What We Liked - Part I
In Part I of his book, Antonio describes how he set out to discover just exactly "Why Most Companies only partially Achieve Their Strategies". In doing so, he first sets the stage by making two separate but related distinctions. The first is the essence of corporate strategy, i.e. the difference between "Strategic Planning", and "Strategy Execution" (i.e. implementation). The second is the difference between "Run-the-Business", i.e. operations, and "Change-the-Business", i.e. projects.
As he says:
"After serving as manager of numerous strategic and transformational projects, I started to wonder how organizations could successfully select and manage hundreds of projects - some of them large, transformational and strategic, but also lots of smaller ones - when most to them had difficulty efficiently handling just one."
Very good question! In searching for an answer he surprisingly discovered that there was very little literature and academic thought on strategy execution/implementation. That's when he decided to do his own research, the subject of this book.
Interestingly, over the last decade we have seen in the project management literature, increasing calls for ensuring that a project's Business Case is aligned with corporate strategy as justification. That's looking up the ladder. In contrast, we have not heard corresponding calls for upper management to deliberately fashion viable project programs for executing their corporate strategic intent. That is, looking down the ladder.
That's a bit like going into a candy shop and sampling a whole range of candies to see which best fits our appetite. Instead, we could exactly describe what we are looking for, such as more energy, and consequently zeroing in on black chocolate. In Antonio's case he "was looking for the magic formula that would enable an organization to configure all of its various elements - e.g. strategy selection, processes, competencies, structure, roles, systems and culture - so that it maximized its success in these areas."
In this search, Antonio made two discoveries: almost unaware, companies have begun implementing strategic initiatives through projects and project management. Secondly, "this trend renders obsolete some of the most popular cited theories in business management, such as Porter's value chain, and identifies flaws in the current accounting standards for assessing and organization's fair value." Figure 1 illustrates the impact on GDP of this relentless trend from less than 10% in 1900 to close to 40% today. Rest assured, Change-the-Business (projects) is becoming big business.
According to Antonio:
"[As the figure shows] more and more organizations have been turning from operations work to project work. Amazingly, however, the academic world has failed to identify this trend. Only a handful of companies have fully exploited the benefits of this shift, many without really knowing that the change is taking place."
"But this trend has enormous consequences for the way companies are managed - it represents a new paradigm. The change-the-business dimension is completely different from the run-the-business side in almost every single element: management processes, tools, skills, structure, governance, control, performance metrics and so forth. Because neither management gurus nor the academic world have noticed this trend, it has grown in a unique way within each company. Despite the differences in how the trend is expressed, it always results in significant conflicts between these two dimensions, which explains why so many projects fail and so many strategies are not executed successfully."
Figure 1: Economic evidence of the trend
As a specific example - because "The change-the-business dimension is completely different from the run-the-business side", it is not possible for project management to rely on corporate accounting for project cost control. The former is prospective based on estimates within ranges, while the latter is purely historic and accurate to the penny.
Moreover, as Antonio explains, organizational evolution over the last hundred years has involved major changes, from an industrial economy to an information society and the mass use of personal computers and the Internet. But attention has been solely on improvements in the efficiency of such Run-the-Business items as Knowledge Management, Service or Product Design, Sourcing, Production, Sales & Marketing, and Service or Product Delivery with financial accountability standards established accordingly.
Lack of attention to project management
While it is true that "Without operations there is no business" growing the business and boosting its profitability depends heavily on initiating and successfully completing projects. Unfortunately, as noted earlier, there has been much less attention on how to track the financial value of projects that could amount to 35% or more of the business.
What Antonio discovered is that "most heads of organizations view project management as a highly technical discipline - an area for engineers, information technology (IT) professionals and project managers. Consequently, they:
- Lack a basic understanding of how to link each of their strategic projects with the company's overall strategy.
- Do not devote much time to developing project management in-house.
- Fail to implement a formal project selection process and investment committee to discuss, prioritize and decide on all the new proposals.
- Lack the means to monitor the success or failure of their strategic projects.
- And therefore do not spend enough time following up on the execution of projects.
Disregard by Business Management Gurus and lack of sufficient corporate attention on the execution of projects, especially their financial implications, has likely permitted a lackadaisical attention to project cost accounting generally. The result is consequent serious cost overruns in many cases. We would add that in our view, present day professional project management associations are complicit in encouraging this self-serving view of "project management as a highly technical discipline". This view is compounded by failing to differentiate between the job of managing a project from the job of managing the project's technology.
To summarize, Antonio says that:
"During the past century, companies' efforts to achieve their strategic initiatives have led to a relentless improvement, and thus constant reduction, of operational work (run the business activities) and an unstoppable increase in projects (change the business activities). This slow but inevitable trend has had a significant impact on strategy execution. Unfortunately many companies remain ill equipped to manage the shift. Therefore, as the number of projects multiplied, the rate of strategic failures increased. My research shows that the traditional functional company's poor project management skills - and the resulting difficulties in executing its strategy - can be linked to seven main obstacles:
- Omission of uniform methods and standard processes.
- Misalignment of organizational structure with the company's changing reality.
- Absence of appropriate governing structure to support strategy execution.
- Lack of project execution culture, skills and leadership attention.
- Complexity of tracking and forecasting project costs, financials and benefits.
- Inadequacy of systems and tools for monitoring strategy execution.
- Lack of focus."
All of these issues are dealt with in detail in Antonio's book. In particular, the idea that investing in many initiatives in the belief that this will increase the chances of success is totally wrong because it only leads to a lack of focus.
2. Ibid, p1
3. Ibid, p2
5. Ibid, p3
6. Ibid. The italics are the author's.
7. Ibid, p38
8. Ibid, p13
9. Ibid, p17
11. Ibid, p41
12. Antonio goes to some length to describe the work of many Business Management Gurus and consulting companies and their absence of attention to project management.
13. Ibid, p59