Implementing strategy through projects

Implementing Strategy Through Projects Sergio Pellegrinelli

s

TRATEGY

FORMULATION

and Cliff Bowman

HAS

BEEN

THE

SUBJECT

of much managerial and academic interest, both in defining exactly what is meant by strategy and in developing appropriate concepts and techniques for its formulation. Ground breaking work has been undertaken by Ansoff,’ Porter,2,3 Hamel and Prahalad4,5 and many other distinguished writers. However, the issue of implementation has received less attention. Once a strategy has been developed, its implementation appears to be seen as a matter of operational detail and tactical adjustment.

The Challenge of Strategy Implementation Where an implementation framework is put forward, for instance by Hrebiniak and Joyce,‘j it primarily communication about strategic involves clear objectives, against which line managers then devise their own operating targets and plans. The strategy implementation process is entrusted to the organization’s internal systems and procedures. Consequently, senior management is limited by existing conventions and protocols in its ability to monitor and accelerate progress. Such translation of strategy into relevant action plans for individual business units, functions and departments requires a high level of corporate discipline: a consistent understanding of the strategy and its implications is required throughout the organization, and staff have to be willing and able to take the necessary actions. Although most organizations use structures and procedures, such as steering committees and planning systems, strategic initiatives tend to be uncoordinated and some are never realized. This may not cause a problem if the organization is adopting an

Senior managers spend a great deal of time and effort formuldng and promoting their chosen strategy, but all too often find that very &tle changes within the organization. The strategy does not have the impact expected: somehow the original objectives ere dissipated aa the strategy moves into implementation and the in&E momentum is ioat before the expected benefits are realized. This failure to implement strategy is often a result of senior management trying to use the organizatiun’s existing systems and structures, its ‘status quo’, to change the ‘status quo’. This arricfe sets o& the underlying causes of poor performance in ~m~leme~ting strategies, and out&es how en organkation, by adopting a project and programme orientated approach with ita associated management framework, can ensure much greater SWXW.

‘incremental’ approach to strategy formulation and implementation, as described initially by Lindblom7 and later developed into the concept of ‘logical incrementalism’ by Quinn.R A lack of formal strategy formulation, planning and implementation is ‘normal’ if strategy should and does emerge in an unplanned manner as the organization responds, instinctively, to its environment as suggested by Mintzberg and Waters9 and later Mintzberg.‘O Incremental and emergent change typically occurs within or at the boundaries of the existing paradigm. A paradigm, as defined by Johnson,” is the set of beliefs and assumptions held in common and taken for granted in an organization. The concept encompasses the forces of inertia, stability and strategy within the organization. Long Range Planning

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Paradigms, however, can fall out of line with the external environment-the concept of strategic drift-demanding a more revolutionary strategy or change.” For such revolutionary change to occur senior management must first identify and accept the need for the change, then actively intervene in the process. For senior managers to diagnose effectively the need for and appropriate nature of revolutionary change, they have to bypass the preconceptions of the existing paradigm.11,12 The specific experience of senior managers implementing revolutionary strategies with whom’ the authors have worked is that initiatives tend to dissipate as they are implemented by line managers and staff. This experience is common to organizations in different industries and of different sizes. Intended outcomes and desired benefits are only partially realized, as illustrated in Figure 1. The rest of the organization has not thought beyond the paradigm and consequently finds the strategy alien and is reluctant to take the actions required. The need for senior management to overcome the inertia of the organization to implement strategic documented.‘3-15 However, by change is well

choosing to implement a revolutionary strategy through the existing structures and hierarchies, senior management is, in essence, trying to use the existing paradigm to redefine the paradigm. To put it another way, senior management is trying to use the ‘status quo’ to overthrow the ‘status quo’. The conflicts and difficulties faced are significant and can be summarized as follows:

a

Smooth FIOLV of Operations vs Step Change to Seize Opportunity: Much of a line manager’s working life is spent in making sure his functional area or department runs smoothly and that changes, where necessary, are introduced gradually with minimum risk. This is fundamentally different from making a step change such as adopting a new technology, reorganizing work practices or possibly abandoning certain customers. There is a natural inclination to reduce the scale and urgency of the change and to create a sense of security by using established, but potentially inappropriate, organizational arrangements and procedures.

a

Efficient Execution of Tasks vs Securing of Desired Benefits: Typically, a functional organization allows technical specialization and creates economies of scale and scope. However, the efficient execution of tasks tends to become an end in itself and not a means of achieving the overall goals. If the existing hierarchy is used to implement the strategy, the person responsible for on-going processes has to address the issue of their effectiveness in relation to the new strategic direction. The pressure to compromise is both powerful and hidden.

a

Current Way of Doing Business vs Future Way of Doing Business: An organization gradually adapts its structure and style, and hence its practices, methods and value systems, to match the way it does business. Making a strategic change requires managers to conceive and accept new practices. However, the current environment conditions their responses and limits what they are prepared to contemplate. ‘Best’ practices and ‘common sense’ funnel the strategy so it conforms to the prevailing beliefs and attitudes. For instance, despite the fact that many initiatives cut across functional and department boundaries, implementation plans tend to mirror the existing structures.

Intended Strategy

I implemented through

Existing Structures, Processes and Culture

Intentions diaorted and reinterpreted; absorbed into existing rwtines

Implementing Strategy Through Projects

cl

Established Distribution of Power vs New Distribution of Power: Organizations are inherently political, having complex structures of influence and power which the strategy is likely to disturb. The paradox is that the most powerful managers, who may have the most to lose, are of pivotal importance in implementing the strategy.

These and other conflicts are observed in their various guises by many of the commentators already cited. The contention of this article is that the conflicts encountered are not endemic to strategy implementation but to the approach adopted. Just as the formulation of a revolutionary strategy requires senior managers to bypass the paradigm in the way they think about the organization and its environment, its implementation requires them to bypass the existing systems, structures and hierarchies. The framework for initiating, direction and realizing change should be separate from the procedures born of the prevailing paradigm. Such an alternative approach to strategy implementation is offered by projects and the associated disciplines of project and programme management. This view emerges from consulting experience in helping organizations formulate and in particular implement revolutionary strategies. A selection of relevant case material is used to support, develop and illustrate the principal arguments. These cases represent evidence of the success of the approaches advocated in the article and link general concepts to real world experience. As with any findings based on case material, it is impossible to be definitive or conclusive. Nonetheless, the experience of companies and managers can provide valuable insights into the practice of management.

Translating

way of organizing and managing construction and high technology activities.lfi While the basic approach and disciplines are appropriate, for project management to be effective in implementing strategy, the concept of a project has to be understood in a wider sense: as a vehicle for achieving change. In this context, most strategic initiatives can be conceived and handled as projects; from the more tangible issues such as new product development to the ‘softer’ aspects such as organization redesign and management development. This concept of a project as a vehicle for change is gaining greater recognition and appreciation, for instance by Buchanan and Boddy.17 The project approach acts outside the existing processes and culture to transform the way an organization operates and helps embed new behaviours required by a revolutionary strategy, as illustrated in Figure 2. This is achieved through the creation of roles and responsibilities distinct from the established hierarchy, performed usually by existing managers in addition to their routine work, and a ‘zero-based’ starting point to defining and realizing the project objectives.

Strategy Into Action

The challenge facing senior management seeking to implement revolutionary change within the organization is to manage that change outside the straitjacket of the existing bureaucracy, procedures and norms. Projects and project management help senior management to do precisely that. Project management is a systematic, phased approach enabling organizations to undertake complex changes outside the scope of their on-going business. In the past, projects were regarded as a Long Range Planning Vol. 27

August

1994

The Two Key Project Roles are those of Client and Project Manager The client, usually a senior manager (if not the chief executive), defines the business requirement and the project’s role in implementing the overall strategy. Senior managers who have been intimately involved in creating the revolutionary strategy are charged with defining the concrete actions and changes necessary to effect the strategy. The project may represent a discrete initiative or the means of grouping and bounding a set of actions. The project manager ensures that the project, once defined, is executed efficiently by managing the day to day activites, reporting directly to the client on project related issues. This project organization separates these potentially divergent decision making roles within a project. The senior manager (client) acts as the guardian of the new vision and resulting strategy in the face of possible implementation difficulties. This duality of role and formality of the relationship enables the new strategic thinking to be preserved and articulated precisely as the project moves from the concept phase through the feasibility and detailed definition phases, so implementation is unambiguous. The client role is there to prevent any operational compromises to the ideal from being driven by the manger’s preoccupation with ease of project implementation and to ensure that the underlying strategic objectives of the project are achieved. this role needs to be performed Importantly, throughout the life of the project and after its completion, to ensure that the project delivers the benefits sought. Clearly, an intimate understanding of the strategy and its internal logic is required for this role to be performed well. In summary, the client role cannot be vested in the project manager nor given to junior managers. The role of project manager is usually performed by a manager within the organization, either as a full time role, or more frequently, in addition to his or her routine work. In general, a dedicated project manager or project team is allocated to a project only if the project is very large or strategically very important. In most organizations the project manager draws on the resources from different parts of the organization to carry out the activities required. Project Management is Designed for Major Changes The disciplines of project management facilitate the Implementing

Strategy

Through

Projects

process of undertaking complex, usually unique, changes for which an organization has no depth of experience or established set of procedures. The definition process seeks to clarify the project objectives, constraints and assumptions, thereby avoiding the trap of presumption and unquestioning adoption of the existing way of doing things. Similarly, techniques such as work breakdown structures, networking allocation and resource provide an unbiased methodology for planning and undertaking the necessary activities. The project plan formalizes the scale and the nature of the change, the schedule indicates the timing and urgency of the changes required, the responsibilities for individual activities are pinpointed. The problems of dissipation are reduced significantly, albeit to be replaced, in part, with the more overt and manageable problems of non-compliance. The power of the project approach has been demonstrated in practice. A core element of UK Insurance Company’s strategy was to change the way and serviced its intermediaries; it supported independent financial advisors (IFAs). The existing branch network exhibited high cost/low productivity relative to its competitors, yet provided little differentiation. The Sales Division was given the task of restructuring itself. The solutions proposed involved some manpower and cost reductions, but within the same branch framework. These recommendations were not radical enough to solve the cost problem but at the same time threatened to compromise the Company’s growth ambitions. Nothing happened. A year later a project was established to address the issue of the branch structure, cliented by the General Manager and project managed by a line manager from the Marketing Division. After some time spent understanding the nature of the problem and the constraints, a ‘market oriented’ approach was adopted. The requirements of the IFAs were researched and an ideal support and servicing organization devised and costed. Using this ideal as a blueprint of the end goal, the plan to transform the branch network was developed, relatively painlessly and without too many compromises, as a series of logical stages. The power of the approach lay in the fact that the project created the context to challenge the Company’s conventional thinking, to assimilate previously ignored ideas and to test the viability of and reaction to various scenarios. The project

manager had a knowledge of the industry and relationships with managers within the Company, yet was not committed to any existing approach. The role gave him the mandate and authority to question the status quo and explore alternatives. In essence, the part of the paradigm on how best to service IFAs was bypassed. Importantly, the General Manager was able to exert a direct influence and to demonstrate his support of the process and final outcome without seeming to ,undermine the authority of the senior managers in the Sales Division. This important role of creating a legitimate framework for management intervention is only now being discussed in the academic literature.” The above case history describes the use of project management in achieving a major strategic objective. The experience of the authors is that organizations usually have a number of initiatives to implement which combine to deliver the competitive advantage sought. Revolutionary strategies by their very nature tend to be unique and tightly integrated. They cannot rely on cumulative improvements associated with an incremental strategy which is both informed and constrained by the prevailing paradigm. Mintzberg I8 has identified and called these strategies ‘gestalt’. In general, organizations are faced with two important and linked difficulties when using projects to implement their strategy: The Interdependence of Projects Implementing a strategy usually involves defining and undertaking a range of projects each addressing a component of the strategy. The relationship between the components is usually complex, overlapping and interdependent. For projects to be effective, though, they need tight definition and well specified boundaries. The integration of the projects is often the root of successful strategy implementation. Learning During Projects A strategy, even a predetermined revolutionary one, is subject to modification during implementation as a response either to changing circumstances or to new information on the feasibility or desirability of certain actions. Project planning and implementation techniques, on the other hand, rely on fixed objectives, constraints and timescales. The decomposition of strategic initiatives into sequential tightly scoped projects, which facilitate the incorporation of

learning achieved during implementation, pins the fine tuning of strategy to operating

underrealities.

The Programme Approach The answer to these two difficulties lies in the emerging discipline of programme management. A programme is a framework for grouping existing projects and defining new ones. These projects are managed in a co-ordinated way either to achieve a common goal or to extract benefits that would otherwise not be achieved if they were managed independently. A programme differs from a project in that it does not necessarily have a single objective, nor a finite time horizon. The use of programme frameworks as a means of grouping projects is quite widespread, particularly among organizations which incur high capital investments, such as telecommunications, railways and utilities. For instance, British Telecom, the UK’s largest telecommunications company, has programmes and programme offices which co-ordinate the work on the thousands of projects under way within the organization at any point in time. The Company uses projects, and their associated management disciplines, extensively for all types of changes, including major re-structuring. A recent example is the widely publicized Project Sovereign aimed at reducing the number of management layers within the organization. British Rail uses programmes and projects to such an extent that it has instituted the post of Director of Projects, distinct from the functional directorates from which most of the project team members are drawn as required, to create a centre of excellence. Programmes can do more than simply group projects to facilitate coordination, they can act as a bridge between strategy and projects. The programme management approach ‘operationalizes’ the strategy by: 0

Creating framework for the strategy implementation process: thereby ensuring critical elements are identified and a complete set of actions is specified and assigned without crucial interfaces being overlooked.

cl

Making project definition more systematic and objective: thereby reducing the prevalence of long duration projects, which have a higher risk of Long Range Planning Vol. 27

August 1994

failure or obsolescence, and replacing them with shorter sequential projects defined and managed within the programme framework. The use of programmes as a means of managing strategic change is becoming accepted and organizations are now exploiting their potential. In the case of the Insurance Company referred to above, the project to restructure the branch network was one in a number of strategic initiatives to transform the Company into a more market and customer focused organization. Other projects were set up to investigate the needs and attitudes of the target market, to improve the Company’s corporate image, to look at the potential offered by new sales channels and so forth. These projects were clearly interdependent and, because of their exploratory nature, involved considerable organizational learning. The core of a programme approach was established for managing the projects: one of the authors acted as programme co-ordinator to help identify and manage the dependencies and the General Manager reviewed progress on individual projects and overall progress towards the wider strategic goals at a single meeting attended by all the project managers.

Company Cases A few organizations are adopting a more formal and structured programme framework, as illustrated in the case studies below. A Water Company A recently privatized Water Company was concerned that its approach to its investment expenditure, the platform for its strategic development, had not kept pace with the changes to the company’s environment stemming from privatization. The focus had changed from the need to ‘spend’ whatever capital was made available by the Government to the need to achieve strategic, timing and ‘value for money’ objectives. This required not only improved techniques for the management of individual projects, but also a new approach to the management of the whole investment budget. The Water Company decided to adopt a strategic programme framework which enabled the formulation and on-going maintenance of the investment expenditure against future strategic and current Implementing Strategy Through

Projects

business needs. Required organizational changes and re-assignment of responsibilities between head office and the operating units, and between line management and the company’s technical functions, were also undertaken. This resulted in strengthened mechanisms for the planning of individual projects and for the monitoring, reporting and control of project and programme performance. Senior management is now confident that projects are delivering the improvements required by the Company’s strategy. The advantage of such a strategic programme approach is that a direct link is created between the overall strategy and the many individual projects and initiatives. In the case of the water company, should the strategy need to be amended to respond to new EC directives on water quality, the implications for individual projects can be readily identified. The strategic programme framework is designed to cope with implementation delays and impasses that might otherwise jeopardize the achievement of the organization’s goals.

Financial Services A large UK Financial Institution faced with the need to reduce costs substantially and to become more responsive to market pressures has taken on board the project and programme approaches as the only visible means to achieve the corporate transformation within the timescales required. The concept of a ‘Strategic Change Programme’ has been formalized along with the procedures for initiating a strategic project and the role of the ‘Strategic Change Project Office’. An ‘Alignment Committee’, made up of the senior management team, has been set up to ensure projects and sub-programmes are aligned to the corporate strategic objectives. These are parallel structures to the Company’s existing hierarchies and procedures. Crucially, the organization understands that the structure and contents of the programmes are transitory, while being committed to the idea that projects and programmes are the appropriate vehicles for strategic change. Managers are seconded as project managers or on to project teams, on a full time or part time basis, with the assurance that they can move back into line positions and the understanding that work done on projects is valued by the organization.

Implications

for Managers

The argument put forward is that project and programme management are superior to conventional approaches to strategy implementation and change management, especially when dealing with revolutionary change. Specifically: seeking to implement revolutionary cl Managers strategies should not use the systems, structures and hierarchies associated with the status quo they want to overthrow. 0

Projects and programmes are effective vehicles for change because they offer the opportunity to operate outside the status quo but alongside existing structures.

0

The disciplines and rigours of the project and programme management have to be applied for the approach to be effective.

This third point has been implicit in the argument so far and is worth elaborating on here because of its implications regarding the behaviour of managers. The basic principles and techniques of project and programme management have been outlined above. Greater detail can be readily gained from published material on setting up projects, facilitating the interaction between project team members and reintegrating full time project team members into the organization, for instance Archibold16 or Cleland and King.lg However, this represents the substance but not necessarily the spirit of what is required. Successful application of the programme approach to strategy implementation requires senior managers to step outside the paradigm, just as they did to conceive the revolutionary strategy. This means fundamentally re-examining their understanding of the implementation processes and personal managerial behaviours. Failure to benefit from the programme approach is usually caused by perceived similarity and presumed familiarity: perceived similarity of the programme approach to existing organizational systems and procedures and presumed familiarity with the project and programme principles. Managers often see commonalities between the techniques used to break down strategies into programmes and the traditional cascade method of translating strategic

operating targets. objectives into frequently claim knowlege or personal ‘managing’ projects.

They also experience of

Pitfalls The pitfalls to be avoided are illustrated below. Any strategy needs to be broken down into manageable pieces and whichever approach is adopted, some generic techniques are applied. Conventional approaches, for instance,” focus on defining the relationship between the business strategy and the functions or divisions in the organizationswhat does the strategy mean for manufacturing, sales, etc? The programme management approach focuses on defining all the projects or initiatives that comprise the business strategy and their relationship to each other. Superficially, the process looks similar but the results are considerably different: profunctional boundaries, grammes typically cross initiatives are consolidated and rationalized, new programme clienting responsibilities are created. The Business Planning Group of an Irish Bank reckoned that their biggest challenge in getting the programme management approach accepted was convincing members of the Board that they should not each have ‘their own strategic programme to run’. Once defined projects within a strategic programme framework need on-going senior management support. Projects are vehicles for change and, as with any vehicle, they require a driver-the project manager. The need for project flexibility and integration within the strategic programme demands active direction setting and navigation-part of the client (or sponsor) role. Unfortunately, experience of training project managers in numerous organizations indicates that many senior managers pay lip service to the client role and expect the appointed project managers to ‘get on with it’. Refreshingly, one organization recognized the potential problem and arranged for a group of senior managers to attend a workshop on how to be good project clients.

Summary The choice of change mechanism and approach is critical for the effectiveness of strategy implementation. While an evolutionary strategy can seek to Long Range Planning Vol. 27

August

1994

change the organization from within, a revolutionary strategy does not have that option. Using the existing organizational structures and procedures to implement a revolutionary strategy is tantamount to asking the ‘status quo’ to overthrow the ‘status quo’. An alternative is offered by projects and the associated skills and disciplines of project and programme

management. The case histories cited demonstrate that project and programme management enable organizations to translate strategy into action. Projects are far superior to conventional approaches to strategy implementation and change management and offer a competitive advantage to the organization which can master and apply them.

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