Strategic Alignment in Project Management - Essay Example

October 30, Strategic alignment in Project Management The Business of Projects In terms of PMBOK’s Project Management Processes, a project can be defined as “a temporary endeavor to create a unique product, service or result.” By the same standards, Project Management can be defined as “the application of knowledge, skills, tools and techniques to meet project activities and project requirements.” (PMI, 2004) Going by the definition, a project could be any effort that has a definite beginning and an ending, produces some output and therefore takes some input, and could very well be isolated from the internal environment in which it is embedded – the organization. That however can hardly be the case. When we speak of projects, we are speaking of elements within a whole. These elements cannot be discrete, but have to in some way or the other complement each other for the fulfillment of the general objective of development and growth of the organization. Adopting a more holistic view, an organization is concerned with overall business development that would necessitate what has been termed as Business Management. Classical Business Management emerged at the very beginning of the 20th Century. Project Management, on the other hand, was viewed almost independent of Business Management and was expected to provide the most effective and efficient means of producing the deliverables that a project was intended for. The Classical Model of Project Management which started somewhere in the fifties and sixties of the 20th Century, was primarily conceived to plan and control the timelines and costs for large projects in the aeronautical and construction industries. This model basically defined the logical sequences of different activities involved in the project along with the time, cost and other resources that each activity would require. Thus, Business Management and Project Management were viewed as distinct disciplines, or in other words, the business and the projects were thought to be disparate entities within the same organization. However, the 1980s heralded the unprecedented development of Information and Communication Technology opening up new channels of communication and new avenues for business on a world-wide scale. Changes swept over all sectors of activities, including businesses. Globalization broke down many conventional barriers, markets were de-regulated, a new market-driven economy emerged, and business organizations began to face global competition. The shelf life of products and services began to grow shorter and shorter, some times expiring even before the products or services hit the market. Failed projects became the order of the day for companies that could not adapt themselves fast enough to the changing situation. This was particularly evident in the very sector that had been responsible for ushering in the changes: the late 1980s witnessed a high rate of IT project failures. It soon became evident that organizations needed to change their overall approach in order to survive the intense competition and change. Businesses demanded actual delivery of value to consumers, which gave reason for organizations to address complex social, economic and business issues as organic programs. That is when strategic project management was proposed to fill this need. The Strategic Project Management model stressed the integration of project management with business elements and offered an all encompassing package comprising strategic project business management and project management, otherwise known as the Project Centric Organization. (Johnson, 2007) What is strategy? The roots of the word ‘strategy’ go back to the military arena. In military terms strategy would imply a plan to win a war or a battle. The same principle can be applied to businesses and projects. Here, battles would refer to projects whereas the war would refer to the business as a whole. Just as the strategy of each battle would have to be unique and would depend on the unique environment of the battle including the position of the enemy and the terrain of the area where the battle would be fought, so would the strategy of the project have to consider the competition and the prevalent business environment. “Each project is a unique battle, and just like in war, it needs a specific strategy. This strategy is obviously derived from the company and business strategy; it follows behaviour, norms, and patterns normally used by the organization…” (Shenhar, et al, 2000) Business strategy or organization strategy is defined as “the direction and scope of an organization over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectation.” (Johnsom & Scholes, 1993) The strategy of a business organization should be able to position the organization such that it retains the competitive edge in the long run. Wheeler & Hunger (1998) states that the development of organization strategy goes through the five distinct steps of Environmental Scanning, Strategy Formulation, Strategy Implementation and Evaluation and Control. Environmental scanning would imply having a very good understanding of the prevalent market conditions, of the competition, of the new technologies that can be taken advantage of and specifically the core competencies of the organization itself in terms of project-management related practices. Only a proper understanding of the existing capabilities, the required capabilities and the outcomes that are desired will enable organizational strategists to develop a practical and effective strategy. Delivering the Strategy The crucial point however is how exactly to deliver or implement the strategy. Once the organization strategy is set, the senior management must be able to explain the strategy and communicate it to the managers to gain the support of the organization for actual implementation. Executives and staff will have to have a proper understanding of the business strategy in terms of the market position targeted, the purpose behind, the key initiatives and priorities of the strategy, the tradeoffs and integrations which would be required, the expected performance standards and deliverables, and the timing and sequencing. Only then will they be able to break down the strategy into concrete tasks and goals that can be practically achieved and executed. Execution of the strategy would therefore to a large extent depend on transferring and embedding it into the ambit of project management – to translate it into project strategy. To be able to grasp how to transfer or translate organization strategy to project strategy, we have to understand the difference between a project plan and a project strategy. Every project has a plan for execution or a plan of how to get things done in a sequential manner. It includes decisions about activities and the resources, time frame and deliverables. This, however, is not the project strategy or the strategy of managing the project. Strategy is on a higher plane, and comprises what drives this plan to success along the pathway laid down by the organization as a whole. The strategy for the project would provide the perspective and the direction in conformity with the organizational goals and objectives, and it will act as a guideline and as the policy which leads to the actual plan, at the same time promoting a pattern of behaviour essential for success. Strategic Management Systems ensures the implementation of strategy in business organizations. The Balanced Score Card method developed in the 1990s is one of the more successful strategic management systems (Brown & Russell, 2008). Strategic Management Systems are used to translate the organization strategy into operational action plan. The traditional project assessment of any organization tended to focus exclusively on financials. This was a regressive rather than progressive approach. “The Balanced Scorecard attempts to provide both historical and future insights, by balancing financial results with efforts that create value over the long term (Brown & Russell, 2008). In strategic management, the goals defined in the organization strategy are converted into quantitative measures of success. The organization then lays down appropriate measures and an associated target for each strategic objective. Strategic project management then has the basis to design and implement projects to meet these strategic objectives. (Tharp, 2007) In strategic project management, the project manager has equally compelling reasons to use strategy and goals when managing a project. The project manager can fall back on organization objectives to justify new projects or the need to continue a project, determine critical objectives or scope changes in projects and in prioritising conflicting projects. Clubbing projects in portfolios according to strategic goals and managing them in groups is the approach adopted by project portfolio management. When a particular portfolio is aligned to a strategic objective, it becomes very easy for project managers to be strategically oriented, and to categorize the projects. An organization may have multiple project portfolios, each meeting different strategic goals. PMI (2006) published the Standard for Portfolio Management which focuses on Alignment, Selection and Measurements aspects of Project Portfolio Management. While alignment with strategic goals and selection of projects remain important, the measurement of the achievements of the project portfolios in terms of the strategic goals of the organization is also a very crucial factor that serves to keep strategic project management on the tracks. Capability for Strategic Project Delivery A very basic factor which could make or mar any strategic project management initiative is how well a strategy is developed, communicated and implemented. Failure to do so is very often “because executives misunderstand strategy and confuse the strategic and operating agendas. Moreover human resource plans and activities frequently stay firmly rooted in operations and fail to serve or advance the strategic requirements of the business.” (Whitman, 2009) Strategic Project Management is not simply assigning a strategic objective to a project. The organization itself has to have the capability to deliver in terms of the strategic project approach. This may even necessitate restructuring of the organization. To be able to do so any organizational strategist will first have to have a clear understanding of the business strategy. Then only will the strategist be able to define the organizational implications of the strategy, and accordingly design, develop and implement organization initiatives which could enable the organization the capability of delivering the strategy. In other words, it is not only the projects which have to be oriented around the organization strategy, but the organization itself has to be modelled and oriented to be able to deliver the strategy. A business organization, or organization for the matter, has a structure that “is the sum total of the ways in which an organization can divide its labour into distinct tasks and then achieve co-ordination amongst them.” (Mintzberg, 1979) An organization, for example, can have a Bureaucratic or Tall structure or an Organic or Flat structure. A bureaucratic organization is one with a tall structure which comprises hierarchies with several levels of management. A salient feature of such an organization is work specialization and functional division of labor. This type of organization has a top-down approach to management. On the other hand, organizations with an organic or flat structure are flexible, they adapt more to a form of management in which participation can cut across hierarchy, and they do not have many hierarchical levels. An organic-structured organization can adapt more easily to changing priorities. Thus, in today’s world of fluctuating business and market environments, when it could be required to adapt and change organizational strategy to suit the changing environment, an organization with an organic structure would be more suitable for strategic project management than the bureaucratic structure. Other key organization ingredients for success of the strategic project management approach include organizational culture, skill-set and competencies requirements, systems to manage talents, practices, and operation standards and performance needs. Communication Gap Even though an organization may realize the value of organization strategy, it may not realize the value of disseminating or communicating the strategy widely enough. This would be a stumbling block for any strategic project management endeavor. Many organizations feel that only the senior management needs to be aware of and understand strategic plans. "The idea that only senior manager of the organization need to know and understand the strategic plan has been around for a long time, with enormously negative consequences." (Goodstein, Nolan, Pfeiffer, 1993, p. 354) Many in the senior management may also feel that strategic plans are confidential enough not to be handed out even to project managers. This not only displays a lack of trust, but also prevents project managers planning and executing his projects in synchronization with the specified strategy. There are instances in which strategic plans are discussed but never written down. When the strategy does not filter down an organization, it remains floating like unwanted sludge at the top. An organization that desires to strategically orient its projects should ensure that the strategy itself is well-defined, documented and readily available to everybody concerned irrespective of management or hierarchical level. PMI-defined objectives The Project Management Institute (PMI), with more than 100,000 members worldwide, has done extensive research on Strategic Project Management which it terms Organization Project Management (OPM) since it entered the field in 1998. It had chartered the Organizational Project Management Maturity Model (OPM3) which has since determined the best practices associated with Organizational Project Management, the capabilities that are prerequisite or aggregate to each best practice, the observable outcomes that signify the existence of a given capability in an organization, and the key performance indicators that provide the means to measure the outcomes. These Best Practices, Capabilities, Outcomes and Key Performance Indicators, form the core of the PMI Organizational Project Management Maturity Model which can be a big help to organizations to assess their state of Organizational Project Management maturity, and to chart their course to achieve strategic project management capabilities. An organization desiring to implement strategic project management therefore has to first identify the best practises that already exist within the organization, then it has to identify the capabilities and convert them into the other required best practices. The outcomes and the performance indicators give the organization means of continuous evaluation against the set standards. This implies that the organization goes through iterative rounds of assessment, evaluation and improvement until it meets the final standards of best practices. Strategic project management can therefore be deemed to be a evolutionary process in which the entire organization has to deliberately and consciously involved. This once again reiterates the significant point that strategic project management can not be exclusively applied only to projects, but has to be intrinsic to the organization as a whole. Looking at the Big Picture “Strategically managed projects are focused on achieving business results, while operationally managed projects are focused on getting the job done.” (Shenhar et al, 2000) Strategic project management takes a more holistic approach not only to project management but also to the development of the organization. In many cases, short-term operational emphasis has backfired causing irreparable damage not only to the organization but also to the product concerned itself. Shenhar et al (2000) cites the example of the Ford Taurus car the first generation of which was a huge success. It was launched in 1986. It had set examples for new practices in project management and product development. Yet the project manager was fired because he had exceeded the project deadline by six months. When the second generation of the Ford Taurus was being developed in the early 1990s, the project manager did not want to suffer the fate of his predecessor. To keep the project deadline he compromised on many other crucial things such as vendor relationship, product integration and team spirit. The second generation Ford Taurus was launched on time but it did not come anywhere near the first Taurus in terms of sales and business success. While operational project management can be well suited for the short-term perspective, strategic project management is a long-term approach which aims to provide enough flexibility to accommodate all short-term changes that may occur along the way. This can be achieved only when projects and project managers are aligned with the comprehensive strategy of the organization. “Project Managers have to see the big picture and how their project fits within the larger strategy of their firm” (Larson & Gray, 2006, p. 331) In an age when the business environment fluctuates and changes within comparatively short periods of time, it is possible that even organization strategy needs to be adjusted, adapted and changed comparatively frequently. This could call for similar changes in the project management strategy. Nevertheless, it is because of its fickle nature that it imperative that projects be managed with an eye on the overall environment in tune with the holistic business environment of the organization. References 1. PMI, 2004, A Guide to the Project Management Body of Knowledge. Project Management Institute, Third Edition 2. Johnson, A., S., 2007, Project Management and Business Processes: A look at Strategy, Structure, Processes and Projects, PM World Today 3. Shenhar, A., Poli, M., Lechler, T., 2000, A new framework for Strategic Project Management, Stevens Institute of Technology, NJ 4. Johnsom, G., Scholes, K., 1993, Exploring corporate strategy. Cambridge: University Press 5. Wheeler, Hunger, (eds), 1998, Strategic management and business policy. New York: Addison Wesely, Third Edtion. 6. Brown, A., S., Russell, J., T., 2008, Getting your Projects to meet Strategic Goals, 2008 PMI Global Congress Proceedings, - Sydney, Australia, Denver. 7. Tharp, J., 2007, Align Project Management to Organizational Strategy, PMI Global Congress Proceedings, - Hong Kong. 8. PMI, 2006, The Standard for Portfolio Management. Newtown Square, PA: Project Management Institute. 9. Whitman, D., R., 2009, Implementing Effective Organizational Strategy, Charlesmore Partners International. 10. Mintzberg, H., 1979, The structuring of organizations. Englewood Cliffs: Prentice Hall. 11. Goodstein, L., Nolan, T., Pfeiffer, J., W., 1993, Applied Strategic Planning: How to Develop a Plan That Really Works. New York: McGraw-Hill. 12. Gray, C., F., and Larson, E., W., 2006, Project Management: The Managerial Process. McGraw-Hill   Read More