Organization Strategy and Project Selection
The Strategic Management Process: An Overview
The Need for a Project Portfolio Management System
A Portfolio Management System
Applying a Selection Model
Managing the Portfolio System
Appendix 2.1: Request for Proposal (RFP)
Strategy is implemented through projects. Every project should have a clear link to the organization's strategy. Strategy is fundamentally deciding how the organization will compete. Organizations use projects to convert strategy into new products, services, and processes needed for success. For example, Intel's major strategy is one of differentiation. Its projects target innovation and time to market. Currently, Intel is directing its strategy toward specialty chips for products other than computers, such as autos, security, http://textflow.mheducation.com/parser.php?secload=2&fake&print 1/3
cell phones, air controls. Another goal is to reduce project cycle times. Intel, NEC, General Electric, and
AT&T have reduced their cycle times by 20–50 percent. Projects and project management play the key role in supporting strategic goals. It is vital for project managers to think and act strategically.
Aligning projects with the strategic goals of the organization is crucial for project success. Today's economic climate is unprecedented by rapid changes in technology, global competition, and financial uncertainty. These conditions make strategy/project alignment even more essential for success. Ensuring a strong link between the strategic plan and projects is a difficult task that demands constant attention from top and middle management.
The larger and more diverse an organization, the more difficult it is to create and maintain this strong link. Companies today are under enormous pressure to manage a process that clearly aligns projects to organization strategy. Ample evidence still suggests that many organizations have not developed a process that clearly aligns project selection to the strategic plan. The result is poor utilization of the organization's resources—people, money, equipment, and core competencies. Conversely, organizations that have a coherent link of projects to strategy have more cooperation across the organization, perform better on projects, and have fewer projects.
How can an organization ensure this link and alignment? The answer requires integration of projects with the strategic plan. Integration assumes the existence of a strategic plan and a process for prioritizing projects by their contribution to the plan. A crucial factor to ensure the success of integrating the plan with projects lies in the creation of a process that is open and transparent for all participants to review.
This chapter presents an overview of the importance of strategic planning and the process for developing a strategic plan. Typical problems encountered when strategy and projects are not linked are noted. A generic methodology that ensures integration by creating very strong linkages of project selection and priority to the strategic plan is then discussed. The intended outcomes are clear organization focus, best use of scarce organization resources (people, equipment, capital), and improved communication across projects and departments.
Why Project Managers Need to Understand Strategy
Project management historically has been preoccupied solely with the planning and execution of projects.
Strategy was considered to be under the purview of senior management. This is oldschool thinking.
Newschool thinking recognizes that project management is at the apex of strategy and operations. Aaron
Shenhar speaks to this issue when he states, “… it is time to expand