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24.04.2017 14:15

”Lean Management Office” (LMO) is the next generation Project Management Office (PMO)

Matti Haukka

Imagine a PMO that truly supports organizational and business transformation through change programs, development projects, investments, product backlogs, and smaller scale development activities. A PMO that has reached this level could be called a LMO (Lean Management Office).

Project culture development is a beginning, but it’s not enough!

Reaching the “LMO level” doesn’t happen overnight; it demands years of systematic development, an important part of which is project culture development. Strategies are implemented and development happens mainly through programs and projects, so project culture development is a good starting point. However, it’s not enough.

Strong ownership is key

The LMO drives and develops portfolio management processes that ensure quick strategy realization and agile organizational transformation. The LMO is a PMO that has successfully developed the organization’s portfolio management processes to maturity level 4. This means that portfolio management, and decision making related to its components, is a continuum of the strategy process – ergo an essential part of the organization’s management and governance system. It enables experimentation, but only within the limits of the organization’s risk capacity.

So what’s Lean about this?

It’s the fact that a PMO working like this can shorten the lead time of development activities substantially. The customer oriented approach that Lean builds on can only be realized through good ownership of projects and development activities. Strong business ownership is also a prerequisite for the highest levels of portfolio management maturity.

Assign a director responsible for transformation management

The LMO is also a part of the organization’s executive board. Hence, in the executive board, there should be a member responsible for transformation (= projects and development) management. The title of this person can be Chief Strategy Officer, Chief Business Development Officer or such – the essential is their responsibility area. Their team might be a virtual network, or a permanent organizational unit of its own; this is up to the organization and available resources.

The LMO controls resource utilization by developing flow efficiency

The LMO utilizes the most efficient methods and processes for each individual case. It draws the “big picture” of the entire portfolio, where development processes can be programs, different types of projects, or product backlogs. These processes shouldn’t be their own islands; they should be connected to a common transparent, but flexible, decision making model. What’s essential is that the LMO controls the efficient utilization of the organization's’ resources by developing the flow efficiency, which in practice leads to decreasing the amount of simultaneous projects.*

LMO is a honorary title

Since Lean is a management philosophy, I wouldn’t officially rename the PMO function to “LMO”. It’s more of a honorary title, earned by a PMO that’s an essential player in the organization’s governance system, supporting management just like financial administration, but with the aim to find and eliminate waste and bottlenecks.

*) In the case of project business, I wouldn’t formulate the goal quite like this. Flow efficiency is important in project business as well, but apart from that, many of the principles presented in this post would need to be formulated differently.

Matti Haukka

Matti is a founder partner of Project Institute Finland. He has worked as a project management trainer and consultant for 27 years, and prior to that as a project manager and ERP developer in the shipbuilding industry.

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