governance- strategy and pm
DESCRIPTION
project managemntTRANSCRIPT
GOVERNANCE
STRATEGY
AND
PROJECT MANAGEMENT
MODULE 1
Governance Definition
General Definition:
Exercise of authority, control
• A method, or systems or government or management ,
• In other words, good practices, guidelines
One might conclude that governance is a process – by which
authority is conferred on rulers, by which they make the rules,
and by which those rules are enforced and modified.
“Governance is the processes and practices which define
the strategic operating and decision-making boundaries of
an organization (or organizational unit) and how decisions
are made and implemented” Creelman, J, & Smart, A. RBPM
WHY DO WE NEED GOVERNANCE ?
• Provide structure, process and clarity to support timely and
quality decision making regarding strategy execution
• Ensure clear responsibility and accountability for strategy
execution
• Ensure leadership capacity to manage the execution of strategy,
run the day to day business, and support the realization of the
vision
• Provide a direct link to existing managerial committees and
the transition to future organization structure ensuring strategy
execution
• Ensure achievement of strategic objectives and implementation
of strategic initiatives are on time and within budget
• Facilitate building strategy execution capabilities in the
organization
• Manage strategy execution risks that could jeopardize the
realization of our vision
GOVERNANCE
STRATEGY
“Vision without action is a
daydream. Action without vision
is a nightmare”
Japanese Proverb
1-6
Allocate resources through
operating plans and
budgets that are explicitly
linked to strategy
Palladium’s Execution Premium Process (XPP)
Develop the Strategy
Translate the Strategy
Align the Organization
Link to Operations
Execute
Monitor and Learn
Test and Adapt
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Stage 6
Set our strategic priorities
Respond to shifts in our
environment and the
affects of our strategic
choices
Check our progress
and revise our
strategy as part of a
continual process
Clarify our strategy into
operational and
measureable terms
Align the organization
to our strategy and
motivate employees to
help execute
Conduct ongoing
operations and
discretionary projects
Initiatives
Processes
1-7
“A strategy is an integrated set of choices that position a firm, in an
industry, to earn superior returns over the long run.”
Stage 1: Develop the Strategy
Strategy is:
− A plan
− Short-term and long-term actions
− Destination, or end state
− A way to measure progressShows how you get to your
destination by defining goals or objectives
Strategy
PROCESS
RESOURCES
PEOPLE
Shows your destination
Vision
Source: Jan Rivkin, “Where do great strategies come from?” Harvard Business School Faculty Seminar Series Lecture
Summary: The Strategy Management Process: Building the Strategy Plan
1. Define Change Agenda
“Strategic Change Agenda”
2. Define Vision “Vision Statement”
3. Strategic Analysis “SWOT and Strategic Issues”
4. Strategy Formulation
“Value Gap and formulation techniques”
5. Strategy Mapping “Strategy Maps”
6. Measures and Targets
“Balanced Scorecard”
7. Strategic Initiatives
“Investment Portfolio”
8. Strategy Funding “Stratex”
STRATEGIC PLAN
9. Accountability “Theme Team”
Process “Methodology”
KEY:
II. STRATEGY PLANNING
I. STRATEGY DEVELOPMENT
1-9
Stage 1: Develop the Strategy
Defining the strategy fundamentals: Mission, Vision and Values
Mission Vision Values
• Most fundamental reason for
being
• Inspirational for people
• Easy to communicate
• Remains the same over time
• Visualization of what we want to
be
• It has to be Challenging
• Tangible within time-frame
• Uniqueness
• Inspirational for people
• Outline the behaviors expected
from the employees
• They are the DNA of
organizations
Give people the power to share
and make the world more open
and connected
By 2020, we will be The
Reference in Sports Excellence
World Wide
Flexibility – Honesty – Teamwork
– Responsiveness – Passion…
Cha
ract
eris
tics
Exa
mpl
es
1-10
Enhancing the Vision: The traditional vision statement leaves much ambiguity for the development of strategy
“To Be The
Best”
Vision
Strategy?
Typical Vision Statements
“We will be one of the world’s premier
companies, distinctive and successful in
everything we do”Allied Signal
“To be the best refining, marketing and
transportation company in the U.S. petroleum
industry”
CITGO
Enhanced (Quantified) Vision
“We will be the benchmark in consumer banking,
achieving a Top 2 ranking in our markets, with a
30% return on equity and $40 billion in total
assets in the next 5 years.”
“2 – 3 – 4 in 5”
1-11
At the highest conceptual level, the Balanced Scorecard is a
framework that helps organizations translate
strategy into operational objectives that drive
both behavior and performance.
Stage 2: Translating the Strategy
Strategy Maps Describe how an Organization Creates Value … and Focus Change by Clarifying Priorities
#1. Financial performance, a lag
indicator, provides the tangible
definition of value.
#2. The customer value proposition
defines the source of value.
#3. Business processes create value for
the customer and shareholder.
#4. Intangible assets must be aligned
with the key processes.
#5. Cause-and-effect relationships define
the logic that converts intangible
assets to tangible outcomes
Internal Process Perspective
Financial Perspective
Learning & Growth Perspective
Customer Perspective
Sustained
Shareholder
Value
Price Quality Time Function Relation Brand
Product/Service Attributes
Operations
Management
Processes
Customer
Management
Processes
Innovation
Processes
Productivity Revenue Growth
Relationship Image
Regulatory
and Social
Processes
Human Capital
Information Capital
Organization Capital
1-13
Natural cause and effect logic
To Build the Strategic Capabilities…
Needed to Deliver Unique Sets
of Benefits to Customers...
To Drive Financial Success...
And Realise the Vision
Equip Our People...
Financial
Results
Customer
Benefits
Internal
Capabilities
Knowledge, Skills, Systems, and Tools
The Balanced Scorecard Supports the Strategy Map
Strategic initiatives are the drivers of action
Execute strategy by managing & measuring initiatives
On Ground Time
On-Time Departure
30 Minutes
90%
Turnaround Cycle
Time Optimization
What the
strategy
is trying
to
achieve
The level of
performance
or rate of
improvement
needed
Processes and
programs
required to
reach the
target
How
performance
against the
objective is
monitored
Objective Target InitiativeMeasure
Fast ground
turnaround
Balanced Scorecard
Objective Measure Target Initiative
$XXX
Budget
Action Plan
Theme: Operating Efficiency
FinancialProfits &
RONA
Grow
Revenues
Fewer
Planes
CustomerAttract & Retain
More Customers
On-time
Service
Lowest
Prices
Fast Ground
Turnaround
Internal
Learning
Strategic Job
Ramp Agent
Strategic Systems
Crew Scheduling
Ground Crew
Alignment
1-15
From management to execution
A Strategy Framework enables an organization to establish accountability and manage
initiatives against clearly defined priorities and goals:
2 3 4
Strategy Fundamentals
Strategic Themes
Strategy Map
Key Performance Indicators &
Targets
Strategic Initiatives
Mission, Vision and values of the organization
3 – 4 areas that shape the vision
Set of strategic objectives framed on strategic themes
Set of measures for the objectives
The Strategy Execution
Stage 3: Align the Organization
Value is created by delivering
the customer value proposition
Value is created through synergy
among organization components
Employees
Shareholders
Board
CEO
Corporate
Group
Division
SBU SBUSBUSBUSBU
“Customer
Derived
Value ”
“Enterprise
Derived
Value ”
Value in organisations is created in two distinct ways
Alignment is the process through which we create synergy
1-17
Financial
Perspective
Customer
Perspective
Internal
Perspective
Shareholder
Value
Growth Production
Learning &
Growth
Perspective
Human Capital
Information Capital
Customer Value Proposition
Price Quality Availability Selection Functionality Service Partnership Brand
Product / Service Attributes Relationship Image
Organization Capital
Innovation
Process
Customer
Management
Process
Operation
Management
Process
Regulatory &
Social
Process
The Strategy Map
Production
Supply Chain
Customer
Management
Innovation
Social / Regulatory
Human Capital
Organization
Capital
Information
Capital
CORE
BUSINESS
PROCESSESINTANGIBLE
ASSETS
MANAGEMENT
Stage 4: Align Operations The Strategy Map identifies the high-level factors that must be further defined at a lower level of detail
Stage 5: Monitor and Learn
Are strategic objectives being achieved or not? If they are, then acknowledge, reward and
communicate progress. If not, then consider the following questions:
1. Will the objectives be achieved relative to the portfolio of strategic initiatives funded? If
not, then why?
2. Should the targets and deadlines for completion of these strategic initiatives be
changed?
3. Are these initiatives adequately resources (personnel, money, equipment, facilities,
training, etc.) to achieve specified goals?
4. Are the goals still realistic?
5. Should priorities be changed?
6. Should the strategic objectives be changed?
7. What can be learned from our monitoring and evaluation in order to improve future
planning activities and also to improve future monitoring and evaluation efforts?
7 8 9 10 11 12
The Operational Management Process
(ensure execution of short term plan/budget)
Time Allocation
Actions
Discuss Implications
Review Performance
The Strategy Management Process(ensure execution of the long-range strategy)
Time Allocation
Refine Strategic Issues
Discuss Implications
Review Performance
4 5 61 2 3
Develop new approaches to strategic issues between
meetings
Identify strategic
issues that
require attention
7 8 9 10 11 12
The Operational Management Process
(ensure execution of short term plan/budget)
Time Allocation
Actions
Discuss Implications
Review Performance
The Strategy Management Process(ensure execution of the long-range strategy)
Time Allocation
Refine Strategic Issues
Discuss Implications
Review Performance
4 5 61 2 3
Develop new approaches to strategic issues between
meetings
Identify strategic
issues that
require attention
KEY
Monthly Operating Review
Quarterly Strategic Review
10%
60%
10%
30%
10%
40%
50%
Stage 5: Monitor and Learn
Q1 Q2 Q3 Q4
Review Performance
• The last stage in the XPP process is critical to ensuring
long-term success of your strategy. Too often, strategic
plans are formulated and then followed blindly – without regard
to competitive changes or changes in the marketplace. Even a
well-formulated strategy must be tested periodically – even
if it is being executed to perfection – to ensure that it’s the
“right” strategy for the organization. Achieving breakthrough
results requires both a good strategy and optimal execution of
that strategy.
• Various techniques can be used to determine whether a
strategy is successful. These techniques are applied at the
“strategic” level; they differ from Operations Research in that
they are not focused on a particular process, or operational
measure, but rather on the entire strategy.
• These techniques still employ analytics; they are based on
rigorous testing rather than “gut feel,” but those analytics are
applied to a macro-level analysis of the organization’s strategy,
results, and future scenarios.
Stage 6: Test and Adapt
Adapt
&
GOVERNANCE
PORTFOLIO
PROGRAM
PROJECT MANAGEMENT
Governance in the PM Context
‘Governance refers to
the set of policies,
regulations, functions,
processes, procedures
and responsibilities that
define the
establishment,
management and control
of projects, programs
and portfolios.’APM Body of Knowledge, 6th edition
• It relates to consistent
management, cohesive
policies, guidance,
processes and decision
rights for a given area of
responsibilities
• Defined in terms of
mechanism thought to be
needed to promote it
• The function is to ensure
that an organization /
partnership fulfill its overall
purpose
• Operates in an effective and
ethical manner
• In mature project management organizations,
project management exists in a broader
context that includes program management
and portfolio management
• Organizational planning can direct the funding
and support for the component projects on the
basis of risk categories, specific lines of
business, or general types of projects
Relationship Among Project Management, Program Management, and Portfolio Management
Program & Projects Link to Org’s Strategy
1-25
A portfolio refers to a collection of projects or
programs and other work that are grouped
together to facilitate effective management of that
work to meet strategic business objectives
Portfolio management refers to the centralized
management of one or more portfolios which
includes identifying, prioritizing, authorizing,
managing, and controlling projects, programs,
and other related work to achieve strategic
business objectives
Portfolio Management
1-26
A program is a group of related projects managed
in a coordinated way to obtain benefits and
control not available from managing them
individually
Program management is defined as the
centralized, coordinated management of a
program to achieve the program's strategic
objectives and benefits
Program Management
1-27
Portfolio
Portfolios
Programmes
Projects
Projects
Projects Programmes
Programmes
Projects
Projects
Projects Other Work
Portfolio, Program and Projects
Eg: Link Strategies to Potential Projects
1-29
The Importance of Alignment
1-30
Process measurement databases
Project files
Historical information and lessons learned
knowledge bases
Issue and defect management databases
Configuration management knowledge
bases
Financial databases etc
Corporate Knowledge Base
INITIATIVE
Initiative – Definition
“A collection of finite-duration activities, projects and programs outside of day-to-day work that bring about change, and are designed to help an organization achieve its targeted performance.”
Kaplan – Norton
“It’s a broad transformational effort to create
significant strategic results for an organization.”
Strategic Initiative (SI) – Definition
1-33
What is a Strategic Initiative?
A “Good” Strategic Initiative should have:
o Accountability at the Leadership Team Level
o Clearly defined start and end dates
o Clearly defined deliverables
o A budget assigned
o Committed resource allocation (e.g., Real
Employee Hours)
An Initiative is NOT:
o Business as usual
o NOT the same thing as strategic objectives or
strategic goals
o NOT studies or analytics
For Example:
“Research and
select new
expansion
markets”,
“Automate the
whole
manufacturing
process”
For Example:
“Pay the salaries
every month,”
“Do the
maintenance”
1-34
The Value of Strategic Initiatives
Strategy Execution
(The execution of the strategic
Initiatives)
Why should organizations have strategic Initiatives?
Macro-Environment
Micro-Environment
FIRM
Societal Trends
General Economics
Disruptive Technology
Emerging Policy and Regulation
Competitors
Substitutes
Suppliers
Customers
Current
Status
Desired
Status
Organizations operate in a complex
environment where many different aspects
are subject to change…
In order not to lose competitiveness
organizations must evolve and develop long
term plans that describe the desired future
situation
The successful execution of strategic initiatives is the way to move from the current to the desired status
1-35
What Is an Initiative?
Initiatives are defined to help close the Performance
Gap.
Initiatives help close the gap
between our current and desired
performance.
STRATEGIC INITIATIVE
Get on a diet
Weight
80 Kg
KPI
Target
Actual Target
100
80
We
igh
t (K
g)
gap
KPIs and targets track our progress toward
achieving and communicating the intent of the
Strategic objectives.
KPI / TARGET
Loose weight
Strategic Objectives articulate the
components of our strategy
Where’s the Value?
Companies spend billions every year on
the “wrong” projects
Less than half of all projects are truly
aligned to a company’s strategy
Only 1 in 7 projects add value beyond
“staying even” (i.e., enhance
competitive position, differentiate
products and services, or create unique
capabilities)
Waste
Innovation
Productivity
Sustaining
Source: G. Moore presentation at Palladium Balanced Scorecard Summit, November 2005; SAP; McKinsey Quarterly and Palladium research
“Half of my initiatives achieve strategic goals. I just don’t know which half.”
70%-80% fail to deliver expected results on time and budget
WasteInitiatives
Yielding
Results
Why? Some Statistics
At strategic level:
- 84% of companies either do not conduct business cases for
their projects or perform them on select key projects only
- 89% are flying blind with no metrics in place except for financial
data
- 84% of companies are unable to realign their budgets with their
business needs
At project management level:
- 19% of projects – outright failures
- 46% constitute troubled projects
40% of projects investments fail to deliver their intended
benefits
Results? Underperforming projects of $5.2 trillion worldwide
1-38
This process is not always easy to implement, for several reasons:
Initiative Overload
Organizations with over
500 strategic Initiatives
Lack of Alignment
Initiatives not having
impact on any strategic
objective
Conflicting
initiatives
Initiatives with different
purposes for the same
objective
Inability to
prioritize the
initiative pool
Lack of agreement
amongst the top
managers on top priority
initiatives
Insufficient
resources
Initiatives usually require
extra effort from
organizations
Poor project
Management
Capabilities
Time, budget and people
management
Why? Some Statistics
Question:What is Draining the Value
from your Initiatives?Discussions
Conclusion #1In order for the company to deliver successful projects the executive management must select ‘good’
projects to implement
Conclusion # 2
In order for the company to deliver successful projects, number of projects
assigned to the company employees must not exceed some reasonable threshold; otherwise none of the projects will be
delivered successfully
Benefits of Initiative Realization
Help to Extract 80% more value
Accelerate results, help “fund” future
execution steps
Increase on-time, on-budget delivery of
strategic initiatives
Ensure effective execution and benefits
realization from strategic initiatives
Increase organizations commitment and
confidence
Increase employee engagement
Increase the likelihood of fully realizing
the overall strategy, achieving the
organizations vision and closing the
strategic value gap
Module 2