Project VS Process

Project VS Process

Why are they managed like day and night inside of the very same company? How to manage Processes and Projects, and how to prioritize one over the other.

The IEM Enterprise model on the operating level. Transformation from "startup —> business" from a cybernetic point of view.

1. Projects and process have opposing properties.

Project: enlightenment, inspiration, a flash, blitz, a spark of energy for the physical body and spiritual will, mobilization.

Process: the inside of a watch.

A project is limited in time, process (depending on resources) continues indefinitely.

The nature of projects implies a high degree of unpredictability; any project is chaotic on the inside.

A process is strictly structured (standardized).

A project is creating the nuclear bomb. The process is their mass production in an arms race.

2. Mathematically, the relationship between Project and Process is such:

Project = Delta of Process.

In other words, Project is a final set of changes in Process (a groups of processes) for the consumer of the Project.

At the same time, that which is the Project from the point of view of the consumer is the final step of the final Process (processes for a group of suppliers) for the supplier(s).

Simply speaking, the consumer's Project is the supplier's Process.

For example, building a home is the Project for the future homeowner, and a Process for the builder (including the General Contractor).

Which Processes of the consumer (buyer) change as a result of the Project's realization?

For example, the household cash flows -> the processes for providing for the family (with the addition of paying for a mortgage, the budget for everything else is reduced).

Transport processes — to work, from work, to the store, to daycare, to school, etc... (some new address).

The changes (delta in the individual processes for the homeowner) are many, but their set is finite.

A construction company will move the equipment to the next section (also the next step in the construction process) and continues to build typical boxes.

From this arises the empirical (and really surprising) fact that at the intersection of supplier and consumer, the efficiency of business processes are on average higher for the former.

Exactly because in the pool of consumers there is always a proportion for whom this is a one time purchase (project).

In the case of the interaction being a process for both of them (a supermarket and milk distributor), the effectiveness of the operation at the intersection is always comparable.

3. Processes are managed according to the IEM Enterprise paradigm.

Moreover, from the point of view of IEM cybernetics, "Enterprise" is a group (node) of processes united through a shared center for making decisions.

Simultaneously, the foundational business processes of the Enterprise, which create value for the consumer, are parts of the global value chains.

From a bird's eye view, within the multidimensional structure of global value chains, a Enterprise is a knot of a colossal spider web of human economic relationships.

A CEO spider sitting in the middle, in his own turn (if he's competent), ensures that the transit of common resources from the fragments of value chains within the perimeter of the Enterprise's control goes as smoothly as possible.

No more, no less.

NB: on the operating level. About strategic marketing it's different: iem.community/iem-enterprise/IEM-leader-core-business/.

Approximating the real enterprise in the cybernetic model, IEM Enterprise mathematically guarantees the highest possible operating profit(*) within given market conditions.

And vice-versa.


(*) On average, in the long term.

At the moment, traditional administrative measures can give the best result with a guarantee that the systemic effect will be the opposite (previously on iem.community/articles/Bureaucratic-Initiatives/).

4. Projects are managed using the ERP paradigm.

More specifically, resource planning.

More correctly, PRP — project resource planning.

An enterprise, the enterprise as a whole, can only be effectively managed using the IEM paradigm, or something similar.

And more precisely, by the situation (scientifically, "ad hoc"). In excel, on paper, by intuition.

The project, we remind you, is by its nature chaotic. And for chaos there is not and cannot be a universally effective method.

Someone "suggests" something? On the fence they "suggest" too. Dry water isn't common, my friends. Don't spend your time and energy on unscientific mumbo jumbo.

Given the unique nature of each project (for a given enterprise), it ends anyway.

5. Colossal "project management systems", from our point of view, are profoundly wasteful.

On one hand, they do not work from the start precisely because projects are chaotic.

That is bringing a monstrous "project management system" into a situation similar to our current project will most likely take longer than the last "DIY" project.

On the other hand, they (megasystems) are simply unnecessary. No matter how complex and large a project, it can be decomposed into large cells which should be performed by competent suppliers.

If such competent suppliers exist, mega systems "for project management" are useless. Gant's good old paradigm is enough.

And if the suppliers are incompetent, then this mega system will not help any thing.

If John drank too much and didn't bring the bricks, well, you understand: an automatic SMS reminder is unlikely to help.

6. From the above, it’s possible to say that even though ERP systems are fundamentally unfit for managing enterprises, they can theoretically be useful for managing projects.

So?

No.

For anyone with experience implementing or using an ERP system, the idea of using, for example, SAP to manage the construction of their own home (let it be a personal skyscraper for a billion dollars) will elicit a belly laugh.

ERP systems can NOT manage projects (as well as anything else in the universe) precisely because they are NOT for managing.

These systems are for planning resources. They were designed and have developed (we will do without estimates) in this way for almost half a century.

But, as was shown above, the best resource planning systems for projects is the combination of Gant's paradigm and quality suppliers.

Recently, following market demand, some ERP vendors have tried REpositioning their systems as management.

Of course this marketing trap is within the limits of criminally acceptable sleight of hand.

From the view of the term "management" in the science of cybernetics, " "A managing ERP system" is a lie, a deception of customers.

7. Where does an Enterprise come from? It is the essence of a tangle of processes.

From the Project.

The name of which is "startup".

Every startup (Project — "chrysalis") at a certain point should turn into a business (Process — "butterfly").

This is a particularly dangerous moment, my friends.

If too soon (extremely rare, but it happens), the chrysalis stops developing under the heavy skeleton of the organization’s processes. And dies before reaching its prime.

If too late, it's a chaotic group of friends with ideas that cannot pull it together to release a viable product in quantity and quality.

Taking advantage of the delay, competitors pull it together and occupy the market.

The chaotic group of friends stays together to argue over, "Who messed it all up?"

8. The CEO with ambitions is doomed to deal with boths Projects and Processes.

Above, we showed how to separate one from the other.

And now, the main thing: (always limited) energy and intellectual resources of the CEO should be spent on projects.

Their goal is changing Processes so that they worked automatically.

This is an absolutely necessary foundation for future success on the operational level.

A CEO deeply invested in business processes on the operating level ("controlling orders", for example) guarantees a preservation of today's backwardness and leaving the market from a strategic perspective.

An attempt to control three cents with a loss of a billion in earnings.

And what's more common, the more the general director is involved in the operating details of a company, the worse it works.

Golden nails, although expensive, are still worse than steel.

Ergo, dear general CEO's: work on Projects as to NOT work on Processes.

"In this sign you will conquer!"

 

P.S. But don't forget, these beneficial Projects, like the operating level of a business as a whole, is only half of the work of a true IEM business leader.

The second half — strategic marketing.

The marketing strategy defines the potential limit for sales.

The quality of the operating level determines the market percentage achieved.

Thus:

  • An Enterprise with a poor marketing strategy is doomed to bankruptcy regardless of its operating efficiency (you can produce to the moon and back, but no one will need your product, no matter what success you have in reducing the cost);
  •  An Enterprise with a good marketing strategy, but a disaster on the operating level, cannot complete orders.

And with regard to the situation in this business ("ad hoc") the competent CEO determines the priorities to focus his efforts on.

May 29, 2018 by John Galt