangle of scope, time, and budget. These are your direct costs.
- Product or service success: This refers to when the product or service is deemed successful (e.g., the system is used by all users in scope, up-time is 99.99%, customer satisfaction has increased by 25%, and operational costs have decreased by 15%). These are your direct benefits.
- Business success: This has to do with whether the product or service brings value to the overall organization, and how it contributes financially and/or strategically to the business's success. These are your indirect costs and indirect benefits.
The total value of your project can also be written as:
Value = Total Benefits (Direct and Indirect) Total Costs (Direct and Indirect)
Overall, a successful project depends on the combination of these criteria. Some argue that product/service success is the same as business success, or argue that product/service success automatically means business success. But this is not true
Below you will find four true stories that illustrate how product success can be completely different from business success.
- A new investment product for a bank that has a high margin but also carries a significant risk for the bank, not just the customer. The product was wildly successful and many clients bought it. Many more than expected, which made the risk profile for the bank too high too continue with the product.
- This one product is very successful and is creating revenue and happy customers but it goes against everything that is defined in the new strategy of the company, and this is blocking the company from moving in a different direction that is needed to be relevant in the future.
- The very successful product with many happy clients is not helping the company to get additional clients. It is actually cannibalizing their existing clients.
- The very successful new service in the direct business of the company is competing with services offered through the partner channel of the business. And these partners are so pissed that they jump ship and it results in a huge net loss.
For smaller companies with only one product, or a very small product/service portfolio, you might argue product success and business success are similar and very tightly correlated. But for larger companies with bigger portfolios, I'm of the opinion that product success and business success are fundamentally different. This is reflected in the three separate levels I recommend to define project success.
In terms of accountabilities, the project manager is accountable for project delivery success. The product/service owner is accountable for product or service success. And the project sponsor is accountable for business success.
While this may sound simple and straightforward, the challenges arise in clearly defining the success criteria for each level, establishing baseline values for them, and then periodically reviewing and measuring them.
That is where the Project Success Model can help you.