Oct 13, 2008

Strategy Execution: Align the Portfolio, Tune Up the Performance Engine, and Go!

Posted by J. Kent Crawford in Portfolio Management, Strategy Execution | 8 Comments

Every organization wants to effectively execute strategies, but many struggle to implement a process for doing so. This struggle is one reason that the Balanced Scorecard has had such a wide following and impact on business. Simply put, the BSC emphasizes the linkage of measurement to strategy. For the first time, the details of the project portfolio (what the Balanced Scorecard creators call “strategic initiatives”) become important to a company’s strategic thinkers. Companies that have implemented this model have seen measurable bottom line successes, according to research by Scorecard creators Kaplan and Norton.

Such alignment resolves thorny project management problems. Many studies have cited the lack of executive support as a key contributor to project failure. Project managers complain that their projects do not receive the resources they need. Projects completed “successfully” by project management standards (on time, on budget, to spec) have been considered failures because they did not address a business need.  All these issues are alleviated in a company that ties strategic planning to portfolio selection and project execution. In our 2007 book, Seven Steps to Strategy Execution, we call this an “execution environment”: one where strategic vision waterfalls down through the organization, linking corporate direction to goals, objectives and performance measures at every level—providing each team member with the “zest” of understanding how their work contributes to the organization. Meanwhile, excellent project management provides the data that executives need to make adjustments to the overall strategic plan.

If you’re in Denver at the PMI Global Congress North America in Denver, Colorado, come talk with me in more detail about these ideas! My presentation based on our Seven Steps book is on Monday, October 20, 2008 from 12:45 pm – 2:00 pm.

Meanwhile, here’s a question for you: Isn’t “the strategic plan” just another way of saying “the project portfolio”? And, if not … why not?


(24 votes. Average: 2.5 out of 5)

8 Comments on Strategy Execution: Align the Portfolio, Tune Up the Performance Engine, and Go!

Jeannette Cabanis-Brewin says:

Kent: When Jim Pennypacker and I presented the results of the Strategy & Projects research at the 2006 PMI Global Congress, Alex Brown, who was in the audience, noted that the Japanese company where he worked at that time did indeed consider the portfolio and the strategic plan to be one and the same. I’ve lost Alex’s contact info, but I hope he’ll chime in in this discussion ...

Posted on October 13, 2008 at 3:15 pm

alexsbrown says:

Hello Jeannette and Kent! It is wonderful to see your new blog. I love the topic and the focus, and I look forward to hearing much more in the future.

My answer is a definitive “NO”. “Project portfolio” is not the same as “strategic plan”. At MSIG USA, as Jeannette mentioned, we made them the same, but that is not true for every company.

Start from the side of the strategic plan. The strategic plan may include items that are never managed as a portfolio of projects:
* Operations
* Operational improvement goals
* Financial targets
* Market-share goals
* Sales campaigns and marketing efforts

Personally, I believe that all of this work SHOULD does benefit from project management, but I recognize that most companies do not manage this work as a project.

Now, look from the project portfolio perspective. There are project portfolios that are
* Tactical
* Non-strategic
* Anti-strategic

A project portfolio is just a collection of projects. It might or might not be aligned with the strategic plan for the organization. It is hard work to keep them aligned, and no one should have the illusion that creating a “portfolio” means that they are done with that hard work. It is a constant struggle to keep the portfolio aligned with strategic plans, just as it is a struggle to understand and fit a single project’s goals into the organization.

I hope this helps generate a little discussion. Overall I think a project portfolio SHOULD reflect the strategic plan, but are they the same? No, definitely not.

—Alex Brown

Posted on October 15, 2008 at 5:37 pm

Paul Lombard, PMP says:

Kent welcome to the blogosphere. I appreciate your insights. My perception is that an organization has two problems, today and tommorrow. By that I mean that some of what comes out of the Strategic Planning effort will be breakthrough work which will be added to the Portfolio and other efforts designed to improve the day to day operations of the company might be assigned to Programs, or functional processes withing the organization. These efforts will not get into the portfolio and perhaps they shouldn’t given the ineherent limitations most organizations have in effectively managing portfolios (a minimum number of strategically linked projects managed effectively versus lots of projects managed ineffectively).
Thanks for the chance to dialogue.

Posted on October 17, 2008 at 3:31 pm

Jeannette Cabanis-Brewin says:

Paul ... I see your point. And yet—as I understand it—every portfolio includes these kind of “lights-on” housekeeping and regulatory-driven projects ... making sure they are in the right proportion to the blue-horizon type projects is just an aspect of portfolio balancing.

Posted on November 18, 2008 at 4:48 pm

Paul Lombard says:

Jeanette - Thanks for your insight (as always) It is a fair question. In my previous work as a strategic planner this question often came up. In shaping the answer I revert to the thinking of the PMBOK. First let me say that my thinking is based on a strategic hierarchy which flows as follows; Vision, Strategy, Goal, Objective. (noted that this hierarchy or terminology is not consistently applied or defined in all organizations). Beginning with a Vision (simple example) “We are recognized worldwide as the “best in class” information delivery organization” An example strategy (strategies are typically “mini visions”) “Our training delivery approaches meets the diverse learning needs of our customers”. From that is derived one or more goals,(A goal is an a result from which supporting objectives are created) In the case of the strategy above “to create diverse delivery approaches” Goals might be focused on things like “Create an E-Learning capability to reach the non-traditional learner” “Diversify the technical areas (ITIL, Prince 2, etc) of the instructor cadre”, Create packaged learning tools (DVD plus manuals, Another goal might be to “Enhance the readability of our training materials for the international student”. Below these goals would be objectives which are SMART; (Specific, Measurable, Agreed upon, Realistic and Time Based). Now having established that framework, back to the original question. Would all of the goals be handled as projects within the Portfolio. My interpretation would be a conditional “no”. My reasoning is that if you take the last of those goals. The “readability” goal, that one goal may or may not be a project. It might end up as work to be accomplished by the Curriculum development function of the company as part of their normal work. According to PMI, the primary distinguishing factor between projects and operations is the finiteness (beginning and end) of projects. My interpretation of the above is that enhancing the curriculum would become continuing work which would not have an end to it going forward.  I do agree that most strategic plans are stratified to represent different types of projects to ensure the portfolio is balanced in terms of breakthrough and improvement, but I also think that some of the goals that come out of strategic planning can be assigned to functional areas for immediate action without going the project route.

Posted on November 19, 2008 at 12:08 pm

Mike Ellsworth says:

Regarding housekeeping, regulatory, maintenance, and other ops: The traditional definition of a project states that a project is something with an end point. These operational functions don’t meet that definition, and so aren’t projects.

This isn’t to say, however, that you can’t manage them as if they were year-long projects, but I wonder if these activities would get the proper attention if the project portfolio were the only strategic document/entity.

And on the flip side, if they’re not present in the project portfolio, that could also de-emphasize their importance.

I guess the real deciding factor for me is: Do these activities use the same resources as those being managed in the project portfolio? If so, they belong there. But if you never have to involve, say, the housekeeping staff in your projects, then why manage them in the portfolio?

Posted on November 19, 2008 at 2:31 pm

Martin-Bertram says:

Great idea, but will this work over the long run?

Posted on July 29, 2009 at 5:35 pm

Car Insurance Guy says:

Ah!!! at last I found what I was looking for. Somtimes it takes so much effort to find even tiny useful piece of information.
Nice post. Thanks

Posted on November 8, 2009 at 3:53 pm

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