2. 2 | Putting strategy into action requires the right tools
Monitor and Optimize
Strategy Execution
Using Proven Tools
The problem is each project is defined within its own terms. The resources
it gets and the measures used to determine if it is worthwhile will depend
on a narrow set of locally defined criteria. That might be down to the will
and influence of the head of department. But strategy is about the whole
business. How does a company know if these discrete, autonomous projects
are getting the business any closer to its strategic goals?
The gap can be filled using a combination of strong governance in creating
and approving projects, a way of allocating resources against strategic goals
and a method of measuring performance against criteria relevant to the
strategy. Company-wide software can compare and analyze the data and a
well-structured team can oversee and measure project performance across
the business.
But first you need to get the right strategy. Sometimes strategy comes from
the gut: a visceral feeling that the world is changing and the business needs
to transform to get ahead of the curve. While there are businesses which
have achieved spectacular success by going with their leader’s gut instinct,
the approach can be a bit hit and miss.
Fortunately there is a method by which improves a business’s chances of
producing relevant, executable strategy.
Business people love to think up a great
strategy. And they like to roll up their sleeves
and get down to work. But strategy does not
always work in practice as it appears on paper.
When businesses try to get a strategy moving they often do it with projects.
A problem with customer loyalty? Get a project around customer relationship
management. A problem winning new business? Get a marketing project off
the ground. Stuck with underperforming employees? Start a recruitment or
training project.
Professor Kaplan and
the Balanced Scorecard
Robert Kaplan, the Marvin Bower Professor
of Leadership Development Emeritus at the
Harvard Business School, has created a six-
stage plan for developing strategy and ensuring
it is executed consistently and measurably.
He developed the approach with long-time
collaborator David Norton, a founder and
director of the Palladium Group, an organization
specializing in systems and processes to
improve the execution of business strategy.
Together they are widely recognized in business
management circles for creating the balanced
scorecard, a system of measuring anything from
an IT project to overall business performance
according to metrics which include hard
financial measures as well as soft measures
such as employee morale or customer
satisfaction, which may be a leading indicator of
achieving more distant strategic goals.
Putting strategy into action requires the right tools | 3
3. Putting strategy into action requires the right tools | 5
Developing the
right strategy
Their six-stage plan incorporates balanced
scorecards and starts with an approach for
developing strategy. A company needs to ask
itself three questions, say Kaplan and Norton.
Firstly, what business are we in, and why? When staff have their nose to the
grindstone, the answer may seem obvious. But, as globalization and the advent
of the Internet show; things change. So a company needs to figure out its
mission, values and vision as the world is now.
Secondly, what are the key issues we face and why? Analyze the competitive
and operating environment. What’s changed since the last strategy was
created? What has changed in the economic, political, technological,
environmental and legal surroundings? Inside the business, how are your
people, operations and technology performing? Answering these questions
can offer a SWOT analysis of the situation.
Thirdly, how can we best compete? This might be describing a niche or a
customer value proposition that makes the organization different. It may also
describe the people, skills and technology the business needs.
The remainder of the six-stage plan takes businesses through planning the
strategy using “strategy maps” and the balanced scorecard, aligning the
organization with the strategy, planning operations, monitoring and learning
about problems, and finally testing and adapting the strategy using internal
operational data. The idea is that then this feeds back into the creation of a
new strategy when the business needs one.
Imagine this dispersed across a global organization employing thousands of
people and it offers an idea of the complexity involved with executing strategy
in a large company.
Fortunately, software can help at each stage in creating and executing a
strategy. Project and portfolio management (PPM) tools can reach across the
entire organization, storing data on projects’ content, objectives, performance
and spending.
4. 6 | Putting strategy into action requires the right tools Putting strategy into action requires the right tools | 7
Building the strategy
But at the inception of strategy, PPM systems
can evaluate the relative merit of various
strategic options. Their analytics capability
can provide critical insight and visibility into
resource capacity issues, global skill pools,
project execution and inter-dependencies
and portfolio risks in a way that helps senior
decision-makers weigh up which strategy
is best.
This helps address the chronic misalignment between strategy and
execution that results from a disconnect between planned strategic
initiatives and the ability of the organization to execute. In practice, this may
involve, for example, not simply answering the question “What is the right
thing to do?” but also “Do we have the capabilities and resources to do it?”
Planning it out
The strategy can be mapped out so operational goals and target metrics
are assigned at the highest level while specific goals cascade down to
component initiatives, programs and aligned projects.
PPM will help plan strategic execution by showing how these goals trickle
down through the project hierarchy in a way everyone can reference. The
tools can assign project metrics to particular programs. Similarly, project
spending can be rolled up through the organization, to assess the cost of
a particular plan.
The software offers the executive team a clear line of sight between
strategic objectives and the way projects perform on the ground.
How project portfolio management supports strategic execution
To ensure strategy creates real progress on the ground, businesses need
a system to link it to a portfolio of projects each with defined resources
and measurable outcomes. An example of such system is shown in the
figure above. It should have the capability to set up a hierarchy of strategic
objectives across the organization and cascade them down through the
levels of management. It should create balanced scorecards, set up financial
and non-financial performance indicators as well as track the actual
outcome of the strategy compared with the plan. The system will also help
launch and manage projects that will deliver the strategy and determine
the allocation of resources to them. It should measure projects’ financial
and non-financial outcomes which should be fed back and aggregated into
the strategic performance measure, so businesses can track their actual
performance against strategic plans.
5. 8 | Putting strategy into action requires the right tools Putting strategy into action requires the right tools | 9
Getting the organization in line
To execute a strategy, people, processes and technology need to be
aligned with it. PPM software can help by communicating strategic
initiatives and tasks throughout the organization. It can help allocate
resources and show who is responsible for meeting strategic objectives.
The software can also capture progress toward goals and show the
leadership team what pitfalls and obstacles lay ahead.
PPM can give the team in charge of strategic execution real-time data,
component by component, project by project, building up to a picture of
how well aligned the current organization is with strategic aims and offer of
a picture of where and how to bring it closer to them.
Operations need plans too
Once the strategy is mapped out and the organization aligned to it,
businesses can plan operations. As Professor Kaplan has pointed out,
formulating strategy and planning operations can be disjointed. But
operations planned without strategic objectives in mind cannot hope to
meet them.
PPM allows managers to plan operations by further translating strategic
initiatives into specific tasks with detailed resource plans and assignments.
By working from the top down and bottom up, PPM software helps ensure
organizational planning is in step with strategy.
Monitor and learn
Once the plan is in motion, it can gain a momentum all of its own. Checks
and balances are essential to ensure projects are creating the results first
imagined in the strategy. This is where PPM software comes into its own.
Metrics from individual projects can feed up into strategic themes and give
the executive team an up-to-date picture of where they are headed. If the
business is off course, they can use the software to drill down and show
which projects are not performing as expected. This will also help decide
what corrective action is necessary to get operations back on track.
As projects continue, PPM analytics can distil success factors and other
information from ongoing projects and initiatives to assists leaders in
assessing risk, business value and resource or capacity requirements.
Learn from success
and failure alike
Even if today’s strategy is a success, it may not
be right for tomorrow. PPM software captures
the data necessary to provide invaluable
insight into project performance right across
the organization. This helps leadership teams
be responsive to changing economic and
competitive environments, rapidly evaluating
alternative strategies and changing tack by re-
alignment of the project and resource portfolio.
Ultimately, the insight captured in a PPM software can form the foundation
for the next stage in the strategic cycle. Either to adjust and amend the
current strategy, or form a new one, learning valuable lessons from both
success and failure.
Putting a structure in place
But to execute strategy effectively, businesses need a team to take
responsibility for ensuring the leadership team have the information and
processes in place to keep it on track. If not, there is a risk strategy can
drift, and be seen as a one-off activity.
6. Putting strategy into action requires the right tools | 11
This “office of strategy management” could be just a handful of people
whose only job is to keep the strategy execution system functioning so it
does not fall into disuse and decay. They will be the primary users of PPM
software, although the executive team will see much of the output, and
on-the-ground management will be recording performance of their projects
using these tools.
Tooling up for strategic success
Executing on strategy remains a tough job for many companies. A 2013 survey
of members of the Institute of Management Accountants by the Business
Research and Analysis Group, found nearly six in 10 organizations felt their
ability to execute on strategy was either “somewhat or not successful”.
But there are methods, such as Kaplan and Norton’s six-stage approach, which
can guide businesses to ensure they get the returns on strategy they hoped
for. Software tools like PPM are there to support these ways of working. With
such help, businesses can let their talent shine, execute brilliant strategies and
ensure they always provide ample return on investment.
