Aligning Business Strategy 101

Aligning your PMO’s business strategy would, at first glance, appear to be a relatively simple thing. Just get the projects within the portfolio doing a better job of PM-ing, and you’re there, right? Well, no, there’s a lot more going on, and this blog entry will help you evaluate some of the key factors in performing this key function.
GTIM Nation will recall my oft-cited axiom: Quality, Affordability, Availability, pick any two. Meaning that, within any given industry, you will have customers who will tend to fall into the following categories:
·Those who insist on high quality, but want it at a good price, and are therefore willing to wait for it.
·Others who also want high quality, but are unwilling to wait, and so are willing to pay more for it.
·Customers on a budget, but still need it right away, and so are looking for a simple get-the-job-done solution.
The clear implication here is that the first step in formulating a business strategy is to make an honest assessment of where your organization falls within this structure. In other words, with respect to your org’s competition, which of the above customer sets do you believe you appeal to the most? Keep in mind that, even though most project-based organizations are regularly involved in the Request For Proposal – Proposal Submission – Contract Award cycle, and the determining factor is typically the lowest bidder on a proposal that convinces the customer that that organization is capable of delivering the requested scope, the Affordability factor is not necessarily negated from the get-go. It’s not at all unusual for a client to award the contract to a well-known, reliable organization over a lower-bidding relative unknown, particularly if the work is high-priority or high-profile.
With this structure in place, let’s now examine some of the common strategies that might be more appropriate for a given management environment than others. For example, take the first of the above bullets, an organization known for delivering high-quality output, at a competitive price. Quality, check, and affordability, check, leaving only availability. For most organizations in this bin, the indicated strategy is to treat the employees (talent) very well, keep the facilities in top-notch condition, and ignore the Asset Managers when they come around spouting that maximize-shareholder-wealth drivel. When this type of organization asserts that their most valuable asset is their people, they’re not blowing smoke. Their customers are willing to queue up for this particular good or service for a reason, so an emphasis on PM is clearly indicated, as well as an aversion to cost-cutters, or those who go on and on about Return on Investment. Those are Asset Managers’ strategies, and should not hold prominence in this type of organization.
Next we have companies that attract customers also seeking high quality, but need it quickly, and are therefore willing to pay more for it. Again, as long as high quality is a draw, it must be maintained, meaning that your workforce must be more talented, your facilities as good or better, and your PM capability adequate, if not superior. As with the previous category, the threat here is that, should the executives listen to the Asset Managers’ cost-cutting strategies, the result, sooner or later, will be a lapse in quality or delivery. And make no mistake – any reduction in the cost of producing a given good or service has the potential to negatively impact on the quality (or availability) of that good or service. The line between cutting waste and cutting into productive capability is very fine, and often rather fuzzy. And, if a move to ostensively cut waste does impact scope delivery or quality, it usually ends up being recognizable only after the damage has been done, and customers have been lost.
As we have seen, a robust PM capability is indicated in each of the two already-evaluated scenarios. Isn’t there any room for the Asset Managers? Well, yes, here in the situation where the good or service being provided is of low or middling quality, but is affordable and readily available. Since this customer base is attracted by lower prices, any opportunity to lower production or delivery costs will not only carry greater appeal, but is likely to make your competitors’ life more difficult. Some of the more, shall we say, unfortunate aspects of doing business in this particular niche is that your employees tend to be more interchangeable than the organizations that exist in the other two arenas, meaning that, while they may be more available, they will also not make as much in salary/benefits, and will be less likely to stick around if and when another opportunity presents itself. Also, this is the place where PM is less relevant, since customer satisfaction is less of a factor than in the other two environs.
In summary, if your organization’s customer base falls into one of the first two bulleted situations above, go ahead and use the appropriate tools from the PMI® toolbox. Hire PMPs®, write Work Packages, employ Earned Value and Critical Path Methodologies. If, however, your org’s customer base is best described in the third bullet above, well, take it easy. Your organization isn’t that serious about PM, unless they are planning on making a play to appeal to one of the other bulleted scenarios.
And these, GTIM Nation, are the basics of aligning your PMO’s business strategy with the rest of your organization.