Eight to Late

Sensemaking and Analytics for Organizations

The effect of organizational culture on project success

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It is a truism that two organisations using the same project management practices and structures will have different levels of success with them. Clearly, there’s a lot more to project success than project management. Despite this, most studies of project success tend to focus on  project level, or operational, variables such as  level of user involvement, use (or not) of a formal methodology, reliability of estimates etc (Note: these variables have been taken from the oft quoted Standish Report). As important as these factors are, they fail to take into account that projects live and evolve in a wider environment which includes the sponsoring organisation.   A recent paper entitled, New Product Development Projects: The Effects of Organizational Culture published in the December 2007 issue of the Project Management Journal, studies the effect of organisational culture on project success with specific reference to new product development (NPD) projects.  I summarise and review the paper below.

The authors claim that despite the importance of NPD projects for the long term success of an organisation, the effect of strategic level variables (organisational culture, organizational strategy, management involvement etc.)  on project success has not been widely studied. They suggest this might be so because these variables are hard to define, quantify and measure.  Further, on reviewing the existing literature, they find that the few published, organisation-oriented studies tend to focus on the end result of the development process (i.e. the product) rather than on factors affecting the project. Hence the motivation for their study.

Incidentally, they note that there has been some work on the effect of national culture on NPD project performance,  but these studies find no correlation between the two.

To measure something as elusive as organisational culture, you first have to pin it down by defining it. The definition does not have to be all-encompassing, but it needs to be precise enough for people to have a common understanding of what you’re talking about. To do this, the authors created a set of questions based on various definitions of organisational culture available in the literature. The resulting questionnaires were mailed out to various organisations engaged in NPD projects. The responses received (from over a hundred organisations) were analysed using  exploratory factor analysis,  enabling the authors to group the questions  into the following dimensions of organisational culture:

  • Positive work environment: this includes factors such as
    •  openness to new ideas,
    • employees feeling valued as individuals,
    • open discussion with superiors encouraged etc.
  • Management leadership:  this includes factors such as
    •  clear goals set and responsibilities delegated,
    • employees have input in decision making, 
    • incentives offered to work on new ideas, 
    • high-risk high-return projects encouraged etc.
  • Results orientation: this includes factors such as
    • employees are pressured to finish work,
    • correct procedures more important than correct results etc.

These dimensions define organisational culture for the purposes of their study

To measure project success, the authors use the following dimensions adapted from Griffin and Page:

  • Consumer-based:  the customers are satisfied with the product. This can also be classed as Customer Satisfaction.
  • Commercial success: the product makes money
  • Technical success: the product works as intended.

Note that these variables are actually a subset of those suggested by Griffin and Page. 

Project success was measured by getting upper management in the surveyed companies to rate product success along each of the above dimensions.

Finally, the authors correlate organisational culture to product success (for the surveyed companies) using correlation and regression analysis. The results (which are really no surprise) indicate that:

  • Positive work environments and management leadership are strongly correlated with each other and with the three measures of product success. That is: 
    • Strong management leadership and positive work environments go hand-in-hand. 
    • Companies with positive work environments (and, by implication, strong management leadership)  have better commercial success with new products, enjoy better customer satisfaction and have greater technical success than those with less positive work environments (and, by implication, weak leadership).
  • Results orientation is not strongly correlated with any of the other variables. If this seems surprising at first sight, take another look at what goes into making up this variable and it will seem less so!

Although the paper focuses on NPD projects, I think the conclusions – especially those pertaining to customer satisfaction and technical success –  apply to other  projects  as well.  Further, though the conclusions may be obvious to many, such research is important because it lends analytical backing to otherwise intuitive notions. It does this by:

  • Defining (albeit, in a limited way) what is meant by organisational culture and project success.
  • Studying the relationship between the variables that make up the two. 

Defining variables and quantifying relationships can give us a sense for which organisational culture variables are the most significant determinants of project success. So, although the study is a preliminary one (as the authors themselves admit), the work is a useful step in understanding the relationship between projects and the larger environment in which projects live and breathe.

References:

Belassi, W., Kondra, A. Z.,  and Tukel, O. I., New Product Development Projects: The Effects of Organizational CultureProject Management Journal, 38 (4), 12-24 (2007).

Written by K

February 26, 2008 at 6:22 pm

4 Responses

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  1. Dear Kailash Awati,
    I have just stumbled upon your last review on the PMJ March paper concerning KM transfer in PBO.
    It is a great pleasure for me reading it, and I have already taged some of your other reviews: Comm. and PM success and more.
    What I like in your writing is the way you express your ideas and knowledge in a criticsm way.
    I would be delighted if you wil join my Linkedin network for further mutual interests discussions.

    Regards
    Tomer Keidar

    Like

    Tomer Keidar

    April 26, 2008 at 8:11 am

  2. […] See my posts on utility of project management techniques for new product development and the effect of organizational culture of new product development project success, for example. Posted by K Filed in Paper Review, Project […]

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  3. […] on roles and professional ability rather than individuals and personalities. At a higher level,  organizational culture plays a role in determining how a project is governed, managed and […]

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