Business Strategy & Alignment to Project Management

Business Strategy & Alignment to Project Management
JONATHAN DONADO Strategy Alignment to Project Management PMI & ASP Linkedin.com/in/jonathandonado March 23rd 2016
1. The Basics 2. The Alignment 3. Questions PMI & ASP
What is a Strategy ?
… an Art
Let’s start by defining what it isn’t a Strategy
SOME COMMON MISTAKES: Be #1 in our market ….Pursue a global expansion….Have unmatched customer service….etc
STRATEGY is NOT: a TACTIC an OBJECTIVE or a GOAL a DESCRIPTION
Strategy is a common buzzword:
Where does the word strategy come from?
From the Greek word “Strategos” = The art of the general
Strategy can be found in the book “The ART of WAR” by Sun Tzu (from 500 BC)
Today, Business is seen as a modern day war….
…challenges of a CEO are similar to an ancient General
…a CEO needs to define a set of tactics to lead to business “victory”
How do we know what it is our strategy? How do we make one?
A Google Search provides the following formal results
? So … is it a surprise we have misunderstandings about business strategies?
Or …. why do great strategies have no impact on the organization? ?
To blame: 1. A strategy that isn’t well defined? … or 2. A lazy execution? ?
A large proportion of failure is due to Strategy definition and not in the execution
Strategy needs to influence Action…. So, in order to influence Action, it needs to be Remembered….
In order for a strategy to be Remembered…. It needs to be Understood…
In order to be Understood… a strategy needs to be SIMPLE (if not it is a just a report)
So, a Strategy needs to be: 1. Remembered 2. Understood 3. Simple
Business Components
Overview Where are we going? The future. The dreams. Who are we as a company? What we do. Why we exist. Our purpose. Values. What are going to do to achieve our objectives? How are we going to get there? Vision Mission Strategy
Example: Business Canadian Intellectual Property Office https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr03475.html
Example: Mission Vs Vision From a philosopher
Example: Strategy vs Tactics • Planning • Large Scale • Why • Difficult to Copy • Long Term Frame • Doing • Small Scale • How • Easy to Copy • Short Term Frame
Example: Strategy vs Tactics
So… Business Strategy in simple terms
A BUSINESS STRATEGY answers 2 questions: 1. How firms create value 2. How firms sustain value
What is Value ? What Customers are willing to pay What It cost the Company to produce it VALUE
A Survey Says…
70% of employees don’t understand their company strategy Forbes “When CEOs Talk Strategy, 70% Of The Company Doesn't Get It”, 2013
To make sure all employees understand the Business Strategy, we need to make sure that it clarifies the following:
1. Why Customers buy our products? Need to Clarify Key Drivers
Drivers to increase revenues or lower cost are defined by Strategy 1. Key Drivers
1. Key Drivers Who are the people that make out target market ?
1. Key Drivers Value proposition to differentiate our products: 1. Product Differentiation 2. Cost Reduction
2. Identify Critical Challenges
2. Challenges Internal or External. Need to define top 3 to 4 obstacles to focus attention
2. Challenges: Internal What capabilities do we need to be the best in the market at delivering our value proposition ?
2. Challenges: External - What is the competition doing? - How is the market evolving? - Etc
2. Key Drivers Strategy Formulation
2. Key Drivers Strategy Formulation
2. Key Drivers Strategy Formulation Porter 5 Forces
3. Determine Must-Win Battles
3. Must-Win Battles Define battles that a company needs to win in the next 2 to 3 years to overcome obstacles to value creation
Why do companies with good strategies fail ?
Not too many known names Let’s take the DOW JONES. It started in 1896. The companies were:
Some names unknown DOW JONES 1976. The companies were:
Only GE remains since 1st Index DOW JONES 2016. The latest group as of March 21 2016
FAILURE ? Companies need to balance current strategies with the discovery of new ones The “Strategy Trap” for successful companies: Exploitation Get cash for growth Exploration Find new wining products business models
FAILURE because overtime as Companies focus more on Exploitation The Strategy Trap for successful companies:
FAILURE overtime. Companies focus more on exploitation 1 / 3 firms become trapped in just a 5 year period Exploitation Exploration
FAILURE overtime. Companies focus more on exploitation 7 / 10 firms can’t escape the trap Exploitation Exploration
Business Strategy: Takeaways:
Business Strategy Takeaways 1. a Strategy defines how the company creates and sustains value
Business Strategy Takeaways 2. a Strategy has to be remembered, understood and be simple
Business Strategy Takeaways 3. a Strategy fails because companies focus on mainly in Exploiting instead or Exploring
Between high level Vision/Strategy and in-the-trenches project implementation, we need to bridge the gap
The PMO delivers 2 main areas of improvement to the organization: 1. Helps choose the right projects 2. Helps deliver the projects correctly
Project Expectations: The projects are expected to be delivered meeting: 1. Budget 2. On Time And …
The projects are expected to be: 1. On Budget 2. On Time 3. Synchronized with strategy Otherwise, it is a waste of company’s resources (human capital and $$) Project Expectations
But less than 42% of organizations report NO high alignment of projects to strategy PMI “The High Cost of Low Performance”, 2014
Fact 90% of Senior Executives report that Executing Strategic initiatives are critical for the company’s competitive advantage ( 2013 The Economist Intelligence Unit report)
Facts Senior Executives report that: - 61% struggle with the execution of those strategies - Only 56% of strategic initiatives are successful ( 2013 The Economist Intelligence Unit report)
Why there is no alignment ? That’s where the PMO comes in PMI “The High Cost of Low Performance”, 2014 - Strong PMO - No PMO (large firms) - Not a strong PMO
1. If company lacks uniform management and oversight processes 2. Leadership has hard time gathering information about the project progress and results 3. Project goals are not aligned with business goals An Organization will benefit from a PMO: Business Unit PMO Project Specific PMO Enterprise PMO
No Alignment Factors with PMO office 1. Internal Factors: No top support, resources, talent, etc 2. External factors: constant change, volatile markets, competitors, etc
1. If company lacks uniform management and oversight processes 2. Leadership has hard time gathering information about the project progress and results 3. Project goals are not aligned with business goals An Organization will benefit from a PMO: Business Unit PMO Project Specific PMO Enterprise PMO
TOP DOWN APPROACH: Recipe for Success 1. Have Leadership buy-in 2. Executive team needs to engage PMO in Strategic Planning 3. PMO needs to report to C-level (Forrester Research found in those case the PMO is highly successful)
PMO: The RIGHT TALENT High performance vs Low Performance PMO: 1. 2x more likely to succeed as they have people with the right talent (technical and business) 2. 1/3 more like to succeed as they have the adequate number of people (The Project Management Office Report. PMI 2014) - General Business Acumen - Leadership - Decision Making - Financial/Cost Control
MEASURING RESULTS Right Procedures + Right Talent = Results 1. Need to measure 2. Look beyond simple project metrics: scope/ budget / schedule. Look for: • Customer Satisfaction • Delivery time • Etc
Alignment Takeaways 1. The main way to bridge the gap between strategy and project execution is the PMO 2. PMO needs to have the support of the company’s leadership to succeed: Top Down Approach 3. PMO needs people with business acumen and measure other factors on top of project metrics.
15 Question #1 PMI & ASP Are there any more resources (books, web sites, etc.) on the topic?
Best Strategy Books
Websites
15 Question #2 PMI & ASP Are there other popular Agile methodologies in practice especially in the Chicago land besides Scrum?
15 Question #3 PMI & ASP As a case study, looking at Yahoo, where did program and project managers fail or was this more a corporate strategy failure?
15 Question #4 PMI & ASP Can we share some tools that help keep things aligned with the organizational strategy?
Aligning Strategy to Execution: Balance Scorecard BALANCE SCORECARD Robert Kaplan HBS in 1990s What you measure is what you get
Aligning Strategy to Execution: Balance Scorecard BALANCE SCORECARD Robert Kaplan HBS in 1990s What you measure is what you get
Aligning Strategy to Execution: Balance Scorecard BALANCE SCORECARD
Aligning Strategy to Execution Robert Kaplan & Norton 2008. They present their management system, which houses six sequential stages intended to help organizations capture what they call an “execution premium”—a measurable increase in value derived from successful strategy execution. They outline six stages in this system: 1. Develop the strategy 2. Plan the strategy 3. Align the organization 4. Plan operations 5. Monitor and learn 6. Test and adapt http://www.amanet.org/training/articles/What-Is-Strategy-Execution.aspx
15 Question #5 PMI & ASP Do you determine strategy first and project management is the tool that helps you manage the projects to complete the strategy?
Strategy >>> Implementation (PM) http://www.amanet.org/training/articles/What-Is-Strategy-Execution.aspx
15 Question #6 PMI & ASP Do you have a strategy development template?
Strategy > Business Model Canvas http://www.peterjthomson.com/2013/11/value-proposition-canvas/ By Alexander Osterwalder “Business Model Generation”
15 Question #7 PMI & ASP Does all strategies include projects and the underlying management of them?
15 Question #8 PMI & ASP Does project management have any influence on strategy?
15 Question #9 PMI & ASP How can I get a PMO started in a company where I am the only PMP certified person?
Strategy > PM Influence https://www.pmi.org/~/media/PDF/Publications/PMI-Pulse-Impact-of-PMOs-on-
15 Question #10 PMI & ASP How can the PMO get a stronger voice into the 'C' level suite if not property represented through the Organizational Chart ?
Strategy > PMO Voice https://www.pmi.org/~/media/PDF/Publications/PMI-Pulse-Impact-of-PMOs-on-
15 Question #11 PMI & ASP How can we best bridge strategy and project management ?
Strategy > PM Bridging the Gap http://www.herbrubenstein.com/articles/Implementation.pdf COMMUNICATION TOOLS: BALANCE SCORECARD FORMULATION: SIMPLE STRATEGY PMO
15 Question #12 PMI & ASP How did you become interested in the topic being discussed?
Strategy > Personal Interest comes from EXPERIENCE ROLES INTEREST EDUCATION POST-GRAD MASTERS COLLEGE RESPONSABILITIES
15 Question #13 PMI & ASP How do projects get chosen to align with new strategies?
Strategy > Project Selection for Strategy http://www.techrepublic.com/blog/tech-decision-maker/prioritize-projects-to-align- FUNDS (MONEY) PRIORITIZE EQUIPMENT PEOPLE Company resources are limited /scarce Need a project selection and priority system to ensure strong link between projects and the strategic plan
15 Question #14 PMI & ASP How do we ensure that projects we've taken on are still delivering the business value that was promised in the business case?
Strategy > Delivery Business Value http://https://www.mindtools.com/pages/article/newPPM_58.htm/ BUSINESS VALUE 1. Continuous support from SPONSOR 2. Realistic Project Requirements 3. Measuring ongoing results 4. Feedback / Communication To continue to deliver business value is critical that the following occur:
15 Question #15 PMI & ASP How do you balance Strategy and resource loading?
Strategy > Resource Loading/Allocation http://www.techrepublic.com/blog/tech-decision-maker/prioritize-projects-to-align- with-strategic-plan-116516/ Strategic Planning: Resource allocation begins at strategic planning when a company formulates its vision and goals for the future. The vision and strategic goals are accomplished through achievement of objectives. Budgeting: Once you have set your objective, you will need to allocate sufficient resources to accomplish it. In practical terms, this is often a matter of project budgeting.
15 Question #16 PMI & ASP How do you define a business strategy?
Strategy > Definition “Business Strategic” is the direction/path and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
15 Question #17 PMI & ASP How do you ensure benefit realization is tracked consistently and accurately?
15 Question #18 PMI & ASP How do you get executives to be more transparent with the PMO with regards to the business strategy? It seems PMO tends to be that last to know.
Strategy > Management to Support PMO https://www.pmi.org/~/media/PDF/Publications/PMI-Pulse-Impact-of-PMOs-on- Strategy-Implementation.ashx THE IMPACT ON PMOS ON STRATEGY IMPLEMENTATION: Conclusions
15 Question #19 PMI & ASP How do you get more funds for resources? Best methods?
15 Question #20 PMI & ASP How do you manage project and strategy integration cross culturally?
Strategy > Cross Culture Project Management Time Orientation Individualism Communication Project Manager shall be culturally sensitive and promote creativity and motivation through flexible leadership. The PM needs to promote an environment of cross-cultural communication with respect and understanding of differences among team members. Main Challenges: https://www.gwu.edu/~umpleby/recent_papers/2009%20PMI%20Anbari%20Cultural% 20Differences.pdf
15 Question #21 PMI & ASP How do you use the tools discussed at your job?
Strategy > Tools Used https://www.gwu.edu/~umpleby/recent_papers/2009%20PMI%20Anbari%20Cultural% 20Differences.pdf Tool Used: Business Plans, SWOT, Business Model Canvas, Balance Scorecard, Porter 5 Forces, McKinsey 7s
15 Question #22 PMI & ASP How does one get to be empowered to say 'no' to a project, without hiding behind process ?
15 Question #23 PMI & ASP How does one put an end to pet projects that do not align to the mission/vision of the company ?
15 Question #24 PMI & ASP How is the growth of Agile project management impacting strategic planning?
15 Question #25 PMI & ASP How much does the PMO influence either or both (agile project management & strategic planning)?
15 Question #26 PMI & ASP How much involvement in the strategy from external PM? (6 months contract)
15 Question #27 PMI & ASP How should change of strategy be communicated to all shareholders?
15 Question #28 PMI & ASP How to effectively communicate strategy up, down and across the organization?
15 Question #29 PMI & ASP How to identify the most effective project management methodology for a project?
15 Question #30 PMI & ASP How to measure cost of risk for your project ?
15 Question #31 PMI & ASP I have seen a lot of divestment by formerly large companies, e.g., HP, Abbott, and parts are being sold off. Does strategy come first before projects, programs and portfolios ?
15 Question #32 PMI & ASP I majored in MIS, specializing in IT project management. While I have a little PM experience from past work experience I have never been a real PM. How do I get started towards a true PM career ?
15 Question #33 PMI & ASP If I gave you a laptop to plan your next project, what software would you want on it?
15 Question #34 PMI & ASP I'm interested to hear about the alignment of strategy with PM
15 Question #35 PMI & ASP In a large organization, how can a PMO do a better job to help facilitate project selection/prioritization across departments?
15 Question #36 PMI & ASP In an acquisition situation, when 2 cultures are radically different, what type of turnover would be expected?
15 Question #37 PMI & ASP In the arena of IT, much focus is on new/shiny features that will advance strategic objectives. How can we help the business to understand the importance of underlying ?
15 Question #38 PMI & ASP Is having a $ value or cost avoidance the only true measures of aligning projects with business strategy ?
15 Question #39 PMI & ASP Is it always necessary to have a strategy defined around a project or is it enough just to have scope and deliverables ?
15 Question #40 PMI & ASP Is it still project or maybe program management already ?
15 Question #41 PMI & ASP Is there a recommended framework for aligning strategy with performance ?
15 Question #42 PMI & ASP Does this question of strategy and projects differ in large organizations versus start-ups ?
15 Question #43 PMI & ASP I just want to get a high level background on Strategic & Business
15 Question #44 PMI & ASP Please explain your experience in expressing the value of PM's to upper management.
15 Question #45 PMI & ASP Project Management in the Federal Government
15 Question #46 PMI & ASP Project with PMO role in it, and without
15 Question #47 PMI & ASP Recommendations for newly certified PMPs looking for work ?
15 Question #48 PMI & ASP Share your few thoughts on best business practices for Global Business Management
15 Question #49 PMI & ASP Should each team possess own strategy?
15 Question #50 PMI & ASP Should project strategy be dictated by the shareholders or recommended by the project manager ?
15 Question #51 PMI & ASP Should a strategy be bottom up or top down ?
15 Question #52 PMI & ASP Since many functions tend to become siloed over time, what steps can a PM take to insert themselves into the strategy conversation ?
15 Question #53 PMI & ASP Tools and ideas ?
15 Question #54 PMI & ASP What are common techniques to align PMO objectives with corporate strategies ?
15 Question #55 PMI & ASP What are some techniques to verify strategic and project alignment ?
15 Question #56 PMI & ASP What are some ways to communicate that projects are not aligned properly to affect change ?
15 Question #57 PMI & ASP What are successful efforts you have used to integrate project management efforts into strategic development efforts ?
15 Question #58 PMI & ASP What are the major stumbling blocks to align strategy with project management ?
15 Question #59 PMI & ASP What are the ramifications of misalignment ?
15 Question #60 PMI & ASP What are the ways that portfolio management aligns company's project management practices with its corporate objectives ?
15 Question #61 PMI & ASP What are ways to view a list of strategic initiatives ?
15 Question #62 PMI & ASP What characteristics needed of a PMO leader ?
15 Question #63 PMI & ASP What is the best example of a project well aligned with strategy that you have led? How did that alignment affect the project outcome ?
15 Question #64 PMI & ASP What is the difference between tactical and strategic ?
15 Question #65 PMI & ASP What is the fastest growing PM methodology ?
15 Question #66 PMI & ASP What mechanisms do you recommend to address outcomes when project managers are contractors and no longer at the company ?
15 Question #67 PMI & ASP When would a project be chartered that does not align with the strategy and why ?
15 Question #68 PMI & ASP Where have you seen project management efforts fail during strategic initiatives ?
15 Question #69 PMI & ASP Would this vary between Waterfall and Agile environments ?
15 Question #70 PMI & ASP Wouldn’t your company’s business strategy dictate whether or not to initiate a project ? (internal or external clients)
15 PMI & ASP THANK YOU By Jonathan Donado
15 Contact Info Linkedin.com/in/jonathandonado Thank You Jonathan.L.Donado@gmail.com www.branded.me/jonathandonado

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