Strategy setting is acknowledged by larger numbers of organisations in today's world, due to the growing competitive dynamic global market demanding organisations to be more and more agile and organized. Therefore, all organisations have their strategy set and written down to help direct the organisation over the long run. However, the hardest part is after an actual strategy is been analysed and chosen is translating it into organisational action. Accordingly, project management is increasingly developing into a yardstick way of doing business in numerous organisations; since projects are the tools of implementing the organisational strategy. Consequently, each project in the organisation should contribute to the business strategy plan.
Nevertheless, the aim of this research proposal is to illustrate the actual importance of project alignment to business strategy and encourage the linkage between projects and business strategy to attain success and help achieve the strategy plan. For that reason the measures of success not merely rests on the four traditional pillars (scope, time, cost and quality). Moreover, due to the fact that strategy is mainly selected and placed by upper management and the projects are usually chosen by other members in the organisation this research intends to demonstrate the organisational interface between strategy development and project selection. Implications of strategic alignment are examined not only as they relate to individual project selection but as they impact on project portfolio development and management. More realistically, rarely would individual projects be considered on their individual merits as contributing to the advancement of company strategy, but rather how they work together with other projects to contribute, as an aggregate portfolio, towards the advancement of company objectives.#p#分页标题#e#
1.1 Research question :
How does the evolving role of project management in organisations help in achieving strategy efficiency- the degree to which the projects together succeed in fulfilling the organisational strategy.
1. How do the top management in the finance, banking and construction industries formulate their strategic goals?
2. How are the projects evaluated and selected so as to fit into the strategic goals of the company?
3. How may the strategy implementation stage be improved so as to enhance strategic alignment at the project level with the organization strategy?
Illustrate the importance and valuable responsibility of project managers in contributing to the organisational strategy
Exemplify the importance of project alignment with organisational strategy to ensure success
Define a new measure of project success other than the traditional four pillars (scope, time, cost and quality) relating to alignment
Develop an outline model to help align business strategy with projects based on the literature review and the research.
Review of Related Literature
2.1 Chapter overview
The second chapter provides a review of the available academic literature on the topic of strategy implementation to date. Relevant articles from professional and academic journals are herein summarized and their major findings discussed, in order to harmonize and relate the various findings, seek out discrepancies, and build an empirical and theoretical foundation from which to embark on the research topic. In the chapter's conclusion, a synthesis of the available literature shall be formulated, and a research gap identified from which the study takes off, and towards which it can make a meaningful contribution.
2.2 Strategy implementation
Strategy implementation is that phase in the management process when the results of strategic planning are put into action. While a great deal of time and effort are put in the strategy development phase, there is hardly any devoted to the implementation phase. The implementation process spans the time immediately after formal strategy selection, at the time when broad objectives are translated into action plans, schedules, budgets and metrics (Claudiu, Flaviu, & Georgeta-Madalina, 2008, p. 106). There are authors, however, who ascribe to strategi implementation a role more than a mere phase or stage, but as itself the response to the imperatives of organization, strategic, and environmental challenges. In this sense, strategy implementation becomes the goal for which the preliminary planning is geared towards (Lehner, 2004). Still another connotation of strategic implementation is as a control tool for the effective containment of middle management's self-interest (Guth & MacMillan, 1986). This is apparently a take-off from the agency theory and its application at the operational (mid-organizational) level.#p#分页标题#e#
There are five steps in the strategy implementation process, which are graphically depicted in the figure below.
Figure X: Five steps in strategy implementation process (Allio, 2005 in Claudiu, Flaviu & Georgeta-Madalina, 2008, p. 107)
Step 1 calls for refining vision and strategy, which essentially is a review of the output of the strategy formulation phase. This step will analyze the results of the formulation phase and construct a concise report that contains the vision statements, a set of broad strategies, initial performance measures, a preliminary list of resource requirements, the results expected, critical issues expected to be encountered, and the underlying strategic rationale for the foregoing decisions. The end result of this phase is a streamlined and updated input from which the rest of the process shall take off (Claudiu, Flaviu & Georgeta-Madalina, 2008).
The second step involves the crafting of individual implementation programs with a specification of manpower needs and responsibilities, the steps to be undertaken and the costs expected to be incurred. Step 3 involves the integration of implementation programs, wherein the respective program managers come together to discuss the overall effects of the programs put together. An overall consensus is arrived as to whether the project is feasible, affordable, and in line with strategic goals; and if not, what compromises or tradeoffs can be made in order that they become viable (Claudiu, et al., 2008).
The fourth step involves the ratification of the strategies and implementation programs arrived at by the managers in the preceding step. Finally after the formal ratification of the vision and strategies, the plans could be actualized by communicating and monitoring the strategic plans in operational terms that may be easily understood by the first line staff (Claudiu, et al., 2008).
In effective implementation, eight guidelines have been developed by Claudiu et al., (2008), namely simplicity; establishment of a common language; assessment of roles, responsibilities and time frames; balancing the short term with the longer term; accuracy, usage of a common format to enhance clarity and communication; regularly structures and time-limited reunions among teams to share information and re-assess priorities; and link up of implementation activities with the firm's financial infrastructure (e.g. budget, metrics, rewards).
A similar, though differently directed, strategy implementation process is envisioned by Anderson and Cook (1995, p, 39), who see strategy implementation as integrated with total quality concepts. It is thus effected by the four stages of the TQM process, namely (1) definition and demarcation of the TQM environment; (2) identification of key project pursuits; (3) deployment of the project plan; and (4) application and improvement of the TQM plan. This latter view admit of a wider scope than the earlier definition, and therefore a more comprehensie perspective.#p#分页标题#e#
Project portfolio efficiency
Project portfolio refers to the project mix combined in one particular portfolio. The efficiency with which the project mix is undertaken is achieved through the efficient management of the project portfolio. This is within the purview of project portfolio management (PPM), which is a set of processes to analyze, recommend, authorize, activate, expedite, and monitor projects to meet organization improvement goals. The project portfolio management process is shown below:
Figure X: Project Portfolio Management Processes (Kendall, 2006, p. 291)
PPM has the primary objective of improving the rate of investment at the project level (Kendall, 2006), so as to contribute to the improvement of the ROI at the firm level. To do this, PPM seeks to ensure the competent performance of the following activities:
Choosing the right project mix - Projects must be chosen that will leverage the firm's valuable resources in order to bring tangible, measurable value to stakeholders. The choice of the right projects is critical as projects not well chosen, even if well implemented, will not achieve its objectives of bringing optimum value to the firm.
Executing quickly, in the correct sequence - People who actively participate in PPM must have an understanding of the organization's project capacity, and advice management when the limit has been breached. An overload of projects will dramatically increase resource multi-tasking and sharing, and would tend to slow the project implementation flow.
Ensuring the correct scope - Projects and content are aligned cross-functionally, in order that combine changes result in measurable improve in meeting organisational goals. The present trend is for projects, particularly those technical in scope, to find relevance in a single functional area, and in the course paying little attention to the impact assessment on overall organizational goals (Kendall, 2006)
Such project portfolio optimization techniques had been applied in practice in Hydro Ottawa, Ltd., in projects addressing the equipment maintenance and replacement in North American power grids. The execution of such projects as these must evidently align with the broader strategy of the company, otherwise inefficiency in the project execution could easily derail crucial power services to a wide area of the company's franchise area, resulting in customer complaints and possible loss of license to operate (Bennett, Lusney & Cliteur, 2007).
Portfolio efficiency, which includes portfolio optimisation, include creating models that allow for inter- and intra-dependencies among projects to be integrated. This concept was applied by Al-Harthy & Khurana (2008) in the matter of five offshore oil field development projects. The key concept is to capture intra-project and inter-project dependencies, and to work out a system by which these dependencies may be explored to optimise the use of resources among these projects and allow their dependencies to work towards more satisfactory results in the projects (Al-Harthy & Khurana, 2008).#p#分页标题#e#
2.4 Aligning project with the organisation's strategy
There is no clear definition of "alignment" as it pertains to desirable organizational features, nor is its origin clear. For the purpose of this research, two models will provide guidance as to the conceptualization of alignment.
The next following figure shows the conceptualization of alignment by Griffith and Gibson (2001).
Figure X: Graphical representation and definition of alignment (Griffith & Gibson, 2001, p. 70)
In the above figure, the arrows adjust direction from various orientations into one uniform flow, a representation of the acceptance and commitment of the team to the overall project objectives. This is the end towards which alignment is intended. The project objectives must meet the business requirements as well as the overall corporate strategy, which are formed early in the course of the development of the project, which could critically impact on the project's overall success (Griffith & Gibson, 2001).
Typically, a pre-project team is composed of a variety of individuals with varied competencies and experience, representing diverse functional groups with different priorities, expectations and requirements. Alignment is the process of incorporating all the distinct priorities, expectations, and requirements and integrating them into one uniform set of project objectives that effectively achieve the business needs in the proposed project (Griffith & Gibson, 2001).
In business organizations, business strategy planning, portfolio management, and project selection are the traditional responsibilities that are taken over by senior managers, while the project planning and execution processes fall within the responsibility of project managers and their respective project teams. When the two groups of activities (pertaining to those activities performed by senior managers and those by project managers and their teams) are aligned, then "the strategic element feeds the portfolio element, the portfolio element feeds the project management element, and the project management element feeds projects and the team's execution" (Milosevic & Srivannaboon, 2006. p. 98). There are two aspects involved in the alignment of project management:
A two-way influence linking business strategy and project management (i.e. how business strategy influences project management and how project management influences business strategy), such as to define the nature of the alignment between project management and business strategy; and
A process that implements the alignment of project management and business strategy.
The following figure shows the theoretical framework developed by Milosevic & Srivannaboon, that charts the nature and process of the alignment.#p#分页标题#e#
Figure X: A theoretical framework for the nature of the alignment (Milosevic & Srivannaboon,, 2006, p. 104)
The Milosevic and Srivannaboon framework approaches alignment in the form of a matrix, where the elements are the result of the interconnections among competitive attributes, elements focus, and elements contents. The project portfolio model of Buys and Stander (2010), on the other hand, adopt a simplified hierarchical framework where the strategy is implement through a portfolio of programs which are themselves comprised of projects. The hierarchical structure allows for a clear chain of command and responsibility in ensuring the alignment of projects towards program objectives, and programs into objective of the organizational strategy.
Figure X: Hierarchy of projects (Buys & Stander, 2010:61).
2.5 Tools for project alignment
The concept of alignment may be easy to comprehend, but in the course of implementation one is faced with the problem of how to actualize the concept with actual tools and techniques to create the so-called alignment. One effective tool would be categorization (Crawford, Hobbs & Turner, 2006), which effectively links project delivery capability with corporate strategy. It springs from the realization that managers will be employing limited resources to what is essentially a limitless host of alternatives. Not only should assessment be made during the selection of projects, but also during their completion in order to ensure that they had resulted in the desired outcomes - or if not, so as to determine what factors contributed to their failure to deliver, and if such factors may be avoided in the future.
It is also important, in the determination of which project portfolio provides the best alignment, to analyze if the projects are within the capability of the organization to deliver. The organization's management should ask the questions: Is the project within our competency? How should the organization's competencies be apportioned or assigned to the different projects? How may the projects be executed in order to deliver most efficiently and effectively on its objectives with the present available resources and organizational competencies? To answer such choices, the technique proven most expeditious is to assign such labels or attributes as may provide a basis for the categorization process (Crawfold, et al., 2006, 38).
Three challenges to developing the most appropriate categorization process include comparability, visibility and control. Comparability refers to the ease by which projects, though they may be of apparently divergent natures, may be compared objectively with each other. The standardization will pose a challenge, as projects can be highly complex, and the important attributes concealed. This step necessitates the reduction of variety and complexity of the way a thing is viewed, and to highlight the simplest, most important factors. Care should be taken to avoid rigid obedience to any set of rules, because lack of flexibility and sensitivity to other factors may lead to inadequate or inappropriate decisions (Crawford, Hobbs & Turner, 2006).#p#分页标题#e#
In evaluating visibility, it helps to consider such aspects as the scope and coverage of the categorization system, the nonproject activities (operations and maintenance) involved, the critical demarcators along which to draw distinctions, and attributes or metrics by which to identify such distinctions. It is during the process of determining visibility that lines are drawn between the items on which attention shall be focused (i.e., become visible), and those which would tend to be glossed over or ignored (i.e., become invisible).
Finally, categorization, by making certain aspects visible and some not, will essentially be defining the manner by which control shall be exercised. When one has control, it means that one is able to exercise his discretion over how rules for categorization are chosen, and how results are to be interpreted. The judgment employed in determining these measures of control is based on experience, training, and the power of the organization. (Crawford, Hobbs & Turner, 2006:40)
The three challenges balance each other off: high visibility and comparability tends to reduce control; increased control introduces variance into the system and therefore reduces comparability; finally the greater the number of attributes in the categorization process, tends to increase the visibility, but reduce control, of the categorization system (Crawford, Hobbs & Turner, 2006:40).
2.6 Maintaining alignment
Once alignment has been achieved, it is a further task of management to maintain that alignment until the completion of the project, since in the implementation phase incidents occur that would tend to misalign the project from its original direction. The key is maintaining alignment is in effective team management, for which the following best practices are offered by experts (Michelman, 2004):
(1) Connect each project to strategy
It is a practice at Hewlett Packard that for every new initiative, two project managers are assigned to work together, one for business and the other for technology. Both managers are held equally responsible for the successful implementation of the project, meaning that it must not only be completed on time and on budget, but that it must as far as possible advance the company towards its goals. This involves weekly updates from both managers, from the planning to the execution phases, to the vice-president for strategy and development. If at any time upper management feels that the project is heading towards a direction inconsistent with the firm's overall strategy, the project is put on hold until its strategy is fine-tuned to that of the firm's. This tactic of putting a project on hold may entail additional cost due to project delays, but it oftentimes yields much better results the benefits of which far outweigh the cost of the delay (Michelman, 2004).#p#分页标题#e#
(2) Measure and reward
Metric and reward systems that are tailored to support company strategy lie at the core of successful well-aligned businesses. Teradata, a division of NCR, applies this technique at all levels of the organization and at all stages of a project's planning and implementation. The aim of applying metrics is to facilitate decision-making that is strategy-driven, fact-based, and has broad access to timely, accurate, and complete data. Additionally, applying the right reward system creates and maintains the proper motivation among project teams. This involves linking the team's total compensation to its specific results which they must relate to overall company strategy (Michelman, 2004).
(3) Wage war on short-term thinking
In all phases of a project's development and particularly during implementation, there is a tendency to emphasize on immediate results and short-term gains. This is often driven by the team's (or management's) penchant to see some evidence of immediate tangible results, although excellent results in the long-term may provide no evident intermediate yields in the short term. The best practice to address the tendency to think short-term is to tie in individual performance with strategic goals. This may be addressed by providing each employee a document with a list of the company's strategic objectives, and asking each worker to list five or six initiatives he feels the company needs to accomplish in the year towards the company's goals. Managers then consult with their subordinates on their initiatives, which are then broken down into 90-day objectives, and then further resolved into action items. Managers then meet with their workers on a weekly basis to "coach them on their progress (Michelman, 2004).
There have been other studies that embark towards a more systematic approach through the "soft side" of project implementation, dealing with its behavioural aspects to ensure strategic alignment. Behavioural processes within organizations should be closely associated with the type of strategy or competitive behaviour that is desirable in the firm's industry. Such processes would take into account distinct individual behaviour and direct these towards a tangible organizational and competitive collective firm behaviour. Strategic alignment is served when an organization is able to custom-build its processes to foster behaviour that harnesses individual talents and initiatives and harmonize them to attain company objectives (Lehner, 2004).
2.7 Consequences of misalignment
In any alignment process, the final stage should arrive at the acceptance and commitment of all members in the team to the over all project objectives as they relate to the overall strategies articulated in the strategy formulation phase. Absent the commitment of team members and endorsement of team sponsors, there is no alignment.#p#分页标题#e#
Griffith & Gibson (2001) have an interesting analogy of a misaligned project; they liken it to a car with the front end out of alignment. In this case, three situations may apparently result: the ride may well be uncomfortable for the passengers, the tires will eventually wear out faster than expected, and there is every chance that the car may end up off the road. A project team that is misaligned is likewise misdirected. The outcome of the project will not entirely be up to standard, participants are continually in conflict due to their varied viewpoints, and costs will run up higher due to reworks, revisions, and delays (Griffith & Gibson, 2001, p. 70).
In Fox, Donohue & Wu (2007), the consequences of HR goal misalignment in the projects leading to the 2008 Beijing Olympics were explored. The study discussed the failure of the People's Republic of China to strategically align the projects' human resource activities with the national image enhancement goals. It was China's strategy to show the world that it employed fair and ethical labour processes that are globally perceived to be such, then this would have redounded to an additional benefit to the country. However, China's failure to align the projects to strategy resulted in an image that was less desired, unintended, and disadvantageous to the country's image (Fox, Donohue & Wu, 2007).
2.7 Synthesis and research gap
The literature on strategic alignment of project planning and implementation is broad and diverse, because of the complex nature of human behaviour in organisations, and the complexities of project management. Academic studies and professional articles show a concurrence in so far as concerns envisioning a concept of alignment as a unity of purpose and goals; the tools and tactics are however diverse, and evolve over time. This provides an opportunity for researchers to more specifically delve into the details of managing strategic alignment in project planning and execution, by formulating a model that comprehends the different practices and techniques. Such a model may help the practical manager arrive at specific techniques applicable within the context of his business, by underscoring the salient elements determinative of strategic alignment.
2.8 Chapter summary
The foregoing chapter surveys the available academic literature on the concepts and processes of strategic alignment in project management. Conceptual and theoretical models as well as best practices, tools and techniques were examined, and a synthesis presented on the studies and articles surveyed. From this theoretical background, the dissertation will proceed to outline a more concise methodology that will serve the research objectives of this paper to arrive at the desired conclusion.