By Bill Richardson, PMP
The 2002 Project Management Institute’s Selling Project Management to Senior Executives (p. 6) contains the following finding: “The very successful sellers [of the value of project management] link project management to corporate strategies and position project management as a solution to problems.” The successful selling of project managers as partners in the delivery of solutions vs. simply as pairs of hands is as timely and critical today as it was in 2002. Partners understand business drivers and enable value creation. Pairs of hands administer and execute deliverables. Partners are consulted. Pairs of hands are merely informed.
This article provides program and project managers with a primer on business strategy—its purposes, components, and high-level tools and techniques. For those of you currently operating at the pair-of-hands level, this article is a wake-up call. For those of you who currently operate at the partner level, this article is a refresher or quick self-knowledge check. In either case, a basic knowledge of strategic planning is the place to start.
Strategic Planning 101
A strategy is a detailed plan for achieving success—the bundle of decisions and activities that we select to achieve our long-term goals—our path. Every organization must figure out what it wants to achieve and how to make it happen by using its products, customers, and operations. Strategy is fluid, continuous, and iterative and can be broken down into logical steps or elements:
1. Goal Setting: The First Step
We cannot begin to think about a strategy until we have objectives that are prioritized and are based on our business, our markets, and how value is created in our organization. These objectives are aimed at maximizing the value of the organization to the shareholders, with the critical factor being time. Even though we create a vision of the organization, say, twenty years out, the strategic plan considers only a three-year to five-year time horizon. A written declaration of an organization's core purpose and focus, commonly referred to as the mission statement, serves as a consistent directional tool for the firm. In contrast, the strategic plan and its related practices fluctuate according to changing circumstances.
2. Strategy Development Process—The Road Map
Strategy development is focused on three fundamental questions: Where are we now? Where should we go? How do we get there? The answers to these three questions frame the strategy process depicted in Figure 1:
Figure 1: Strategy Development Process
3. Customer Analysis—Getting the Truth
Unmet customer needs are at the heart of business ideas and the development of a business strategy. While step 3 could be included in step 2, it is usually kept separate to underscore and facilitate the need to continuously analyze the customer as part of everyday management. Essentially, we need to know why our customers buy from us and why others buy from our competitors. This information is typically gathered at point of sale via customer surveys or focus groups. Good, regular, and valid information is essential to business strategy success.
4. Internal Business Analysis—Health Check
The internal audit explores the organization’s operational and financial results, evaluates its talent pool, assesses its functions and processes, and explores the health of its key relationships. A good SWOT analysis not only identifies the component strengths, weaknesses, opportunities, and threats (SWOT), but also prioritizes them and helps to limit analysis to a smaller set of the most important factors.
5. Strategic Choices
Generic strategies of cost leadership, differentiation, and niche player provide a good foundation for the strategic choices each business faces. A comprehensive strategy formulation contains both positioning and execution components. An effective strategy must align between positioning and execution.
Positioning articulates clearly and concisely the organization’s strategic approach to achieving its goals by setting out a direction and a choice of suitable products and services. Execution ensures that the organization has the necessary resources, operational capabilities, and organization to support the direction. To enhance our strategic choices, we ask the question “how?” and develop a strategy through approaches like integration, penetration, development, diversification, and divestiture.
6. Strategic Thinking—Optimizing Assets
Strategic thinking involves asking the right solution-oriented questions and conducting appropriate analyses to formulate plans and strategies. Asset optimization questions have long been fertile ground for new ideas—for thinking about the best use for each significant asset that we currently own and control.
Another strategy-generating approach is to use core-business thinking. Your core business is defined by the set of products, customer segments, processes, and technologies in which you can build the greatest competitive advantage. Defining your core business can be difficult and may require a small team to answer the question. If we were forced to sell off all of our businesses except for one, which one would we keep? Once your core business has been identified, the key is to work the core to your best advantage—for example, taking advantage of operational excellence in the core business area.
Another method uses best practices lists that can be found in publications. For example, Choi and Valikangas (strategy+business, vol. 23) distilled a list of nearly two hundred business strategies into a top ten list that includes generic approaches like consolidation, value migration, and bypassing.
7. Implementing Strategic Decisions—Execution Matters
The principal causes of strategy failures are the attitudes, communication, and commitment of senior management. The best system for implementing strategies is by using the balanced scorecard. It provides a framework for considering strategy from four perspectives—financial, customer, business processes, and learning and growth. It was created by Kaplan and Norton in 1992 as a means of neutralizing the limitations of managing only by financial measures.
Implementing strategy is a team game, and even though senior management has the responsibility to formulate and articulate the business strategy, you, as a program or project management professional, play a lead role in the strategy implementation segment of the process. As a program manager, you are expected to understand the strategic drivers of the program, the specific benefit levers, and the required level of governance to make change happen. As project manager, you are expected to fulfill a similar role at the project level, whether it is part of a formal program or a one-off high-impact strategic project.
Each successful strategy could be a catalyst for a strategic thinking direction and approach. As a program or project manager, take the time to identify the strategies in play in the next business case or feasibility study you review. If they are not clear in the financial analysis document, do not be afraid to ask for clarification from your sponsor.
Partnership status may take months or years to establish. Regardless, you will not be able to “link project management to corporate strategies and position project management as a solution to problems” if you do not understand the driving business strategies. This article helps you start—now, it’s up to you to go deeper!
About the Author
Bill Richardson, PMP, is an internationally recognized speaker, author, facilitator, coach, and trainer. Bill brings a unique blend of account management, project management, and process management to the realm of maximizing the return on investment of projects, program portfolios, and people. His recent book, Thinking on Purpose for Project Managers: Outsmarting Evolution, crystallizes his experience into a set of five steps to help project managers take control of their thinking and ultimately their results.