Applying management science thinking boosts a legal department’s capacity to support its business departments. Steven Cao, general counsel of Energy China Overseas Investment Division/China Gezhouba Group Overseas Investment, reveals how in-house counsel can successfully apply project management methods
In academic circles, it is said that corporate activities can be broadly classified into two types ‒ operations and projects. Operations consist mainly of an enterprise’s continual and repetitive business carried out by its functional departments. Their management structure is characterised by hierarchy and gives rise to the bulk of the enterprise’s revenue and fixed costs. The focus of operational activities is efficiency and productivity, their objectives are mainly performance-driven and cost reduction, and they maintain the stability and continued existence of the enterprise.
Projects, on the other hand, include the enterprise’s transformational and innovative business, and are implemented by project management teams. Their management structure is flat, and they produce dedicated results and products within a specified period of time and budget. The focus of project activities is strategy, transformation and change, their main goal is long-term value creation, and they promote the long-term growth of the enterprise.
To achieve longevity, an enterprise must maintain flexibility at the organisational level. That is, it must find a balance between developing its existing capabilities (operations) and seeking new ones (projects). Operations lead the organisation forward, whereas projects promote organisational change.
The cover story of the November-December 2021 issue of Harvard Business Review, titled The Project Economy Has Arrived, observed the following: “Projects have displaced operations as the economic engine of our times. With advances in technology such as information technology, robotics and artificial intelligence, future business activities will change from being efficiency-driven to being change-driven. By 2027, some 88 million people around the world are likely to be working in project management, and the value of project-oriented economic activity will have reached USD20 trillion.
“Despite this transformation, many leaders still don’t appreciate the value of projects and project management. Only 35% of the projects undertaken worldwide are successful ‒ which means we’re wasting an extravagant amount of time, money and opportunity. Therefore, companies need a new approach to project management. They must adopt a project-driven organisational structure, ensure that executives have the capabilities to effectively sponsor projects, and train managers in modern project management.”
The US Project Management Institute (PMI) defines a project as a temporary effort to create value through a unique product, service or result. It is an activity with a definite start time, a fixed scope, and specific resources. Accordingly, projects are limited in time. Furthermore, a project is not a routine action, but a specific series of actions taken to achieve a certain specific goal and, therefore, a project is unique.