Effective Implementation Of Strategic Initiatives Nov 2009
Upcoming SlideShare
Loading in...5
×
 

Effective Implementation Of Strategic Initiatives Nov 2009

on

  • 13,516 views

 

Statistics

Views

Total Views
13,516
Slideshare-icon Views on SlideShare
13,499
Embed Views
17

Actions

Likes
4
Downloads
771
Comments
1

3 Embeds 17

http://www.slideshare.net 12
http://www.linkedin.com 4
http://www.lmodules.com 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

11 of 1

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • so usefull
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • TITLE:
  • this is the Agenda, day 1
  • This is the agenda day 2
  • This is the agenda day 2

Effective Implementation Of Strategic Initiatives Nov 2009 Effective Implementation Of Strategic Initiatives Nov 2009 Presentation Transcript

  • Effective Implementation of Strategic Initiatives Seminar Workshop 27 th & 28 th October 2009 Kuala Lumpur, Malaysia Presenter: Mr Geer Iseke Director & Principal Consultant Iseke Consulting Limited [email_address] +64-21-654-987
  • Iseke Consulting – Geer Iseke
    • Background and Experience
      • 10 years working in Information technology roles – operations, systems, product mgt, systems engineering, sales & marketing
      • 10 years working in General Management roles in Financial services – customer service, sales & distribution
      • 5 years working in Senior executive roles - strategy, planning, change, corporate development, M&A
      • 5 years working in consulting, advice and programme/project management – business & IT strategy, change management, leading strategic initiatives
    • Industries and Places
      • Banking, Life Insurance, Investment Management, Information technology
      • Transportation, Distribution, Infrastructure, Services
      • New Zealand, Australia, Singapore
    • My goals and desired outcomes from this seminar
      • Interactive learning and sharing (between us all)
      • Pragmatic style – been there, done that (just ask the questions)
      • Fast paced, high value, outcome oriented content (stop me if you need explanation)
  • Seminar Objectives – we will cover….
    • Best practices in strategic planning approaches and key outcomes
    • The business strategy continuum – rolling life cycles, iterations and refinements
    • Realigning corporate strategies to enable successful strategic execution
    • Understanding the strategic execution framework
    • Strategic techniques to develop a strong strategic execution capability
    • Linking strategic planning to strategic execution
    • Development of the strategic execution roadmap
    • The role of Strategic Portfolio Project Management (SPPM)
    • Managing business change associated with successful strategic execution
  • Agenda
    • Day 1 – Strategic Planning, getting ready for Strategy Execution
      • Session 1 - The 70,000 ft View of Strategic Planning & Execution
      • (BREAK)
      • Session 2 - Understanding Strategic Planning approach & outcome
        • Case Studies
        • Practical Workshop: Developing Strategic Goals and Objectives
      • (LUNCH)
      • Session 3 - Understanding the Strategic Execution framework
        • Case Studies
      • Session 4 - Identifying The Strategic Initiatives, Planning Execution
      • (BREAK)
        • Case Studies
        • Practical Workshop: Developing a Strategic Execution Balanced Scorecard
  • Agenda contd
    • Day 2 – Strategic Execution, managing the initiatives implementation
      • Session 5 – Developing the Strategic Portfolio Implementation Plan
        • Case Studies
      • (BREAK)
      • Session 6 – Strategic Portfolio Project Management (SPPM)
        • Case Studies
      • (LUNCH)
        • Practical Workshop: Developing a Strategic Portfolio Roadmap
      • Session 7 – Strategic Business Change Management
        • Case Studies
      • (BREAK)
      • Session 8 – Wrap up, Bringing Strategic Execution into Final Focus
  • Session 1 The 70,000 ft overview of Strategic Planning and Execution
  • What is Strategic Planning – Vision, Mission, Values?
    • Strategic planning:
      • An organization’s process of defining it’s strategy or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people
    • Vision:
      • Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction.
      • Vision is a long term view, sometimes describing a view of how the organization would like the world in which it operates to be.
      • For example a charity working with the poor might have a vision statement which read "A world without poverty“, Microsoft had one that said “"A personal computer in every home running Microsoft software."
    • Mission:
      • Defines the fundamental purpose of an organization or an enterprise, basically describing why it exists and what it does to achieve its Vision.
      • A corporate Mission can last for many years, or for the life of the organization.
      • It is not an objective with a timeline, but rather the overall goal that is accomplished over the years as objectives are achieved that are aligned with the corporate mission.
    • Values:
      • Beliefs that are shared among the key stakeholders (customers, colleagues, communities) of an organization.
      • Values drive an organization's culture and priorities.
  • The Process of strategic and business planning
    • The planning process can be simply defined as follows:
    Vision Goals Define the vision and set a mission statement with hierarchy of goals and objectives, set against Values Analysis conducted according to the desired goals Actions Formulate Initiatives and processes to be taken to attain these goals KPI’s Monitor and get feedback from implemented processes to fully control the operation Objectives Strategic 3-5 year horizon Budgets Tactical 12-18 month horizon Changes Repeat Annually Initiatives Initiatives Initiatives Initiatives Planning Execution
  • The Road to Here……….
    • 50 years ago strategy was taught as part of general management curriculum in business schools
    • It was seen as the most important duty of the Chief Executive
    • Back then, the strategy process had breadth, but not much rigor!
    • Tools for reviewing the external environment, such as the ubiquitous SWOT, were simple, but not that effective
    • Over the following 2-3 decades the tools were refined and a whole industry developed around strategy:
      • Frameworks were developed – 7-S, growth-share matrix, et al
      • Corporate Planning departments emerged
      • Formal systems and standards were developed
      • Consulting firms offered services and solutions
    • It has been a heady period and the strategy toolkit is far richer – but while it gained depth, strategic planning has lost breadth
    • The process has become more about formulation vs implementation and getting the idea right at the outset vs living with a strategy over time!
    • Let’s review some of the key aspects of strategy formulation
  • Strategic Planning today & tomorrow
    • At many top business schools, general management departments have been replaced by strategy groups of experts focused on analysis and economics
    • In terms of analytical precision, strategic planning has made big gains, but in terms of organisational outcomes it has not
    • The senior executives greatest opportunity to outwit the competition is not only watching over strategy day in and day out, but also their greatest opportunity to shape the business itself
    • Competitive advantage is essential to strategy, but today it is recognised that if you cannot implement the strategy, then it is only an academic exercise
    Planning Lead Strategy Execution Lead Strategy The Past & Current The Future
  • A Missing Dimension…
    • Over the past few decades, strategy has become a plan that positions the company in its external landscape – that doesn’t appear to be enough.
    • Strategy should also guide the development of the company – its identity and purpose – over time.
    Fostering competitive advantages and developing the company through time Ongoing Activity Defending an established Strategy through time Everyday, continuous, unending Time Frame Intense period of formulation, followed By prolonged period of implementation Organic process that is adaptive, Holistic, and open-minded Form Unchanging plan that derives from an analytical, left-brain exercise CEO as chief strategist; the job cannot be outsourced Leadership The CEO and strategy consultants Creation of value Goal A long-term sustainable competitive edge What is Missing: Strategy as a Dynamic Process The Prevailing Approach: Strategy as a set Solution
  • Setting the bar at the right height for success
    • How much planning is good enough? - Balancing the “head” and “heart” and avoiding “paralysis through analysis”
    • Often the answer is self evident, many of the stakeholders know the direction and dynamics involved – confusion comes when the competitive and market forces change!
    • KI S S principle – question is what is simple? the “Elevator Pitch” test
      • Can you describe the essence of your business strategy in less than a minute (ie the time it takes for an elevator to go from bottom to top floor)
    • Another aspect that often seems to be forgotten is the need to develop SMART strategic goals:
      • S pecific
      • M easurable
      • A chievable
      • R esourced
      • T ime Bound
  • What is strategic execution?
    • What a company is doing – its de facto strategy- can be summed up by identifying the group of projects in which it invests
    • There are typically three types of strategic project investments:
      • Working in the business
      • Working on the business
      • Working to transform the business
    • Strategic projects can be grouped into programmes, which can be grouped into portfolios – each Strategic Project Portfolio is aligned to a Strategic Goal
    Strategy Portfolio Engagement Programme Project Operations Transition Synthesis
    • Strategic Execution project leadership – 3 phases:
      • Engagement – engage the strategy via the project investment stream
      • Synthesis – monitor and continuously align the project work with strategy
      • Transition – transfer projects crisply into operations to reap the benefits
  • Who is in control of strategic commitments?
    • There are many examples of how corporate strategy is not only identified, but also executed by those who you would think wouldn’t be – not by the CEO and senior executive, rather by senior management and staff.
    • Much of this comes about due to a mis-match of resource, process, understanding, communication and execution.
    • Strategic commitments tend to get made in two ways , through:
      • Organisational structures, where:
        • Knowledge is dispersed
        • Power is dispersed
        • Roles determine perspectives
      • Decision making processes, where:
        • Processes span multiple levels but activities proceed on parallel, independent tracks
        • Processes are iterative
  • In summary,
    • There is no “one set way” to undertake Strategic Planning!
    • The key aspect that everyone will agree is that whilst organisations might be (in general) good at strategic planning, they are poor at strategic execution.
    • The global business landscape is littered with expensive, well intended strategies that failed in the execution phase.
    • Corporations spend about $100 billion a year (pre economic adjustment) on management consulting and training, most of it aimed at brilliant strategy.
    • Business schools unleash throngs of aspiring strategists and big-picture thinkers into the corporate world each year.
    • Yet studies have shown that less than 10% of effectively formulated strategies carry through to successful implementation – so something like 90% of companies fail to execute strategies effectively.
  • Session 1 Case Studies
    • Intel Corp, USA – Whos’ in control of strategy?
    • Knight Ridder, USA – Customers decisions
    • Ryan Air, UK – The CEO as Chief Strategist
  • Case Study: Intel Corp – Who’s in Control?
    • A leader can announce a strategy to become global, change core technologies, or open new markets, but the strategy will only be realised if its in line with pattern of resource allocation made at every level of the organisation
    • Intel’s exit from the memory business:
      • Legend has it that Andy Grove and Gordon Moore were talking strategically about what business Intel should be in.
      • On Grove asking the question “what would they do if Intel were a company they just acquired”?, Moore answered “get out of memory!”.
      • It turned out, though, that Intel’s revenues from memory were by this time only 4% of it’s total sales.
      • Intel’s lower-level managers had already exited the business – what Intel hadn’t done is shut down the flow of research funding into memory (which was eating up 30% of the research budget).
      • Nor had Intel announced it’s “exit” to the outside world.
      • At Intel, the exit from memory took place over time, because the managers in manufacturing responded to a directive from Finance: Allocate plant space so as to maximise gross margin per wafer square inch.
      • Memory and microprocessors used the same silicon wafers, so as competitive conditions worsened in memory, the rule took Intel right out of the memory business.
    • What can we learn from this?
      • Because knowledge and power span organisational levels, managers at each level are likely to have an impact on strategy.
      • External forces can also have a strong effect on how resources are allocated, and in turn, how strategy evolves – the most powerful are the companies best customers and the capital markets.
      • Strategic decisions are critically affected not just by senior corporate managers, but also by midlevel managers, their teams.
      • The left and the right hand of Intel’s executive were not synchronised – on one hand, 30% of research money was being allocated to memory, while on the other hand only 4% of total sales came from memory – clearly senior managers were not in control!
      • But in the end the corporate culture was self correcting.
  • Case Study: Knight Ridder – Customer’s decisions
    • Customer decisions can play a huge role in real strategy formation, particularly in businesses with a few very powerful customers. Companies that stay close to their best customers give them a virtual veto on product development and distribution.
    • Knight Ridder’s (USA’s 2 nd largest newspaper publisher) strategy to enter the internet business:
      • In 1995, Tony Ridder recognised the internet was going to have a dramatic affect on his newspaper company.
      • Accordingly, he redirected corporate strategy to focus on the internet, presented annual reports that discussed plans for new media, and moved headquarters from Miami to San Jose.
      • Despite these bold efforts to change corporate strategy, the realised strategy continued to be largely controlled by existing advertising customers in the newspaper business.
      • Every day, sales reps had the choice of selling a $40k print display ad to their existing print customers or promoting a $2k online ad that was unfamiliar, even uninteresting to these same advertisers – and every day the reps made the logical choice to sell traditional print ads.
      • Knight Ridder and other newspaper companies have been largely unsuccessful in tapping into this new and evolving revenue stream.
    • What can we learn from this?
      • Customers can exert major influences on the sales force - they can capture the resource allocation process, and in effect, it’s strategy.
      • Management need to think through the strategic issues, develop scenarios and test them before implementing strategic initiatives that change the resource allocation and processes.
  • Case Study: Ryan Air – The CEO as Chief Strategist
    • In most popular portrayals, the strategists job seems finished once a carefully articulated strategy has been made ready for implementation.
    • Then comes the arduous task of determining how to implement the strategy – and what to do when the competition reacts?
    • Sometimes, this clarity requires not only the CEO to redefine the strategy, but also to lead the implementation.
    • Ryan Air proves a case in point:
      • During it’s early years, the Irish Airline entered the Dublin-London market with full service priced at less that half the fares of the incumbents British Airways and Aer Lingus.
      • Ryan Airs leaders didn’t anticipate the ferocity with which its competitors would respond. When the resulting fare war brought Ryan Air to its knees, its CEO and executive didn’t simply urge the airline to try harder.
      • Lead by the CEO, they revamped the strategy and transformed the company into a no-frills player with a low-cost business model.
      • As Michael O’Leary, CEO since 1994, has said: “Yes, Aer Lingus attacked us, but we exposed ourselves and given the circumstances, it required leadership and commitment to reposition ourselves”
    • What can we learn from this?
      • When confronted by significant challenges, the CEO must recognise the strategic significance of issues being raised and opportunities being contemplated.
      • The CEO needs to see them through the lens of the whole, even as those with narrower responsibilities may be seeing the same issues parochially.
      • While faithfully translating purpose into practice, the CEO must also remain open to the idea that the purpose itself may need change.
      • The judgements made at these moments of transition can make or break a leader or a company.
      • The change and execution leadership must come from the very top
  • Session 2 Understanding Strategic Planning approaches and key outcomes
  • Choosing between 2 nd best vs ideal strategies
    • Is a 2 nd best strategy good enough? Yes, if it can be implemented better!
    • Many organisation attempt for perfect world (ideal) strategies, but:
      • World is changing around them – competition, regulation, leadership
      • Experience curve takes affect (ie we know more about something the longer we are involved with it)
      • Pareto principle 80/20 rules apply – problem solving, change management
    • A brilliant strategy may put you on the competitive map - but only solid execution keeps you there
    • 2 nd best strategies are identified through:
      • Strategic scenario analysis – identifying different strategic scenarios based on changing future
      • Execution capability – understanding core competencies, not attempting to do more than the organisation is capable
    • No prescribed approach for developing 2 nd best strategies - just an accepted principle amongst executive that you don’t “bite off more than you can chew!”
  • Alternative Views of Strategy
    • The Implicit Strategy Model of the Past two decades:
      • One ideal competitive position in the industry
      • Benchmarking of all activities and achieve best proactive
      • Aggressive outsourcing and partnering to gain efficiencies
      • Advantages rest on a few key success factors, critical resources, core competencies
      • Flexibility and rapid response to all competitive and market changes
    • Sustainable Competitive Advantage model:
      • Unique competitive position for the company
      • Activities tailored to strategy
      • Clear trade-offs and choices vis-à-vis competitors
      • Competitive advantage arises from fit across activities
      • Sustainability comes from the activity system, not the parts
      • Operational effectiveness a given
    What is Strategy, Michael Porter, HBR Nov-Dec 1996
  • Hidden Flaws in Strategies
    • The business world remains littered with examples of bad strategies
      • Flawed analysis, excessive ambition, greed and other corporate vices
      • Key contributing factor that affects every strategist – the Human Brain
    • Flaw 1 – Overconfidence
      • Humans are programmed to feel over confident, particularly over estimating
        • Test strategies under wide range of scenarios
        • Build more flexibility and options into your strategy
    • Flaw 2 – Mental accounting
      • “ The inclination to categorise and treat money differently depending on where it comes from, where it is kept and how it is spent” Richard Thaler, pioneer in Behavioural Economics
        • treating every investment $ exactly as it is, whatever the category or opportunity
    • Flaw 3 – The Status Quo bias
      • People would rather leave things as they are – aversion to failure and loss
        • Adopt a radical view of all portfolio decisions – view all businesses as “up for sale”
        • Subject status quo decisions to a risk analysis as rigorous as change options receive - most strategists are good at identifying the risks of new strategies but not so good at seeing the risks of failing to change
    Hidden Flaws in Strategy, Charles Roxburgh, McKinsey Quarterly, 2003 Issues 2
  • Hidden Flaws in Strategies
    • Flaw 4 – Anchoring
      • Human Brain tends to fix itself to something it knows – good for negotiating, bad for expectations (on price or outcome)
        • Don’t be influenced by the anchoring tactics of others, take a long historical perspective – put trends in the context of last 20-30 years, not last 2-3 years!
    • Flaw 5 – Sunk-cost effect
      • Other wise known as “throwing good money after bad”, often seen in project overruns - Don’t be swayed by loss aversion (rather spend $5m more to complete than write-off $20m now)
        • Apply the full rigor of investment analysis to incremental investments
        • Be prepared to kill strategic experiments early
        • Use “gated funding” approach for strategic investments
    • Flaw 6 – The Herding Instinct
      • The desire to conform to behaviour and opinions of others, “Me-too” strategies
    • Flaws 7 – Misestimating future hedonic states
      • People are bad at estimating how much pleasure or pain they will feel if their circumstances change dramatically
        • In takeovers, adopt dispassionate and unemotional views
        • Keep things in perspective, don’t overreact to apparently deadly strategic threats
    • And the deadliest flaw of all – a failure to recognise the pragmatism required for execution when developing the strategy
  • The Strategy Continuum
    • Strategy definition is part of a continuum – major strategic planning sessions conducted annually, reviewed half yearly, etc
    • Much of the strategic implementation started is abandoned or changed within 12 months due to the impact of:
      • Review and refining of the strategy – ie goals and priorities change
      • Management “merry go round” – ie leadership and management changes
      • External factors – regulatory, economic and competitive changes
    Strategic Planning Model Planning Cycle Year 1 Year 2 Year 3 Year 4 Year 5 Strategic Planning Cycle Define Implement Refine Implement Implement Review Refine Review Define Refine Review Implement @ ICL 2008
  • How to improve strategic planning
    • It can be a frustrating exercise, but there are ways to improve value
    • There are five emergent ideas that can be used for improvement:
      • Start with the issues:
        • Deliberately and thoughtfully identify and discuss the strategic issues that will have the greatest impact on future business performance
        • Use a bottom-up rather than top-down process to gain internal consensus
      • Bring together the right people:
        • Strategic conversations will have little impact if they only involve strategic planners from the BU and Corp levels – those who carry out strategy should also develop it!
        • The CEO, aided by members of the executive, should lead the BU strategic reviews
      • Adapt planning cycles to the need of the business:
        • Issues based strategic planning is resource and time intensive – managers need to focus on executing last years major initiatives – move to alternating BU to biennial
      • Implement a strategic-performance-management system:
        • Many companies (30-40%) fail to execute the strategy
        • Assign accountabilities for initiatives, make their progress transparent, group into portfolios (by strategic goal)
      • Integrate human resources systems into the plan:
        • Successful planning and implementation depends on how managers are evaluated and compensated – link them to the progress and outcomes of strategic initiatives
    • But the most important aspect for improvement is to determine where you want to be in 2-3 years and layout a roadmap for how you are going to get there - incorporate Portfolio Project techniques into the planning process.
    How to improve strategic planning, Rene Dye, McKinsey Quarterly 2007 Issue 3
  • Hierarchy of Company Statements
    • Organisational directions comes in several forms
    • The Mission Statement is the loftiest guiding light and least specific
    • As you work down the hierarchy the statements become more concrete, practical and ultimately unique
    Can you Say What Your Strategy Is, David Collis, HBR April 2008 MISSION Why we exist VALUES What we believe in How we will behave VISION What we want to be STRATEGY What our competitive game plan will be BALANCED SCORECARD How we will monitor the implementation of the plan Strategy Statement OBJECTIVE = Ends SCOPE = Domain ADVANTAGE = Means Strategic Execution PROJECT = Tasks, Deliverables VALUE = Benefits RESOURCES = People, $$
  • Strategic Goals and Objectives
    • The discussion here is about wording, not about the content or intent.
    • The wording of goals should facilitate the development of objectives and initiatives – action oriented, verbs. Often starting with the word “ To ……”
    • Goals are the broad, primary  quantitative  results that management seeks to achieve in the plan.  
    • These goals can include specific financial performance results that you seek to achieve, such as higher revenues or higher profits (e.g. “To Increase Sales by 20%").  They can also include goals to increase the energy level in the company (e.g. "Improve leadership & direction").
    • For each Strategic Goal, there are Strategic Objectives, followed by a number of Strategic Initiatives (or Actions):
      • Example Strategic Goal: “ To Increase Global Sales by 20% in Year 1 "   Example Strategic Objective:    “Redesign Training Curriculum on Sales and Customer Service within 6 months ." 
      • Example Strategic Initiative: “Implement new sales processes, CRM system and sales capability”
    30% X
    • Strategic goals could be worded as Stretch goals
      • A stretch is a goal or challenge that is significantly beyond the organisation’s current performance level.
  • Strategic Themes
    • Strategy consists of complimentary Strategic Themes, which:
      • enable sequencing of strategic change and focus, can be parallel and complimentary
      • deal with conflicting priorities of long-term vs short-term profitability
      • reflect what the management team believes must be done to succeed
      • provide pillars for the segmenting the strategy into general categories:, ie
        • Build the Franchise (Financial perspective)
        • Increase Customer Value (Customer perspective)
        • Achieve Operational Excellence (Process perspective)
        • Be a Good Corporate Citizen (Community perspective)
      • generally deliver benefits over different periods of time
    • Example : A Utility company defined four strategic themes as it prepared for deregulation, consolidating it’s core businesses and moving into a more customer focused business model:
    • Theme 4:
    • “ Pubic Trust”
    • Maintain public support
    • Theme 3:
    • “ Secure the
    • Base”
    • Manage assets and investments to improve cash flow
    • Effective governance
    • Theme 2:
    • “ Increased
    • Customer Focus”
    • Service excellence
    • Value-added solutions
    • Theme 1:
    • “ Grow the
    • Business”
    • Margins in the emerging markets
    • Profitable growth in new markets
    Be a Good Corporate Citizen Achieve Operational Excellence Increase Customer Value Build the Franchise
  • Strategy Maps
    • The key to developing the right strategy which is a strong candidate for successful execution, is to ensure that people in the company can understand it.
    • This can be accomplished through the translation of the strategy into a strategy map, built around strategic themes, and an associated Balanced Scorecard
    • This includes the crucial but perplexing processes by which intangible assets will be converted into tangible outcomes.
    • Strategy maps describe the process of value creation through a series of cause-and-effect linkages among objectives using the four Balances Scorecard perspectives:
      • The ultimate goal of an organisation is to create long-term value for shareholders (private sector) or stakeholders (public sector)
      • Organisation value is created by satisfying customer value propositions
      • Internal processes create and deliver the value that satisfies customers, and they also contribute to the financial perspective’s productivity objectives
      • Intangible assets (people, technology and culture) drive performance improvements in the critical processes that deliver value to customers and stakeholders.
  • Example Strategy map
  • Strategy Translation process
    • Strategic themes split a strategy into several distinct value-creating processes, which allows targets and measures to be created for each
    • The Strategy map provides a way to express the strategy
    • The Balanced Scorecard provides a framework to provide measures and targets
    • The diagram below shows how this translation occurs:
    The Execution Premium, Robert Kaplan & David Norton, 2008
    • Balanced Scorecard
      • Measures
      • Targets
      • Gaps
    Lower level objectives and targets are not aligned with the higher-level goals To convert strategic direction statements into measures and targets that can be linked to the management system Select Measures and Targets How do we measure our strategy?
    • Strategy map (cause and effect)
    • Strategic objectives
    Typical strategies are built by different groups in different parts of the organisation. They are not integrated To develop a comprehensive integrated model of the strategy that pulls together the many diverse components of the plan Create the Strategy Map How do we express our strategy? Enabling Tools Barriers Objective Strategy Translation Process
  • In summary,
    • Developing the right (ie appropriate and implementable) Strategic Goals and Objectives is a CSF of good planning approach and outcomes
    • Developing a “project” change based thinking and culture will help in the development of a strategic plan that can ultimately be successfully implemented
    • Leadership needs to be clear, concise and directional in order to align each activity and project investment to the espoused strategy
    • Strategic Themes and Scorecards are critical components of successful execution
    • Strategy Maps can help to communicate what the strategy is in terms of actions and deliverables, and can act as guidance during execution
    • Effective strategy consists of choosing to do the right things. Effective execution means doing those things right – strategic execution results from executing the right set of strategic projects in the right way
    • Strategy makers can only align the strategy with the execution by working with and through project leaders in the execution process
  • Session 2 Case Studies
    • Theseus - Strategies Change over Time
    • Du Pont – Mapping a Strategic Theme
    • South West Airlines – Using Strategy Maps
  • Case Study: Theseus – Strategies change over time
    • Great companies evolve and change, so do great strategies
    • This is not to say that continuity has no value, not to say that great resources and great advantages aren’t built over the long term
    • We acknowledge that the world, both inside and outside the organisation, changes in both big discontinuous changes but also in frequent smaller ones as well
    • An ancient Greek legend provides a powerful metaphor for this process:
      • According to the legend, the ship that the hero Theseus sailed back to Athens after slaying the Minotaur in Crete was rebuilt over time, plank by plank
      • As each plank decayed, it was replaced by another, until every plank in the ship had been changed
      • Was it then the same ship? If not, at what point – with which plank – did the ship’s identity shift?
    • What can we learn from this?
      • This metaphor captures the evolution of most companies
      • Corporate identities are changing not only in cataclysmic restructurings and grand pronouncements but also by decision after decision, year after year, captain after captain
      • An organic conception of strategy recognises that whatever constitutes strategic advantage will eventually change
      • Theseus’s boat had provided him with great advantage, but it needed to change to survive!
  • Case Study: Du Pont – Mapping a Strategic Theme
    • Du Pont’s Engineering Polymer division needed to lift its game on strategic outcomes – they were not achieving the corporate synergies that they wanted
    • Much of this was related to their structure but they did not want to change the existing structures as tinkering and realigning authority, responsibility and decision rights would not produce the magic required to achieve the synergies, so:
      • The corporate executives used the tools of strategic themes and balanced scorecards to guide the decentralised units in their search for local gains as they identified ways for them to contribute to corporate objectives
      • They created a corporate strategy map that consisted of five different distinct themes, each represented by a vertical chain of cause-and-effect relationships that spans the four balanced scorecard perspectives.
      • For instance, the financial objective for the theme of operational excellence is to minimise operating cost, which will require optimising asset utilisation at the process level, which in turn requires integration with a new sales model, described in Learning & Growth
    Strategic Themes
    • Use discipline process for NBD
    • Develop selling skills
    • Develop organisational skill sets
    • Develop IT platform to grow business without incr infrastructure
    • Develop appropriate sales model and dedicated assets
    Create organisational readiness Learning & Growth
    • Evaluate and pursue M&A options to expand
    • Select NBD concepts from within EP organisation
    • Commodity selling & account mgt
    • Speciality opportunity selection
    • Consulting & program mgt
    • Define & implement application mgt process
    • Understand customer needs and align capabilities
    • Implement order entry and execution
    • Optimise asset utilisation
    • Drive polymer process robustness
    • Achieve best –in-class compound costs
    Cross-sell the product line Process
    • Provide value chain with break through value
    • Match value delivered with cost services
    • Deliver the right offering at the right price
    • Improve productivity and growth in my value chain
    • Deliver to promise
    • Execute transactions with low cost / high reliability
    • Meet my specs with quality & consistency
    • Offer me the lowest price for my needs
    Increase share of customers financial transactions Customer
    • Improve sales and margin via application mgt process
    Product Portfolio
    • Optimise profit by customer category
    Customer Management
    • Achieve extraordinary results
    • Improve transaction cost
    • Minimise operating cost
    Increase revenues and margins Financial New Business Designs Supply-Service Order-Cash Operational Excellence Strategy Map Perspective
  • Case Study: Southwest Airlines – using Strategy maps
    • A strategy or activity map clarifies strategic objectives and helps a company understand which projects are essential for execution Michael Porter’s activity systems maps and Kaplan/Norton’s strategy maps provide enormously useful ways to depict how a given enterprises creates value in the marketplace
    • Southwest Airlines is one the rare companies able to maintain profitability almost continuously in a notoriously difficult industry – by using strategy maps to help them identify key elements in their activity system, which translates into potential projects for strategic execution
      • This figure shows the array of aligned activities that Southwest performs to generate value
      • The darker circles represent Southwest’s hi-order strategic offering; the others are activities or investments tailored to deliver it
      • From the founder to the top management to the most recent hire, people at Southwest understand how they generate value and they consistently did so better than their competition
      • When a company has this level of strategic clarity, the choice of projects and programmes for the strategic investment portfolio becomes much more obvious.
      • For example the map immediately tells where not to invest:
        • Do not evaluate in-flight meal service
        • Do not create a seat assignment system
        • Do not work on connecting to other airlines
        • Do not create an incentive system for travel agents
      • The map also tells us the sort of things Southwest should do, for instance projects to enhance:
        • Ground crew productivity
        • Aircraft utilisation
        • Turnaround time
        • Usage of ticket machines and internet purchase
        • Cost effectiveness
    Limited Passenger services Frequent, Reliable departures Lean, highly Productive Ground and Gate crews High aircraft utilisation Short-haul Point-to-point routes between midsize cities and secondary airports Very low ticket prices No seat assignments No meals No baggage transfers No connections With other airlines “ Southwest, the low-fare airline” High level of employee stock ownership Flexible union contracts High compensation of employees 15-minute gate turnarounds Automatic ticketing machines Standardised Fleet of 737 aircraft Limited use of travel agents Executing Your Strategies, Mark Morgan, et al 2007
  • Practical Workshop-Strategic Goals, Objectives, Metrics
    • Workshop Objective:
      • Help you determine whether your organisation needs improvements to better align the capability of identify strategic goals, objectives and metrics to maximise strategic initiatives
    • Approach:
      • An introduction to a simple process to link strategic outcomes to project outputs - connecting goal to metric, to strategy, to deliverable
      • A series of rating tools, that can be administered informally or formally, to determine whether your organisation needs investments to improve capability of identifying Strategy, Goals and Metrics that facilitate execution. They will measure:
        • Goal-setting
        • Measurements (Metrics)
        • Strategy Connected to Vision
        • Organisation Culture
        • Organisation Structure
        • Strategy effectiveness
  • Practical Workshop-Strategic Goals, Objectives, Metrics
    • An introduction to a simple process to link strategic outcomes to project outputs - connecting goal to metric, to strategy, to deliverable
    • The table below can be used to help teams of leaders get a handle on alignment within the vision imperative – it will help the executive determine:
      • The strategic outcome they are looking for
      • The links to the overall organisational strategy
      • How the outcomes are to be measured
      • How to articulate a simple high-level description of the strategy for getting to the outcome
      • Which indicators to use to measure progress towards the outcome
      • The tangible work product in terms of project outputs that must be created to reach the outcome
    Executing Your Strategies, Mark Morgan, et al 2007 What does the customer think? Does he or she agree with what we think our outcome and measurements are? Customer validation: Broad and simple – the “path”; how will we reach the outcome? Strategy path What things will tell us whether we are making progress towards reaching the outcomes? Leading indicators Hard, tangible things we deliver along the way, plus the final end-state outcome How will we know we have reached the outcome? You don’t measure the strategy – you measure the outcome Which aspect of overall company strategy will this outcome help us reach? This is the future outcome, stated as if it has already occurred Deliverables or project outputs Measurement and target value for measure Linkage to overall strategy or question Goal or strategic outcome
  • 1. Measuring Goal-setting
    • Measure your organisations goal-setting ability
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – The organisation is lost in space, and individuals are making choices for the organisation on whatever basis they choose
    • Between 3 and 6 – There is a mix of individual and organisational goal clarity advantage
    • Above 6 – The organisation is reaching goal clarity
    Average Score: Goals are selected on the basis of affirmative topics that emphasise what the organisation wants more of Goals are created in a way that makes it clear whether they are reached or not Goals in the organisation provide clarity about both outputs and outcomes for the organisation Our systems provide information on goals, including who is accountable for meeting them Management exhibits discipline and resolve in achieving goals There is an organised and defined process for setting goals Our organisation sets clear goals for the near-term (1-5 years) that are supported by our strategy and the way we measure performance
  • 2. Measuring Measurements
    • Measure your organisations ability to measure
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – Measurements are too vague to help deliver strategy
    • Between 3 and 6 – Measurements are present but ineffective
    • Above 6 – The organisation can navigate well
    Average Score: Metrics for the organisation measure the leading-indicator aspects that are central to the business model The organisation’s scorecard is built on lead indicators and uses lag indicators for historical purposes We know how to measure the right things to predict success and avoid pitfalls; we understand the key performance factors for the organisation Managers and leaders clearly articulate the measures of the business and how individual and business measurements relate Measurements are created in a well-developed process that makes who, what, how, how much, and when easy to understand Our measurement of the business are consistent with the way people are measured and are clearly connected to our strategy
  • 3. Measuring Strategy Connected to Vision
    • Measure your organisations ability to measure
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – Measurements are too vague to help deliver strategy
    • Between 3 and 6 – Measurements are present but ineffective
    • Above 6 – The organisation can navigate well
    Average Score: Metrics for the organisation measure the leading-indicator aspects that are central to the business model The organisation’s scorecard is built on lead indicators and uses lag indicators for historical purposes We know how to measure the right things to predict success and avoid pitfalls; we understand the key performance factors for the organisation Managers and leaders clearly articulate the measures of the business and how individual and business measurements relate Measurements are created in a well-developed process that makes who, what, how, how much, and when easy to understand Our measurement of the business are consistent with the way people are measured and are clearly connected to our strategy
  • 4. Measuring Organisational Culture
    • Measure your organisation’s culture
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – Culture is a competitive disadvantage and is a blocker to getting strategy executed
    • Between 3 and 6 – Culture is not likely to be in the way, but is not a competitive advantage
    • Above 6 – Culture is becoming a competitive advantage
    The subcultures within structural areas of the organisation are complimentary to the overall culture of the organisation Average Score: Our culture is a competitive advantage for us because of the way it attracts and motivates people with the skills we need The artefacts of our culture (processes, language, rituals, stories, physical environment) are consistent with and supportive of our strategy The type of information that flows in the organisation keeps our culture alive and strong Managers and leaders are active in shaping the culture of the organisation in effective ways Our business practices are designed in such a way that they support our culture and make our jobs easier Our company culture as it is today is well suited to carry out our strategy and works well with our structure
  • 5. Measuring Organisational Structure
    • Measure your organisation’s structure
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – Structural misalignment is slowing things down and is an impediment to execution
    • Between 3 and 6 – Structure is creating some problems that could be one of the fastest ways to improve strategic execution
    • Above 6 – Structure is one of the things that sets your organisation apart and makes it effective
    The measurements in organisational units are consistent with the way the overall organisational metrics are set We resolve disputes across organisational boundaries quickly and in a fashion that creates sustainable agreements Average Score: There is cooperation between organisational units that supports the execution of strategy Because of our structure, people know how they relate to organisationally to the strategy Our information systems breakdown organisational barriers by openly sharing information across business boundaries Our structure is created through a well-defined business process that takes into account strategy and culture The way we organise ourselves makes doing our jobs and executing our strategy easier Managers and leaders of the organisation design the organisation to optimise business performance
  • 6. Measuring Strategy effectiveness
    • Measure your strategies effectiveness within your organisation
    • On a scale of 1-10 (where 1= seldom true, 5=sometimes true, 10=almost always true)
    Rating (1-10)
    • Interpretation of average score:
    • Below 3 – The strategy is at great risk of failure
    • Between 3 and 6 – There are significant issues to be addressed in the nature of the organisation, and if not addressed, they will slow down execution
    • Above 6 – The effectiveness and nature of the organisation is an advantage to execution
    We know how to best organise to execute our strategy, and the necessary reorganisation can be done without cultural conflict Our strategy can be executed, given our culture, with a reasonable level of organisational change Average Score: Our strategy drives coherent action People in the organisation get a clear sense of what they can do to support the strategy Our strategy is developed on a very strong fact and information based foundation Managers and leaders support and act in alignment with the strategy Our strategy is created in a systematic way, and changes to it are made clear to the organisation The strategy of the organisation is clear and well understood by people throughout the organisation
  • Session 3 Understanding the Strategic Execution Framework
  • What is strategy execution?
    • Most executives retreat to the offsite or Boardroom where they plan the Next Big Thing, leaving the grunt work of execution to the lower echelons
    • But many executives now realise they lack a systematic approach for identifying and implementing the right array of actions to deliver on their promises – not only are they being pressured to execute as promised, but also demonstrate how they will invest to deliver
    • What a company is doing – its de facto strategy – can be summed up by identifying the group of projects in which it invests
    • In fact for the strategy to become reality it must be converted into packets of work we call projects – and these projects must be managed under portfolios of change work that should match the themes in the strategy
    • The project – the lowly project – is the true traction point for strategic execution. A company’s project portfolio drives it’s future value and is the agent of change
    • Simply put, strategic execution requires tightly aligning the project portfolio to the corporate strategy, in what is called the engagement domain – where the objectives of the strategy meet the constraints of resources
    Strategy Portfolio Engagement
  • Understanding Strategic Portfolio Management
    • Strategic execution results from executing the right set of strategic projects in the right way
    • It lies at the crossroads of corporate leadership and project portfolio management – the place where the organisation’s purpose, vision and culture translate into performance and results
    • Project portfolio management is always on (whether executives at the top recognise it or not) – everywhere, people must make thousands of small project investment decisions every day
    • Without clear leadership that aligns each activity and every project investment to the strategy, individuals will use other decision rules in choosing what to work on:
      • first in, first out; last in, first out; loudest demand; squeakiest wheel; boss’s whim; best guess; easiest; most politically correct; quickest to promotion; wild guess
    Strategy Portfolio Engagement Programme Project Operations Transition Synthesis
    • Strategic Execution portfolio management
      • Engagement – engage the strategy via the project investment stream
      • Synthesis – monitor and continuously align the project work with strategy
      • Transition – transfer projects crisply into operations to reap the benefits
  • Business and Technology strategy alignment
    • Strategy Alignment is an iterative process ensuring strategies are complimentary and synergetic, that action plans are realistic and feasible and opportunities are uncovered – for Strategic execution, it incorporates Portfolio Alignment
    Corporate Strategy Transformation Business Domain Input SBU 1 SBU 2 SBU 3 SBU Business Plans SBU 1 SBU 2 SBU 3 Architecture & Process Impact Business Requirements Technology Roadmap Solutions / Projects Corporate IT Strategies Technology Domain SBU 1 SBU 2 SBU 3 Enterprise-wide Technology Principles Technology Business Plans SBU 1 SBU 2 SBU 3 Enterprise-wide Technology Strategies Architecture Investment Roadmaps Projects & Roadmaps Principles, Architecture, Strategies Planning Alignment Process Portfolio Alignment Process
  • Strategic Execution Framework
    • Six aspects (domains) that make up the Strategic Execution Framework
      • Ideation – Clarify and communicate identity, purpose and long-range intention
      • Nature – Align the organisation’s strategy, culture and structure
      • Vision – Translate long-range intention into clear goals, metrics and strategy
      • Engagement – Engage the strategy via the project investment stream
      • Synthesis – Monitor and continuously align project work with strategy
      • Transition – Transfer projects crisply into operations to reap the benefits
    • Navigating the Strategic execution Framework does not require a step-by-step, sequential journey though the six domains
    • The engagement domain is pivotal – it links the strategy with the portfolio of projects to be executed
    Executing Your Strategies, Mark Morgan, et al 2007 Strategy Portfolio Transition Synthesis Nature Ideation Vision Making Strategy Executing Strategy Engagement Engaging
  • Navigating the six SEF imperatives
    • The strategy making domain – where individuals and organisations decide which are the right things to do through:
      • Ideation
      • Vision
      • Nature
    Nature Ideation Vision Making Strategy Strategy Portfolio Transition Synthesis Engagement Executing Strategy Engaging
    • The project leadership domains (engagement and executing) - where the focus is on doing things right , specifically:
      • Engagement
      • Synthesis
      • Transition
  • Engagement capability in a changing world
    • Typically, projects and allocation of resources fall into three types:
      • Working in the business
      • Working on the business
      • Working to transform the business
    • Engagement between strategy and portfolio imperatives is not an event, it is a process and needs to be monitored, reviewed and revised (in a active way)
    • Companies attempting to achieve the engagement imperative may need project investments to develop their capacity to choose and endow the right projects within a changing world
    • Some critical engagement capabilities are:
    • Selection criteria development
    • Portfolio & project “hopper” design
      • Scoring model development
      • Prioritisation process design
      • End-to-end governance design
      • Strategic execution office
      • Resource pool creation
    • Portfolio process design
    • Enterprise planning processes
    • Portfolio management education
    • Portfolio/ project registry
    • Execution capability education
    • Tools, templates and processes
  • Engaging in the right projects
    • There are five critical challenges as part of this process:
      • Deciding how to proceed
      • Indentifying the project and programmes that will convert strategy into action
      • Developing criteria for prioritising project investment decisions
      • Dealing with an overload of qualified projects
      • Reshaping the project portfolio as circumstance change
    • Project priority decisions often require trade-offs between improving or enhancing an existing process and building a new one to support the transformation of the company.
    • Designing strategy around available resources is probably not the best way to drive innovation and change
    • Strategies that collectively require resources far in excess of capacity of the organisation are doomed from the outset
    • The steps required to accomplishing the engagement imperative:
      • Establish the governance /sponsorship environment
      • Match projects with resources
      • Monitor and reshape the portfolio as circumstances evolve
  • Project Governance & Sponsorship
    • In large measure, the success or failure of the strategic execution depends on how the organisation governs it’s project portfolio. The governance system creates the portfolio management environment, establishing:
      • Who will Sponsor the projects
      • Who will (and how to) decide which projects to undertake
      • Who will identify and assign resources to the projects
      • Who will manage each programme and project in the portfolio
    • This can be accomplished in many ways, from assigning senior executive sponsorship, to creating a Portfolio Management team or a Portfolio or Programme Management office
    • Sponsorship brings critical discipline and support to the process of portfolio management by:
      • creating a locus of control, responsibility, and accountability
      • coordinating the allocation of resources to the work of portfolio management
      • Establishing decision-making capabilities to adjust the portfolio to fit emerging strategic needs
    • Good sponsorship brings vision, commitment, accountability and empowerment to the project portfolio environment
  • Prioritising the Work
    • Which is important – apples or oranges? Neither one. Or both. Or either
    • What about product A or product B? There is no way to tell without a structure approach to priorities using categories (or strategic buckets), e.g:
      • Regulatory requirements
      • Infrastructure
      • Product development
      • Branding
      • Point of sale / customer management
      • Hiring, training and communications
    • The criteria for project selection should indicate how each potential project would contribute to the organisation's value proposition and set of value-creating opportunities
    • Criteria used to prioritise projects would differ between “working in the business” vs “working on the business”
    • Contribution to improvement in key metrics
    • Level of reduction in cycle times
    • Level of reduction in process costs
    • Amount of improvement to customer service level
    • Improvement in service or delivery quality
    • Resources required
    • Dollar value of the project
    • Resources required
    • Project risk
    • Profit margin
    • Growth market share
    • Lead time to revenue
    Working on the business Working in the business
  • Value Delivery and Benefits realisation
    • The value and benefits are the project outcomes expressed in terms of advantages for the organisation
    • The core value creation and benefits types are:
    • Benefits realisation begins with the choice and design of projects (in the engagement domain) and ends with the verification of outcomes (in the transition domain) – transition is not complete until benefits have been realised
    • A continuous learning loop must also exist so that portfolio managers and project managers alike can consciously study the results of their work – and improve future outcomes through the project / portfolio lifecycles
    • Revenue
    • Productivity
    • Profit
    • Capacity
    • Speed
    • Development of operating costs
    • Time to market
    • Time to benefit
    • Product cost
    • Product failures
    • Service delivery cost
    Increases in: Decreases in:
  • In summary,
    • Strategic execution requires a systematic approach for identifying and implementing the right actions / outcomes to deliver on strategic promises
    • It will be successful when it executes the right set of strategic projects in the right way - time, order, outcome – through structured and transparent scoping, benefit identification and resourcing
    • Portfolio management is a critical component of strategic execution, with the most significant element being the engagement imperative
    • Typically there are a large number of projects (both technology and business related) occurring simultaneously across the organisation – the alignment, sequencing and resourcing of those under a strategic portfolio framework
    • Developing and implementing the appropriate (right) project governance and sponsorship model will play a large role in the success of strategic execution
    • Strategic execution is not easy – if it was, then there would be more good stories than bad and many more organisations would be well down the experience curve
    • Managing the lifecycle of strategic planning through execution requires leadership commitment, good processes, and the right people and learnings
  • Session 3 Case Studies:
    • WiPro – Using the Strategic execution framework (SEF)
    • Carlson Hospitality – Chunking the execution portfolio
  • Case Study: Wipro – Using the SEF
    • Wipro is a $2.4b Bangalore, India based company incorporated in 1945 (as India Vegetable Products Ltd), changing to Wipro Limited in 1984 to mark the widening of it’s product line to include technology services, etc – today Wipro is a global IT services powerhouse
    • Chairman Azim Premji and his strategy making team recognised the need for comprehensive change that would create new alignments across the organisation and that these would be far reaching
    • A 2005 study (one of many undertaken to drive it’s transformation) revealed that Wipro's ability to grow in the IT solutions market would be directly proportional to it’s ability to create a world-class cadre of strategy-savvy senior programme managers who would need to understand customers strategic needs and the organisational alignments necessary to achieve them so that Wipro could become trusted advisers to helping design IT solutions, so:
      • Using the strategic framework, Wipro adopted a comprehensive, systematic approach to its strategic transformation. It needed to change its capability quickly and comprehensively.
      • First, it designed a simple framework for communicating the new direction throughout their organisation (summarised by the slogan “from ‘Get it done! to ‘Get the right results!’”). They assessed the differences between their existing programme management capabilities and the desired new profile of senior programme managers (identifying significant differences in business focus, delegating, coaching, change management and risk management, role identification, etc)
      • Second, the strategy makers and the project leaders embarked on a series of transformational projects to create the programme management cadre. Al agreed this would involve sustained focus, including comprehensive training, recruiting, compensation, empowerment, processes, governance and accountabilities in order to create a new SEF enable customer partnering capability
    • What can we learn from this?
      • The Strategic Execution Framework helped guide this significant commitment to investments in what could have remained a hidden project portfolio, which if unaddressed, would certainly have hampered execution
      • Executive and senior management were able to make the transition by using a framework to guide the scoping, sequencing and implementation of a broad range of strategic initiatives across Wipro. Once the framework was understood and up and working, success and progress came quickly.
  • Case Study: Carlson – chunking the execution portfolio
    • Carlson Hospitality Worldwide is a large US based in Minneapolis , Minnesota, operating hotels and restaurants and providing marketing & loyalty programmes . They were started in 1938 with an idea and a $55 loan, today they employ some 160,000 people across 150 countries
    • Carlson’s mission is “Building Better relationships ” and Vision is “T o become the most respected private company on earth”
    • Carlson uses chunking to break big, expensive projects into smaller, more manageable ones, thereby boosting their chances of receiving approval and funding, but also their success.
      • After the Board rejected a $15 million / 2 year implementation business case in 2000 to overhaul the company’s central reservation system, managers broke that one large project into smaller work units called “chunks” – still supporting the strategy - each having standalone benefits and minimal mutual dependencies. By chunking into 5 semi-independent projects, it reduced overall risk such that if one chunk was cancelled, others could still move ahead. The overall cost was slightly higher by 10%, due to the stop/start nature of the chunks, but it allowed implementation and benefits to occur much earlier
      • The board soon approved the first chunk. The sequence of chunks was well planned out - even though the projects were independent of each other from benefits – allowing the execution portfolio to be optimised based on sequence of business change, integrating functions and technology enablement
      • Ultimately, Carlson's new reservation system was implemented and voted best in the industry – it’s voice recognition chunk alone generated $40 million in annual revenue by 2003
    • What can we learn from this?
      • According to Carlson’s CIO Scott Heintzeman, chunking helped them learn constantly and perpetually reassess their work priorities. It reduced risk and focused peoples efforts on each work unit. And because the work effort on each chunk extended no more than 3-6 months, people across IT and the business maintained energy and enthusiasm
      • Chunking minimises risk, allows a portfolio to be broken down into more workable and executable projects, allows benefits to be realised earlier and maintain change momentum across the company (compared to one large project that might take 1-2 years, with the benefits only once it is implemented)
  • Session 4 Identifying the Strategic Initiatives and Planning the Strategic Execution
  • Strategic Initiatives
    • Newton’s 1st law applied to an organisation, states that an organisation at rest will remain at rest - Newton’s 2 nd law states that a force is needed to accelerate a mass into motion
    • Strategic initiatives represent the force that accelerates an organisational mass into action, overcoming inertia and resistance to change
    Strategic Initiatives are the collections of finite-duration discretionary projects and programmes, outsides the organisations day-to-day operational activities, that are designed to help the organisation achieve it targeted performance
    • Organisations use three processes to manage their portfolios of strategic initiatives: (1) select initiatives, (2) provide resources for them (3) assign accountability for executing them
    The Execution Premium, Robert Kaplan, HBR press 2008
    • Executive theme owners
    • Theme members
    Executive team members are generally responsible for managing within functional or business unit silos To establish accountability for the execution of cross-business strategic themes 3. Establish Accountability Who will lead the execution of the strategic initiatives?
    • STRATEX (Strategic Expenditures)
    • Prioritised initiatives
    Cross-business portfolio funding is contrary to hierarchical, departmental structure of the budgeting process To provide a source of funding for strategic initiatives that is separate from the operational budgets 2. Fund the Strategy How do we fund out initiatives?
    • Portfolios of initiatives for each strategic theme
    Strategic investments are justified on a stand-alone basis in different parts of the organisation To define the portfolio of initiatives needed to close each of the performance gaps 1. Choose Strategic Initiatives What action programmes does our strategy need? Enabling Tools Barriers Objective Initiative Management Process
  • Choosing Strategic Initiatives
    • A strategic plan requires the coordinated management of multiple initiatives across the company, including processes that cross functions and business units
    • Initiatives should not be selected in isolation of each other – they should aligned to Strategic Goals and Themes – a portfolio of initiatives should be developed for each Strategic Theme
    • The Strategy map is useful for identifying candidate initiatives. Once a list has been identified, the initiatives need to be aligned to Strategic Themes and objectives – Themes with no initiatives should be culled
    The Execution Premium, Robert Kaplan, HBR press 2008 Meet Regulatory Standards Programmes / Projects Warehouse upgrade X Indentify quality needs X Product development funnel X Financial system restructure X Customer call centre upgrade X
    • Drive Future Value
    • Objective 5
    X
    • Grow Partner Relationship
    • Objective 3
    • Objective 4
    X
    • Enhance Service Delivery
    • Objective 1
    • Objective 2
    Initiative “n” Sales force training Procurement redesign Strategic Themes / Initiative Portfolios Initiative Serving No Themes Theme with no Initiatives
  • Review and Scoring Initiatives
    • Appoint a designated group to review all new proposal initiatives – proposals should documented using simply template covering
      • Description of the initiative
      • The strategic theme or objective it is intended to support
      • The expected results
      • Estimated resources, cost and time requirements
    • The group then applies a formal process to evaluate and rank initiatives, screening existing and proposed arriving at a quantitative score
    • The process might have three criteria (each company should choose it own criteria and relative weightings), for example:
      • Strategic fit and benefit (50% weighting)
      • Resource demands (30% weight)
      • Organisational capability and Risk (20% weight)
    Input Candidate projects x 5 x 3 x 2 Output Scored projects Strategic Fit and Benefit
    • Resource Demands
    • Cost to implement
    • FTEs required
    • Duration
    • Organisational Capability (Risk)
    • Confidence in ability to deliver
    • Changes required
    • Scoring model:
    • Each initiative is ranked against all of the criteria
    • The rating is then multiplied by the criterion’s weight
    • The scores for the criteria are added together for the total score
  • Fund the Strategic Initiatives
    • After scoring and ranking all potential initiatives, the group refers all the initiatives and their scores to a leadership team for final discussion, debate and selection – the final approved list contains the critical few strategic initiatives that will funded to drive performance
    • Normal OPEX budgets (the traditional management control system) focuses on performance and accountability for responsibility centres and functions
    • If funding of strategic initiatives comes from these budgets, the strategy will be put in jeopardy – it will have to compete for resources with departmental operational projects
    • Besides OPEX and CAPEX, a strategic expenses category STRATEX should be created to segregate the resources required to implement initiatives that deliver longer term benefits
      • OPEX funds the day to day operations of the company (salaries, marketing, travel)
      • CAPEX funds tangible assets (plant, property, equipment, systems)
      • STRATEX funds intangible assets (that provide long term organisational capabilities)
    • STRATEX is discretionary funding, guided by either rule of thumb (5% of sales) and is often treated like CAPEX (amortisatised or depreciated asset)
    • A good place to start is to accumulate all the spending on existing initiatives and see what percentage of total spending it represents
  • Linking Strategy to the Budget through STRATEX
    • STRATEX funding is critical for the portfolios of cross-business initiatives
    • It therefore deserves a separate authorised line item in the company budget or financial forecast
    • The separate STRATEX line item allows the company to balance long- and short-term considerations in its financial forecasting and operating processes
    Theme 3 Theme 2 Balanced Scorecard
    • Themes
    • Objectives
    • Measures
    • Targets
    • Accountabilities
    Strategic Initiatives
    • Strategy
    • Strategy map
    Integrated Strategic Plan Rolling Forecast (Budget)
    • $$ %
    • Revenue xx 100%
    • Direct expense (xx) (40)
    • Gross margin xx 60%
    • Indirect expense
    • - Sales (xx) (10)
    • - Prof dev (xx) (5)
    • - G+A (xx) (15)
    • Contribution xx 30%
    • R&D (xx) (5)
    • STRATEX (xx) (5)
    • EBITDA XX 20%
    • ITDA (xx) (5)
    • NET INCOME XX 15%
    Operational Plan / Budget Total Budget $xxx Theme 1 $XX Total Strategic Investment Cost Management
    • OPEX
    Investment Management
    • CAPEX
  • Establishing Initiative Accountability
    • The strategy has been divided into several strategic themes, many crossing functions and business units – they do not fall into the existing responsibility of any senior executive
    • At this stage the strategic themes are still plans – they do not produce results until the required changes are executed at the operational and process levels
    • Companies typically assign 1-2 members of the executive team to be “owners” of each strategic theme, giving these “theme owners” the “night jobs” of overseeing execution in addition to their day jobs as heads of business or functional units
    • Each theme owner leads a “theme team” – a collection of individuals drawn from multiple business, regional, and support units – whose job it is to link the theme’s strategic objectives to operational tasks
    • Theme team members can be dedicated or part-time – they join the team because of their competencies and process expertise.
    • Theme teams do not have authority over functions or businesses – typically they are big thinkers, detailed-orientation coalition builders and hard-charging functional specialists – but they strive to ensure buy-in across the organisation
  • Developing the Strategic Execution Roadmap
    • Once the Strategic initiatives have been selected, work is undertaken to identify the sequence of implementation – the Strategic Execution Roadmap
    • The Strategic Execution Roadmap is an extension of the Strategy map, developed by adding the dimension of time across the themes and determining the linkages and sequence of execution
    • Typically some initiatives will be dependent on other initiatives either competing, or at a minimum delivering some changes to operations or processes – the logical order and sequencing is determined by identifying predecessor and successor linkages
    • Typically the Roadmap would cover 3-5 years, with reviews every 12 months
    • Using the Du Pont case study, the Strategic Initiatives 3 year Roadmap for the Strategic Goal: Maximising Shareholder Value
    New Business Designs Customer Management Product Portfolio Supply-Service Order-Cash Operational Excellence Year 3 Year 2 Year 1 Strategic Themes Minimise operating costs Improve transaction costs Offer lower prices IT Platform to allow growth Develop selling skills Optimise profit by category Consulting & program mgt Develop discipline processes Provide breakthrough value Implement order entry & Execution application Implement application mgt Develop sales model Improve productivity Drive polymer process robustness Achieve extraordinary results
  • Identify and Confirm Strategic Initiatives KPIs
    • The KPIs for Strategic Initiatives should be the same as developed for the strategic goal, as defined in the Strategy Map and Balanced Scorecard
    • Developing goal/metric clarity is critical: consider the differences between the following customer measures:
      • Customer satisfaction : Customers say they got what they wanted
      • Customer insistence: Customers insist on buying only from one source
      • Customer reference: Customers regularly refer a business to their friends
    • Each of these strategic outcome measures can easily translate into an effective initiative project output metric – but each will encourage different behaviour, so how do we choose the right KPI
    • One structured approach is to split the goal into component parts of purpose, issue, object and viewpoint:
      • Purpose: Increase
      • Issue: the rate of
      • Object : customer referrals
      • Viewpoint : from the sales force perspective
    • Next identify the underlying questions relative to the goal. In this instance the question might be: How many sales result from existing customers recommending our company to others?
    • Answering the question points to the appropriate metric such as: Percentage of sales transactions from referrals
  • Translate strategy maps into metrics and projects
    • Translating strategic speak into project parlance and metrics is not easy
    • Critical aspect is choosing metrics that align the proposed project outputs with the desired strategic outcomes
    • An example from South West Airlines
    Executing Your Strategies, Mark Morgan, et al 2007 Objectives Measurement Target Initiative
    • Fast ground turnaround
    • On-ground time
    • On-time departure
    • 30 minutes
    • 90%
    • Cycle time optimisation
    Statement of what strategy must achieve and what’s critical to its success How success in achieving the strategy will be measured and tracked The level of performance or rate of improvement needed Key action initiatives / projects required to achieve objectives Strategic Theme: Operating efficiency Profitability More customers Fewer planes Financial Customer Internal Learning Lowest prices Flight is on time Flight is on time Flight is on time Strategy map: Diagram of the cause-and-effect relationships between strategic objectives
  • Matching Initiatives with Organisational resources
    • Creating and optimising Initiatives resourcing needs to meld two types of information together to allow hard decisions to be made about what is and is not going to get done:
      • Resource needs and timing for the prioritised projects
      • Resource capacity and availability over time
    • Optimisation requires each project or programme manager to provide the following information for each project and programme:
      • Project deliverables
      • Success criteria
      • Priorities amongst scope, schedule and resources
      • High level schedule (Gantt chart)
      • Resources required by skill type and approximate timing
      • Interdependencies with other project and programmes
    • This information should be provided in a standard format template, to ensure it allows for all the relevant information and will allow easier comparisons
    • Small portfolios can use spreadsheets to match resources requirements and availability, large portfolios require more sophisticated tools
    • The process of identifying and optimising organisational resources does not have to be perfect, but it should be refined as more information becomes available
  • Project resourcing schedule example
  • In summary,
    • After the executive team has translated its strategy into a Strategy map and Balanced scorecard, it must lead a process that selects, funds and assigns accountability for theme-based portfolios of Strategic Initiatives
    • Companies use the following process to select and manage their strategic initiative portfolios:
      • Choose the strategic initiatives by identifying, ranking strategic initiatives for each theme
      • Fund the strategic initiatives portfolio by establishing a strategic expenditures budget
      • Establish accountability by selecting theme owners and team to execute the portfolios
      • Develop the Strategic Execution Roadmap, based on Strategy map
      • Develop the KPIs for each Strategic Initiative, aggregated to the Strategic Theme
      • Identified the resources required to optimise execution
  • Session 4 Case Studies
    • CODASciSys – choosing strategic initiatives / projects
    • Goodward Insurance – tuning execution planning
    • Serono – making initiative management a competitive advantage
  • Case Study: CODASciSys – choosing strategic projects
    • CODASciSys are a UK-based IT services provider founded in 1980 and listed on the AIM in 1997
    • In the early 2000’s, the organisation was looking at strategically growing their divisions and possibly acquiring companies to compliment their strengths
    • In 2004, CEO Graham Steinsberg wanted to bring managers together to clarify the vision of that the new entity resulting from a revised strategy would look like and have them then develop the strategic implementation plans
      • CODASciSys executive had developed the draft strategic plan – this was the starting point and the first thing that the wider management team did was develop a list of strategic opportunities
      • From the strategic opportunities identified, a number were chosen that had clear alignment and were easily executable, from these a list of strategic projects were developed linked to strategic themes
      • For each of these themes, a list of projects were developed with clear definitions of tasks, milestones and accountabilities
      • The projects were grouped into portfolios and then able to be fine tuned with metrics and resources
      • All the while managers from across CODASciSys were actively involved in planning much of the detail bottom up. They operated in cross-functional teams , each led by divisional executive
      • The CEO spent a lot of his time clarifying and communicating the vision, goals and outcomes rather than directing the development of the strategic execution
      • From this came a strategic implementation plan that was then successfully implemented following acquisitions in France, Sweden and Germany during 2004/05
    • What can we learn from this?
      • Involving a wider team in the design of the strategy execution plan enables buy-in, clearer outcomes and more pragmatic approach to the scope of projects - As a result of involving management, and build cross-functional teams, the managers began thinking like a team instead of obsessing about whether they would still have a job after an acquisition
      • By refine the plan with input from top performers and key stakeholders, they were able to achieve greater buy-in to the strategy and the subsequent execution phases
    Execute Your Strategy without Killing it, Lauren Keller Johnson, HMU, Dec 2004
  • Case Study: Goodwood Insurance – tuning execution
    • Consider the experience of a leading insurance company with 7,000 employees we will call Goodwood Insurance - a successful company with strong capital reserves, steady revenue and customer growth
    • It’s leadership wanted to further enhance execution to deliver on an ambitious five-year strategic agenda that included aggressive targets in customer growth, revenue increases, and cost reduction which would require a new level of teamwork
    • While there were pockets of cross-collaboration across the company, often there was little incentive to do so: Unit A’s goals might require the involvement of Unit B to succeed, but Unit B’s goals might not include supporting Unit A’s effort
    • The company had initiated a number of enterprise wide strategic projects over the years, which had been completed on time and budget, but often had to be reworked because stakeholders needs hadn’t been sufficiently taken into account
      • To identify the greatest barriers to building a stronger execution culture, Goodwood Insurance gave a diagnostic survey (offered by Booz & Co, www.simulator-orgeffectiveness.com ) to all 7,000 staff
      • Through the survey, Goodwood Insurance uncovered impediments to execution in three of the influential organisational traits: (1) Information did not flow freely across organisational boundaries, (2) Important information about competitive environment did not get to headquarter quickly, (3) No one had a good idea of the decisions and actions for which he/she was responsible
      • Executives immediately responded by launching a change programme that covered all three areas, by integrated early (often symbolic) changes with long-term initiatives in an effort to build momentum and galvanise participation and ownership – solid improvements have been made in cross-unit collaboration (20-25%), employee satisfaction has increased and high performers are reaching across boundaries to gain broader understanding of the full business
    • What can we learn from this?
      • Identifying execution impediments across the organisation, then responding to improve them, by engaging with staff can provide insights and collaborative gains
    The Secrets to Successful Strategy execution, Gary Neilson, et al, HBR June 2008
  • Case Study: Serono – initiative management advantage
    • Serono, a Switzerland based pharmaceutical firm, is the largest biotechnical company in Europe and the third largest in the world. It is a world leader in reproductive health, with strong market positions in neurology, metabolism and growth, treatment of multiple sclerosis and psoriasis.
    • Headquartered in Geneva, Serono employs more than 5,000 people in 45 countries around the world. Since 1999, Serono has had double-digit growth in revenues and income. Annual revenues are three times that of it’s biotechnical peers.
    • In 2007, Serono was acquired by Merck and reincorporated as Merck Serono. Prior to this, through a small office named the Office of MTH (“Make Things Happen”), the new CEO Ernesto Bertarelli was looking for ways to create a more nimble, less bureaucratic organisation
      • Serono has established a strict criteria for launching a new initiative. Each objective and strategic theme must have at least one initiative that will drive the actions designed to achieve strategic performance. Also, all organisational units and functions must participate in at least one strategic initiative.
      • The Executive Committee set priorities among all projects and assigns one of it’s member to sponsor each project approved for funding. The committee also assigns responsibility for each strategic initiative to an executive committee member, who reports monthly on progress and direction of his/her strategic initiative to cross-functional supervisory (steering) committees.
      • Serono uses a sophisticated project management system, called the Corporate Strategic Master Plan (CSMP) which is documented in it’s “Yellow Book”. This online system establishes the procedures for monitoring and managing strategic initiatives and projects. The CSMP is updated daily by project managers.
      • To streamline the approval and supervisory process, projects are also organised into clusters of 15-20 strategic initiatives that the executive committee reviews at least twice a year.
    • What can we learn from this?
      • Previously, Serono’s executives most of their time in the operational details of the business. Today, the top management is absolutely capable of distinguishing strategy from operational management.
      • The focus and commitment that the CEO and executive have given to the creation and management of strategic initiatives has paid off significantly in terms of growth and competitive advantage. They do not know how they could continue to lead the company without the capability Strategic execution has given them.
    The Execution Premium, Robert Kaplan/David Norton, 2008
  • Workshop – alignment through the Balanced Scorecard
    • Workshop Objective:
      • Show how to link a Balanced Scorecard to a Strategic map, show the key elements of the Strategy Map and the Balanced Scorecard, then derive Strategic measures, initiatives and budgets
    • Approach:
      • Show how LowCost Airlines developed their Strategy Map, linked to Balanced Scorecard, linked to Actions Plans
      • Show how WellPoint Dental used their Strategy Map to develop a Balanced Scorecard, which linked to strategic execution by identifying the Initiatives necessary to executive the strategy
  • LowCost Airlines – Strategy Map=>Balanced Scorecard
    • Consider the situation of LowCost Airlines, a generic discount airline with a strategic theme of operational excellence, as illustrated
    • The theme’s financial perspective are net income and return on assets. LowCost has also identified two financial metrics - revenue growth and asset utilization (operating fewer planes) - that drive its high-level financial metrics. If LowCost can increase utilization of its air­planes and flight crews, it can earn higher revenues without having to spend more on these expensive resources.
    • The theme’s customer perspective expresses LowCost’s value proposition to offer passengers both the lowest prices and the most reliable depar­ture and arrival times in the industry. LowCost measures these customer objectives by benchmarking its prices, on-time departures, and arrival performance against industry best practices.
    • The theme’s process perspective is the reduction of ground turnaround time. LowCost uses two measures for this critical process objective: the average time its planes spend on the ground between flights, and the percentage of flights that depart the gate on time. By reducing the time its planes spend on the ground, LowCost enables its planes to depart on time (meeting a key customer ex­pectation) and gets better use of its most expensive resources—airplanes and flight crews.
    • The theme’s learning and growth perspective has an objective to train and mo­tivate ground crews for fast ground turnarounds, much like the training of an Indianapolis 500 race car pit crew, which can change four tires in less than fifteen seconds.
    Balanced Scorecard Measurements Targets
    • Market value
    • Seat revenue
    • Plane lease costs
    • FAA on-time arrival rating
    • Customer ranking
    • Number of repeat customers
    • Number of customers
    • On-ground time
    • On-time departure
    • % ground crew stockholders
    • Strategic awareness
    • Strategic job readiness
    • Information systems availability
    • 30% CAGR **
    • 20% CAGR
    • 5% CAGR
    • #1
    • #1
    • 70%
    • Increase 12& annual
    • 30 minutes
    • 90%
    • 100%
    • 100%
    • Yr 1 – 0%
    • Yr 2 – 90%
    • Yr3 – 100%
    • 100%
    Strategy Map Theme: Operating Excellence Objectives Ground crew alignment Strategic systems Crew scheduling Strategic bob Ramp agent Fast ground turnaround Attract and retain more customers Profits and RONA * * Return on net assets ** Compound annual growth rate Grow revenues Fewer planes On-time service Lowest prices
    • Profitability
    • Grow revenues
    • Fewer planes
    • Flight is on time
    • Lower prices
    • Attract and retain more customers
    • Ground crew aligned with strategy
    • Develop the necessary skills
    • Develop the support system
    • Fast ground turnaround
    Financial Customer Process Learning
  • LowCost Airlines – Balanced Scorecard=>Action Plans Balanced Scorecard Measurements Targets
    • Market value
    • Seat revenue
    • Plane lease costs
    • FAA on-time arrival rating
    • Customer ranking
    • Number of repeat customers
    • Number of customers
    • On-ground time
    • On-time departure
    • % ground crew stockholders
    • Strategic awareness
    • Strategic job readiness
    • Information systems availability
    • 30% CAGR **
    • 20% CAGR
    • 5% CAGR
    • #1
    • #1
    • 70%
    • Increase 12& annual
    • 30 minutes
    • 90%
    • 100%
    • 100%
    • Yr 1 – 0%
    • Yr 2 – 90%
    • Yr3 – 100%
    • 100%
    Strategy Map Theme: Operating Excellence Objectives Ground crew alignment Strategic systems Crew scheduling Strategic bob Ramp agent Fast ground turnaround Attract and retain more customers Profits and RONA * * Return on net assets ** Compound annual growth rate Grow revenues Fewer planes On-time service Lowest prices
    • Profitability
    • Grow revenues
    • Fewer planes
    • Flight is on time
    • Lower prices
    • Attract and retain more customers
    • Ground crew aligned with strategy
    • Develop the necessary skills
    • Develop the support system
    • Fast ground turnaround
    Financial Customer Process Learning Action Plans Initiatives Budget
    • xxx
    • xx
    • xx
    • xx
    • $
    • $
    • $
    • $
  • WellPoint Dental – Strategy Map
    • Owns Blue Cross and/or Blue Shield plans in 14 US states, plus independently branded HealthLink and UNICARE
    • More than 35 million medical members and over 80 million speciality members nationwide with revenues of over $42 billion in 2006
    • Recognised as one of the S&P’s Top 50 Best Performing Stocks during last 5 years (as at 2008)
    • Fortune Magazines Most Admired Health Company five years in a row
  • WellPoint Dental – Types of Strategic Measures
  • WellPoint Dental – Selecting Strategic Measures
  • WellPoint Dental – Selecting Strategic Measures Balanced Scorecard Measurements Targets
    • Op Gain variance to plan
    • Revenue from new markets
    • Admin cost PMPM
    • % of accounts won and retained
    • Time spent with Top 50 accounts
    • % Claims within 30-45-60 days
    • Customer satisfaction
    • % First Call resolution
    • Associate survey scores
    • Associate engagement scores
    • % Associates having development plans
    • % managers with 1x1’s
    • 15% per year
    • 20% revenue mix
    • $15m PMPM
    • 80%
    • 50%
    • 90-95-99%
    • 90%
    • 80%
    • 70% satisfaction
    • 80% engagement
    • 60%
    • 60%
    Strategy Map Theme: Drive Profitability Objectives Associate Tools Great Place To Work Recruit and Retain Best talent Deliver on the Basics Total Benefit Solutions Operating Gain Grow Revenues Reduce cost Of care On-time Payment Easy to do Business with
    • Increase operating gain
    • Grow revenue
    • Reduce cost of care
    • Provide competitive benefits
    • Pay claims on time
    • Hassle-free service
    • Associate satisfaction
    • Associate engagement
    • Alignment of individual goals with strategy
    • Associate tools on the job
    • Exceptional service
    Financial Customer Internal Learning Action Plans Initiatives Budget
    • New products – Dental Blue View and Voluntary
    • Operations revitalisation
    • Customer service excellence
    • Communications programmes
    • Associate and Manager Toolkits
    • Development Plan incentives
    • $6.9 million
    • $500k
    • $200k
    • $200k
    Total Budget $7.8 million
  • WellPoint Dental – Summary
  • End of Day 1
  • Agenda
    • Day 2 – Strategic Execution, managing the initiatives implementation
      • Session 5 – Developing the Strategic Portfolio Implementation Plan
        • Case Studies
      • (BREAK)
      • Session 6 – Strategic Portfolio Project Management (SPPM)
        • Case Studies
      • (LUNCH)
        • Practical Workshop: Developing a Strategic Portfolio Roadmap
      • Session 7 – Strategic Business Change Management
        • Case Studies
      • (BREAK)
      • Session 8 – Wrap up, Bringing Strategic Execution into Final Focus
  • Session 5 Developing the Strategic Portfolio Implementation Plan
  • What is Strategic Portfolio Management?
    • Portfolio Management is a process organizing both projects and programmes into a single portfolio to make sure they are kept aligned with the corporate strategy
    • Strategic portfolio management provides a comprehensive up-to-date view of a company’s entire project portfolio and answer several important questions:
      • Is the portfolio aligned with corporate goals?
      • What is the future demand for resources and what is the capacity?
      • Are the most skilled employees working on the most appropriate projects?
      • Will the portfolio meet its business performance targets?
      • What are the risks and impacts of a delay?
    • Timely answers to these questions are critical in determining which projects to pursue and which ones to fix or cancel.
    • Project registration and enforcing an enterprise-wide decision making process for approving projects is an additional critical area in strategic portfolio management.
    • Strategic portfolio management combines and gives visibility into the financial, strategic and operative aspects across your entire project portfolio to enforce governance, to make fact-based decisions and to maximize return on strategic goals and themes
  • Understanding Strategic Portfolio Management
    • Strategic execution results from executing the right set of strategic projects in the right way
    • It lies at the crossroads of corporate leadership and project portfolio management – the place where the organisation’s purpose, vision and culture translate into performance and results
    • Project portfolio management is always on (whether executives at the top recognise it or not) – everywhere, people must make thousands of small project investment decisions every day
    • Without clear leadership that aligns each activity and every project investment to the strategy, individuals will use other decision rules in choosing what to work on:
      • first in, first out; last in, first out; loudest demand; squeakiest wheel; boss’s whim; best guess; easiest; most politically correct; quickest to promotion; wild guess
    Strategy Portfolio Engagement Programme Project Operations Transition Synthesis
    • Strategic Execution portfolio management
      • Engagement – engage the strategy via the project investment stream
      • Synthesis – monitor and continuously align the project work with strategy
      • Transition – transfer projects crisply into operations to reap the benefits
  • Strategic Execution Implementation - Synthesis
    • We have talked about “doing the right projects” – now we want to focus on “doing those projects right”, which we have labelled in the Strategic Execution Framework as the “Synthesis imperative”
    • This requires continuous two-synthesis and alignment between the planned portfolio of the engagement domain and the actual portfolio of ongoing projects and programmes in various stages of execution
    • The strategic project organisation must monitor both the outside environment and internal activities to make certain that the portfolio remains right and the projects are being done right
    • This session is about the “planning to do strategic projects right” - we will cover the “management of those strategic projects” in the next session
    • It covers the nuances of planning and continuously aligning the set of projects and programme initiatives in the organisation strategic portfolio to it’s evolving strategy, while maintain the necessary impetus and controls within the projects themselves
    Strategy Portfolio Engagement Programme Project Operations Transition Synthesis
  • Developing stronger synthesis
    • Developing project management capability is something that companies need to invest in to be successful, and this investment takes time to develop the experience and capability necessary to manage the execution of strategic initiatives.
    • If strategic execution is blocked by insufficient project management, then we need project management to install project management – often a great place to get outside help
    • Attacking the first three of the following suggested project investments concurrently is the best approach for building a synthesis capability:
      • Project, programme and portfolio process and life cycle methodology
      • Project, programme and portfolio management training
      • Sponsorship training
      • Programme and project forecasting and tracking systems
      • A Portfolio Management Office (PMO)
      • Executive training in how to leverage programme and project management
      • A Portfolio Management Governance Council
      • Leadership development for project, programme and portfolio managers
  • The Portfolio Management Office (PMO)
    • Portfolio project management is a process that brings together the projects and operations sides of the organisation
    • The operations side is represented by the a Portfolio Management Governance Council (Steering Group), the projects side is represented by the PMO
    • The PMO is responsible for oversight and the coordination of all projects:
      • Monitoring project accomplishments against established criteria
      • Reporting to the Governance Council / Steering Group
      • Reviewing the “state of health” of projects - project management, resourcing, scope, etc
    • Although most large organisation will have a PMO and Governance Council, the balance of power and responsibility between the two will vary from one organisation to the next
      • In some organisations, the PMO carries most of the evaluation and decision responsibility, escalating the Governance Council only in critical situations
      • In other organisations, the PMO prepares all the analytical data, but the Governance Council makes all the selection, delay and termination decisions
      • In either case, it is important that both groups recognise that they are not the “owners” of the projects or portfolios – that is the role of clients and/or sponsors
  • Portfolio Management Governance Council
    • One of the impediments of having a PPM process is that most of the key stakeholder senior management have their own business functions to oversee – they are not always motivated to spend their time on PPM activities
    • The CEO and executive officers need to provide the overall leadership of the process – this can be achieved by announcing the PPM process and issuing a Charter declaration.
    • The Portfolio Management Governance Council can be set up at either the executive or senior management level – the PPM charter will spell out the specific responsibilities of the Governance Council
    • The Governance Council should represent all the functions in the organisation, with members normally at executive or senior management level.
    • The Governance Council’s role would be to:
      • Make key decisions that affect the project portfolio
      • Elevate issues and decisions (as required, depending on level)
      • Meet and communicate regularly to select projects and manage the pipeline
  • Strategic Portfolio Project Life Cycle
    • The portfolio project lifecycle consists of the following phased components:
      • Identification of needs and opportunities (strategic alignment)
      • Selection of best combinations of strategic initiatives/projects (identify portfolios)
      • Planning of the initiatives/projects (project planning)
      • Execution and implementation (project execution)
      • Realisation of benefits
    • The expansion of the life cycle and scope to include all five items requires critical involvement and leadership of the executive side of the organisation and the development of a portfolio governance culture, processes and tools
    • The first three steps can be represented as a funnel and selection process to filter initiatives and ideas, group them around themes and phases:
    A Management Framework for Project, Programme and Portfolio Integration, RM Wideman, Trafford Publishing 2004 Ideas, Opportunities, Needs Business Planning Selection Concept Phase Selection Filter Screening Processes Planning and Execution Of Approved Projects Project Management
  • The core elements of Portfolio Project planning
    • Strategic portfolio implementation planning has been derived from the experience, processes and models used originally in IT Projects Portfolio management (which were derived from project / programme management)
    • The core elements of Portfolio Project planning are:
      • Aligning the projects with strategic themes and goals
      • Preparation of project proposals so that they can be evaluated
      • Evaluating project value and benefits
      • Appraising the risks that might modify the benefits
      • Determining the optimal use of resources
      • Ranking projects according to a set of selection criteria
      • Selecting projects for the portfolio
  • Aligning the portfolio of projects with strategy
    • Once the leadership has identified and agreed the mission, goals and themes, the critical next level of detail is the identification of specific projects that will execute the strategy
    • Just because a project supports a strategy does not guarantee that it a pass into the strategic project portfolio – the project will still be competing with other projects/candidates for the limited resources of the organisation
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005 Mission Growth to $5Billion Improved customer satisfaction Increased $ from new products Strategic Goals Mergers & Acquisitions Developing sales channels in Asia Continuous Customer participation In our decisions Building Industry-leading Competence in X Strategic Themes Buy & integrate Y Merge & integrate Z Research & recommend 3 channels Establish 5 customer Involvement centres Fund university Collaborative in X Build sustainable Recruiting programme Project candidates for Portfolio planning
  • Preparation of project proposals for evaluation
    • One of the values of portfolio project management is to prioritise work that brings the most value to the organisation
    • The definition of value will differ in accordance with the organisation focus, strategies, and types of projects
    • Regardless of these differences, a process needs to be established to collect information to compare proposals. The process needs to address:
      • Details about the project, linkage to strategic goal (s) and theme (s), sponsor
      • A statement of projected value and benefits
      • An estimate of the likely total costs to execute
      • An appraisal of risk (in achieving the benefits)
      • An inventory of key resources required and availability
      • Linkages to other projects (dependencies)
      • Timeframe by when the project will need to be delivered
      • Ancillary benefits (non-financial)
    • The PMO would own the project proposal template, updating it periodically (in conjunction with the strategic planning cycle)
    • Updates would reflect current rankings, and the selection criteria to reflect the latest thinking relative to strategic buckets (themes), risk philosophy and financial and resource constraints
  • Evaluating Value and Benefits
    • Assume that the number of potential projects exceeds the number that can be effectively executed in a reasonable time, and within the capabilities of the organisation (scale, cost, resources), then there needs to be a process to prioritise projects
    • The PMO should review all project proposals once completed by Sponsors , rejecting those that are not :
      • In line with available resources, mission or other criteria
      • Sound politically, socially, or for business relationships
      • Economically or technologically feasible
      • Within the risk culture or spectrum of the organisation
    • The process must be structured and conducted by a team in order to eliminate the tendency to evaluate projects by political means, power plays, or emotion
    • One of the primary ranking factors is expected Return on Investment (ROI) or Net Present Value (NPV), however there are qualifiers associated with this process – you cannot evaluate of ROI / NPV alone
    • Other aspects to evaluate include the:
      • Balance between maintenance projects and investment projects
      • Allocation balance of R&D or marketing expenditures or resources
      • Probability of delivering the project on time, within budget, and within the designed scope of work
  • Appraising Risks
    • Risk is a modifier of opportunity – any estimates of the benefits of a project must be adjusted for the consideration of risk – it is also a measure of uncertainty
    • The key is to ensure that the potential risk is fully disclosed and considered, which presumes that there is a proactive culture to address risk, backed up by mandated and audited practices
    • There is always considerable danger that enthusiastic or biased sponsors will hide potential risks or discount the impact of potential risks
    • One way to represent risk in a financial terms is to use best case (potential upside) and worst case (potential downside) in the ROI / NPV:
      • Conduct a formal risk evaluation of the project
      • Identify potential risk events
      • Weigh the probability of the risk event occurrence
      • Estimate the impact of the risk event should it occur
      • Identify possible ways to reduce risk (mitigation)
      • Calculate the cost of mitigation actions and the effect of these actions on the risk impact
      • Incorporate the variables into the project valuation (NPV)
    • Lets use the Titanic as an example: assume the NPV of the investment is $50m, but there is a 10% chance that the ship will hit an iceberg during year 1 and sink – should we modify the NPV to $45m?
    • Or, should we take out insurance at $2m, factor that cost and the loss of income into the NPV – which ever way, we would still have a risked based income NPV model that is substantially below $50m
  • Determining the optimal use of resources
    • If we acknowledge that the availability of resources is a constraint on the number and success of projects in the pipeline, and often the projects have financial benefits, why can't we just increase resources as we need them?
    • There are a number of reasons why resource allocation is not elastic:
      • Resources cost money – they have an impact on cash flow. In well managed organisations, the size of the labour force is dictated by the revenue. Often productivity improvements are part of the key strategic measures
      • Effective and efficient resourcing requires a stable workforce – whilst the best, most experienced or knowledgeable people should be assigned to strategic projects, if they require backfilling, then the time to find, induct and train substitutes does not fit into the project timeline and is not an effective or efficient solution
      • One of key objectives of a balanced portfolio is balance – resource balancing is a key aspect of a balanced project portfolio. It is a two way process – the mix of projects and mix of resources should be optimised to best use the organisations resources on work that is well matched to the available strengths and skills
  • Ranking projects and priorities
    • Project candidates can be rated to determine the degree of impact they have on each of the strategies, using investment analysis
    • The sum of the individual strategy impact ratings provides an overall project strategy value score and priority mix
    • For example - assume an organisation has four strategic goals:
      • Build brand value
      • Invest in core technologies
      • Build organisational effectiveness
      • Revitalize quality
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005 $1,000,000 4 3 0 1 0 0 0 1 Launch internet sales channel 0 1 0 0 9 Revitalise quality? 0 7 9 12 10 TOTAL STRATEGY SCORE 0 0 0 0 100 Is this a compliance project essential to stay open? COMPLI -ANCE 9 3 3 3 3 What is the probability of successful implementation for this project? RISK 9 10 12 15 113 OVERALL PROJECT SCORE NPV STRATEGIC ALIGNMENT PROJECT CANDIDATE 0 3 0 0 0 Build organisation effectiveness? $3,500,000 0 0 Close plant X, transfer production to plant Y 3 0 Implement new product development process +/- 20% $400,000 0 9 Marketing campaign linking products to health $5,000,000 3 9 Develop and launch product line for seniors $100,000 0 1 Installation of plant testing equipment Net present Value of Project to the organisation? Invest in core technology? Build brand value? 9 = Strong alignment and/ or high impact 3 = Moderate alignment and/or impact 1 = Limited alignment and/or impact 0 = No relationship 100 = Compliance project necessary to stay in business
  • Reconciling Project Demand to Capacity
    • Perhaps the greatest risk to an organisations ability to deliver on it’s strategy is committing to more projects than it can possibly deliver
    • When this occurs, critical projects fail later in the execution cycle
    • There needs to be a “gating” process to balance demand vs supply, particularly of capacity (to handle the project) and resources (to make the project happen)
    • The executive balancing act is to either 1) increase the resources for critical projects or 2) reduce the scope of the strategies and timeframes
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005 Mission Goal Goal Goal Goal Stay in business Themes Themes Themes Themes Themes Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7 Project 8 Project 9 Project n C R I T E R I A Opportunity Evaluation Process Resource Capacity Pipe “ Portfolio of Projects” Project 2 Project 3 Project 6 Project 8 Project 9 Project n
  • Linking strategic execution to the business plans
    • The project portfolio represents part of the tactical planning that is implemented to support the strategic plan
    • Those projects have a significant impact on the financial condition of the organisation – we introduced STRATEX earlier, but linking project resourcing into business plans is critical
    • Most projects incur costs during their execution and generate revenue (or reduce costs) on completion (or during execution, in case of progress payments) – projects have an impact on the cash flow and projection of financial condition
    • Regulatory reporting requires representation of a current and true picture of the asset value of projects
    • Traditionally, project reporting focused on costs (ignore other financial items such as revenue and cash flow)
    • Today, project reporting has to integrate with the financial function to update revenue and cash flow data based on project status and performance
    • Decisions on the make up of the project portfolio should take into consideration not only projects at hand, but also prospective projects
  • Managing the strategic portfolio in a changing world
    • Even though a portfolio of projects can be agreed and resources committed, there are internal and external forces (ie market, competitor, regulatory, cash flow) that can change the success and outcome of the project initiatives
    • The “in-flight” portfolio of projects needs to be continually monitored to ensure that the strategic benefits outcomes are achieved, and the priorities are aligned to the current state
    • There are a number of techniques to monitor in-flight projects:
      • Earned Value Analysis – monitor “earned value” against cost to complete
      • Stage-Gate Process – phase or chunking the project down into smaller delivery parts
      • Bounding-Box Approach - fixing critical parameters or boundaries using delivery dates, cash flows, performance metrics
    • Often, projects have a high degree of uncertainty – such as high and complex risk, interdependencies and linkages between phases, etc – which require the management of these projects to be more dynamic
    • The Project/Portfolio Management Office role is designed to monitor, coordinate and report on projects that are not conforming to the original proposition/business case, and to recommend realignment of the portfolio on a regular basis
  • In summary,
    • Strategic execution results from executing the right set of strategic projects, in the right way
    • Developing project management capability is something that companies need to invest in to be successful
    • Portfolio project management is a process that brings together the projects and operations sides of the organisation
    • The operations side is represented by the a Portfolio Management Governance Council (Steering Group), the projects side is represented by the PMO
    • The core elements of Strategic Portfolio Project planning are:
      • Aligning the projects with strategic themes and goals
      • Preparation of project proposals so that they can be evaluated
      • Evaluating project value and benefits
      • Appraising the risks that might modify the benefits
      • Determining the optimal use of resources
      • Ranking projects according to a set of selection criteria
      • Selecting projects for the portfolio
    • The “in-flight” portfolio of projects needs to be continually monitored to ensure that the strategic benefits outcomes are achieved, and the priorities are aligned to the current state
  • Session 5 Case Studies
    • Hewlett-Packard – Launch the right programmes
    • Royal Canadian Mounted Police – Coordinating diversity
  • Case Study: HP – Launch the right programmes
    • HP merged with Compaq in May 2002. A tremendous amount of planning and execution had gone into making the merger a success.
    • The merger planning required a rigorous degree of programme management and project management discipline – much of this was as the result of a solid base of project management planning, an effective PMO and launching the right programmes to meet the goals of the merger
      • Prior to the merger and the establishment of the PMO, HP had a number of problems common to many organisations:
        • No common level executive-level programme/project status reporting
        • No master plan of HP programmes for customers
        • Some projects with no real project plans or task lists
        • Projects started and stopped, delayed or successful for no apparent reason
        • Different and inconsistent project methodologies
        • Project plans not in same format and not on one database
        • Actual project costs difficult to assess
      • One of the key challenges for executive was selecting and launching the right programmes – those aligned to strategy vs those required tactically to keep HP running – in the right sequence and using resources in a way that allowed them to optimise the ROI.
      • The PMO developed a model to determine the right programmes to launch by evaluating business value against risk.
    100 50 High Value High Risk Postpone Shift Right 100 50 0 High Value Business Value Ability to execute successfully Low Value High Risk Low Risk High Value Low Risk Good to GO Low Value High Risk Rethink Low Value Low Risk Retarget Shift Up   ? ?
    • What can we learn from this?
      • By preventing low value / high risk projects from ever being launched, more resources were able to be focused on ensuring the success of the highest value projects
      • Provides a standard method, evaluation criteria and tools to rank and evaluate the portfolio
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005
  • Case Study: RCMP – Coordinating diversity
    • The Royal Canadian Mounted Police (RCMP) has 23,000 employees and a C$3.3 billion annual budget.
    • The RCMP operates at four levels – international; national; provincial/territorial; and local (over 200 municipalities, hundreds of rural communities, including 566 aboriginal communities).
    • In 2000, the RCMP faced several challenges – there were budgetary constraints and it’s resources were still not adequate for the policing environment of the 21 st century
    • A new RCMP commissioner, Guilano (Zack) Zaccardelli, felt passionately about improving management; he had a vision that the RCMP could become a strategically focused and execution based organisation of excellence – but he needed it to encompass and align all of the RCMP change activities
      • A senior level project team at the RCMP launched a process to translate the mission (“safe homes, safe communities”) into something operational that could be understood by the highly motivated, but also very tactical police officers throughout Canada
      • The heart of the strategy was contained in five overarching strategic themes aligned to strategic goals:
        • Reduce the threat and impact of organised crime;
        • Reduce the threat of terrorist activity in Canada and abroad;
        • Reduce and prevent youth involvement in crime, both as offenders and as victims;
        • Effectively support international operations;
        • Contribute to safer, healthier aboriginal operations
      • Each theme was assigned a senior RCMP executive owner, who organised the development of initiatives to implement the themes against the strategic goals with local and national manager input. They were also responsible for reviewing the progress against the plans and roadmaps for each theme
      • Once the strategy maps and scorecards were developed (at both the corporate and divisional level), the divisional units selected up to 10 initiatives for implementation
      • From this, under the governance of a centralised PMO and the Executive leadership team, initiatives were scoped and resourced for implementation, many were aggregated into organisational projects & programmes
    • What can we learn from this?
      • Because no single organisation unit had complete ownership, responsibility or accountability for any of the themes, the process promoted cooperation and integration among previously independent local, provincial and national policing units – this allowed them to share lessons, develop joint initiatives and run them collectively under portfolios across the entire RCMP
    How to implement a new strategy without disrupting your organisation, Robert Kaplan, HBR, March 2006
  • Session 6 Execution using Strategic Portfolio Project Management (SPPM)
  • Overview of SPPM
    • In the previous session, we introduced the key elements of the Strategic Portfolio Project Implementation Plan, now we want to discuss the execution and management of those projects using SPPM
    • SPPM is a term used to describe methods for collectively managing a group of current or proposed projects based on numerous key characteristics
    • The key challenge to implementing an effective SPPM process is typically securing the mandate to do so. Many organizations are culturally inured to an informal method of making project investment decisions
    • The key aspects of SPPM that we will cover are:
      • Defining the tools for SPPM
      • Selecting the right projects
      • Size of the pipeline
      • Managing the pipeline
      • Stage - Gate and Bound Box process
      • Projects with high degree of uncertainty
    • In addition, we will cover:
      • Scope & Demand management
      • Cost & Budget management
  • SPPM – Defining the Tools
    • SPPM is a set of processes, supported by people and tools – the tool set includes software that helps us automate specific SPPM processes
    • Tools are being offered in many varieties and from various vendors, who focus on different needs.
    • Among the traditional offerings are tools covering the full gambit of project management, risk management, enterprise resource planning, critical path scheduling, structured objectives planning, etc
    • In addition to the traditional offerings, PPM software also includes:
      • A repository for proposed and active projects
      • Guidelines for presenting project proposals for ranking and selection
      • Project selection criteria
      • Decision engines to develop weight factors for selection criteria
      • A repository for financial and resource allocation data
      • Tools to support project prioritisation and ranking
      • What-if capabilities to explore alternatives
      • Risk evaluation and issue management
    • Examples of integrated tool sets vendors:
      • Deltek, PlanView, Primavera, Sciforma, Oracle, SAP, PeopleSoft, Microsoft, Niku, Prosight, UMT, Expert Choice
  • SPPM – Size of the pipeline
    • Question: How much project work is enough? How much is too much?
    • Proceeding on the basis that projects generate value and benefits, then surely the more projects we have in the pipeline the better off we will be!
    • Some organisations work on that basis, soon finding that the demand for projects exceeds the capacity to execute them all – we all have a story about project deliverables being significantly delayed because the pipeline is overloaded
    • Fewer projects actually cause less friction and over time add more value to the bottom line – committed resources are staying on the job, rather than start / stop and income / benefits start earlier – everyone is happier
    • Often organisation’s partition their pipeline into sub-categories by:
      • strategic theme or goal
      • mandatory or strategic or optional
      • resource availability (ie so much $ value or number of people hours)
    • Partitioning the pipeline into too many categories can also be constraining
    • Keep the pipeline healthy and moving, limiting the amount of work in the pipeline so that projects can be completed as quickly as possible
  • SPPM – Managing the pipeline
    • During the project selection process, we match the assumptions about the project with the assumptions about the business needs and opportunities
    • Once projects are in the pipeline, we update both sets of assumptions:
      • For projects, we periodically measure project status and performance
      • On the business side, we periodically validate or adjust strategies and the assumptions about value, risk, budgets, opportunity and need
    • Popular and proven techniques that are available to support proactive management of the pipeline are:
      • Earned Value Analysis
      • The Stage-Gate process
      • In addition, the Bounding Box approach can be used
    • Key questions used to help manage the pipeline:
      • Is the project still aligned with the strategies?
      • What is the current probability that the project will be successful – technically and commercially?
      • How is the project performing against the target criteria?
      • What are the performance trends? Improving or worsening?
      • Does the project still represent effective use of the organisation’s resources?
  • SPPM – Earned Value Analysis
    • How can we tell if a project is proceeding according to plan?
    • If we use Critical Path scheduling, diminishing float or slack is an indication of schedule slippage – but it doesn’t always reveal how badly the entire scope of work is falling behind or how the actual costs against the amount of work that has been accomplished
    • Earned Value Analysis provides a powerful way to show whether project work completed matches the planned schedule of accomplishment
      • Percent complete so far (%C)
      • Budget at completion (BAC)
      • Budget cost of work completed (BCWP)
      • Budgeted cost of work scheduled (BCWS)
      • Schedule variance (SV)
    • By multiplying the %C times the BAC, we can compute the budgeted BCWP (earned value), which we can compare to the value of the work that we had planned to accomplish (BCWS), so we can see the SV at any time -examples:
      • If we had planned to do 50% of the work item, and accomplished only 20%, then we are behind (by 60%) at that point
      • If we had actually spent 30% of the budget to accomplish 20% of the defined work, then we are overspent by 50% at that point
    • EVA can be quite daunting to many, and as a result is not often used
  • SPPM – Stage - Gate process
    • The Stage-Gate concept was primarily developed to enhance the efforts involved in new product development
    • A new product project consists of a series of steps starting with product conception and leading to product delivery/launch, with each step grouped into phases, each phase having a number of activities and milestones
    • It is a natural practice to apply to PPM – each PPM phase (called a stage) is separated by a decision point (called a gate)
    • Conditions for passing through a gate are defined – at the end of every phase a cross-functional team evaluates the status against the pass/no-pass conditions
    • Active projects in the pipeline can be subject to Stage-Gate controls, with the PMO reviewing each project at each gate and making a recommendation to the Governance Council
    • Funding may be cut off, or a project put on hold, if that project’s performance is not supporting the original plan or is not using resources optimally
    • Stage-Gate techniques need not be limited to new product development projects, it can be applied to any project that has identifiable phases
  • SPPM – Bounding box approach
    • What if the project doesn’t fit well into a phase mode? Perhaps there are overlaps between basic phases
    • In this case, we can use the Bounding box approach instead – this process calls for a setting selected critical parameters (boundaries)
    • The governance council approves a set of targets or limits, such as delivery date, cash flow, projected returns and performance metrics
    • As long as the project stays within the boundaries, the project team will control most of the action and decisions
    • A time boxed project requires that the key deliverables are competed by a certain date, a cost boxed project requires that the key deliverables are completed within a certain budget – in each of these the project team can then play with the other project variables to achieve the outcome
      • Time Boxed projects – variables that can be adjusted are: scope, resource, cost
      • Cost boxed projects – variables that can be adjusted are: time, scope, resource
    • Scope boxed projects are rarely invoked, mainly because that is what is typically implied anyway in the project plan – that the defined scope will be delivered – but this also needs to be looked at as an option
  • SPPM – Managing projects with high uncertainty
    • Uncertainty comes about as a result of not knowing all the dynamics that affect the project through it’s execution
    • Projects with high degrees of uncertainty present two distinct challenges for SPPM outcomes:
      • A high and complex risk condition, that needs to be mitigated
      • The setting of performance targets and metrics, where what is learned from each phase defines the succeeding phase
    • Stage – Gating works well for projects with uncertainty – it allows the project to pass certain criteria before it can progress onwards though a gate. If it fails it can be terminated or revised
  • SPPM – Scope and Demand management
    • One of the biggest challenges for a project (manager) is scope definition and scope creep – typically the scope keeps expanding as more detail is uncovered or the business requirements unfold/change
    • Often the initial scope can be defined in abroad sense by linking to strategic outcomes, or as signed off in the business case.
    • What then happens is that during the execution additional demand is created putting pressure on the scope – which in turns affects cost, duration and risk
    • Scope creep is fine as long as it delivers business benefit and is transparently reconciled with competing resource requirements in the organisation
    • It is better to operate on the premise of “meeting truly important deliverables and getting projects done” than “continually delaying delivery to achieve a more perfect product”
    • Scope and demand management can be effectively implemented by:
      • Discussing project status at each governance council/steering meeting
      • The oversight governing body should monitor and question if scope changes are necessary, knowing that ant delays will affect resource allocation to all projects
      • Consistently apply the SPPM process to new work as you would to a new project
      • Know when something is good enough – learn to say no!
  • SPPM – Cost and Budget management
    • Setting the initial project budget is achieved by estimating the total cost, the risk (and whether contingency is required) and resource availability (in case additional resources are required)
    • This is typically done during the proposal and business case phase, as an input into the process of evaluating candidate projects for the pipe-line
    • Once the project is approved, then the tools for managing the project in the pipeline (such as Earned Value Analysis) will determine whether the budget is sufficient for the delivery of the benefits
    • If there are cost variances identified, then decisions will need to be made about what to do with any potential cost under or over run, options include:
      • Consider terminating the project prior to completion
      • Changing the priority of the project
      • Reallocating resources to other work
    • The PMO should monitor these cost and resources on a regular basis, making recommendations regarding rescheduling or terminating projects with deteriorating cost performance
    • Overall, it is the aggregated cost performance of the portfolio that should be looked at first, then at each individual project – that is to ensure that decisions on individual projects that are critical to strategic outcomes are not made in isolation
  • SPPM – is there a Gorilla in your portfolio?
    • Gorillas are products that dominate the market, placing the company in an extraordinary powerful position – companies with gorilla products can experience 30-40% growth per quarter!
    • The gorilla project, if it is to be successful, requires every possible advantage that can come from superior project management diligence. Key aspects to monitor:
      • Planning – the planning should be dynamic, as the gorilla project will often be based on leading edge technology, so as the project moves along it may deviate from the initial preferred path and we should be ready to select alternative plans, performing what-if evaluations quickly
      • Timing – for the gorilla project, speed is of the essence – the second firm to offer the product does not become the gorilla! The project plan should consider every possible way to shorten the time-to-market cycle. The plan must be carefully monitored and pressure must be maintained to prevent loss of critical time
      • Decision points – the gorilla project has a finite time window. This overall time window must be broken down into smaller units, marking key decision points (milestones) along the way – the plan must identify these decision points. The project team must be continually aware of the upcoming decisions points and be prepared to make the decisions to keep the project on track
      • Risk – considerable risk is a normal component of a gorilla project and this needs tight management. To do so, the potential risks must be first identified, then quantified as to probability and consequence of occurrence, and a mitigation plan prepared and monitored.
  • SPPM – Securing the Support & Participation
    • Because of the pressures to do more with less, obtaining senior executive and management buy-in to a structured SPPM process is essential to create awareness, provide support, build consensus as to organisational goals and motivate stakeholders at all levels to participate
    • Getting support from senior executive enables:
      • Focus on business objectives from the beginning
      • Early application of the SPPM framework to critical business needs
      • Establishment of communications forums
    • There are several ways to validate that level of support but the key is to have the top executive authenticate all of the key role modifications
      • the roles and responsibilities should be public and be officially recognised
      • the people affected can receive a letter from the CEO acknowledging the importance of their role in the new SPPM process
      • Kick the process off with a bang, even if it is just a pilot – let people know this is big
      • Make it clear to everyone that “SPPM is a way of life in the organisation and that support for SPPM is a critical to the organisation’s success”
    • Don’t be afraid to secure help – both internally and from the outside
  • In summary,
    • SPPM is a set of processes, supported by people and tools – the tool set includes software that helps us automate specific SPPM processes
    • Stage-Gate is a natural practice to apply to SPPM – each SPPM phase (called a stage) is separated by a decision point (called a gate)
    • Costs can be managed by looking first at the aggregated cost performance of the portfolio, then at each individual project
    • The gorilla project, if it is to be successful, requires every possible advantage that can come from superior project management diligence
    • Keep the pipeline healthy and moving, limiting the amount of work in the pipeline so that projects can be completed as quickly as possible
    • Implementing a SPPM capability, the organisation must:
      • Develop a PPM process
      • Establish a Governance team and PMO
      • Acquire PPM and other project management support tools
      • Integrate the PPM process and tools with other project management process and tools
    • Instead of deploying a new SPPM system across the board all at once, try it out with a pilot programme – make sure you have executive support and the people involved are adventurous supporters
  • Session 6 Case Studies
    • America Online – developing a SPPM capability
    • AT&T Wireless - the importance of proper prioritisation
  • Case Study: AOL – developing SPPM capability
    • America Online (AOL), a wholly owned subsidiary of Time Warner Inc, based in Dulles, Virginia, is the world’s leader in interactive services, Web brands, Internet technologies and e-commerce services
    • Having grown rapidly during the 1990s, the AOL executive team recognised the need to enhance and formalise many of its project based processes in order to sustain success and growth
    • AOL wanted to build capability and ensure 1) the project portfolio was aligned with AOL strategy and objectives, 2) the selection of high-business-value projects, 3) achieve and maintain the right mix and balance of projects, 4) promote greater accountability via fast and binding decision making
      • In early 2002, AOL formed a team led by John Sammarco, director of portfolio management, to define and develop portfolio management capability – from this a set of guiding principles for AOL’s SPPM capability were agreed and the methodology developed through late 2002 and into 2003, using outside help
      • In late 2003, with the methodologies, training and support tools in place, AOL set up seven portfolio management teams (PMT), each centred on a line of business
      • Although there was desire to adopt the new process and tools rapidly, AOL resisted the urge to rush the implementation in favour of gradual assimilation – this meant introducing these concepts and approaches gradually, getting quick wins and building momentum
      • AOL introduced new scoring model based on a weighted hierarchy of objectives and measures – expanding decision making criteria beyond revenues and earnings, aggregating and synthesising quantitative data with qualitative judgments in real time and in group settings
      • AOL now has seven PMTs – five centred on major lines of business and two on service units (technology and corporate support) – with each at various stages in their implementation. The seven teams are officially tied together at the top of AOL by the Investment Review Board (IRB) consisting of CEO and senior executives
    • What can we learn from this?
      • With the new SPPM method and solution, the PMT was able to meet aggressive time lines for developing a cross-prioritised project list in time for the 2004 planning cycle
      • More importantly, the team were able to cut 80,000 hours (40 FTE) of demand from an initial portfolio of 200,000 hours that were request from the business executives
      • The SPPM capability is helping AOL align it’s portfolio to strategy and return the company to growth
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005
  • Case Study: AT&T – the importance of prioritisation
    • AT&T is the largest communications in the world by revenue - i n 1876, Alexander Graham Bell invented the telephone and that was the foundation of the company that became AT&T – AT&T Wireless is a division
    • In early 2003, AT&T Wireless launched a major software upgrade to it’s CRM system to comply with an FAA mandate, specifying US mobile phone carriers had to allow customers to change provider without changing phone number, with a 24 Nov 2003 deadline:
      • The ATT Wireless project, prophetically code-named Odyssey, started out looking like a relatively standard system upgrade, however the number and complexity of legacy systems created hundreds of linkages and dependencies that needed to be coordinated
      • This caused delays and as the deadline approached, IT workers struggled to make the system work – they relaxed the requirements to freeze code during testing which compounded the number of interface errors and the project spun out of control
      • In early November, the system crashed so badly, some team members proposed going back to the earlier version until the upgraded was stabilised
      • As if the technical challenges were not daunting enough, AT&T Wireless executives exacerbated the situation by issuing some ill-timed public pronouncements about their intention to outsource part of the companies internal IT workforce – eight days before go live, a senior exec told industry analysts that the company would lay off almost 2000 workers
      • The pronouncements had a devastating impact on team morale and productivity – one again the managements failure to “understand” and support the project team undermined execution of a mandatory, and therefore mission critical, initiative
      • The team was till struggling to get it up when on 24 November customers began trying to port their numbers between carriers, that is when the software for handling number portability crashed – it is estimated top have cost AT&T Wireless $100m of revenue before customer service began approaching minimally acceptable customer service in 1Q 2004
    • What can we learn from this?
      • The failure to prioritise the Odyssey programme as mission critical, ahead of all other projects, was the biggest single mistake made by AT&T Wireless executive. By mixing up other requirements (ie to upgrade to the CRM Siebel system) at the same time as those mandated by the FAA, caused the largest contributing factor
    AT&T Wireless Self-destructs, Christopher Koch, CIO Magazine, April 2004
  • Practical Workshop – Strategic Portfolio Roadmap
    • Workshop Objective:
      • Learn how to design and detail a strategic portfolio roadmap, covering multi-year timeframes, laying out the initiatives against Strategic Goals, showing inter-dependencies, rankings, milestones and strategic outcomes/benefits.
    • Approach:
      • Using the example of a Strategic Product Portfolio Roadmap, we will show how the roadmap is defined, created and managed.
      • This examples follows very closely the approach to Strategic Portfolio Roadmap creation, but used in a very tangible example of innovation and product development.
  • Strategic Product Portfolio Resourcing
    • The strategic product portfolio roadmap is a strategically driven resource allocation method – portfolio management and resource allocation can be treated as a hierarchical process, with two levels of decision making:
      • Level 1: Strategic portfolio decisions (alignment to strategies)
      • Level 2: Tactical portfolio decisions (individual project selection)
    Product leadership: Pathways to Profitable Innovation, R.G. Cooper, Perseus Books 2005 Business Strategy and Product Innovation Strategy
    • Resource Commitment to NPD
    • The Strategic Role of Your Business
    • Strategy, Goals and Task Approach
    • Competitive Parity
    • Spending Level Based on Demand
    • from Active Projects
    1. Strategic Portfolio Decisions: Strategic buckets and strategic product road map Resource Commitments to new product development
    • Portfolio Review:
    • Holistic
    • All projects in auction:
      • Right priorities?
      • Right mix?
      • Alignment?
    • By senior management
    • Stage-Gate Process:
    • Individual projects
    • In-depth evaluation
    • Quality data available
    • By senior management
    • Go/Kill decisions
    • Resources allocated
    2. Tactical Portfolio Decisions: Project selection (go/kill), prioritisation, and resource allocation
  • Strategic Roadmaps
    • The strategic road map is a useful tool that helps senior management ensure that the capabilities to achieve their objective are in place when needed
    • There are typically two types of detailed road maps: the product road map and the technology roadmap
    • A strategic roadmap defines the organisation's major new initiatives along a time line, establishes place marks for these major initiatives, and tentatively commits or reserves resources
  • Strategic Product Portfolio Roadmap example
    • An example of an equipment manufacturer below shows not only the major product innovations and their timing, but it also defines platforms and platform extensions needed to develop these new products on a Strategic Product Portfolio Roadmap
    Months 0 12 24 36 48 60 Original Agitator Platform - Extension Chemical Mixers: Basic Line Chemical Mixers: Speciality Impellers Chemical Mixers: Speciality Impellers Plan extensions and new platforms Extensions into Chemical Mixers Platform Extension Petroleum Blenders: Low Power Range Petroleum Blenders: High Power Range Extensions into Petroleum Blenders Aerator Platform P&P Aerators: Line 1 (fixed mount) P&P Aerators: Line 2 (floating) P&P Aerators: High-Power New Platform: Aerators (for P&P Industry) Platform Extension Chemical Aerators: Line 1 Chemical Aerators: Line 2 Platform Extension: Aerators for Chemical Waste Timeline The Power of Platforms, MH Meyer & AP Lehnerd, Free Press, 1997
  • Strategic Buckets
    • When translating the business’s strategy into strategic portfolio decisions, a major challenge is spending breakdown or deployment – where does the senior management team wish to spend its resources to implement the strategy:
      • on what types of initiatives and in what areas?
      • how much should be spent on each strategic theme or initiative?
    • The strategic bucket model operates from the simple principle that implementing strategy equates to committing resource to specific projects
    • The process requires senior management to make forced choices along each of several dimensions – this enables envelopes of resources ($ and people), or ”buckets” to be created
    • Existing projects are categorised into these buckets, then senior management determine whether the actual spending is consistent with desired spending for each bucket
    • For example, at Honeywell a simple breakdown is used (called the Mercedes Benz star method) for allocating resources into 3 categories:
      • Platform development projects, which promises to yield major breakthroughs and new technology platforms (new innovations, technology, etc)
      • New product development (from the existing platforms or research pool)
      • Others, which includes modifications, improvements and cost reductions (to existing)
  • Strategic Buckets examples
    • Here is an example of the Strategic Buckets using the Mercedes Benz star method to determine dimensions (ie categories) and allocation to each
    • Common dimensions used to determine the buckets are:
      • Strategic goals or themes (by individual goals or themes)
      • Business categories (by strategic , operational, mandatory)
      • Structural or across different jurisdictions (by business line or country)
      • Product lines or market segments (by product or segment life cycles)
      • Familiarity to the business (by market newness versus technology newness)
      • Technology cycles or types (by base, key, pacing, embryonic)
      • Stage or phase of development (by early stage versus development, and beyond)
    The business strategy dictates the split of resources into buckets; projects are rank ordered within buckets, but using different criteria for each bucket
  • Familiarity Matrix Bubble Diagrams
    • Familiarity Matrix Bubble Diagram – resources split across market and technology newness categories
    • Projects are shown as bubbles, with each bubble size denoting the resources being spent on each project
    Base Technology New But Familiar Technology New But Unfamiliar Technology Base Markets New But Familiar New But Unfamiliar Technology Newness to the Business Market Newness A B D C E B C C C C C C C C Project Portfolio Management, Harvey Levine, Posey-Bass, 2005
  • Determining sequence and timelines
    • The method used by organisations to determine the sequence or order of execution is difficult to state as a simple methodology or process - it varies according to the:
      • Complexity of the strategic portfolio
      • Inter-dependencies within the portfolio
      • Linkages between strategic goals and themes
      • Stage-gate process being used for portfolio and project management
      • Organisational maturity and capability
      • Resource or knowledge constraints
      • Time dependence or mandates
    • The key determination is that each project delivers a completed set of outcomes and deliverables - if these outcomes or deliverables are prerequisites for the next project, then they have dependencies with each other
    • Dependency management is a fundamental element of project management scheduling (Gantt charting and critical path management)
    • One tried and tested method is to keep each project as short as possible, by splitting a larger outcome into smaller chunks – this reduces risk and helps manage interdependencies (ie another initiative is dependent only some early deliverables of the dependant initiative)
  • Example – let’s develop a Strategic Roadmap
    • Existing Programme A, comprising of projects – duration remaining :
      • Project Ea – complete in 6 months time
      • Project Eb – complete in 2 months time
    • Strategic Theme A, comprised of the following strategic initiatives - duration:
      • Project Aa - 12 months (dependant on Ea)
      • Project Ab - 18 months (dependant on Ea))
      • Project Ac - 6 months (dependant on Eb)
      • Project Ad - 12 months (dependant on Ab)
    • Strategic Theme B, comprised of the following strategic initiatives – duration:
      • Project Ba - 6 months (can start now)
      • Project Bb - 12 months (dependant on Ab for it’s deliverables in the first 6 months)
      • Project Bc - 12 months (dependant on Bb)
      • Project Bd - 6 months (dependant on Bc)
    • Strategic Theme C, comprised of the following strategic initiatives – duration:
      • Project Ca - 9 months (dependant on Bb)
      • Project Cb - 6 months (dependant on Ca)
      • Project Cc - 12 months (dependant on Ca and Bd)
      • Project Cd - 6 months (can be done at any time, the sooner the better!)
    • So, what does the Strategic Roadmap look like???
  • Example – develop a Strategic Roadmap Existing Projects E Strategic Theme A Strategic Theme B Strategic Theme C 2Q 3Q 4Q 1Q Future Year 3 1Q Future year 1 2Q 3Q 4Q 1Q Future Year 2 2Q 3Q 4Q 4Q 3Q 2Q 1Q This year
  • Example – develop a Strategic Roadmap Existing Projects E Strategic Theme A Strategic Theme B Strategic Theme C Ea Eb Aa Ab1 Ab2 Ac Ad Ba Bb Bc Bd Ca Cb Cc Cd 2Q 3Q 4Q 1Q Future Year 3 1Q Future year 1 2Q 3Q 4Q 1Q Future Year 2 2Q 3Q 4Q 4Q 3Q 2Q 1Q This year
  • Session 7 Strategic Business Change Management
  • Overview of Strategic Business Change Management
    • It is not enough to merely prescribe "the  change"  and expect it to happen - creating change within an organization takes hard work and structure around what must actually take place to make the  change  happen.
    • To begin, lets look at the formal definitions of project management and change management - two key distinct, but intertwined disciplines, that are required to bring strategic change to life
    • Both project management and change management support moving an organization from a current state (how things are done today), through a transition state to a future state (the new processes, systems, organization structures or job roles defined by "the  change" )
    Defining Change Management, Tim Creasey, Prosci, Jan 2007 Project management is the application of knowledge, skills, tools and techniques to  project activities  to meet project requirements. Project management is accomplished through the application and integration of the project management processes of initiating, planning, executing, monitoring and controlling, and closing. Change management is the process, tools and techniques to manage the  people side  of change to achieve the required business outcome. Change management incorporates the organizational tools that can be utilized to help individuals make successful personal transitions resulting in the adoption and realization of change Change Management Project Management
  • ADKAR
    • ADKAR is a goal-oriented change management model that allows change management teams to focus their activities on specific business results
    • By identifying the required outcomes or goals of change management, ADKAR becomes a useful framework for change management teams in the planning and execution of their work
    • The business dimension of change includes the typical project elements: 
      • Business need or opportunity is identified
      • Project is defined (scope and objectives)
      • Business solution is designed (new processes, systems and organizational structure)
      • New processes and systems are developed
      • Solution is implemented into the organization
    • Effective management of the people dimension of change requires managing five key goals that form the basis of the ADKAR model:
      • Awareness  of the need to change
      • Desire  to participate and support the change
      • Knowledge  of how to change (and what the change looks like)
      • Ability  to implement the change on a day-to-day basis
      • Reinforcement  to keep the change in place
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Change Management - Awareness
    • The first step to enable change is to create awareness of the need for change
    • The following factors influence the process of building awareness within the individuals during a change:
      • Acceptance of awareness messages is greatly influence by the persons view of the current state. Those strongly invested in the current state may discredit or deny the reasons for the change
      • An individuals cognitive style impacts how they perceive the need for change and how they solve problems; some may already see the need for change, where as others may be caught off-guard
      • The credibility of the sender of awareness messages and organisations history with change will weigh heavily on whether or not the awareness message is believed and accepted
      • The presence of misinformation or propaganda in the background conversation can stall efforts to create awareness of the need for change; in some cases, overcoming misinformation presents a major barrier for change
      • Awareness of the need for change is easier to create in the presence of external and observable drivers. Changes driven by internal drivers or by reasons that are debateable face greater challenges to building awareness
    • Awareness establishes the groundwork upon which individuals can make personal choices about change
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Change Management - Desire
    • Desire is the second step to manage change and represents the motivation and ultimate choice to support and participate in change
    • Our desire to support and participate in a change is based on a number of considerations:
      • The nature of the change and what’s in it for us as individuals
      • How we perceive the organisation and the surroundings that are undergoing change
      • Our personal situation
      • What motivates us as people, including our expectation that we could be successful and realise the change
    • A combination of these factors will ultimately contribute to the behaviours we express when confronted with change
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Change Management - Knowledge
    • Knowledge is the third element and is an essential outcome for a change to be realised, both for the individual and for the organisation as a whole
    • Knowledge includes:
      • Training and education on the skills and behaviours needed to change
      • Detailed information on how to use new systems, processes and tools
      • Understanding of the new roles and responsibilities
    • A combination of factors ultimately determines the degree to which individuals can acquire the necessary knowledge of how to change:
      • Our current knowledge level
      • Our capacity to learn
      • The availability of resources
      • The access to needed information
    • Understanding how to change can be a simple process in some cases and a transformation others
    • Knowing how to do something and be able to do something is not necessarily the same thing
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Change Management - Ability
    • Ability to change is the fourth element and represents the demonstrated capability to implement the change and achieve the desired performance level
    • Developing abilities related to new process, tools and job roles will vary from employee to employee – some will fall naturally into the new way of work, others may struggle
    • Ability is not equivalent to knowledge and is not an automatic outcome of training – knowing how to do something and being able to do something are not necessarily the same thing
    • Several tactics can be used to develop the abilities of employees in a changing environment:
      • Day-to-day involvement of supervisors/team leaders – to establish coaching relationships
      • Access to subject matter experts – to close knowledge gaps, have one-on-one demos
      • Performance monitoring – to demonstrate that progress is being made and measured
      • Hands-on exercises during training – to provide practice before trying new processes, etc
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Change Management - Reinforcement
    • Reinforcing change is the final element of ADKAR – it is achieved when the necessary mechanisms are in place to sustain change
    • It is just as critical as that first communication to build awareness of the need for change
    • Reinforcement is the process of “pushing down the home stretch” and finishing the change- it serves three purposes:
      • Sustaining the change and prevents individuals from slipping back into old behaviours
      • Building momentum during the transition phase
      • Creating a history that individuals remember when the next change occurs
    • There are a number of activities that strengthen and sustain change:
      • Celebrations and recognition (even recognition of small successes)
      • Rewards (that are relevant and meaningful)
      • Feedback from employees (to identify where the change is taking hold or struggling)
      • Audits and performance measurements (in particular, measuring the benefits)
      • Accountability systems (to sustain the change over a long period of time)
    • The primary sponsor plays a key role in the reinforcement process for successful change – it is not a responsibility that can or should be delegated
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006
  • Leadership and Communication
    • Executives and senior leaders provide the authority and credibility needed for a change to be successful
    • Whether the change involves new processes, new systems, new job roles or new organization structures - or all of the above - senior leaders must be present to demonstrate their own and the organisation's commitment
    • All change requires an executive to sponsor the initiative – their role is to:
      • Participate actively and visibly throughout the project
      • Build a coalition of sponsorship and manage resistance
      • Communicate directly with employees
    • How the change is communicated by senior leaders is critical:
      • Structured effort - including the sequencing of messages and the creation of a formal deliverable
      • Start earlier - even if you do not have all the answers, share what you can and share when more answers are expected
      • Communicate more often - frequent communications are critical to successful change management
      • Answer the questions people have - avoid focusing on the details and instead focus on the reasons for the change and the personal impacts of the change
      • User preferred senders - senior leaders for business messages; immediate supervisors for personal messages
  • The Five Change Management Roles
    • The ultimate goal of change management is to engage employees and encourage their adoption in a new way of doing their jobs
    • Moving people from what they individually think they should be doing to a organisational approach is the most difficult aspect
    • There are six key change management roles:
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006 What they should be saying.. What they are likely saying now.. Change Management Role We own the change management methodology and support it’s implementation across the organisation I don’t even exist yet The Change Management Office (or group or department) – often the PMO I support different activities of the change management team and the project team I get called in on projects and given one little task, but I am not sure how I fit in the overall picture Project support functions I manage the initiation, execution and implementation of the change. I integrate change management into my project plans My focus is just the initiation side. Once I flip the switch, I am moving on to the next project Project team I coach my direct reports through the changes that impact their day-to day work I feel like I am the direct target for some of these changes, and I wish I knew what was going on Middle managers and front line supervisors (team leads) I launch (authorise and fund) changes I sponsor and lead strategic change I gave you funding and signed the charter – now go make it happen Executives and senior management I develop the change management strategy and plans. I am an integral part of project success I feel like I am on an island here – people expect me to do everything and have all the answers Change management resource/team
  • Benefits realisation in practice
    • Change happens at individual level
      • Changes to processes, systems, tools, job roles and org
      • Structures only come to life through changes in individual workflow and behaviors
    • Individual change is central to project benefits realisation and ROI
    ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006 Current Transition Future
    • Goal of any project or change is to improve performance in the future state:
      • Reduce cost
      • Generate revenue
      • Improve efficiency
      • Improve operations
      • Reduce risk
      • Meet regulatory requirements
      • Deliver on customer expectations
      • Be best-in-class
    • To improve performance (i.e. reach the future state) changes are made to:
      • Processes
      • Systems
      • Tools
      • Job roles
      • Org structure
    Current Transition Future Organisational change via a project Current Transition Future Individuals changing workflow and behaviour ROI results from: Future Current >
  • In summary,
    • Both project management and change management support moving an organization from a current state through a transition state to a future state
    • Effective management of the people dimension of change requires managing five key goals that form the basis of the ADKAR model:
      • Awareness  of the need to change
      • Desire  to participate and support the change
      • Knowledge  of how to change (and what the change looks like)
      • Ability  to implement the change on a day-to-day basis
      • Reinforcement  to keep the change in place
    • Five elements of a balanced change management transition include :
      • creating strong sponsorship for change management among business leaders
      • establishing standardized processes and tools for managing change
      • creating permanent roles like a CMO or change management group to support change management and to manage the portfolio of change
      • offering ongoing training programs in change management for business leaders, supervisors and managers, employees and project teams
      • developing project criteria, a gate process or performance measurement system that ensures the consistent and effective application of change management across all projects
  • Session 7 Case Studies
    • Ashland Inc – building a strategic change management capability
  • Case Study: Ashland Inc – building change capability
    • Ashland Inc is a Fortune 500 diversified chemical company providing innovative products, services and solutions to customers around the globe Between 1998 and 2003, Ashland had sold their oil exploration business, joint venture marketing and refining, sold their coal business, restructured resource groups and relocated the Head office
    • By 2002, Ashland’s earning were well off track – operating costs were high and redundancy was occurring, share price was affected – and strategic change was necessary to realign a change adverse organisation
    • They realised in 2003 that they had not managed the strategic change of direction as well as they could have
      • Frustrated with poorly managed business change, the CEO asked Dwight King, vice-president of HR, to initiate a programme to build change management capability into the organisation
      • Dwight arranged an executive briefing with business unit Presidents and as a result a series of change management initiatives were developed
      • They adopted the ADKAR approach and by early 2005 there was momentum around basic change management terminology, imbedding business change into operational activities and early adoption of change management into strategic initiatives
      • In mid 2005, when the Global SAP implementation initiative moved from the testing phase into full scale implementation, Ashland formed its Global One project team for SAP deployment world-wide.
      • Dwight and the leadership team convinced the SAP Project Director that he needed to have a Change Management element beyond what they were calling “change” which primarily translated to systems training
      • This marked a big shift in Ashland’s deployment strategy – instead of deploying change management one project at a time, CEO Jim O’Brien sanctioned an enterprise wide approach to change
      • He selected Hank Waters to be the Ashland Enterprise Change Manager executive sponsor and they put together an organisational structure and identified key players to be involved.
      • A year later, they imbedded Change Management into Strategic Execution, ensuring that all strategic and business changes used the same approach – between 2003 and 2008, Ashland undertook substantial change successfully
    • What can we learn from this?
      • Executive sponsorship and leadership is critical for building new capability
      • View the adoption of change management as a journey – it took Ashland 5 years to build capability!
      • Linking strategic execution with change management can get better traction by imbedding it into an organisation-wide initiative (ie organisation-wide systems change) rather than in pockets across the organisation
    Prosci 2008 Case Study www.change-management.com
  • Session 8 Wrap up - Bringing Strategic Execution into Final Focus
  • Linking Successful Planning to Ongoing Operations
    • Transition is the crucial final step in realising the benefits of strategic programmes and projects – it can free up resources or leave the organisation mired in unfinished strategic initiatives, unable to operationalise its strategic intent
    • To reap the full magnitude of strategic benefits for the organisation, there must be a feedback from operations to the strategic planners regarding the actual ongoing results of all the projects and programmes in the strategic portfolio
    • Successful transitions create seamless and timely handovers to operations – this however requires strong sponsorship, tight project management, empowering change management and strong benefits management and realisation accountabilities
    • The use of strategy maps, balanced scorecards and portfolio management enable the development of clear and appropriate strategic plans, to be linked to effective and efficient execution and transition into operation
    Strategy Portfolio Engagement Programme Project Operations Transition Synthesis
  • Choosing the right time for handovers
    • Handovers present the most difficult challenges of strategic execution
    • One challenge is learning to recognise when a project is ready for transition
    • Often new questions or observations come up – for example:
      • Opportunities exist for significant improvement in the thing we have just built (because the world has changed or we have a clearer – and potentially different – view of reality now!
      • The players have changed and see things very differently from those who signed off on the original deal!
      • Customer have modified their view of the world and request a few features they would like us to squeeze in “while we are at it”!
      • The competitive landscape has changed!
      • New technology has changed the shape of the solution!
    • Each of these common realisations – and no doubt a few more – creates the potential for scope creep that will necessitate for time and resources
    • In order to manage this process, we need to distinguish between outputs and outcome:
      • Outputs are the things a project creates (systems, processes, documentation, etc)
      • Outcomes are the results that the outputs create for the beneficiaries (greater productivity, faster response, better performance, etc)
    • Managing beneficiary tradeoffs and the difference between outputs and outcomes will help determine when/how to handover
  • Making the Case for SPPM
    • Establishing formal SPPM can provide many strategic benefits to the organisation (as we have discussed), however it inevitably involves implementing significant changes that can be met with initial resistance
    • To make the case for SPPM, it is necessary to demonstrate how SPPM can address real and immediate problems in the project environment, by:
      • Soliciting the input of co-workers to isolate know problems (obtaining statements)
      • Considering the source of input (identifying who says)
      • Correctly analysing feedback based on the sources and natures of the problem (make interpretations)
      • Developing potential solutions and seeking external help
      • Outlining business and resource related benefits accruing from implementation of suggested SPPM solutions
      • Documenting and communicating findings to achieve SPPM acceptance
    • Often the real time to break inertia and gather momentum for SPPM is through a crisis – lack of strategic traction, initiatives going wrong, business economics changing, executive leadership changes
    • Making a case for SPPM improves immensely when structure and attitude align to support important business objectives
    Project Portfolio Management, Harvey Levine, Posey-Bass, 2005
  • Getting Traction
    • Who knows what the “half life of a good idea” is?
    • 5 days – if you have not done something about the good idea in five days, then you will have only half the chance of doing something about it
    • That’s not to say the good idea is a good idea, but you still need to dis-prove that! (or disabuse people of that notion)
    • Much will depend on your organisation’s willingness to change, or finding an executive (and you may be that person) with the ability to connect with other like thinking colleagues, so that collectively you can start the journey
    • The message is to go back to the office and talk to people about strategic execution, to look at your own organisation, to assess how and when this methodology, processes and tools should be implemented
    • So let me summarise the 2 days………
  • The State of Strategic Planning
    • There is no “one set way” to undertake Strategic Planning!
    • The key aspect that everyone will agree is that whilst organisations might be (in general) good at strategic planning, they are poor at strategic execution.
    • The global business landscape is littered with expensive, well intended strategies that failed in the execution phase.
    • Corporations spend about $100 billion a year (pre economic adjustment) on management consulting and training, most of it aimed at brilliant strategy.
    • Business schools unleash throngs of aspiring strategists and big-picture thinkers into the corporate world each year.
    • Yet studies have shown that less than 10% of effectively formulated strategies carry through to successful implementation – so something like 90% of companies fail to execute strategies effectively.
  • Aligning Strategic Planning with Execution
    • Developing the right (ie appropriate and implementable) Strategic Goals and Objectives is a CSF of good planning approach and outcomes
    • Developing a “project” change based thinking and culture will help in the development of a strategic plan that can ultimately be successfully implemented
    • Leadership needs to be clear, concise and directional in order to align each activity and project investment to the espoused strategy
    • Strategic Themes and Scorecards are critical components of successful execution
    • Strategy Maps can help to communicate what the strategy is in terms of actions and deliverables, and can act as guidance during execution
    • Effective strategy consists of choosing to do the right things. Effective execution means doing those things right – strategic execution results from executing the right set of strategic projects in the right way
    • Strategy makers can only align the strategy with the execution by working with and through project leaders in the execution process
  • Understanding Strategic Execution
    • Strategic execution requires a systematic approach for identifying and implementing the right actions / outcomes to deliver on strategic promises
    • It will be successful when it executes the right set of strategic projects in the right way - time, order, outcome – through structured and transparent scoping, benefit identification and resourcing
    • Portfolio management is a critical component of strategic execution, with the most significant element being the engagement imperative
    • Typically there are a large number of projects (both technology and business related) occurring simultaneously across the organisation – the alignment, sequencing and resourcing of those under a strategic portfolio framework
    • Developing and implementing the appropriate (right) project governance and sponsorship model will play a large role in the success of strategic execution
    • Strategic execution is not easy – if it was, then there would be more good stories than bad and many more organisations would be well down the experience curve
    • Managing the lifecycle of strategic planning through execution requires leadership commitment, good processes, and the right people and learnings
  • Developing Strategic Initiatives
    • After the executive team has translated its strategy into a Strategy map and Balanced scorecard, it must lead a process that selects, funds and assigns accountability for theme-based portfolios of Strategic Initiatives
    • Companies use the following process to select and manage their strategic initiative portfolios:
      • Choose the strategic initiatives by identifying, ranking strategic initiatives for each theme
      • Fund the strategic initiatives portfolio by establishing a strategic expenditures budget
      • Establish accountability by selecting theme owners and team to execute the portfolios
      • Develop the Strategic Execution Roadmap, based on Strategy map
      • Develop the KPIs for each Strategic Initiative, aggregated to the Strategic Theme
      • Identified the resources required to optimise execution
  • Planning the Strategic Portfolio of Projects
    • Strategic execution results from executing the right set of strategic projects, in the right way
    • Developing project management capability is something that companies need to invest in to be successful
    • Portfolio project management is a process that brings together the projects and operations sides of the organisation
    • The operations side is represented by the a Portfolio Management Governance Council (Steering Group), the projects side is represented by the PMO
    • The core elements of Strategic Portfolio Project planning are:
      • Aligning the projects with strategic themes and goals
      • Preparation of project proposals so that they can be evaluated
      • Evaluating project value and benefits
      • Appraising the risks that might modify the benefits
      • Determining the optimal use of resources
      • Ranking projects according to a set of selection criteria
      • Selecting projects for the portfolio
    • The “in-flight” portfolio of projects needs to be continually monitored to ensure that the strategic benefits outcomes are achieved, and the priorities are aligned to the current state
  • The Art of Strategic Portfolio Project Management
    • SPPM is a set of processes, supported by people and tools – the tool set includes software that helps us automate specific SPPM processes
    • Stage-Gate is a natural practice to apply to SPPM – each SPPM phase (called a stage) is separated by a decision point (called a gate)
    • Costs can be managed by looking first at the aggregated cost performance of the portfolio, then at each individual project
    • The gorilla project, if it is to be successful, requires every possible advantage that can come from superior project management diligence
    • Keep the pipeline healthy and moving, limiting the amount of work in the pipeline so that projects can be completed as quickly as possible
    • Implementing a SPPM capability, the organisation must:
      • Develop a PPM process
      • Establish a Governance team and PMO
      • Acquire PPM and other project management support tools
      • Integrate the PPM process and tools with other project management process and tools
    • Instead of deploying a new SPPM system across the board all at once, try it out with a pilot programme – make sure you have executive support and the people involved are adventurous supporters
  • Strategic Change Management and Transition
    • Both project management and change management support moving an organization from a current state through a transition state to a future state
    • Effective management of the people dimension of change requires managing five key goals that form the basis of the ADKAR model:
      • Awareness  of the need to change
      • Desire  to participate and support the change
      • Knowledge  of how to change (and what the change looks like)
      • Ability  to implement the change on a day-to-day basis
      • Reinforcement  to keep the change in place
    • Five elements of a balanced change management transition include :
      • creating strong sponsorship for change management among business leaders
      • establishing standardized processes and tools for managing change
      • creating permanent roles like a CMO or change management group to support change management and to manage the portfolio of change
      • offering ongoing training programs in change management for business leaders, supervisors and managers, employees and project teams
      • developing project criteria, a gate process or performance measurement system that ensures the consistent and effective application of change management across all projects
  • Final Thoughts…
    • 20 years of strategy, projects and change tell me that it is a journey….
    • Over the last decade (and certainly today), the organisational acceptance of the need for strategy - that can be effectively executed - has grown exponentially
    • Today, organisations are scrambling to execute strategy and initiatives in a away that gives them competitive advantage in changing world – for less time and money
    • The material presented in this seminar is a fast journey through the world of strategic execution and implementation of strategic initiatives
    • When the strategy makers and the project leaders truly work together to convert strategy into action, they create organisations that outperform others and are attractive places for people to invest their human capital
    • In these types of organisations, it has been said that the role of CEO is better described as chief execution officer – after all executive and execution only differ by two letters
    Thank you for attending, participating and hopefully this has provided you with food for thought and inspiration….. Good luck – call if you need help!
  • References What is Strategy, Michael Porter, HBR Nov-Dec 1996 Hidden Flaws in Strategy, Charles Roxburgh, McKinsey Quarterly, 2003 Issues 2 How to improve strategic planning, Rene Dye, McKinsey Quarterly 2007 Issue 3 Can you Say What Your Strategy Is, David Collis, HBR April 2008 The Execution Premium, Robert Kaplan & David Norton, 2008 Executing Your Strategies, Mark Morgan, et al 2007 Execute Your Strategy without Killing it, Lauren Keller Johnson, HMU, Dec 2004 The Secrets to Successful Strategy execution, Gary Neilson, et al, HBR June 2008 A Management Framework for Project, Programme and Portfolio Integration, RM Wideman, Trafford Publishing 2004 Project Portfolio Management, Harvey Levine, Posey-Bass, 2005 How to implement a new strategy without disrupting your organisation, Robert Kaplan, HBR, March 2006 AT&T Wireless Self-destructs, Christopher Koch, CIO Magazine, April 2004 Defining Change Management, Tim Creasey, Prosci, Jan 2007 ADKAR – A model for change in business, Jeff Hiatt, Prosci Research, 2006 Prosci 2008 Case Study www.change-management.com Product leadership: Pathways to Profitable Innovation, R.G. Cooper, Perseus Books 2005