A pre-mortem is a proactive risk management exercise that helps teams anticipate potential failures before they occur. Unlike traditional risk assessments, which often focus on known risks, a pre-mortem encourages teams to imagine a scenario where the initiative has already failed and work backward to identify the causes. This method:
Uncovers hidden risks that might otherwise be overlooked.
Encourages open and candid discussions within teams.
Enhances risk mitigation strategies early in the process.
Strengthens team alignment and shared accountability for success.
What Are the Outcomes of a Pre-Mortem?
When executed effectively, a pre-mortem delivers several valuable outcomes:
A comprehensive list of potential failure points.
A prioritized risk register with mitigation actions.
Stronger team cohesion and ownership over the initiative’s success.
Improved decision-making, ensuring proactive rather than reactive responses to risks.
How to Execute a Pre-Mortem
Follow these structured steps to conduct an effective pre-mortem:
Set the Stage: Gather the key stakeholders, including project sponsors, team leads, and operational experts. Ensure a psychologically safe environment where candid discussions are encouraged.
Define the Scenario: Present the hypothetical situation: “It is six months (or an appropriate timeframe) in the future, and the project has completely failed. What went wrong?”
Brainstorm Failure Points: Each participant individually lists reasons for failure, considering strategic, operational, and technical factors.
Share and Categorize: Consolidate and group similar failure points into themes (e.g., governance issues, resource constraints, external disruptions).
Prioritize Risks: Use voting, ranking, or a risk assessment matrix to determine which failure points are the most critical.
Develop Mitigation Actions: For each high-priority risk, define preventive measures and contingency plans.
Integrate into Governance: Assign ownership for risk monitoring and integrate these insights into ongoing project reviews.
When and With Whom Should You Conduct a Pre-Mortem?
When: Ideally, before finalizing the transformation strategy or at key milestones in major initiatives (e.g., post-planning, before execution phases, during major pivots).
With Whom: A cross-functional group including executives, project managers, functional leads, risk officers, and frontline implementers.
By embedding the pre-mortem approach into your transformation governance, you significantly improve the likelihood of success by proactively identifying and addressing risks before they materialize.
This technique not only improves project outcomes but also builds stronger teams through enhanced communication and psychological safety.
Organizational transformations represent some of the most complex undertakings in business. According to research by McKinsey & Company (2019), nearly 70% of transformations fail to achieve their stated objectives, with inadequate risk management frequently cited as a contributing factor.
Effective risk management requires a structured approach where risks are identified, assessed, and mitigated at the appropriate levels:
Portfolio Risks – Strategic risks impacting the entire transformation, requiring executive oversight. Examples include: resource allocation, organizational capacity for change, external (market/regulatory) and financial sustainability risks.
Program Risks – Cross-project risks affecting multiple initiatives, managed at the program level. Examples include: interdependencies/resource conflicts between projects, timeline/milestone risks, development, technical integration, adoption, and benefit realization risks.
Project Risks – Operational and execution risks handled by project teams. Examples include: scope/requirements, schedule, budget, resource, quality, performance, team capability/capacity, and stakeholder acceptance risks.
A clear governance structure ensures that risks are escalated to the right level—whether the Executive Steering Committee, Program Leadership, or Project Management—for timely decision-making and intervention.
2. Risk Management in Transformation Governance
To embed risk management into transformation governance effectively, organizations must:
Define risk ownership at different levels (executive, program, project).
Establish governance bodies with clear escalation mechanisms.
Integrate risk reviews into decision-making forums.
Ensure risk reporting is transparent, structured, and aligned with transformation objectives.
3. Risk Assessment & Mapping Tools
Several proven tools can help organizations systematically assess and map risks:
Risk Matrix (Probability vs. Impact): Prioritizes risks based on likelihood and severity.
Risk Breakdown Structure (RBS): Categorizes risks by type (strategic, organizational, operational, financial, technical, change management, etc.).
Bow-Tie Analysis: For high-priority risks, visualizes potential causes, consequences, and controls for a given risk.
Monte Carlo Simulations: Provides probabilistic forecasting for risk impact on budgets and timelines.
SWIFT (Structured What-If Technique): Facilitates structured brainstorming on potential risks.
Each of these tools helps organizations gain visibility into risks and prepare for effective mitigation.
4. Mitigation Planning & Execution
Risk mitigation involves defining structured responses based on the nature and severity of risks:
Avoid: Eliminating the risk by altering the transformation approach.
Mitigate: Reducing the impact or probability through proactive measures.
Transfer: Shifting the risk to a third party (e.g., insurance, outsourcing).
Accept: Acknowledging the risk with contingency plans in place.
A Risk Register should be maintained to track risks, owners, mitigation actions, timelines, resources, and follow-ups. Additionally, mitigation progress should be reviewed in governance forums to ensure accountability and timely interventions.
5. A Step-by-Step Guide to Implementing Risk Management
Risk Management Framework: Agree on the objectives, structure, policies, and procedures.
Risk Identification: Engage stakeholders and put mechanisms in place across all levels to surface risks early.
Risk Assessment: Use structured tools to break risks down, categorize them, and evaluate the likelihood and impact.
Risk Prioritization: Align risk priorities with transformation goals and organizational risk appetite.
Governance & Oversight: Integrate risk reviews into transformation governance structures, with dedicated risk review sessions.
Ongoing Monitoring & Communication: Establish reporting mechanisms, including risk trend reporting, and continuous improvement processes.
6. Example – Global Financial Services Transformation
A major financial institution undertaking a digital transformation employed a three-tiered risk management approach:
Portfolio Level (Executive Steering Committee) The ESC focused on strategic risks including regulatory compliance, competitive disruption, and organizational capacity for change. They established quarterly “risk deep dives” where each transformation workstream presented their top risks and mitigation strategies. The ESC maintained a portfolio-level risk contingency reserve, allocating funds to address emerging risks based on severity and alignment with strategic priorities.
Program Level (Transformation Office) The Transformation Office implemented a “Risk Guild” comprising risk owners from each workstream who met bi-weekly to identify cross-program dependencies and risks. They employed a sophisticated risk visualization dashboard that highlighted interdependencies between workstreams and potential cascading impacts. The office also maintained a centralized risk register with automated escalation of risks that exceeded defined thresholds.
Project Level (Agile Teams) Individual teams incorporated risk identification into their sprint planning and retrospectives, with “risk spikes” allocated to investigate high-priority uncertainties. Teams used “risk-adjusted story points” to account for implementation uncertainties in their capacity planning. A “see something, say something” culture encouraged anyone to raise potential risks through a simple digital form.
The results were impressive: while industry benchmarks suggested that 70% of financial services transformations fail to meet objectives, this institution achieved 85% of its targeted benefits within the planned timeframe.
7. Common Pitfalls and How to Avoid Them
Risk Management as Compliance Exercise
Problem: Risk management becomes a bureaucratic checkbox exercise rather than a decision-making tool.
Solution: Focus on decision-relevance by integrating risk discussions directly into key decision points. Emphasize how risk information has influenced specific decisions. Use concrete, specific risk descriptions rather than generic categories.
Overemphasis on Documentation
Problem: Teams spend more time documenting risks than managing them.
Solution: Simplify documentation requirements, focusing on action-oriented information. Implement user-friendly tools that minimize administrative burden. Establish “one source of truth” rather than duplicative risk registers.
Failure to Close the Loop
Problem: Identified risks have mitigation plans, but no one follows up on implementation.
Solution: Implement clear accountability for mitigation actions with regular status reviews. Treat high-priority risk mitigations as projects with defined deliverables, timelines, and resources. Celebrate successful risk mitigation.
Risk Isolation
Problem: Risk management operates in isolation from other management processes.
Solution: Integrate risk considerations into strategic planning, resource allocation, and performance management. Use consistent language and frameworks across processes. Ensure risk owners participate in relevant decision forums.
Static Approach
Problem: Risk register becomes a static document that doesn’t evolve with changing circumstances.
Solution: Implement regular risk refresh cycles. Establish triggers for out-of-cycle risk reviews based on internal or external events. Create mechanisms to identify and assess emerging risks.
8. Conclusion
Risk management in organizational transformation is not a peripheral activity but a central governance function that enables informed decision-making and increases the likelihood of success. By implementing a multi-layered approach that addresses portfolio, program, and project risks, organizations can navigate the inherent uncertainties of transformation with greater confidence.
The tools, frameworks, and step-by-step guide outlined in this article provide a roadmap for implementing robust risk management practices. However, the most important factor is creating a risk-aware culture where identifying and managing risks becomes part of everyone’s responsibility.
In setting up portfolio management, I have frequently relied on the materials and thinking of the Project Management Institute (PMI). These resources offer a structured approach to prioritize, execute, and govern transformation initiatives effectively. By aligning projects and programs with strategic objectives, portfolio management empowers leaders to maximize value delivery and adapt to changing circumstances.
Understanding Portfolio Management in Transformations
Portfolio management, as articulated by PMI, involves the centralized management of one or more portfolios to achieve strategic goals. Unlike project or program management, which focuses on delivering specific outputs or outcomes, portfolio management takes a holistic view. It ensures that all initiatives within the portfolio are aligned with organizational strategy, properly resourced, and balanced in terms of risk and reward.
When applied to transformations, portfolio management enables organizations to:
Align Initiatives with Strategy: Ensure all transformation efforts contribute to overarching business goals.
Optimize Resource Allocation: Efficiently distribute finite organizational resources across initiatives to maximize impact.
Balance Risk and Value: Evaluate and manage the risks associated with each initiative while ensuring optimal value delivery.
Monitor and Adapt: Continuously assess portfolio performance and adjust to external and internal changes.
Key Components of Portfolio Management
PMI outlines several key components essential for effective portfolio management:
Portfolio Governance: Establish a decision-making framework that defines roles, responsibilities, and criteria for evaluating and prioritizing initiatives.
Strategic Alignment: Ensure every initiative aligns with the organization’s strategic goals and delivers measurable value.
Performance Management: Track the performance of portfolio components to ensure they deliver expected benefits.
Risk Management: Identify, assess, and mitigate risks at the portfolio level.
Stakeholder Engagement: Actively involve stakeholders to gain insights, address concerns, and ensure buy-in.
Applying Portfolio Management to Transformations
1. Defining a Transformation Portfolio
Begin by identifying all potential initiatives that could support the transformation. These may include process improvements, technology upgrades, workforce development programs, or customer experience enhancements. Categorize and group these initiatives based on their strategic importance, expected benefits, and interdependencies.
2. Establishing Governance Structures
Create a governance framework tailored to the transformation effort. This should include:
A portfolio steering committee responsible for prioritizing and approving initiatives.
Defined criteria for evaluating initiatives, such as strategic alignment, risk, cost, and potential benefits.
Regular review cycles to monitor progress and make data-driven decisions.
3. Prioritizing and Sequencing Initiatives
Use prioritization techniques, such as scoring models or weighted criteria, to rank initiatives based on their alignment with strategic goals, potential impact, and resource requirements. Sequencing initiatives appropriately helps manage dependencies and ensures smooth execution.
4. Resource Optimization
Assess the organization’s resource capacity, including budget, personnel, and technology. Allocate resources to high-priority initiatives while maintaining flexibility to reallocate as needed.
5. Continuous Monitoring and Adaptation
Establish key performance indicators (KPIs) to measure the success of portfolio initiatives. Regularly review portfolio performance to identify underperforming initiatives, reallocate resources, or adjust strategies in response to changing circumstances.
Benefits of Portfolio Management in Transformations
Enhanced Strategic Alignment: Ensures all transformation initiatives are purposefully aligned with business goals.
Increased Efficiency: Optimizes the use of resources across initiatives, reducing waste and duplication.
Improved Decision-Making: Provides leaders with clear visibility into portfolio performance, enabling informed decisions.
Risk Mitigation: Proactively identifies and addresses risks, reducing the likelihood of costly setbacks.
Agility: Allows organizations to adapt quickly to evolving market conditions and business needs.
Case Example: Portfolio Management in a Digital Transformation
Consider the following example of how a company would apply the:
Identify Initiatives: Key initiatives include implementing an ERP system, automating commercial and supply chain processes, and launching employee upskilling programs.
Prioritize Projects: The ERP implementation is prioritized as it serves as the foundation for other initiatives, which can then roll out with higher speed and effectiveness.
Allocate Resources: Budget and personnel are allocated based on the strategic importance and interdependencies of initiatives, considering organizational resource capacity.
Monitor Progress: KPIs such as system adoption rates, productivity improvements, and training completion rates are tracked to measure success.
Adapt Plans: When process disruptions occur, resources are reallocated to initiatives focused on fixing critical issues.
This approach results in a cohesive, strategically aligned transformation that delivers measurable improvements in efficiency and capability.
Conclusion
Portfolio management provides a robust framework for navigating the complexities of business transformations. By aligning initiatives with strategic goals, optimizing resource allocation, and maintaining agility, leaders can drive meaningful change and deliver lasting value. Adopting PMI’s portfolio management principles equips organizations with the tools needed to turn ambitious transformation visions into reality.
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