Organization politics exist in every office and can have a significant influence on the portfolio management system when it comes to which projects receive funding and high priority. This is especially true when the criteria and process for selecting projects are ill-defined and not aligned with the mission of the firm. Project selection may be based not so much on facts and sound reasoning, but rather on the persuasiveness and power of people advocating projects.
The term “sacred cow” is often used to denote a project that a powerful, high-ranking official is advocating.
Case in point, a marketing consultant confided that he was once hired by the marketing director of a large firm to conduct an in dependent, external market analysis for a new product the firm was interested in developing.
His extensive research indicated that there was insufficient demand to warrant the financing of this new product. The marketing director chose to bury the report and made the consultant promise never to share this information with anyone.
The director explained that this new product was the “pet idea” of the new CEO, who saw it as his legacy to the firm. He went on to describe the CEO’s irrational obsession with the project and how he referred to it as his “new baby.”
Like a parent fiercely protecting his child, the marketing director believed that he would lose his job if such critical information ever became known.
Organization Politics Solutions
Having a project sponsor can play a significant role in the selection and successful implementation of product innovation projects. Project sponsors are typically high-ranking managers who endorse and lend political support for the completion of a specific project.
They are instrumental in winning approval of the project and in protecting the project during the critical development stage. Savvy project managers recognize the importance of having “friends in higher courts” who can advocate for their case and protect their interests.
The significance of organization politics can be seen in the ill-fated ALTO computer project at Xerox during the mid-1970s. The project was a tremendous technological success; it developed the first workable mouse, the first laser printer, the first user-friendly software, and the first local area network.
All of these developments were five years ahead of their nearest competitor. Over the next five years this opportunity to dominate the nascent personal computer market was squandered because of internal in-fighting at Xerox and the absence of a strong project sponsor.
In portfolio management, organization politics can play a role not only in project selection but also in the aspirations behind projects. Individuals can enhance their power within an organization by managing extraordinary and critical projects. Power and status naturally accrue to successful innovators and risk takers rather than to steady producers.
Many ambitious managers pursue high-profile projects as a means for moving quickly up the corporate ladder.
For example, Lee Iacocca’s career was built on successfully leading the design and development of the highly successful Ford Mustang.
Managers become heroes by leading projects that contribute significantly to an organization’s mission or solve a pressing crisis.
Many would argue that organization politics and project management should not mix. A more proactive response is that projects and politics invariably mix and that effective project managers recognize that any significant project has political ramifications.
Likewise, top management needs to develop a system for identifying and selecting projects that reduces the impact of internal organization politics and fosters the selection of the best projects for achieving the mission and strategy of the firm.