This short video tutorial covers the essentials of how mature organizations select projects and programs that are aligned with an organization’s strategy.
In this segment, we will review how mature organizations ensure that their selected programs and other initiatives are linked to their business strategies. As programs are large initiatives that organizations undertake to further their growth, it is quite essential that these programs are aligned with the organization’s strategy and vision. A program not aligned to an organization’s strategy can end up wasting an organization’s capital and resources. So, a methodical approach based on industry best practices can help an organization select the right programs and ensure that they stay aligned for the duration of the program’s execution and delivery phases.
Let’s first see how an organization develops its strategy. The input to this process is usually the vision and mission of the organization and that’s obvious because an organization’s strategy must always align to the vision of its owners and shareholders, so that should always be the starting point. Next, the business should take a snapshot of its current performance and assess the strengths and weaknesses of its current business strategy and operations. In this context, the organization should also reference its current strategy and strategic business plans to see what has been working, what needs to continue and to discuss new areas that the organization may want to get into for the future. The organization should also look into the current market environment as that’s an essential input to develop an organization’s future strategy. Here, the organization gets a better understanding of its target market’s audience, the demands of its products and services, and any new opportunities that it may see in its space. Finally, input from ideas and innovation should also factor into the strategy development process.
So, with these inputs, the organization gets into the strategy development process. As this process is repeated often throughout the year, it is also referred to as the Strategy Development Cycle. In this step, the organization takes these inputs and conducts numerous workshops with its executives and business managers. They go through a series of steps that involves strategic thinking and analysis of the certain set of information related to the markets that the organization wants to compete in, assessment of its customers and audience, looking at their products and services, their competitive situation, assessments of suppliers, and so on.
The result from this process is that either a new strategic plan is created or an existing strategic plan document is updated. This document usually contains the various initiatives that the organization wants to pursue and work on in the subsequent months and years. In the context of our discussion, some of these initiatives eventually will become the programs or projects that the organization will work on.
Once an organization has a list of its initiatives, it takes them through what’s called a portfolio planning and management process. A portfolio is a collection of related initiatives that are tied to a certain business objective or they are grouped with other management goals in mind. For example, if the organization has decided to launch a number of marketing-related initiatives in its new strategic cycle, it may decide to group all marketing related initiatives in one portfolio. Alternatively, if an organization has launched a number of new initiatives of let’s say systems modernization in different departments, it may group all systems modernization initiatives in a portfolio. So, the grouping reasons may vary depending on the organizational objectives and the way that the organization wants to monitor the performance of those initiatives.
Another goal of the portfolio management function is to evaluate the various initiatives based on their merits and to select and prioritize them. This is because an organization may select a number of initiatives in its strategy development cycle but its budget and resources may be limited. Besides, an organization’s budget is also allocated for other ongoing operational issues and emergency projects, etc. So, the initial evaluation and selection process selects the most important initiatives that the organization wants to work on. Besides, the evaluation and selection process may not be driven solely for budgetary reasons but there may be other factors as well. We won’t cover those details here as that’s part of the project portfolio management function and is covered in another training session at CorpExcellence.com.
So, in a nutshell, the result of the portfolio planning and management process is a number of selected programs and projects that the organization has decided to work on. Since these initiatives have been selected through a formal process of strategic thinking, evaluation, and selection, they are more aligned to the organization’s strategy than those programs and initiatives, which don’t undergo such formal and methodical scrutiny.