Strategic Project Management

Demystifying Project Management:

Strategic Project Management
PMI Talent Triangle: Strategic and Business Management

Strategy Basics

There is a new topic emerging on the horizon in the project management lexicon: “Strategic and Business Management”. It is one of the three sides of the talent triangle, PMI's new formulation for the skills necessary to stay atop the Project Management (PM) profession.

For the Project Manager, the most basic application of this leg of the triangle is "Strategic Project Management." Let's take a look at what that means by breaking the phrase down into its two concepts, "Strategic Projects" and "Project Management". 

Project Management is an easy phrase to understand. According to PMI, Project Management is "the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements." In layman's terms, Project Management is simply "getting stuff done".

Strategy is a set of decisions designed to make a person or group successful in a competitive environment. In the case of a business, strategy is the approach a business chooses to be profitable. This profit strategy is implemented through the selection of specific projects that support the strategy. 

Hence, Strategic Project Management is the idea that all projects should be managed to maximize an organization's strategy, or overall profitability. One could argue that all projects should be managed to maximize profit, but there is a distinction. It is possible to maximize the profit on a specific project without enhancing the overall profitability of the company. We have choices in how we plan and execute projects, and our decisions can affect the overall competitive posture of the company. For example, by acquiring resources for a project which will have other uses for the company, the manager might not maximize the profit of that particular project, but by improving the overall competitiveness and profitability of the company, it is strategically advantageous to acquire that resource.

Vision and Mission

Another popular definition of strategy is the activities a company undertakes to realize its vision and mission. A vision is an emotional, inspirational, long-term description of what an organization wants to be. The mission is the near-term answer to “Why does this organization exist” and answers three questions: 1) What products, services or information do we provide? 2) Who needs what we provide? and 3) What is their problem or need we address? There are many variants on these approaches to vision and mission, but for the most part they fall in line with this and I have always found these definitions sufficient to meet my needs. Here are a few good examples:

IKEA

At IKEA, our vision is to create a better everyday life for many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. 

Universal Health Services

Mission: To provide superior quality healthcare services that: PATIENTS recommend to family and friends, PHYSICIANS prefer for their patients, PURCHASERS select for their clients, EMPLOYEES are proud of, and INVESTORS seek for long-term returns. 

Toyota

Vision Statement: "To be the most successful and respected car company in America." 

Mission Statement: "To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America."

The Project Management Office (PMO)

With the above concepts of strategy in mind, whose job is it to identify the projects that will successfully execute a strategy? The vision and mission are created by executive management. The projects that execute strategy are more and more often defined by the Project Management Office. As a whole, the collection of strategic projects a company chooses are referred to as its "strategic portfolio".

Each PMO has its own way of going about developing a strategic portfolio, but I've found similarities in most approaches and like to think of them as consisting of five basic steps.

1. Evaluate Your Current Competitive Position

The first step in formulating a business strategy is to thoroughly evaluate your current business environment and your competition as they pertain to your stated mission as preparation for planning. Without this understanding, selecting a strategy is just licking your finger and holding it to the wind. One of the most common approaches to strategic planning is to conduct a "SWOT" analysis to examine your Strengths and Weaknesses (factors internal to the organization) and Opportunities and Threats (factors external to the organization). Another approach is to analyze a series of factors including what your business interests and values are, what products and services you should NOT provide, and the geographic region you want to serve. Think through how to distinguish yourself from your competitors and identify the organizational skills and resources you have that you can take advantage of.

2. Review and Interpret the Organizational Mission

Using the company vision and mission, create a concrete goal of what your competitive position should be in order to achieve that vision and mission. The organization's mission is handed down by the executive staff. It is the PMO's job to review and interpret the mission so that they know exactly what their organization and posture should be to realize the vision and mission. Essentially, you ask yourself, what is the ideal shape of our company if we are to be the best at what we do? 

3. Analyze and formulate strategies

With a clear understanding of where the company is now, and where it needs to be to succeed, you conduct a gap analysis to figure out how to get from here to there. What capabilities, resources, and people do you need that you don't currently have? It is this gap analysis that becomes your strategy and defines your strategic project portfolio. All strategic projects should contribute to getting you from where you are to where you need to be to realize the vision and mission of your company. These projects maximize your ability to compete and succeed in your business. There is no defined set of projects that are considered strategic, but they are always directed toward increasing profitability. Here are a few examples of strategic projects:

• Conduct a market survey of customer needs
• Review and streamline corporate processes
• Upgrade infrastructure to maximize efficiency and reduce operating cost
• Re-evalute your supply chain to reduce cost
• Streamline your Information Technology (IT) and Enterprise Resource Planning (ERP) systems
• Invest in employee training and development
• Create an internal research and development team
• Undertake mergers and acquisitions

This is by no means a comprehensive list, but it highlights the idea behind strategic projects.

4. Set objectives to achieve strategies

The best way to set objectives is to use the "SMART" approach. "SMART" stands for Specific, Measurable, Assignable, Reasonable and Time bound. The "SMART" approach helps avoid vague and unachievable objectives. A common objective I hear is to “Grow our company revenue stream 20% in 12 months.” On the surface, this seems specific. But in practice this would not be a good objective. If you make blanket objectives for an entire company, some product lines may achieve it and others may not. The ones who do not succeed may be in a position where the objective was not reasonable. A better objective would be to “Increase the revenue stream of <specific product> by 20% by the 4th quarter of the year.” Another example of a SMART objective might be “The chief project management trainer will develop, within 30 days, a project management workshop that will last 4 hours and teaches attendees to develop a schedule and Work Breakdown Structure (WBS) in line with Project Management Institute (PMI) standards.” It’s very specific, the metrics of success are measurable, it has been assigned to an individual, it is reasonable, and time-bound.

5. Execute the strategy

This is the point at which a company turns to you, the Project Manager, to have specific project plans developed to achieve the objectives! Start by establishing your marching orders for each project. Write down the company's need this project is addressing (needs analysis). Then identify what the project will create in order to be successful (deliverables). Follow this up by creating an action plan (schedule) and a budget. These three elements, deliverables, action plan, and budget, referred to as scope-schedule-budget in the professional Project Management world, are the cornerstones of any successful project.

You may have noticed that the five steps in developing and executing a strategy are, in themselves, a project! Analyze the current state, develop a desired state, conduct a gap analysis, develop an action plan, and execute the plan. This is a classic "process improvement" project model and is the foundation of strategic project management.

Dr. Bill Carswell, PMP

Director of Programs

www.7stepPM.com

Please use the comments feedback area below to share your thoughts. What are your thoughts about strategic project management? What projects do you consider strategic? 7stepPM readers want to know!

After you have spent 15 minutes reading this blog and participating in the discussion forum below, don’t forget to fill out the Pennies for PDUs form to get your certificate of PDU credit.