Strategic mgt. process applied to project managemt - Dissertation Example

?The Execution Premium Process (XPP) applied to Programme Management for Performance and Results Enhancement In any effort towards enhancement of systems or processes, success is largely a function of the understanding that change is a necessary adjunct of improvement (Langley, et al., 2009). Kaplan and Norton (2008) argued that modern business is already blessed with the so-called building blocks towards effective strategy formulation and execution, as well as, the necessary tools to ensure operational efficacy. However, for a synergy of the building blocks and tools to drive an organisation towards desired performance and outcomes, the missing link consists of what Kaplan and Norton (2008) described as “a comprehensive framework to integrate all these tools so that they are properly aligned and synchronised” (p. 31). Execution Premium Process (XPP) is the solution proposed by Kaplan and Norton (2008). This paper will, thus, venture to ascertain the viability of applying XPP to programme management to enhance organisational performance.         The Execution Premium Process or XPP is a comprehensive and integrated management system which combines strategy formulation, planning, and operational execution (Kaplan and Norton, 2008). Program management on the other hand refers to the coordinated management of a selection of projects in order to attain benefits which are deemed strategically important for an organisation (Reiss, 2006). XPP is comprised of six stages: (1) strategy development; (2) strategy planning; (3) organization alignment; (4) operations planning; (5) monitoring and learning; and (6) strategy testing and adaptation. This system was developed due to a need for a framework to which various strategy and operational management tools could be utilized (Kaplan & Norton 2008; Shelldrake, 2011).         Strategy development involves the formulation of organizational strategies by addressing three crucial factors: (1) mission, values, and vision; (2) key issues; and (3) the strategy itself. Organizations need to be clear with regards to their purpose, the principles by which everyone is guided in their actions, and future aspirations. An organization needs to reaffirm their mission, values, and vision as an initial step in strategy development (Kaplan & Norton 2008).         The next step involves a review of the organization’s competitive and operating environment. Managers need to utilize three sources for the review: (1) the external environment; (2) the internal environment; and (3) the status of the current strategy. Issues concerning the external environment may be identified through the use of the PESTEL tool which stands for political, economic, social, technological, environmental and legal. Meanwhile, issues pertaining to the internal environment include human capital, innovation, operations, and technology deployment (Kaplan & Norton 2008). Another tool used is the SWOT which is described as a table wherein the strengths, weaknesses, opportunities, and threats to the organization are laid out for review. Information gathered at his point will be utilized to develop a strategic change agenda which rationalizes the need to identify and address challenges. Meanwhile, the third step of this stage involves the development of a new strategy based on the information collected from the previous steps. Factors such as the market niche, customer value proposition, key processes, human capital, and technology are likewise involved (Kaplan & Norton 2008). The second stage of XPP involves creating a strategy plan through the development of guidelines for strategic objectives, measures, targets, initiatives and budgets. Likewise, this stage determines how resources are allocated for each component of the plan. This stage is comprised of five components: (1) creation of strategy maps; (2) identification of measures and targets; (3) selection of strategic initiatives; (4) allocation of funds and resources; and (5) establishment of theme teams (Kaplan & Norton 2008). Strategy maps are described as a visual representation of strategy themes. In this technique all related objectives are grouped together based on four to six strategic themes which represent the main components of the strategy laid out by the organization. By clustering related objectives, managers can manage each cluster separately and maintain coordination among clusters at the same time (Kaplan & Norton 2008). After the related objectives have been clustered together into its corresponding themes, a Balanced Scorecard of measures, targets, and gaps is created. In turn, each target set is assigned to a strategic initiative. Strategic initiatives are a set of complementary actions which assist the organization in meeting their performance targets (Kaplan & Norton 2008). Once strategic initiatives are assigned to specific targets, funding and resources are allocated to each initiative. In addition, each strategy initiative is expected to be executed in a simultaneous and coordinated manner. The allocation of funding and budgets are usually handled by the executive team. To simplify allocation, a special budget category called STRATEX or strategic expenditures is utilized (Kaplan & Norton 2008). After the strategy is mapped out, categorized, assigned, and funded, the organization selects theme owners to lead and manage the execution of the strategy. Theme owners will be supported by theme teams which help provide accountability and feedback on the execution of each theme. Members of the theme team are selected from across the organization (Kaplan & Norton 2008). The third stage of XPP concerns the alignment of the strategy with the organization itself. This includes alignment with strategies laid out by individual business and functional units. To ensure proper alignment, employees are expected to understand how the strategy works and how it should be carried out. Moreover, motivation should be provided to employees in order to gain commitment in carrying out the strategy (Kaplan & Norton 2008). During the alignment process, the organization needs to make sure that all business units are aligned with the strategy. To facilitate this, managers can utilize strategy maps which allow individual business units to visualize how overall strategies: (1) are related to localized strategies; and (2) affect the execution of other strategy components (Kaplan & Norton 2008). After business unit and corporate strategies are aligned, support units are created to help ensure that value-creating strategies stay aligned with their own. For example, support units ensure that service-level agreements with business units are consistently being met through the use of support unit strategy maps and scorecards. Lastly, the organization should be sure that the employees themselves are aligned with its overall strategy. This can be achieved through the use of formal communication channels, aligning employees’ personal objectives, and incentive programs (Kaplan & Norton 2008). The fourth stage of XPP involves the relationship between organizational strategy and daily operations. Companies are encouraged to align current process improvement activities with their strategic priorities. In addition, the operational planning process seeks to address two important questions: (1) which business process improvements are most critical for executing the strategy? and (2) how do we link strategy with operating plans and budgets? (Kaplan & Norton 2008). Managers need to determine which business process improvement will facilitate the delivery of specific strategies. Improvements may come in the form of performance, customer loyalty, cost reduction, productivity, regulatory, or social. In this case, managers should proceed with developing custom dashboards which provide focus and feedback to employees, as well as to track progress of process improvement initiatives (Kaplan & Norton 2008). The other half of the alignment process deals with linking strategy with operational plans and budgets. An operating plan is made up of three parts: sales forecast, resource capacity plan, and operating and capital budgets. Sales forecast may be performed annually or quarterly. In addition, a sales forecast should indicate the expected quantity, mix, and nature of individual sales orders, production runs and transactions (Kaplan & Norton 2008). Meanwhile, a resource capacity plan maps out the quantity of resources required to make the plan a reality, whether in the form of people, equipment, or facilities.  Once the forecast and resource capacity plan has been laid out, the financial implications and operating and capital budgets can be determined. By utilizing these components, a forecast and detailed profit-and-loss statement for every product, customer, channel, and region (Kaplan & Norton 2008). The fifth stage of XPP involves monitoring of operational and strategic plans with the aim of identifying opportunities for improvement. Management can utilize two tools – operational review meetings and strategy review meetings. Operational review meetings are used to assess departmental and functional performance and to identify existing and persistent issues. On the other hand, strategy review meetings are used to evaluate the progress and barriers to strategy execution, as well as to retrospect on strategy indicators and initiatives (Kaplan & Norton). Two questions are considered by managers at this particular stage: (1) are our operations under control?; and (2) are we executing our strategy well? The first question is addressed through operational review meetings wherein managers assess short-term performance, as well as act on new issues that demand attention and resolution. Meanwhile, the second question is resolved by regular strategy review meetings which aim to determine if strategy execution is kept on track. Whenever problems arise, the leadership team attempts to identify its cause and possible solutions. In addition, responsibility is delegated to ensure that performance targets are met (Kaplan & Norton 2008). The final stage of XPP aims to ensure that fundamental strategic assumptions retain its validity. To achieve this, the organization takes into consideration the following factors: (1) supplemental data from new dashboards; (2) monthly Balanced Scorecard metrics; (3) updates in the competitive and regulatory environment; and (4) new ideas and opportunities presented by employees. Once these factors have been considered, the organization comes up with an updated strategy adapted from the information presented (Kaplan & Norton 2008).   Project management is defined as the process of planning, coordinating, and controlling the complicated and various activities involved in organizational projects. Its main purpose is to ensure that the project is completed successfully in the face of existing risks and problems. A project manager therefore, has the responsibility to deliver results in a timely and cost-effective manner (Lock 2007).         The art of managing projects has evolved from the construction of prehistoric monuments to complex IT projects. Early forms of project management were founded on common sense, determination, and hard work. It took centuries before industrial engineers and behavioral scientists started to look into the complex world where work practices, organization theory, and people get the job done. Moreover, key points in human history – industrial revolution, production-line manufacturing, computers, and information technology, among others – have helped shape how managers handle projects in the organization (Lock 2007). Organizational projects may be categorized into four types: (1) type 1 – civil engineering, construction, petrochemical, mining, and quarrying; (2) type 2 – manufacturing; (3) type 3 – IT-related projects and those pertaining to management change; and (4) type 4 – pure scientific research. Type 1 projects are characterized by hazardous and risky conditions, substantial amount of capital investment, complex communication issues, and extensive management covering progress, finance, and quality (Lock 2007). Meanwhile, Type 2 projects mostly consist of projects related to the manufacturing sector, wherein companies are able to closely manage everything in a controlled environment. However, some projects are more complex, involving several members belonging to different organizations in different countries. These projects are harder to control and coordinate, and pose a higher risk. Difficulties are compounded by organizational complexity, national rivalries, contracts, long-distance communications, multiple languages, and conflicting technical standards (Lock 2007).   Type 3 projects are attributed to projects belonging to the IT sector, as well as projects concerning management change. Examples include: implementation of a new computer system; company relocation; organizational restructuring; or performing a feasibility report. These types of projects may also share a relationship between projects belonging to the Type 1 or 2 category (Lock 2007).            Lastly, projects which are devoted to pure scientific research belong to the Type 4 classification of projects. Projects under this classification carry the highest amount of risk. Whereas some projects could possibly yield discoveries profitable to an organization, the possibly also exists that a project could spend a substantial amount of resources without producing any beneficial result. Moreover, some projects may experience difficulty in defining objectives, as well as conformance to project management methods utilized on other project types (Lock 2007). Nokes and Kelly (2007) identified five main problems faced by project managers: (1) managing people; (2) lack of a common approach; (3) unexpected/unforeseen problems; (4) getting people to think outside their disciplines; and (5) selling the benefits of project management.         Project managers find the management of people as a challenge due to the number of activities and different personalities involved in the project. Being a project manager entails understanding how individuals work and how to get people to work collectively. Sometimes, a manager needs to tailor-fit his/her project management approach to a particular group or individual (Nokes & Kelly 2007). Project managers have to deal with a lack of a common approach which reduces their efficiency in addressing the same administrative issues. Also, it increases the risks involved as the project progresses. This includes dealing with problems which the organization did not anticipate. Managers had to deal with these problems, taking up extra time and resources which can negatively impact the project (Nokes & Kelly 2007). There are some situations wherein managers need to encourage team members to think outside the box. However, highly technical and intellectual members of the team may find it difficult to think beyond their respective disciplines. In addition, project managers encounter difficulties in convincing stakeholders on the long-term advantages of utilizing project management approaches. This could be attributed to the differences among individuals which a manager needs to acknowledge and adapt to (Nokes & Kelly 2007). Project management is founded on common sense and its aim is to ensure that all activities required to get the job done are performed and finished at the right time. This includes performing the necessary adjustments so that the same expected results will occur despite the existence of variances. Aside from common sense, there are nine knowledge areas involved in project management, namely: (1) integration; (2) scope; (3) time; (4) cost; (5) quality; (6) human resources; (7) communication; (8) risk; and (9) procurement (Nokes & Kelly 2007). Adopting a project management strategy for organizational projects has its benefits. First, by using a common approach, managers are able to coordinate their efforts in terms of planning, managing, and execution, with less risk and more efficiency. Second, training programs for managers will conform to a standard. This allows new project managers to have the same set of core skills which are provided during training. Third, standardization of training programs will reduce costs. Lastly, stakeholders will benefit in terms of a more efficient and effective interaction with managers due to the commonality between projects (Nokes & Kelly 2007). Project integration management is the focal point of project management. This knowledge area comprises the necessary skills, tools, and techniques utilized in integrating each project component. In essence, project integration is responsible for putting together each activity and ensuring that each component is done at the right time, sequence, and alignment with the other parts (Nokes & Kelly 2007). Project scope management is concerned with the definition of project boundaries. Project scope is defined with the identification of what is included and excluded in the project. This area also deals with the management of changes in the original project scope (Nokes & Kelly 2007).            Project time management deals with ensuring that project activities start on time and finishes on schedule. This knowledge area involves the techniques time estimation, schedule planning and monitoring. Project cost management ensures that projects proceed within the budgetary limits of the plan. This area includes techniques for cost estimation, budget planning, cost control, and cost monitoring.         Project quality management is concerned with ensuring that project deliverables conform to specifications indicated in the plan. This includes evaluation of the project in terms of how it was done (methodology), how soon it was completed (time), and how much it cost to complete (budget) (Nokes & Kelly 2007). Project human resource management deals with the methods utilized to recruit, lead, and manage team members for a project. In addition, this knowledge area covers professional development. Project communication management involves the identification of recipients, channels, and timetables required for information dissemination. This area ensures that information is sent and received by the right person at the right time and format (Nokes & Kelly 2007). Project risk management is concerned with the identification and assessment of risks, as well as the development of responses for specific types of risks. Moreover, project risk management is responsible for putting response plans into action once identified or anticipated risks manifests itself during the project implementation. Lastly, project procurement management deals with the procurement of resources required for the project (Nokes & Kelly 2007). Rajegopal, McGuin & Waller (2007) emphasized the importance of projects as significant investments made by organizations. Projects warrant attention since it is considered as an essential component of business subject to stringent inspection and accountability. Hence, management needs to acknowledge the impact of projects in the overall profitability and success of the organization. Projects in an organization cover a diverse selection of initiatives which include IT improvements, business transformation, construction, and compliance, to name a few. Moreover, an organization may have a number of projects being implemented at the same time. The complexity of this multi-dimensional environment, coupled with the demand for increased accountability by stakeholders, necessitates the need for access to consistent and comparable information regarding all projects in the organization. Hence, managers need to be equipped with the tools necessary in creating the right composition of short, medium, and long term projects to maintain profitability, conserve resources, and comply with corporate strategic objectives and specifications (Rajegopal, McGuin & Waller 2007). Project performance in a large of modern businesses is still below standard due to failure to meet commitments. Most companies lack the tactical infrastructure required to deliver on their commitments. In addition, most organizations lack strategic visibility over project activity. As a result, managers lack: a standard approach to project planning; real-time tracking of available resources; and assessment tool for project health and status. Moreover, from a strategic planning point of view most organizations fail to understand project benefit realization, value and prioritization, as well as the benefits of being able to balance projects as business investments (Rajegopal, McGuin & Waller 2007). References Kaplan, RS & Norton, DP 2008, The Execution Premium: Linking strategy to operations for competitive advantage, Harvard Business School Press, Boston, MA. Langley, GL, Moen, RD, Nolan, KM, Nolan, TW, Norman, CL, and Provost, LP, 2009, The improvement guide: A practical approach to enhancing organisational performance, 2nd edn, Jossey-Bass / Wiley, San Francisco, CA. Lock, D (2007). Project management, Gower Publishing, Hampshire, GBR. Nokes, S & Kelly, S (2007). The definite guide to project management: The fast track to getting the job done on time and on budget, 2nd edn, Prentice Hall Financial Times, Upper Saddle River, NJ. Sheldrake, P 2011, The business of influence: Reframing marketing and PR for the digital age, John Wiley & Sons, West Sussex, GBR. Read More