HOUSTON, TX, USA 5 8 NOVEMBER 2017 #PMOSym PMO17BR213 Leading an Enterprise Portfolio Management Office in a Disruptive Environment: Lessons Learned at the US Postal Service Emil Dzuray, Director Office of Strategic Planning, J Otis Smith, Manager, Strategic Management Office United States Postal Service
Printers & Mailers Global Delivery Ecosystem Logistics E-Commerce Retailers Mail Service Providers Software Vendors Advertising 2
Large USPS Platform Supports Ecosystem 154B MAIL & PACKAGES Delivers 48% of world s mail Most affordable of industrialized Posts Most efficient of industrialized Posts $71B REVENUE No taxpayer funds! ~31,000 Post Offices 300+ Sorting Facilities ~8500 Processing Systems ~204,000 Delivery Vehicles 508,000 Career Employees 155M Delivery Points *EOFY 2016 3
CONVENIENT, AFFORDABLE UNIVERSAL POSTAL SERVICES HELP BUSINESSES CONNECT & GROW PROMPT, RELIABLE SERVICES CONNECT & INFORM CITIZENS & COMMUNITIES TRUSTED, SECURE, RESPECTED BRAND USPS MISSION: 4
USPS Corporate Performance Goals How we measure success.. High Quality Services Priority Mail First Class Mail Standard Mail Scan Performance Excellent Customer Experience Business Service Network Residential/SME Delivery Retail Point of Sale Customer Care Center Safe & Engaged Workforce Illness & Injury Rate Employee Engagement Score (Postal Pulse) Equal Employment Opportunity Sustain Controllable Income Revenue Controllable Income Deliveries per Hour 5
Dire USPS Business Conditions in FY2011 Baseline 2012 forecasts with no strategic initiatives. USPS establishes DRIVE epmo ~$20 B 2011 New PMG responded to worsening financial situation, instituted Plan to Profit 3 yrs declining revenue (~-$19B) Controllable costs up above revenue Liquidity near zero Mail volume (down 21%) Big initiatives needed to close ~$20B gap: Radically cut costs Grow core revenue Build new capabilities Enormous risks due to legislative, contractual and market uncertainties 6
Selected Strategies to Position the USPS to Thrive in Multiple Future Scenarios USPS 2030 Customer Trends SCENARIO 1 Capability 1 Capability 2 Capability n Technology Trends SCENARIO 2 Capability 1 Capability 2 Capability n USPS TODAY customer employee stakeholders Industry Trends Social Trends SCENARIO 3 SCENARIO 4 Capability 1 Capability 2 Capability n Capability 1 Capability 2 Capability n Legislative & Regulatory SCENARIO 5 Capability 1 Capability 2 Capability n Global Postal Market SCENARIO N Capability 1 Capability 2 Capability n Build out capabilities that appear in all/most scenarios, identify triggers for outlying scenarios, and be flexible! 7
What we did to optimize strategy execution in a disruptive environment 8
Examined Lessons from Successful Strategic Execution Used in Disruptive Environments 9
Established Rigorous Strategic Execution Guiding Principles Clear leadership commitment and accountability Accountable Officer/Executive leads each Initiative Chartered by ELT Effective governance with explicit roles and processes defined up-front Focus on delivering full economic impact on schedule Transparency on what matters Consistent monitoring and tracking through standardized, exceptionsbased reporting Roadmaps developed from bottom-up build of detail Forward looking course corrections and change management Governance methodology helped avoid pitfalls "Best in class" change management 10
Key Elements of Rigorous Strategy Execution Strategic Alignment Executive Visibility Rigorous Strategy Execution Early Indicators of Risk Strengthen Internal Talent Crossfunctional Integration 11
Rigorous Strategy Execution Strategic Alignment Executive Visibility Strategic Alignment Structured portfolio for shared accountabilities Rigorous Strategy Execution Strengthen Internal Talent Crossfunctional Integration Early Indicators of Risk Established a robust governance process Aligned portfolio outcomes to corporate and executive goals 12
Strategic Alignment Structured the Portfolio for Shared Accountabilities Supported by an Enterprise Project Management Office (epmo) Portfolio Management Standardized central epmo contractor Project Management Portfolio Management Steering Workgroup OSP SMO Initiative A (w/ PMO) Executive Leadership Team Initiative B (w/ PMO) Initiative Leads Initiative C (w/ PMO) Business Unit VPs Other Initiatives teams Large initiatives with dedicated PMOs Smaller initiative with PM support 13
Focused Efforts on Overall Outcome Management, not Project Management Rigorous Strategic Execution is not project management Rigorous Strategy Execution aims to Rigorous Strategy Execution Whereas project management aims to 14
Strategic Alignment Established Portfolio Governance to Align Corporate and Executive Goals to Portfolio Outcomes Portfolio of Strategic Initiatives 5 Year Strategic Plan, Financial Plan, & USPS Performance Goals Portfolio Objectives Monitor Progress Executive Performance Goals Personal Goals Initiative Charter Objectives Roadmap Plans Linked to Results 15
Rigorous Strategy Execution Strategic Alignment Executive Visibility Executive Visibility Established routine Deep Dives to expedite decisions Rigorous Strategy Execution Early Indicators of Risk Facilitated senior leadership early interventions and routine portfolio refinements Strengthen Internal Talent Crossfunctional Integration 16
Executive Visibility Achieved Executive Visibility Through Deep Dives to Expedite Decisions and Provide Real Operational Insight Exhibit 7 17
Executive Visibility Elements of a High Value Deep Dive Discussion ESTABLISHED RULES OF ENGAGEMENT TO DRIVE HIGH VALUE DEEP DIVE DISCUSSIONS ELT champion set agenda, tone for meeting, and focus areas IL Presenters - Commit to transparency - Lay cards on table Participants - Commit to high engagement discussion high respect SMO Keep us on task Identify, capture, and track action items Manage presentation times keep the discussion on track Present background data as required. All Come prepared and be present - put down your Smartphone and ipad
Executive Visibility 2. Deep Dives into critical initiatives to maintain crossfunctional alignment and share learnings Structured Deep Dive Meetings to Facilitate Visibility and Early Interventions Across 4 Dimensions Quarterly March 2018 Su Mo Tu We Th Fr Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Deep Dive Date 3. Performance outcome reviews to track progress, make adjustments, and implement interventions Annually 4.Portfolio composition and governance refinement using a Keep/Start/Stop process Live Performance Dashboard 19
Executive Visibility Created Live Dashboards to Facilitate Discussion of Risks and Opportunities for Early Intervention Each month, Initiative Leaders discuss Assessment of projected end of year performance End of year forecasts for KPIs projected to miss targets Mitigations taken for targets projected to miss Top 2-3 accomplishments since the last status report ## [Initiative Name] (Initiative Leader Name) NO 20
Rigorous Strategy Execution Strategic Alignment Executive Visibility Early Indicators of Risk Plans tied to performance outcomes Rigorous Strategy Execution Early Indicators of Risk Exception based status reporting and executive intervention requests Strengthen Internal Talent Crossfunctional Integration 21
Early Indicators of Risk Developed a Framework for Early Indicators of Risk Using Exception-based Reporting G Y R Prioritize initiatives needing immediate Senior Leadership attention Goal of yellow and red status is to foster discussion about initiatives at risk Five types of indicators to provide initiative status Initiative Leader Confidence Are you on track to achieve EOY performance? Risk What is the probability & impact of potential challenges? Milestone - Is our schedule on track? Impact (Results) Are we meeting our results? Update Are the milestones/impacts up to date in our system of record? Reporting designed to cascade most urgent settings upward Opportunity to request assistance from Senior Leaders 22
Rigorous Strategy Execution Rigorous Strategy Execution Strategic Alignment Executive Visibility Early Indicators of Risk Cross Functional Integration Cross-functional accountability Regular communications across the enterprise Strengthen Internal Talent Crossfunctional Integration 23
Crossfunctional Integration Cross-Functional Integration is Critical to Success Initiative Charters INITIATIVE LEAD Roadmaps ROADMAP OWNER Critical Critical Milestones Critical Milestones Critical Milestones Milestones Date Stakeholder (s) Outcome Target Status/Forecast Establish clear roadmaps for each initiative Link Milestones directly to performance outcomes and stakeholders Identify critical activities and leading indicators identified Establish intervention points and Senior Executive decisions Assign cross functional accountabilities at the milestone level Rigor-test stakeholder readiness and commitments when plans are established Track in a single system of record (TMOS)
Crossfunctional Integration Routine initiative steering committee meetings led by Senior Leadership ENCOURAGED Sponsors REGULAR and Executive COMMUNICATIONS leaders AT ALL LEVELS OF THE PORTFOLIO Weekly SMO meetings with Initiative Leads and Roadmap Teams Monthly one-on-one Initiative Lead meetings with CEO to discuss program health and key issues Quarterly Roadmap Owner and Stakeholder engagement sessions (Path Ahead meetings) 25
Rigorous Strategy Execution Strategic Alignment Executive Visibility Strengthen Internal Talent Acquire and develop inhouse resources to fill talent gaps Rigorous Strategy Execution Early Indicators of Risk Promulgate best practices using consistent standards Strengthen Internal Talent Crossfunctional Integration Celebrate Success! 26
Strengthen Internal Talent FTE Definition & Planning Strengthened and Developed In-house Resources to Fill Talent Gaps epmo Support Over a Project Lifecycle Execution Performance / Monitoring Close Contractor Resources Contractor Resources USPS Resources Time USPS Resources primary driver of PMO activities Re-deploy USPS Resources USPS PM Talent Development Investments: PM Basics Training PMI Certifications for SMEs Agile training for specialized functions PM skills in emerging leader curriculum Tools & how-to guides to support USPS processes at all levels Central epmo function for coaching and training 27 27
Strengthen Internal Talent CELEBRATED SUCCESS TO MAINTAIN ENGAGEMENT Reviewed major accomplishments each quarter with senior executives and initiative leader Hosted portfolio-wide end of year celebrations 28
What results did we see? 29
Portfolio Strategy Execution Results - FY12-FY16 Executed 62 initiatives, 439 roadmaps containing ~14,500 outcome milestones Achieved ~$15 billion cost savings and revenue gains of ~$6 billion ~73% of the epmo-managed objectives achieved their target on time Conducted >108 regular in-depth Deep Dive reviews Created PM training and trained over 450 staff and all new leaders on basic project management skills Increased employee qualifications with over 420 PMI certified PMPs Maintained overall leadership confidence from 2012 to 2016 for governance processes Averaged 82% of all respondents agreeing USPS has a clear set of goals and a strategy to achieve them. Averaged 84% of all respondents agreeing I have been well informed of the DRIVE processes and my role. 30
Impact on our Business Baseline 2012 forecasts with no strategic initiatives. USPS establishes DRIVE epmo ~$20 B USPS still requires legislative and regulatory changes to ensure long term financial stability 31
Lessons Learned 32
Top Lessons Learned from Rigorous Strategy Execution (I) Start from the top Senior leaders drive culture and communicate importance of sticking to the process and the plan Create a sense of urgency around why and define a tangible vision for the future Build/maintain leadership structure to sponsor/guide culture change and initiatives Charter an epmo to govern execution and change processes Host routine, cross-functional Deep Dives into initiative execution Develop enterprise-wide systems to enable transparency, mitigate risks, and rigorously track project results 33
Top Lessons Learned from Rigorous Strategy Execution (II) Teams struggle with being red - praise leaders who accurately communicate their status Link plan milestones to tangible results to show meaningful progress Robustly engage leaders, employees, customers & stakeholders Develop and support internal talent to build future capacity to manage complex change efforts Celebrate accomplishments big and small - don t just focus on gaps Be disciplined - but flexible Communicate, communicate, communicate - especially the why 34
Closing Thoughts Our lessons identified 5 elements of epmo success through Rigorous Strategy Execution Call to Action for you: Acknowledge how far you have come Commit to go further - continuous improvement! Try new things...and be willing to fail learn quickly! 35
Food for thought: Acknowledge how far you have come 1950-36
Strive to go further 2014 37
Be willing to try new things. 38
Rigorous Strategy Execution is key to delivering results in disruptive environments Emil J. Dzuray Director, Strategic Planning US Postal Service emil.j.dzuray@usps.gov For more information - J Otis Smith Manager, Strategic Management Office US Postal Service jotis.smith@usps.gov 39