Projects Are Strategy
The column builds on the fundamental principle that many of the challenges stem from the fact that project management is not the primary purpose of organizations, and never will be. Companies are created, structured and run primarily to deliver operational products and services. Projects, however, are still critical to the business success of these organizations – in creating, enhancing, replacing and retiring products and services in response to competitive and market demands. The challenge, then, is to arrive at an approach to managing projects in organizations that can co-exist with their current operational focus. This series addresses the practical steps that organizations can and must take to successfully create an effective project management capability.
In the world of organizations, all work can be divided into two categories: you are either running the business or you are changing the business. The act of running the business is governed by a host of well defined processes, techniques and disciplines collectively described as operations management. If you are changing the business, you are doing projects. What is frustrating for many senior managers, and some project managers, is that the process of changing the business is often so poorly managed. In many instances, change efforts are not even identified as being projects. Responsibility for these ‘accidental project’s is assumed by management teams who don’t see them as such, and may not even recognize that the discipline of project management exists and could provide meaningful support.
Nowhere is this more true than in the development and articulation of strategic plans. The real role of a strategic plan is nothing less than establishing the blueprint for changing the business. Practically speaking, it should identify the activities and the full scope of effort necessary to manage the changes that are expected – from the creation of new products or markets to the improvement of productivity or the establishment of production targets. To validate this, think of your own organization: if you were satisfied with the same quality, productivity and cost structure, and were to continue to provide the same products and services in the same quantities and at the same price to the same customers, you wouldn’t need a strategic plan. In a nutshell, the strategic plan defines what is going to be different, this year or for the next few years.
The implication of this statement is that all projects should be aligned with the strategic plan, and the strategic plan should articulate all projects that are to be done within the organization. Whether establishing new locations, launching new products, entering new markets or making changes to productivity and quality, all of these changes should derive from the strategic plan. So too should all of the smaller changes – whether optimizing production lines, improving process quality, enhancing information systems or establishing a relationship with a new customer. Each of these efforts is a project, and should be managed as such, and any project being undertaken should clearly align with and support the strategic plan.
Now, there are those that will argue that you can’t plan all of these activities up front, and as such it is inappropriate for them all to be defined in the strategic plan. To a certain extent, this is true – many initiatives can not be identified during a formalized annual planning cycle, and will emerge throughout the course of the business year. This does not mean that these efforts should not align with the overall goals and direction of the strategic plan, and that this alignment should not be formally validated prior to initiating the project.
This is also not to say that the senior management team must therefore review, prioritize and approve each and every project prior to its initiation, no matter how small. The best strategic planning processes have multiple layers of definition, from the overarching corporate objectives through to individual business unit and departmental plans. The key emphasis is on ensuring alignment from the organization to the division to the department. While each department will define their own plans and review them with their immediate management teams, each is still responsible for running their operation and overseeing the projects they are responsible for. While senior management may not formally review and approve every departmental or divisional initiative, there should at least be a level of auditability that verifies each project aligns with the rest of the organization.
The importance of this alignment has been driven home through consulting with several customers around their business planning and prioritization processes. What these engagements have illustrated is that in the majority of companies only a small percentage of projects are actually visible at a senior management level. These projects are usually corporate in nature, having a far-reaching impact on the organization’s health and future well-being and often representing a significant investment of corporate resources. What is unique about these projects is that they often represent a significant majority of financial investment in projects – up to 75% of total project expenditures in some organizations – while representing a much smaller percentage of overall staff effort. The majority of staff hours, again typically between 60% and 75%, are actually spent on projects that senior management is not even aware of. Given the significant degree of human capital associated with these projects, organizations have a responsibility to ensure that it is effectively managed.
Once we recognize that the work of strategic plans is really project work, the reason for many organizations failing to realize their strategic goals also begins to become clear. The failure rates for projects continue to be quite high, even where formal project management is being used – in some organizations, as much as 70% or 80%. When initiatives are being managed without the benefit of formal project management, the failure rates are even higher. We need to start making better choices about how we realize the objectives of our strategic plans, and to recognize and approach the projects they define using formal management techniques.
More importantly, however, we need to recognize that projects are a threat to the operational status quo -operations management is designed to ensure consistency and repeatability, and to the greatest degree possible minimize variation. By definition, projects introduce change into operational processes. They introduce variation, and certainly at the outset will have a detrimental effect on consistency and repeatability, until the new mode of operations can be embraced and adopted. As a result, there tends to be a strong and innate opposition to projects, and often very little enthusiasm for supporting them.
To be effective, organizations need to have far greater alignment between projects, operations and strategy-making. We need to make better choices about the strategies we adopt, and the projects that result from them. We need to ensure that the projects we are undertaking do in fact align with the strategic choices of the organization. And we need to better manage the operational impacts that result from the projects we undertake. Only then can will the work of organizations be truly aligned.