Strategic Management and Projects

(MAPM 607-4)

Fesseha Afewerk (A/Professor)

Certified Management educator

Addis Ababa University

College of Business and Economics
School of Commerce Graduate Program
1
Module outline…
CHAPTER 2
Managing projects strategically
2.1 Conventional project management vs SPM
2. 2 The significance of strategic thinking to
project management
• Key elements of strategic thinking

2
 Strategic project management
• Strategic Project Management (SPM)
is the process of thinking about your
Projects in light of their connection to
your strategic plan.
• In other words, Strategic Project
Management is about forming clear
links between your Projects and
Strategic Objectives.
 Strategic project management…
• Strategic Project Management (SPM)
defines the big picture of how the
project may benefit the company's
efficiency and effectiveness as a whole.
This process combines project
management methodologies and
frameworks and business strategies to
drive organizational breakthroughs.
 What's the Difference Between Strategic Project
Management & Project Management?

• There's an extensive overlap

between traditional and strategic
project management.
• Simply put, it's all about looking at
your existing portfolio of projects
through a strategic lens.
What's the Difference Between Strategic Project
Management & Project Management…
• That means that you'll still apply all of your traditional
project management methodologies and frameworks
to strategic project management. Also, project
management teams will need to manage the broader
business aspects of their projects to align and support
the organizational strategy. They will no longer be
concerned just about meeting the aforementioned
traditional project management challenges.
• It's probably easier to think of strategic project
management as a new sub-discipline within the
broader discipline of project management. Just like
resource management or dependencies are today.
 Strategic Project Management
vs.
Conventional Project Management
Conventional Project SPM
Management
Link with business
direct and explicit vague and distant
strategy
highly flexible, → creative,
Project definitionusually portrayed as a 'given'
depending on options
only done once a
Project planningfollows on directly from project definition
project STRATEGY IS SET

important but only in context

absolutely central – it is all about control
Attitude to detail – tries always to see the big
→ 10 Key Project Leader Skills
('helicopter') picture
far-reaching stakeholder
Importance ofemphasis on formal structures: project
analysis – requires continual
stakeholdersmanager, team, sponsor
scanning
The importance ofcoped with through critical path analysis uncertainty analysis done
uncertainty(after activity planning) first, then activities planned
 Benefits of Strategic Planning in
Project Management
• The implementation of strategic
project management leads to
achieving a competitive market
advantage.
 Benefits of Strategic Planning in
Project Management…
• The art of identifying and choosing the right
projects to work on in a given time frame is
proving to be a significant advantage in the
modern marketplace.
• Expanding the project management function to
include strategic project management
methodologies in the selection of projects allows
a growing number of businesses to identify and
select projects that provide the maximum value,
both for them and their clients.
• Therefore, aligning project management and
organization strategy produces significant
benefits for the organization.
 Benefits of Strategic Planning in
Project Management…
• Contrasting the practice of leading expensive projects that are not
fully compatible with the business goals, this alignment can cast a
new light on the project selection process. Funds are more
carefully spent on improving the impact on the company's overall
performance, thereby increasing profitability and reducing
unnecessary expenses.
• This alignment can also improve project success rates and the
organization's ability to address customer needs and expectations
quickly. Research has shown a sharp increase in financial
performance and overall project success rates for projects that
were more aligned with business strategies. When each project
directly contributes to the company's bottom line, the
organization as a whole improves, improving customer
experiences and retention rates.
 How to Develop Strategic Project
Management
• Managing priorities is an essential part of both
traditional and strategic project management.
If your business is focused on educating a
certain customer profile, this customer
strategy will affect every aspect of your
business operations, including the project
management teams.
 How to Develop Strategic Project
Management…
• Therefore, a strategic project
manager should pay attention to the
following:
• Simplify decision-making
• Improve priority management
• Link budgets to strategy
• Contribute to the project strategy.
 How to Develop Strategic Project
Management…
• Focus on organizational ambitions
• Revisit strategic progress
– strategic management entails oversight of an
expansive approach or endeavors at achieving an
effort through concerted means.
– Whereas, project management signifies a
specific endeavor in an effort to contribute to a
strategic objective.
 How to Develop Strategic Project
Management…
• Conventional project management is an
approach that will work for most areas and
conditions. This approach utilizes a universal
approach and procedures for managing and
problem-solving. These tools and techniques
have been establishing for a long period of
time.
 Strategic project management…
• Strategic project management is the
process of aligning projects with
strategic objectives.
• It is the process of combining
business strategy and project
management to efficiently carry out
those strategies and deliver
organizational breakthroughs.
 Strategic project management…
• Strategic project management
gives companies the chance to gain
a competitive advantage in terms
of actually reaping the benefits of
proper project management.
 Why Do Strategy and Project Management
Efforts Need to be Aligned?
• Strategy-focused organizations are better positioned to
meet the challenges of a changing world and deliver
customer and stakeholder value.
• Today’s high performing organizations, whether they use
an agile or traditional style of management, effectively
communicate to their employees what they are trying to
accomplish, align day-to-day work to vision and strategy,
• use strategy to prioritize their portfolio of work, and
measure and monitor progress towards tangible strategic
targets.
• This type of strategic management goes hand in hand with
effective project management because as strategists
map out a plan, project managers execute the
plan successfully.
 Strategic Thinking
“Strategic Thinking is analyzing opportunities
and problems from a broad perspective and
understanding the potential impact your
actions might have on others.”
“Strategic thinking focuses on the long term
rather than the short-term. It focuses on the
big picture and the small picture, as opposed
to just focusing on the small picture. Strategic
thinking is both analytical and creative.”
 Strategic Thinking…
• “Strategic Thinking is a thinking process
involving elements of Systems Perspective;
Intent Focus; Intelligent Opportunism;
Thinking in Time; and Hypothesis Driven.”
 Strategic vs. Non-strategic

Strategic Non-Strategic
•Broad view with zoom in
•Narrow view
•Abstract with powerful
•Concrete with no engagement
engagement of the imagination
of the imagination
•Abstraction illustrated with
•Concrete illustration only
concrete examples
•Generally understood ideas
•Important, non-intuitive,
that fit within a consensus
framework breaking ideas
framework
•Embraces alternatives and
•Embraces neither alternatives
uncertainties
nor uncertainties
•Aims to achieve an over-
•Focuses on supporting goals
arching goal
The significance of strategic thinking to
project management
• With strategic thinking, you can create the
future for yourself and your employees.
• It helps you to identify opportunities for
change, and take advantage of them.
• This, in turn, increases market share and
profitability, and makes your business more
durable.
 Significance of strategic thinking to
project management…
• Strategic Thinking Provides Insight into New
Opportunities & Growth
• Strategic Thinking Directs You to Managing
Resources Effectively
• Strategic Thinking Prepares You to Respond
Quickly
• Strategic Thinking Leads to Better Decision-
Making
The significance of strategic thinking to
project management…
• Creates a sense of direction.
• Increase operational efficiency.
• Increase market share and profitability.
• Increase durability and sustainability.
• Being proactive instead of reactive.
 Research Phase
• The work in this phase is usually done
before the strategic thinking team works
together.
• The key research elements are to identify
and understand the Voice of the Customer,
identify the extent to which employees are
engaged within the organization culture
and to benchmark internally and externally
to identify best practices.
 Strategy Phase
• The work in this phase is usually
done as an off-site.
• Although this can be accomplished in
2 days, it is preferable to put aside 3
days for the full strategic thinking
planning.
• The team will start by reviewing the
results of the strategic thinking
research phase.
The significance of strategic thinking to
project management…
• Strategic Thinking is a planning process that applies
innovation
• to develop business strategies that have a greater
chance for success.
• Strategic thinking is the ability to see the total
enterprise, to spot the trends and understand the
competitive landscape, to see where the business
needs to go and to lead it into the future.
• More and more organizations are learning that past
experience is not always the best basis for developing
future strategies.
• executives need to thoughtfully consider how to create
value for customers
 Strategic thinking
• !t the foundation is self "awareness, which arises from the
ability to think critically, along with an intellectual openness.
Those, in turn, provide the basic business skills including
decision "making, problem "solving, and a solid grasp of both
the business and the customers it serves.
• The higher one rises in an organization, the more these skills
are needed and as they are developed, they build the next
layer up the ability to embrace change and ambiguity, and in so
doing create something new and different. That, in essence, is
strategic thinking.
• but it all starts with critical thinking and those who cannot
master the basics donot go far in an organization.
 Strategic thinking…
• Strategic Thinking - is the "What"
and the "Why"...that is what
should we be doing and why.
• Strategic Planning - is the "How"
and "When" ...at a very high level.
 Strategic thinking…
• Strategic Thinking is a complex process, which is
also considered as an effective business tool as
well.
• It involves various cognitive and thoughtful
activities that lead to a better future of an
organization. In a nutshell, it involves a series of
decision-making steps that optimize the process
and helps an organization to meet deadlines and
provide productive results.
• Creative thinking, vision, and system thinking
constitute its foundation.
strategic thinking involving three main activities.

Source: Wootton and Horne (2001)

When engaging in strategic thinking, there are 4
critical questions that should be asked
1. What is the economic environment in which
we must operate?
2. What competencies does the organization
have which provide a sustainable
competitive advantage?
3. What resources support or constrain our
actions?
4. What opportunities lay before us?
 strategic thinking…

Strategic thinking Strategic thinking

is learned, not cannot be
innate. taught.
 strategic thinking…

Seeing
systems
Vision/Goals

Analysis

The ability to see what is - and what could be –

and make choices that lead to desired outcomes.
Key elements of strategic thinking
Sees systems.
Analytical. (Makes
Vision/goal (causes,
sense of diverse
driven. relationships,
input and data.)
leverage points)

Focused on long Thinks across past,

Weighs decisions
term forces, present and
against criteria.
trends, impacts. future.

Questions
Anticipates Allows for
assumptions,
unwanted events “intelligent
habits and
and risk. opportunism”
conclusions.
 Key questions that can help
• What is our goal/purpose?
• What key problems, causes and solutions do we exist to
address?
• What are past, current and possible future trends?
• What are the key opportunities and threats we face?
(Where is greatest leverage? Where is greatest risk?)
• What will it take? What are possible course of action?
• What are the implications of these choices?
• What criteria will we use to choose and evaluate a
course of action?
• How does our plan intersect with other goals/plans?
Lack of shared analysis can limit
strategic thinking
shared
vision/goals

opportunities historical
and threats analysis

Problems and
power analysis
causes
Power relationships can limit strategic
thinking
More
Less Power
power
Over-emphasis on only the long-term
or immediate challenges

Immediate
only

Long term
only
 Anchoring can limit strategic thinking
• When faced with a choice, we may
ANCHOR on a certain good outcome
we think will occur.
• It can be hard to remain open to
other options or implications.
• Anchoring is often the result of over-
the-top urgency to “just do
something.”
 Bias can limit strategic thinking
• We all have biases.

• We select for information that supports

our viewpoint and experiences.

• We tend to disregard information that

doesn’t fit our beliefs/values.
 What can I/we do?
SELF-REFLECTIO
• What are my own strengths and weaknesses
related to strategic thinking?
• What adjustments can I make? How might I
improve my own strategic thinking skills and
habits?
• How can I provide more strategic leadership –
regardless of the position I hold?
 What can I/we do?
GROUP REFLECTION
• How can we (continue to) develop a shared
analysis among the staff and board?

• How can we (continue to) nurture a staff culture

that promotes strategic thinking?

• What skills/habits can we learn to improve our

ability to think and work strategically as a staff
team?
 Thinking Strategically
• Thinking strategically is about being pragmatic,
flexible and realistic
• It produces plans that are simple and
concentrate
on a few targets only
• Being truly strategic means being clear about
what the organization is and what it isn't, about
whom its good for and whom its not good for,
about what it can and cant become (Evans, 2004)
 Thinking Strategically…
• Processes to encourage strategic thinking
– Stimulus Questions
– SWOT Analysis
– Focus group process
 Summary
• Strategic thinking has six key elements that
include the ability to: anticipate, challenge,
interpret, decide, align and learn. While each
of these elements has received isolated
attention, they become significant in entirely
new ways when examined in the context of
one comprehensive framework.
 Summary…
• Anticipate: Most leaders focus on the present, but research
shows that futures never follow a straight line. Strategic
leaders proactively monitor the environment to foresee
industry shifts — even at the periphery so that they can
prepare for the resulting threats and opportunities.
• Challenge: Though conventional wisdom is tempting,
strategic thinkers question everything instead of accepting
information at face value. They reframe problems to
understand root causes, challenge current beliefs and
mindsets and uncover hypocrisy, manipulation and bias.
• Interpret: Anticipating change and challenging conventions
surfaces valuable facts and figures that must be
thoughtfully analysed to yield actionable results. Strategic
leaders compare and contrast these data points in
unconventional ways and test multiple hypotheses before
arriving at conclusions.
 Summary…
• Decide: Indecision, also known as analysis paralysis, often keeps
leaders from acting swiftly, resulting in missed windows of
opportunity. Strategic leaders use process and discipline to
arrive at a good enough decision. They balance speed, rigor,
quality and agility to take courageous stands, even with
incomplete information.
• Align: Strategic leaders welcome the diversity of differing
viewpoints and opinions, but also must know how and when to
align divergent agendas to work towards a common goal.
Actively engaging stakeholders to encourage open dialogue and
address misalignment helps build trust and reach consensus.
• Learn: Learning leaders encourage and embrace feedback,
viewing success and failure as sources of critical insight. They
insist on rigorous debriefs, remain agile, course-correct quickly if
off track and celebrate the right kind of failures in addition to
success.
 Summary…
• Any strategy and project within the ‘bigger picture’
needs to have indicators to measure success. The
same is true for strategic project management.
• Strategic project managers often use these four
categories of performance measurement:
• Finance
• Customer
• Learning and growth
• Internal business processes.
• Essentially, they provide the basis for defining
objectives for programs, portfolios and projects.
 Summary…
• Criteria for Project Selection Models (Soulder)
– Realism (technical-, resource-, market-risk)
– Capability (adequately sophisticated)
– Flexibility (valid results over large domain)
– Ease of Use (no expert needed to run model)
– Cost (much less than project benefit)
– Easy Computerization (use standard software)
 Summary…
• Project Evaluation Factors (PEFs)
–Production Factors
–Marketing Factors
–Financial Factors
–Personnel Factors
–Administrative and Misc. Factors
 Summary…
• Numeric PS Models Profit/Profitability
– Payback Period (PB)
– Average Rate of Return
– Discounted Cash Flow (NPV)
– Internal Rate of Return
– Profitability Index
– Other Profitability Models
 Summary…
• Strategic thinking skills are any skills that
enable you to use critical thinking to solve
complex problems and plan for the future.
These skills are essential to accomplish
business objectives, overcome obstacles, and
address challenges—particularly if they’re
projected to take weeks, months, or even
years to achieve.
 Summary…
• Strategic thinking skills include:
– Analytical skills: To ideate a strategy that helps your
organization reach its objectives, you must be capable
of analyzing a variety of inputs—from financial
statements and KPIs, to market conditions, emerging
business trends, and internal resource allocation. This
initial analysis is crucial to creating a strategy that aligns
with the current reality facing your organization.
– Communication skills: Putting a strategy into place for
your company, regardless of its size, requires
solid communication skills. The ability to communicate
complex ideas, collaborate with internal and external
stakeholders, build consensus, and ensure everyone is
aligned and working toward shared goals are all central
to strategic thinking.
 Summary…
• Problem-solving skills: Strategic planning is often used
to solve problems or address challenges, such as
missed financial targets, inefficient workflows, or an
emerging competitor. Implementing a strategy that
addresses the central challenge you face requires you
to first understand the problem and its potential
solutions. From there, you can craft a strategy that
solves it.
• Planning and management skills: Strategy isn’t just
about thinking of a solution—it involves
implementation, too. Once data has been analyzed, the
problem is understood, and a solution has been
identified, you need strong planning and management
skills to bring everything together.
Chapter 2 ends