program strategy Alignment Tutorial

program strategy Alignment Tutorial

Last updated on 29th Sep 2020, Blog, Tutorials

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Program Strategy Alignment is the performance domain that identifies program outputs and outcomes to provide benefits aligned with the organization’s strategic goals and objectives.

Programs are designed to align with the organizational strategy and to facilitate the realization of organizational benefits. To accomplish this, program managers need to have a thorough understanding of how the program will fulfill the portfolio and organization’s strategy, goals and objectives, and the skills needed to align the program with the long term goals of the organization.

When an organization develops its strategy, there is typically an initial evaluation and selection process that may be formal or informal to help the organization determine which initiatives to approve, deny, or defer as part of the portfolio management practice of the organization. 

The more mature an organization is in terms of program and project management, the more likely it will have a formalized process for program selection such as a portfolio review board or a program steering committee. Either decision-making body may issue a program charter that defines the strategic objectives and benefits a particular program is expected to deliver. The program charter is a document issued by a sponsor that authorizes the program management team to use organizational resources to execute the program and links the program to the organization’s strategic objectives. It defines the scope and purpose of a proposed program presented to governance to obtain approval,funding, and authorization. This program charter confirms the commitment of organizational resources to determine if a program is the most appropriate approach for achieving these objectives and triggers the program definition phase.

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Program Strategy Alignment is initiated with the development of a program business case. A program business case is a documented economic feasibility study used to establish validity of the benefits to be delivered by a program; it justifies the need for a program by defining how a program’s expected outcomes would support the organization’s strategic goals and objectives. As the documented economic feasibility study is used to establish validity of the benefits to be delivered by a program, the business case is then further used as an input to the program charter and subsequently the program roadmap. These three documents are established as part of program formulation activities

During the execution of the program formulation sub phase, the program strategy alignment process is initiated and runs until the end of the program life cycle. During this time, the management processes to identify and quantify environmental factors, outcomes, and benefits and to identify and manage program risks are executed and controlled within the program governance framework. When misalignment is identified, the program management plan or organization’s strategic goals and objectives should be revised to ensure alignment. This may occur in research, where the results of a program determine that a given line of research is not likely to succeed, and the organization then changes its strategy-sometimes without canceling or discontinuing the program-to better leverage the results of the program.

3 Steps to Align Project and Strategy :

Review Every Project:

This first step will require you to have an understanding of your organization’s overall long-range strategy. Once you have an idea of where you and your organization are trying to get to, you can begin reviewing all of the projects that are in-progress and all of the projects that are in the pipeline to ensure that they are consistent with your organization’s overall goals.

In reviewing these projects, you need to look at several things:

Set realistic expectations:

First, understand that management and the executives of the organization own the portfolio of projects that you and your teams are working on. Which means that if you aren’t an executive, you may find that some projects that are not aligned with the overall organizational strategy will still be advanced and taken on. So from the outset, you need to understand that even the best understanding and strategic effort can be thwarted.

Consult key stakeholders:

This is important because each key stakeholder will have an opinion and an idea for why a project was taken on and why it is important. From this information, you can learn things about how the decision to take on the project was constructed, which will help you understand better where or why the project fits into the strategy at the current moment.

Remember: change happens:

Organizations and priorities are living entities. Mike Tyson said something to the effect of “everyone has a strategy until they get punched in the mouth.” The same idea applies to your organization’s strategy. It is great and perfect until its first engagement with the real world. So you have to be prepared and understand that projects and strategy are living entities that will grow and change as they engage with the world. This can be either a positive event or a negative event, depending on how wed to the initial strategy your organization is.

It’s okay to kill (projects):

Finally, the most important thing to remember maybe, it is okay to kill projects. The idea of a trying to save a sunk cost can really trip up an organization. No matter how rational it is to stop throwing good money after bad on a project that is misaligned or so far off track that there is never anyway that value will be captured from the project, many organizations become so wed to the investment already made that they continue to make every effort to recoup something from the project. To more effectively align strategy with your projects, you have to come to the realization pretty quickly that it is not just okay, but required that you kill some projects because they no longer have the same priority in the organization.

Build a Decision Making Framework :

In some organizations, this framework can take the form of a project management office (PMO). In other, smaller organizations, this framework can just rest with an executive or a project manager that has been tasked with the ability to make “yes” or “no” decisions on projects based upon the strategic importance of a project to the organization’s strategy.

To create an effective decision making framework, you need to think about three important concepts as you make your strategic decisions:

  • First, the business purpose of a project should be clearly stated. By stating the business purpose of a project clearly at the outset, it is much easier for you to make a decision on whether or not this project aligns with your organization’s strategy. Allowing you to make a “yes” or “no” decision pretty confidently. Thinking in terms of business purpose will require that you spend a great deal of time focusing on getting as much tangible information about the projects that you are weighing as possible. If you don’t, your decision-making can be less successful because you can confuse intangible values and irrelevant metrics with real, true, strategically aligned value, which can destroy your framework from the start.
  • Second, think about any special considerations that are at play with your project, your organization, your clients, or your market. Organizations and their projects don’t live in vacuums, so to not consider the reality of the environment you are a part of is bad decision making. The truth is, the decision to work on a project is driven by personality and desire as much as utility and strategic purpose more often than we may care to admit. So it is important to recognize these situations when they are happening so that you can have the opportunity to reorient a project in a manner that works with these considerations while doing your best to align the project with the strategic ambitions of the organization.
  • Third, think about the iterations that the project may achieve as it advances. As when you are reviewing your projects, here you also need to remember that projects and strategies are living entities. As the project advances, you should be gaining new information on the project, the market, and the likelihood that the project is going to be successful against the strategic goals it was green lit against. Because you aren’t making your decisions in a vacuum, it is important to build and plan for the idea that you should expect change and that you need to adapt to it in a proactive manner.

Set Priorities :

The logical conclusion of reviewing your projects and building a decision-making framework is to set priorities for your projects built upon the snapshot of your organization at the point you are making the decision.

While setting priorities can be difficult, its is necessary to enable the organization to capture value from its strategic planning. The key in setting priorities is:

Define alignment :

Alignment between projects and strategies should not be the one true marker of any decision you make or suggest, even knowing what considerations are at play. This allows you to acknowledge the best course of action and to make any subsequent decisions from the basis of why you are or are not following this course of action.

Measure projects :

Give more weight to the projects that will accelerate the organization’s growth and achievement of long-term goals. It can’t be stated clearly that any time you have the chance to offer up immediate, significant advancement towards a goal, you should. Because these successes will certainly help your ability to have greater influence in the future and the success will often provide increased motivation to everyone involved.

Set clear guidelines and expectations for review :

As we have discussed throughout, strategies and projects are living entities. So to ensure your priorities maintain their ability to drive positive results, set up some clear off ramps for review and reevaluation. This will help you overcome any inclination to allow your strategy and projects to coast on autopilot.

Communicate :

To gain true buy-in at all levels, you really need to put extra emphasis on communicating with your teams and key stakeholders throughout the strategic process and the project. Giving people a voice will allow you to gain stronger commitments and will often elicit better feedback which will help you ultimately ensure that your projects deliver on your organization’s strategy.

Strategic alignment in an organization is a constant battle that is brought on by forces inside and outside of the organization. To capitalize on the benefits of strong project management and strategic vision, it is vital that the project leaders in an organization spend the necessary effort on creating alignment between strategy and project delivery. In the long-term, the benefits of this alignment can be felt in the organization’s ability to achieve its goals, maximize its value to its customers, and to thrive in an environment where projects are the norm and change is a rapidly evolving constant.

The Importance of Projects’ Strategic Alignment :

Many corporations are suffering from project failures, reaching up to billions of dollars in losses. A global research report done by BIA Canada showed that the major reason for these failures is the misalignment of projects with organizational strategy (Stanleigh, 2010, para. 1).

One of the most profound examples for such failed projects is the Royal Dutch Shell in their Siberian liquefied gas facility, Sakhalin Energy, that had a cost doubling from $US10 billion to US$20 billion due to lack of the project’s strategic alignment. (Stanleigh, 2010, para. 2)

The report also found that 68% of organizations worldwide had no techniques for project prioritization or linking tools to corporate strategy. (Stanleigh, 2010, para.7)

Another survey done by PricewaterhouseCoopers in 2004 that included 10,640 projects from 30 countries with a total value of $US7.2 billion, showed that only 2.5% of projects achieve 100% success due to their right strategic alignment (Stanleigh, 2010, para. 3).

A new study done by Calleam Consulting Ltd. on more than 70 failed large projects (Calleam, 2014a, para. 2), such as “787 Dreamliner” Boeing Project in 2013 that had a cost increase of $US18 billion above the original $5 billion (Calleam, 2013, para. 2), and the “The Promise” projects for Avon in 2014 that had a cost increase from $US100 million to $US125 million (Calleam, 2014b, para. 2), also revealed that one of the major mistakes causing their failure was the misalignment with strategy, where there was a failure to understand what these projects are really trying to achieve. Their vision and goals were archived without being used for subsequent decision making (Calleam, 2014b, para. 3–6).

According to Tony Grundy, two major reasons are contributing to this loose link among projects and business strategy. The first is that corporate strategy is not known to those who are at the project level, since top management hides it for commercial sensitivity and want to maintain their power. In addition, project managers still don’t consider it important for them to know the detailed business strategy. The second reason is that the strategy itself is not clear and its ideas are not integrated or consistent (Grundy, 2001, p. 16).

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Hence, the increasing importance of projects’ strategic alignment has arisen. This has necessitated considering project management as a means for strategy implementation, shifting the relative importance of strategy to project management from a 90:10 to at least 50:50 concern (Grundy, 1998, p. 43).

Hence, project management needs to be altered from the traditional notion of only delivering on time and on budget to become a process for strategic change; this requires including more complex interdependent and less tangible qualitative factors (Grundy, 1998, p. 43).

All of the above requirements needed to achieve strategic alignment are done at the start in the evaluation and selection process, and hence this process derives its significance from being the place for this achievement.

Existing gaps in current models used for projects evaluation and selection :

Many current models exist, but they share similar characteristics and concepts, and hence they have the same gaps and weaknesses that reduce the strategic alignment efficiency.

Current models consist of multiple steps for handling the alignment process, with a minimum of eleven steps, and sometimes more, which add more complexity to the process and increases the possibilities for errors and mistakes. In addition to the multiple steps, a lot of tools are used during these steps, and many of them are duplicated in their usages, with each tool performing just one discrete and isolated functionality.

Handling of the portfolio processing is also separated from project data processing, where each is performed alone with no integration, having separate models with separate steps and tools for each.

The major critical flaw found in all these models is the separation of qualitative strategic issues from quantitative financial considerations, where there is no technique available for unifying them into one integrated process that requires quantifying the qualitative strategic issues.

In addition to separating portfolio handling from projects handling, portfolio handling is also separated from business strategy handling by dealing with each in isolation, then trying in a disconnected technique to combine them in an inefficient input-output relationship.

Another separation exists in the handling process of constraints; again, each is processed alone without regard to the aggregate impact for all of the constraints together. Projects and constraints combination is also missing, which would hide the constraints’ impact on projects.

Projects are separated as well in their analysis, where the benefit of each is studied alone, thus losing the required projects’ synergy that create the maximum collective benefits all together, and not by individual benefits.

Business Strategic Management Model :

The major business strategic management model consists of four stages, which are: Environmental Scanning (Strategic Analysis), Strategy Formulation (Planning), Strategy Implementation (Execution), and Evaluation and control (Wheelen, 2012, p. 62).

This paper will focus on the strategic alignment during the scanning and formulation stages. Re-evaluation of selected projects during the execution and controlling phases is out of this paper’s scope.

Strategy Formulation (Planning) Process :

Strategy formulation defines four sequential basic entities, which are: the mission, objectives and goals, strategies and plans, and policies (Wheelen, 2012, p. 51).

An organization starts by setting a vision, which is the future desired image of the organization. It should be achievable, since it will guide the organization for its fulfillment. The mission is the means by which the vision is achieved. It defines the activities, the basic roles to engage with, and specifies what the organization does and why it exists

Objectives and goals define how to achieve a mission, and what needs to be done. Goals are not time bound, and they are formulated at the corporate management level, while objectives are time bound, used to achieve goals, and are formulated at any organizational level

Objectives should be optimal, compatible with resources, and can be achieved by using them in association with time needed for accomplishment. Objectives should also be easily quantified, and based on research

Strategies and plans define how objectives can be achieved. Each organization has three basic levels: the corporate level, the business level, and the functional level. At each level, different types of strategies are analyzed, evaluated, and selected. At the corporate level, there are the stability, growth, and retrenchment strategies. At the business level there are the overall cost leadership, the differentiation, and the focus strategies. And at the functional level, there are the financial, operations, human resources, purchasing, marketing, logistics, IT, and R&D strategies

The last entity is the policies which are the actions and decisions that aim at facilitating the implementation of plans and strategies, such as using a new technology, training, motivation, etc. 

Portfolio Management Standards :

The Project Management Institute (PMI) developed a guide to a portfolio management standard highlighting the major tools and techniques to be used. The Standard for Portfolio Management – Third Edition defines three iterative non-sequential process groups: the Defining, Aligning, and the Authorizing and Controlling, and five Knowledge Areas: the Portfolio Strategic Management, the Governance Management, the Performance Management, the Communication Management, and the Risk Management

As for the part concerned of this paper’s scope, the evaluation and selection process, only a number of selected processes will be involved and discussed from the first three Knowledge Areas: the Portfolio Strategic Management, the Portfolio Governance Management, and Portfolio Performance Management.

The Defining and Aligning process groups for the three selected knowledge areas are all included except for one process, the manage strategic change, since it is considered out of the paper’s scope, so nine processes are going to be considered, which are:

1- Develop Portfolio Strategic Plan: This plan evaluates the high level organizational strategies, especially those related to investment decisions. These strategies are defined in portfolio-related goals and objectives. This process uses the following tools: Component inventory, Strategic alignment analysis, and Prioritization analysis 

2- Develop Portfolio Charter: The purpose of this charter is to identify portfolio structure, and to identify its management team. This charter should be aligned with the developed portfolio strategic plan. This process uses the following tools: Scenario analysis, and Capability and capacity analysis 

3- Define Portfolio Roadmap: The portfolio roadmap defines high level schedule over time to evaluate gaps with organizational strategy and objectives. The defined high level schedule organizes the strategic plan components that should be implemented over time along with their dependencies. This process uses the following tools: Interdependency analysis, Cost-benefit analysis, and Prioritization analysis. 

4- Develop Portfolio Management Plan: This plan defines portfolio components and develops portfolio organizational structure. This process uses the following tools: Elicitation technique, Organizational structure analysis, and Integration of portfolio plans 

5- Define Portfolio: In this process, qualified portfolio components are created and organized for evaluation, selection, and prioritization. This process uses the following tools: Component inventory, Component categorization, and weighted ranking and scoring 

6- Optimize Portfolio: In this process, the qualified portfolio components created in the previous process are reviewed, analyzed, and changed to create a balance to achieve strategic objectives. This process uses the following tools: Capability and capacity analysis, Quantitative and qualitative analysis, Graphical analysis, and weighted ranking and scoring 

7- Develop Portfolio Performance Management Plan: This performance plan defines portfolio value and how to realize this value. It achieves this realization through measurement to targets, alignment to strategy, and roles in plan execution

8- Manage Supply and Demand: This process identifies required resources and allocates them accordingly 

9- Manage Portfolio Value: The aim of this process is to measure, capture, validate, and report value, in order to maximize rate on investment 

The New Tool of Combined Four Functionalities :

For the process of projects evaluation and selection, four major functions must be performed, which are: analyze project data and constraints, interpret analysis results, select appropriate options, and then refine them.

In current models, for each function, a specific tool is used, resulting in using four different tools, causing the process to become longer and more complicated with redundancy.

A new tool is presented here which combines the four functionalities into one. The tool is further demonstrated using a simulated numerical case study. This tool relies on a special type of linear programming algorithm called the Ghasemzadeh and Archer model (Ghasemzadeh, & Archer, 2000, pp. 73–88). This model makes it possible to combine multiple projects with their multiple constraints, both the quantitative and qualitative, in addition to the organization’s available resources that are set according to its unique culture, structure, weighting, and importance criteria.

This tool also enables the quantification of qualitative strategic issues, which then makes it possible to integrate them with the already quantified financial issues. This process is further clarified in the simulated case study

The result of this tool provides the best combination of projects that maximize synergetic benefit when they all are combined all together, and not just by each individual benefit.

Simulated Numerical Case Study: Case Description :

An organization had planned its strategy, and had done market research for available new projects to be undertaken. In its strategy, the organization had defined its major quantitative and qualitative strategic issues and set their maximum capability value. These issues are considered constraints for the projects to be evaluated and selected (Hamdan, 2012, p. 21).

The quantitative constraints were the project cost and number of labor working hours. The qualitative constraints were the project priority, its quality level, risk level, historical information usage level, newly acquired experience level, communications complexity, and technology usage level (Hamdan, 2012, pp. 21–22).

Project cost and labor hours are already quantifiable and were set to maximum numerical value. Qualitative issues are then quantified in order to be integrated and used in the model. The quantification of the qualitative strategic issues (constraints) is set as the following: (Hamdan, 2012, pp. 21–22)

1. Priority is either set to 1 or 0. If (1) then project MUST be included regardless of any other constraints.

2. Quality is measured by the number of standards to be used.

3. Risk is measured by overall score of possibility and impact.

4. Historical information usage is measured by the number of data records used.

5. Newly acquired experience level is measured by the number of new skills to be learned.

6. Communications complexity is measured by the number of channels to be used.

7. Technology level is measured by the number of devices to be used.

In this case study, the above constraints were set to their maximum value that should not be exceeded by the aggregated sum of the selected projects all together. These values were set as the following: Project cost: US$ 10 million, Labor hours: 2 million hours, Quality: 1,000 standards, Risk: score of 600, Historical information: 10,000 data record, Newly acquired experience level: 5,000 skill, Communications complexity: 10,000 channels, Technology level: 3,000 devices (Hamdan, 2012, pp. 21–22).

From the market research analysis done by the organization, it was found that there are 20 available projects that the organization can select from. For each of these projects, the quantitative and qualitative constraints mentioned above were collected and analyzed for each project from the 20 available projects (Hamdan, 2012, pp. 21–22).

Next, the formulation and implementation of the linear programming model that will combine all the organization’s maximum values and the whole 20 projects data will be performed.

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Conclusion :

The business environment is rapidly changing with very short life cycles. This creates a new burden on corporations to chase after these changes at a quicker pace, or to otherwise get out of the market. For this reason, lengthy and complicated processes causing decisions and implementation delays are no longer accepted, and the need for quicker more efficient techniques are highly required. This paper has highlighted a new proposed technique for filling this basic need in the hope of helping corporations keep up the required pace.

The model used here provides a quick method to select the optimal projects combination; still the responsibility of this model handling and implementation is divided among higher executives, portfolio managers, operations managers, and project managers, which creates a new requirement to coordinate and gather all these responsible people to apply the new model.

This is considered to be a new challenge for the project management office (PMO), and hence further research is required for the role of the PMO in implementing this model.

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