Managing the strategic change portfolio
Posted by Grant Brewer on 01 Feb 2005
It is hard to think of an organisation today that isn't going through some kind of strategic change – whether driven by poor performance that needs to be fixed or whether driven by the desire to increase its advantage over competitors. Ideas to improve strategic vision and become more effective at strategy execution have been previously discussed in this column.
An often forgotten aspect of strategy execution is worth exploring after your organisation got momentum behind a positive strategic direction. And that is developing a project centric organisation.
What is a project centric organisation? It is an organisation that has the ability to coordinate effectively a portfolio of projects grouped into programs in order to implement strategic change. That sounds theoretical - so what does it really mean?
Project centric organisations develop the capability to implement large strategic changes across functional units, whilst drawing on the best available people within the organisation to contribute to the implementation team. The agility demanded by a competitive marketplace requires collaboration across divisions, and the modern organisation cannot afford to work exclusively in a functional model. Project centric organisations, by working through cross-functional project teams, achieve sustainable competitive advantage by implementing new ideas across the whole organisation so that the change gets integrated into the fabric of the business easily and rapidly.
In project centric organisations, teamwork becomes a core competency. Effective teamwork usually goes hand in hand with mature communication skills and high emotional intelligence. Matrix reporting structure is common, and employees usually belong to a functional unit but also contribute as members of various project teams. The organisation has to be adept at configuring teams for one project, disbanding the team and reconfiguring a new project team with new objectives. This requires an organisation that is flexible and agile.
This configuration of people and efforts is particularly common in forward thinking organisations and those operating in information or knowledge based services.
Project portfolio management
Project portfolio management stems from the need to manage the portfolio of projects in a coordinated and effective way that optimises the benefit for the organisation. It is similar to investment theory, because organisations need to allocate limited resources (usually time, money and people) to a large number of competing project ideas. Choice is the essence of strategy execution – it just isn't possible to do everything at the same time.
A starting point is to establish a central coordinating office – referred to as a program office. A program is a collection of projects focused on a related set of objectives. At a minimum the program office establishes the standards and methods that guide all projects being implemented in the organisation. It is important to establish consistency across various projects and to ensure that each project team doesn't reinvent processes and learns from the experiences of other teams.
A program office can go beyond this "centre of excellence" model to provide more detailed guidance and support of project teams, centrally manage resources, integrate reporting and facilitate communication between the projects teams.
It is increasingly common to find a program office (even if it goes under another name) that is focused on coordinating the execution of the most important strategic projects that are needed to transform an organisation. These program offices frequently report to the CEO or another board member. Frequently, there will also be other program offices spread across the organisation. For example, the information technology division might have its own program office. A great deal of success can be found without creating definitive centralisation of all project activity, although care must be taken to ensure there is a balance between independence, consistency and alignment.
Measuring success
Program offices frequently contribute to solving the challenge of ensuring strategic alignment between functional departments, project teams and the business strategy. Actively managing the project portfolio helps executives make better choices and trade offs between different strategic alternatives. The result is an increased ability to execute the strategy. In addition, the organisation will increase its project management capability and achieve increased levels of consistency and repeatability within project processes (increasing the reusability or repeatability of project processes is often though of as reflecting increased project maturity).
Enabling change
Becoming a project based organisation can increase the speed of evolution within an organisation enabling it to respond to a changing marketplace with greater flexibility, speed and efficiency. Project centricity makes it easier to get the best people focused in the areas of the business that matter the most. Aggregating strategically important projects under a program office can help remove chance from strategic execution. Connecting the projects across the organisational divisions also creates a more effective learning organisation, and an organisation that rapidly learns and shares knowledge is likely to be more innovative. This is what General Electric refers to as a boundaryless organisation.
Increasing alignment between the different efforts in the organisation, thereby increasing the effectiveness and success of strategic execution is a sure way to raise your competitive edge.
Managing the strategic change portfolio was published as Strategym #23 in February 2005
Categories
Tags
change (2) | strategic (1) | managing (1) | project (1) | portfolio, (1) | projects, (1)
The trackback URL for this entry is http://grantbrewer.com/trackback/50/8EsMIi6b/