Chapter 2 - Organization strategy and project selection. This chapter presents an overview of the importance of strategic planning and the process for developing a strategic plan. Typical problems encountered when strategy and projects are not linked are noted. A generic methodology that ensures integration by creating very strong linkages of project selection and priority to the strategic plan is then discussed. | Why Project Managers Need to Understand the Strategic Management Process Changes in the organization’s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission. 2– Projects and Strategy Mistakes caused by not understanding the role of projects in accomplishing strategy: Focusing on problems or solutions with low strategic priority. Focusing on the immediate customer rather than the whole market place and value chain. Overemphasizing technology that results in projects that pursue exotic technology that does not fit the strategy or customer need Trying to solve customer issues with a product or service rather than focusing on the 20% with 80% of the value (Pareto’s Law). Engaging in a never-ending search for perfection only the project team really cares . | Why Project Managers Need to Understand the Strategic Management Process Changes in the organization’s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission. 2– Projects and Strategy Mistakes caused by not understanding the role of projects in accomplishing strategy: Focusing on problems or solutions with low strategic priority. Focusing on the immediate customer rather than the whole market place and value chain. Overemphasizing technology that results in projects that pursue exotic technology that does not fit the strategy or customer need Trying to solve customer issues with a product or service rather than focusing on the 20% with 80% of the value (Pareto’s Law). Engaging in a never-ending search for perfection only the project team really cares about. 2– The Strategic Management Process: An Overview Strategic Management Requires every project to be clearly linked to strategy. Provides theme and focus of firm’s future direction. Responding to changes in the external environment—environmental scanning Allocating scarce resources of the firm to improve its competitive position—internal responses to new programs Requires strong links among mission, goals, objectives, strategy, and implementation. 2– Project Portfolio Management Problems The Implementation Gap The lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy. Organization Politics Project selection is based on the persuasiveness and power of people advocating the projects. Resource Conflicts and Multitasking Multiproject environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects. 2– A Portfolio
