In case you've not noticed, domain knowledge is now becoming very important in the project manager's skillset. Don't believe me? Head over to this link and check out the project manager job listings.
How many of the job listings say something along the lines of “Retail banking domain knowledge a strong advantage”? Or “Knowledge in Trading System ABC is a must”?
Gone are the days when all you needed was to pick up “generic PM skills” (i.e. stakeholder management, project governance, knowledge of templates, PM processes).
These days, to get into a PM job in a bank, for example, you need domain knowledge.
I'll start off by defining domain knowledge as follows.
Definition: Domain knowledge refers to a broad-based understanding of a particular industry or solution.
Notice the words “industry” and “solution”. As important as project management skills are the industry and solution skills you possess.
For example, industry domain knowledge could refer any of the following:
An understanding of how private banking works - from the front-office to the back-office. How clients open accounts, relationship managers place trades, back-office operations staff do reconciliations and trade settlement. Or how trade confirmations are verified and get sent out from the bank to the client.
An understanding of how life insurance works - from the acquisition of new business, to underwriting of proposals, inforcing and policy servicing. How premiums are calculated and how premium notices are generated to the client. How claims are made and how the insurance firm manages risk.
Things like that. I can tell you from my experience, if you possess industry knowledge, you are worlds apart from the “generic PMs” out there. Literally worlds apart. You'll get the headhunter calls. You'll get the bigger pay packages.
What about solution knowledge? Well, take for example:
You understand how a private banking system software works. You know its various modules, its strengths and limitations. More importantly, you know how it can be best used to meet the needs of a private bank.
You understand tax laws and regulatory restrictions around setting up business in a particular country. You understand what business entities to set up in a particular country so as to make your organization more tax efficient.
Can you see where I'm coming with this? Clients and organizations pay for skill sets. And in a world where knowledge is easily accessed, the more you know, the more marketable you become.
Let me illustrate the domain knowledge concept with the following diagram.
The 3 Skill Circles of Project Managers
If you're a Project Manager who is skilled in just industry knowledge (Area A) - you can spew out business terms and understand business process without a problem. You know exactly what a rights issue is under equity corporate actions and how dividends get processed. But if you are asked to start up a project and put in a governance structure for project management - guess what? You'll be in trouble. You'd also have no knowledge of how particular software solutions might be used to meet business needs
If you're a Project Manager who is skilled in just generic project management methodologies (Area B) - you can run projects - no problem. But if you face stakeholders from the business who ask you about the T+3 trade settlement cycle for equities - you'll be tongue tied. You'll also not know how solutions can be constructed to meet business goals.
The same applies to folks in Area C - who only know a solution very well but are not trained in the art of project management and also lack direct industry experience.
The folks in Areas D, E or F - who know two sets of skills (e.g. industry and generic PM skills, or solution and industry skills) - will be in real demand out there in the market.
And here's the real killer combo - being in Area G. This kind of project manager has the generic PM skills, plus industry AND solution skills.
So you're looking at a person who can manage projects in the stock broking industry for a particular trading system, for example. Or a project manager who can run projects for a retail bank focusing on a specific Customer-Relationship-Management (CRM) software). These folks are REALLY hot in the market.
I also propose that we, as project managers, usually start out in one of the “outer areas”, e.g. Areas A, B and C. Over time, as you get more expertise, you start moving into areas D, E, F and eventually G.
And it's true - if you look at the profile of strong project managers you know - how many of them are in Areas D, E, F or G? I'll bet many of them are there.
So how do you increase your domain knowledge? The best way is to keep doing projects aligned to an industry or a solution. Or better yet, keep doing projects aligned to a particular industry plus solution combo.
Case Study: I'll use myself as an example. I started out working as a Business Analyst in a large American multinational IT services company. I picked up very “generic” skills in IT, programming and so forth - never gaining any industry or solution skill.
And I hated that. So instead of going down the generic IT path (which would have made me a pure, generic IT project manager) - I started asking for projects aligned to financial services.
First, I did an core insurance system implementation project. Using the Business Analyst skills I picked up in that project, I went on to join banks and did core banking and improvement projects there.
I also did a part-time degree in finance. After I came back to consulting, I kept working on banking projects and also aligned myself to a particular banking solution.
So today, I am a banking PM person who has deep expertise in the banking industry AND a banking software solution. This corresponds to Area G in the diagram above. And that is a good place to be.
If you're a generic IT PM, my suggestion to you is to volunteer for projects which help you pick up industry knowledge. Or pick projects aligned to a solution.
Once you pick up the domain skill, you can then do similar projects again - in the same company or elsewhere. Over time, your resume will build up in those domain areas and you'll become more and more valuable in the market.
Tip: Do NOT fall into the trap of thinking whatever you're doing will still be in demand in the future. These days, job security just is not there, especially in the private sector. You need to keep looking out for the hot areas in the market, and given your skill set and current expertise, ask yourself “How can I pick up those new skills by leveraging on my past expertise?”
You'd be surprised - some of your past expertise can be transferable - meaning that if you want a project management job in banking, but you've spent 10 years managing projects in the manufacturing industry - you can still get the job.
And once you get the job, build up your domain knowledge to make yourself more valuable to your employer and the market.
With the above understanding of the importance of domain knowledge for PMs, try the following exercise:
Take a piece of paper and draw a line down the middle.
On the left side of the line, list down the skills you have under the headings “Generic Project Management”, “Industry” and “Solution”. Just a few bullet points under each heading will do.
On the right side of the line, against the same headers, list down the skills that you want to pick up.
Use this sheet of paper as a guide for your next project posting as a project manager or project team member.
Try doing this same exercise after every major project you complete. This helps you align yourself to your skill sets and where you eventually want to go.
And there you have it! I hope I've helped you understand why domain knowledge - in an industry or a solution - is so important to round out your skills as a PM. It's not longer possible to sell yourself as just a “generic PM” - you need to add on more niche skills so that you present deeper expertise to employers. So start accumulating your domain knowledge today!
Are you wondering how to break into a Project Management?
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Or discover what skills, certifications and domain / industry knowledge are required to excel in a PM role?
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