Project Strategy: The Key to Project Success

Transcription

1 Project Strategy: The Key to Project Success Michael Poli and Aaron J. Shenhar Wesley J. Howe School of Technology Management, Stevens Institute of Technology Abstract This paper introduces and defines the concept of Project Strategy. Nike s Just Do It! is the prevailing attitude around projects. Schedule and budget dominate the measures of project success. To take advantage of opportunities, projects must be more than just tactical or operational. Building market share, extending product lines, increasing revenue, satisfying customers, and building for the future are more important measures of project success. Projects should be an active element in the implementation of a company s strategic intent, achieve better results, and increase the company s competitive advantage or value. Project Strategy focuses the project on the desired strategic results. It is an overarching set of guidelines to be used by the project in making decisions and taking action in alignment with corporate, business, marketing, and operational strategies. Existing frameworks and models offer insight in defining Project Strategy. I. Introduction The traditional measures of project success are based upon the triple constraint, delivering the project on time, within budget and to specification. Doing this is based upon short-term thinking. Nike s Just Do It! is the prevailing attitude around projects. Here are the schedule, the budget and the specifications Just Do It! In this reactive mindset, schedule and budget dominate the measures of project success. If we have to tradeoff anything, we usually tradeoff specification. Customers do not get the feature/functionality they expected. No wonder they are not satisfied with project results. Project success must be measured differently and projects must be managed differently. Projects must be managed strategically. They must be more than just tactical or operational. Corporations need to take advantage of the enormous opportunities that projects represent Project Strategy provides an umbrella or framework that can be used to dynamically guide project actions and decision making as the project environment changes. II. Project Success Project success must be measured on more then the triple constraint criteria of schedule, budget, and specification. Building market share, extending product lines, increasing revenue, satisfying customers, and building for the future are more important measures of project success. Shenhar developed four Success Dimensions [8] that measure project success over time, both the short-term and long-term. The nearest term measure immediately after project completion, is Success Dimension #1. It measures project success based upon Efficiency, whether the project was completed on time and within budget, two of the traditional triple constraint measures. Page 1

2 Within a year of project completion, Success Dimension #2 measures Impact on the Customer, was the specification met, the third measure of the traditional triple constraint. Additionally, Success Dimension #2 measures customer satisfaction and quality. A year or two after project completion, Success Dimension #3 measures Impact on the Business, did the project efforts result in increasing revenue and profits, creating positive ROI and ROE. In three to five year s time, Success Dimension #4 measures Building for the Future, did the project create infrastructure, new core competencies, new market opportunities, or extend product lines? Given this new perspective on project success, it is necessary to approach projects with a different mindset. The reactive nature of the Nike philosophy of Just Do It! is not acceptable. Just having a project plan is not enough. The nature of projects is that they are contingent on the environment. Project success depends upon the ability to adapt to that ever-changing environment. Projects must be proactive and dynamic! There must be a Project Strategy to guide the project. III. Project Strategy Projects should be an active element in the implementation of the company s strategic intent. At the corporate level, there is a corporate strategy embodied in a strategic plan. [2] The business strategy is found in the business plan. The marketing plan is derived from the marketing strategy. The operational plan from the operations plan. All the strategies lead to plans. But the project plan just is. There is no Project Strategy. Project Strategy is missing. All the strategies and plans have to embrace and build upon the prior strategies and plans. The project plan does not build upon nor embrace the other strategies or plans. Instead it focuses on the tactics of doing tasks and completing deliverables. But for what purpose? To complete the project on time, within budget, and to specification, that is a short-term perspective. Long-term thinking would be to have the project create competitive advantage or value for the corporation. A Project Strategy is essential to achieving better results and increasing the value obtained from projects. We define Project Strategy as The project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best value from the project. [9] Project Strategy is an overarching set of guidelines to be used by the project in making decisions and taking action throughout the course of the project. It is in alignment with the corporate, business, marketing, and operational strategies. There are two types of projects: those that are undertaken with the intent of creating products or services for external customers and those that are focused on internal customers. The external customer projects are meant to achieve a competitive advantage for the firm. They provide the revenue, cash flow and profits. The internal customer projects are meant to create business value Page 2

3 for the firm. They provide cost efficiencies, productivity enhancements, and faster response times. They contribute indirectly to competitive advantage. A Project Strategy is required whether projects are focused on external or internal customers. Asking and answering the questions of Why, What, How, Who, When and Where at a high-level, the Project Strategy helps the project focus on the desired strategic results, to achieve the highest competitive advantage and the best value from the project results. IV. Project Frameworks Existing frameworks and models offer insight in defining the elements of Project Strategy. At the corporate strategy level, Michael Porter s generic strategies [4] of cost leadership, differentiation, and focus (a niche strategy, combining cost leadership and differentiation) can be used especially with external customer projects. At the business strategy level, Wheelwright and Clark s framework [1] can be used to assemble a project portfolio, selecting projects based upon project mix and resource usage. The framework classifies projects on the degree of product and process change in the project. Three project types are defined: breakthrough projects where there is extensive product and process change, platform projects where there is moderate product and process change, and derivative projects where there is modest or incremental product and process change. At the marketing strategy level, the target customer, their characteristics and a deployment strategy can be determined using Rogers Technology Adoption Life Cycle. [6] Rogers identifies four customer types and their expectations. The Innovators like to dabble in new technology. The Early Adopters are the visionaries. They see the application, are willing to take the risks and can supply the resources to further develop the technology. The Early Majority are the first customers in the main stream market. [3] They embrace the technology once the application has been developed and the costs to switch to the new technology have been justified. The rest of the mainstream market is comprised of members of the Late Majority. They are risk adverse and will not embrace the new technology until it has become an industry standard. Finally, there are the Laggards who will resist the new technology no matter what. Waiting for them to adopt the new technology can be a time consuming and exasperating experience. Internal customer projects have a better chance of success if they use a deployment strategy that deploys to users according to their customer type in the sequence suggested by the Technology Adoption Life Cycle. Why try to deploy to the Laggards first? That is only setting the project up for disaster and failure. The Innovators can help test the project deliverables. By creating teams of power users from within the Early Adopters the value of the project deliverables can be established. The Early Adopters can provide valuable leadership when it comes time to train the rest of the user population. The success established by the Early Adopters provides the impetus for the Early Majority to accept the project deliverables and to use them on a larger scale. The Early Majority in turn provide the stability that the Late Majority users require. Page 3

4 At the operations strategy level, Porter s Value Chain [5] concept can be used with internal customer projects. Projects can effect the firm s infrastructure: it s primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service; or it s support activities such as human resource management, technology development, and procurement. These projects tend to be focused on internal customers but they can have a significant indirect effect on competitive advantage. Often internal customer projects must be developed in coordination with external customer projects to create the proper organizational support for the effective marketing, distribution, and sales of external products/services. Shenhar s UCP (Uncertainty, Complexity and Pace) model [7] helps to determine project management style and to assess project risk. On the Technological Uncertainty dimension, Shenhar classifies the project as low-tech with no new technology, medium-tech with some new technology, high-tech with mostly new technology, and super-high-tech with all new technology. Projects are classified as assembly, system or arrays on the Complexity dimension. Pace is classified as regular, fast competitive, or blitz-critical. Project risk increases as one moves from lowest to highest ranking on each of these dimensions. Taken as a three-dimensional model, the highest risk project would be a super-high-tech, array project being run at blitz-critical pace; the lowest risk project would be a low-tech, assembly project being run at regular pace. Shenhar further offers suggestions on how to adapt one s project management style to the project type, as classified on the UCP dimensions. V. The Elements of Project Strategy Project Strategy involves six elements: objective, product definition, competitive advantage/value, business perspective, project definition, and strategic focus. Asking and answering the questions of Why, What, How, Who, When and Where at a high level helps us to define each of these elements and in turn Project Strategy. Objective Why are we doing the project? What is the business opportunity? Is the project to create a new product or service with increased sales? Then we need to address Success Dimension #3 Impact on the Business. We can use Porter s generic strategies to guide us in choosing from either a cost leadership, differentiation or focus strategy. We would choose to set up an externally focused customer project. If the project addresses Success Dimension #4 Building for the Future, to build infrastructure for the long-term, then we can use Porter s Value Chain. We can choose among the primary and support activities to instantiate an appropriate internally focused customer project. Who is the customer? Who are the users? What are their needs? How do we address their needs? What is the deployment strategy? Which users should get the project deliverables first, second, etc.? From the Rogers framework we can determine the customer type for the customer and the users, their needs, expectations, and deliverables. This enables us to understand how we can address their needs and satisfy them, helping us to be successful on Success Dimension #2. Page 4

5 Product Definition This element addresses the product definition process. What deliverables are we producing? Is it a product/service? What are we required to make? What are the deliverables that will address the Whole Product that the customer expects? Here we look to the Leavit framework to define the product, the project deliverables. How are the project deliverables to be defined? The voices of the customers and the users, their needs and expectations must be addressed. How will we communicate with the customer? Data is needed to assess the efficacy and effectiveness of the proposed project deliverables. What information needs to be collected? How will market data be collected? Was there a competitive analysis comparing competitors products and positions? Were there technology, market and risk assessments? Who will do them? Will we use maps and trends, QFD, or other methods to define requirements and specs? A product vision, a statement that expresses an emotional appeal of the product and its advantage, is required. This vision needs to be clearly articulated. Who will do so, when, and how? Who will determine if the vision needs to be changed during the project and rearticulated? Functional requirements and technical specification documents need to be developed. How are the requirements and specifications to be defined? Who and what organizational functions will be involved? How will this cross-functional involvement be managed? What do we expect of top management? Answers to the above questions further solidify our ability to achieve Success Dimension #2 Impact on the Customer. Competitive Advantage/Value The project must identify the specific competitive advantage of the project deliverables (product, process, or service). How good is it? What is the advantage to customers and users over the competitors, over previous products, over alternative solutions? Will one of the following variables: cost, performance, time of introduction, or another advantage, or a combination of advantages, allow us to be successful on Success Dimension #3 Impact on the Business? Are the project deliverables cost/effective? Why is our solution better? Why would customers prefer our process, product or service? What is the value to our business? What is the value to the company? How would we benefit? How does it support or fit the company s strategy (separate short and long term value). Business Perspective This element asks the questions What are the business expectations? What do we expect? By establishing high level criteria, we can insure that the project goals will be in alignment with the corporate, business, marketing, and operational strategies. This alignment will address Success Dimension #3 Impact on the Business and Success Dimension #4 Building for the Future. We must develop a business plan that defines and articulates the strategy and competitive advantage/value that the project seeks. The project manager should be involved in strategy Page 5

6 setting and strategic planning sessions that lead to the project launch. Input from the customer, users, and the other project stakeholders should be part of this process. The competitive advantage/value sought should be clearly defined, articulated, written down, and well communicated to management and team members. All team members should be aware of the competitive advantage/value, understand it, accept it, and work to achieve it. Project Definition This element focuses on the project scope, project type and team selection issues. The scope defines the extent of the project s deliverables and the magnitude of the available resources. The project type classifies the project. We can use Wheelwright and Clark s framework to classify projects as either breakthrough, platform or derivative. We can define the levels of product and process change required. We can also use Shenhar s framework to classify the project on the UCP to set expectations vis-à-vis project risk. Additionally, we can determine the project management style to be used and how to relate to Success Dimension #1 Efficiency. From the leadership and team viewpoint, we can ask the following. What level of management should the project manager be selected? What competencies will be needed? Strategic Focus This element creates the mindset that will guide the project. It defines the behavior needed to achieve the competitive advantage/value. How should the team behave? What specific guidelines for behavior and decisions should be used to support the strategic focus? What should be done to achieve the best competitive advantage/value? How will we create a relentless pursuit of competitive advantage/value? A motivated team will enable the project to achieve its goals. What is the strategic focus of the project? Is it clearly associated with the competitive advantage? How will the Project Strategy be articulated, by whom, and when? How should we characterize the behavior that supports the proper strategic focus? How will we know if this behavior is present? What are our policies on managing and leveraging company competencies, professional expertise, internal synergies, and external alliances? Who will communicate and explain the policy? How do we insure that the project manager and team members manage the project with the strategic focus in mind explicitly, implicitly? What actions should the project manager take to guarantee strategic project success? What actions should others take to guarantee the strategic focus is maintained? Answers to these questions will insure that the four Success Dimensions will be properly addressed; that the corporate, business, marketing, and operational strategies will be aligned; and that the expectations for the project will be met. Page 6

7 VI. Conclusions Projects offer an enormous opportunity for achieving competitive advantage and/or achieving value for the corporation. Projects must be managed strategically. It is proposed that a Project Strategy is necessary to take advantage of these opportunities. This paper uses existing frameworks to define Project Strategy and in turn how to align your corporate, business, marketing, and operations strategies and to achieve your strategic intent. Asking and answering the questions of Why, What, How, Who, When and Where at a high-level, the Project Strategy helps the project focus on the desired strategic results, to achieve the highest competitive advantage and to obtain the best value from the project. References [1] K. B. Clark and S. C. Wheelwright, Steven (1993). Managing New Product and Process Development, The Free Press, New York, NY. [2] H. Mintzberg, B. Ahlstrand and J. Lampel (1998), Strategy Safari, Simon &Schuster, New York, NY. [3] G. Moore (1999), Crossing the Chasm, Revised Edition, HarperBusiness, New York, NY. [4] M. Porter (1980). Competitive Strategy, The Free Press, New York, NY. [5] M. Porter (1985). Competitive Advantage, The Free Press, New York, NY. [6] E. M. Rogers (1995). Diffusion of Innovations, 4 th Edition, The Free Press, New York, NY. [7] A. J. Shenhar, D. Dvir, T. Lechler and M. Poli (July 2002) One Size Does Not Fit All True For Projects, True For Frameworks, PMI Research Conference, Seattle. [8] A. J. Shenhar, O. Levy, D. Dvir and A. Maltz (2001) Project Success A Multidimensional, Strategic Concept. Long Range Planning, pp [9] A. J. Shenhar, M. Poli and T. Lechler (2001) A New Framework for Strategic Project Management, Pergamon, Management of Technology: The Key to Prosperity in the Third Millennium, PICMET - Ninth International Conference on Management Technology, Thousand Oaks, CA. Page 7

8 What is Project Strategy? Definition: We define Project Strategy as The project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best value from the project. Project Strategy involves six elements: Objective, Product Definition, Competitive Advantage/Value, Business Perspective, Project Definition, and Strategic Focus. Elements of Project Strategy Question Details Objective Why do we do it? Who is the customer/user? What is their need? How we address this need? What is the business opportunity? Product Definition What is the product? What are we producing? Functional requirements. Technical specifications. Competitive Advantage/Value Business Perspective Project Definition Strategic Focus How good is it? Why is it better? Why would the customer buy? What is the value for us? What do we expect? How to assess success? How do we do it? What is the project? How to behave? What to do to achieve the best CA/V? How to create a relentless pursuit of competitive advantage/value? What is the advantage to customer/user over: - Competitors? - Previous products? - Alternative solutions? Product cost/effectiveness. How would we benefit? Specified success dimensions. Business plan. Project scope (SOW). Project type classification. Resources time, $, etc. Guidelines for behavior. Policy on managing and leveraging: - Company competencies - Professional expertise - Internal synergy - External alliances Page 8