Align projects to strategy to maximise returns

 

The fourth annual Global PPM survey from PwC highlights the fact that organisations use subjective information to make decisions about what projects go forward. That’s a kind way of saying that the executive team choose projects based on organisational politics and personal agendas rather than on what’s best for the company. As a result, many businesses start projects that should never have got off the ground.

Just over three quarters of C-suite execs feel that their projects are aligned to strategy, which is quite high (although you’d expect it to be 100%, otherwise why are you bothering to work on the project?). However, only 72% of project and programme managers – the ones who are actually doing the work – agree that there is a coherent relationship between the objectives of the programme and the company strategy. About one in ten employees report that projects receive budget approval but do not necessarily align to strategy in any noticeable way.

The story gets even worse when you look at PwC’s objective maturity assessments. By their reckoning, only 62% of programmes have a mature or established link to strategy.

And this is an improving situation!

While it’s pretty dire that so many projects are undertaken without a clear link to how they are going to help the business in any way, it did used to be worse.

PwC report that in 2012 as many as 30% of an organisation’s programmes were in some way conflicted with the overall business strategy. One in five didn’t have a correlation between the project portfolio and business strategy. So it is better today.

There is still a long way to go though.

What is the cost of getting it wrong?

The exact cost in money terms is going to depend on what projects and programmes your business kicks off that have no tangible link to business results. Of course, they might still be of use in some way, but that will be through accident rather than design. They might deliver some benefits, but another project might have delivered more benefit. That’s where data comes into the project selection process. As the report’s authors say, guessing is not a strategy for success.

They also talk about removing the option for people to game the system and using methodical approaches to prioritising and selecting projects. You only have a limited amount of money to invest. Make sure it’s being invested in the right projects.

What you can do about it

It’s fine to say that CEOs should be more strategic, have multiple planning horizons and be closer to the delivery teams, but project managers, programme managers and portfolio office managers can’t really influence how the CEO operates. This is what you can do.

Stop reporting on the past and focus on the future. The PwC survey shows that the two main focus areas for PMOs (and by extension, project managers) are reporting (63%) and monitoring (54%). To move up the maturity curve, focus on more proactive portfolio optimisation services. What can you do to spot trends and predict benefits instead of reporting on what has already happened?

Choose projects objectively. Use decent data to draw conclusions about which projects should go forward and which should be shelved. Use objective checklists and review projects thoroughly. No more organisational politics and directors’ pet projects, although I appreciate that is easier said than done. If you are a project manager, ask the questions: has your project been through the approval process and if not, why not?

Stop projects. If a project isn’t going to deliver the benefits, speak up. Recommend that it’s cancelled, or at least stopped for a bit to see if anything can be salvaged. You know your project best, and you’ll know if there is no visible link to anything strategic. If you want to be known as a project leader, act like a leader and have the difficult conversations.

Solicit new ideas for projects. Don’t rely on the old routes for project proposals, because those old routes are probably the directors who are used to skipping through the approval process and having their bright ideas delivered. Go out to your business colleagues and solicit ideas for projects. Make it easy for people to put forward suggestions so your pipeline of ideas is always full. The more you have to choose from, the easier it will be to choose the high-value ideas.

Get the right people on the team. One of the reasons, in my experience, why projects don’t get stopped is that the project team don’t know enough about the business area they are working in to be able to provide that level of consultancy. Get the right people on to the project team so you don’t have that problem. Second business experts to the project full time or part time so that you’ve always got a deep link to operational practice. They will be able to help you identify whether you’ve got a problem or whether the project is moving towards delivering something of value.

It is hard to get it right every time. Sometimes we don’t have the power to stop projects or influence those above us in the hierarchy to make the right decisions. But nothing gets better if project managers, programme managers and portfolio managers don’t try. We should adopt the attitude that projects should and do align to strategy and then be surprised when they don’t. It should simply be ‘how we do business round here’. If we don’t ask the right questions, we run the risk of working on low value, unstrategic initiatives that aren’t even delivering tactical benefit. What’s the point of that?