MPA 209 PROJECT PLANNING AND DEVELOPMENT
STUDENT: JONAL A. DE LOS REYES
PROFESSOR: DR. JOSEFINA B. BITONIO
Michael Porter on Strategy and Project
► Michael Porter, Aerospace Engineer, top Harvard Business School Professor and
one of the most well-known long time strategy experts in the world, spoke at the
PMO Symposium by the Project Management Institute (PMI) a few years ago.
► The main point of his speech is that it pays for project and program managers
to have a good understanding of strategy. Indeed, organizational success
depends on continuous dialog between implementers and strategists – which
can only take place if all have a firm grasp of strategy.
► Every project is embedded in a strategy
o if we don’t understand that strategy then we can’t
decide we got the right project
o thus we need to get alignment
► Strategy needs to be clear at all parts of the organization to make decisions
that are aligned and speak the same language
► Strategy is about the whole company, how it fits together
On Misconceptions About Strategy
► Porter observes that many people have the impression that strategy
is provided by upper management in a top down fashion. Porter
asserts that upper management frequently does not have the skills
to communicate the strategy well, and that the top down
approach is better replaced with a continuous dialog to assure an
understanding flavored by experience at various levels.
► Businesses often misconstrue the whole idea of strategy and default
to the idea of simply being the best in the business. There is an
assumption – one that often is wrong – that if the company
becomes the best, it will be successful.
On Misconceptions About Strategy
► The reality is that different results can come out of “being the best”, all
depending on the situation. Porter asserts that, for example, there is no best
auto company. It all depends on who the car is meant to serve. It depends on
the needs of the customer. Indeed, there are multiple successful car company
serving different customer needs – usually to the exclusion of other customer
needs. Strategy involves making choices and tradeoffs – not simply being the
► There is no one way to compete. The strategist’s job is to figure out how to
deliver unique value to customers the company chooses to serve. As in the
auto industry, a company in any industry cannot meet the needs of every
customer. Therefore, strategy is about competing to be unique in some way.
► Another misconception is to confuse strategy with a goal. In contrast with goals,
strategy is more about how – about the set of choices the company makes that
will give it the competitive advantage needed to achieve the goal. Strategy is
more holistic; it’s not about any single action. Actions flow out of strategy.
Typically, it is a series of action steps…which are implemented by projects and
On Business (Not Corporate)
► Porter continues down the line of reasoning that strategy is holistic, is specific about choices about how
to compete, and is about positioning. Porter distinguishes between the strategy of a specific business,
versus a portfolio of businesses, as a large corporation might have. His focus is on business, not
► With a business, there are two basic considerations in making the choices:
o Industry structure – The nature of the business, the degree of change
happening, the inherent profitability, and the external environment, or
industry ecosystem. He talks about his Five Forces Framework, which depicts
how competition takes place through industry forces, how industry rivalry
evolves, and how companies can even be effected by indirect rivals.
o Positioning – How the organization will decide to compete within the industry
to gain competitive advantage. The question is, “Where do you want to
be?” The answer to that question determines the priorities on projects and
Two Basic Approaches to Strategy
► Porter goes on to simplify strategy by isolating two basic approaches to
positioning for superior performance and greater profit:
1. Provide greater value to command a higher price
2. Become inherently more efficient to achieve a
► It’s either higher prices or lower costs. Porter asserts that rarely can a
business do both.
► From that simple explanation, strategy can get a bit more complicated. There
are many ways to provide greater value as a differentiator, or to become more
efficient while maintaining an adequate level of quality. So how can businesses
achieve competitive advantage in one of these two ways?
► It’s by using the next of Porter’s well-known tools, the “value chain.
► The value chain provides the framework for achieving advantage. Here are the
two key things Porter says the value chain can do for a business:
1. Takes a systems view of the business
2. Portrays the business as a set of activities
► Everyone in a business is somewhere in that business’ value chain. Every
participates in adding value for the customer in some way. Here are some
examples of value chain activities:
1. After sales service
2. Product development
► There are myriads of activities in the value chain. Porter asserts that companies
can build competitive advantage anywhere in the value chain. However, it is
more difficult for a competitor to copy if competitive advantage is built on a
unique combination of activities, especially if those activities are interconnected.
► Porter’s discussion then turned to how, more specifically, organizations can gain
Two Ways to Gain Competitive Advantage
► First, Porter notes that building and enhancing competitive advantage is done through projects and
► Porter outlines two types of projects:
1. Operational effectiveness
2. Choosing to do things differently
► Operational effectiveness is all about best practices. For example, companies in many industries can
operate more effectively by implementing an Enterprise Resources Planning (ERP) system. Many
projects involve implementing an ERP system, and they can save money and make businesses more
► However, implementing a “best practice” such as an ERP system, is not really strategic and does not
really differentiate the company from competitors. Best practices advance everyone that
implements them, but leaves them with little or no competitive advantage…and leaves everyone
else behind. Best practices can keep your company in the game so that it can implement some real
► That’s where choosing to do things differently comes in. That’s what real strategy is. It is about
focusing on unique positioning – or developing a unique value proposition.
► Porter outlines three parts to a unique value proposition:
o What customers are you serving? Who are we going after…and who not?
o What specific needs of those customers are we trying to meet? Is it all the
needs…or a subset?
o How do the answers to these first two questions translate to the pricing we want?
► The key is that the company needs to answer these questions differently – uniquely –
from all other competitors. The idea is to engineer a distinctive value chain to deliver
► Porter emphasizes the idea of tradeoffs – the idea that you choose to be good at
one thing, and at the same time choose to not be good at another. He summarizes
that strategy is fundamentally about choice:
o Who to create value for
o How to configure the business to deliver that value
o How to choose tradeoffs about who not to serve
► These choices are unique, and not about doing the same things as other
competitors. They also need to be self-reinforcing – through continuous and
consistent execution. That means consistency across operations…and projects.
Final Points From Michael Porter
► Porter made some final points to tie it all together.
❖ If the benefits of strategy are going to be realized, strategy cannot be a secret. Strategy
should not be confidential – as may be appropriate for technologies.
❖ Today, the ideas around the strategy need to be widely circulated, transparent, and
❖ Project managers – not just senor managers – need to have a strong concept for
❖ Project managers and strategists need to distinguish between operational
improvements driven by best practices and strategic initiatives that do things differently.
► Porter says that strategy is tested every day. Metrics need to inform, and the ability to adjust must
► Finally, what project and program managers do is embedded in strategy. It is critical to understand
the big impact of the project that you, as a project manager, are running. Project managers
cannot be passive recipients of top down guidance. Instead, a two-way dialog about strategy is
needed on a continuous basis.
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