Bridge between Strategy and Operations

Success of a business requires two major attributes—how relevant and focused the business strategy is and how effective the business operations are. In an organization, people perceive that strategy is at the highest management level while operation is at the floor level. For implementing it, the strategy has to be converted into operations. There may be a disconnect between the strategy and operations, which will eventually lead to poor implementation.

This is experienced by many organizations. On the other hand, there are organizations, which are effectively working on strategy and operations issues, and have transformed themselves into value-driven growing organizations.

This article explores the basic premise of strategy and operations in an organizational perspective. The article brings out the importance of the linkage between strategy and operations, in achieving the organizational goal. It also shows how Project Management can be the bridge between strategy and operations and explains how Project Management is the language of implementation.

Vision without doing is merely a dream

Action without vision is just passing the time

Vision with action can change the world
                                                           -- Joel Barker, “ Mr. Paradigm”4
                                                                
1          Introduction

Success of a business requires two major attributes viz. how relevant and focused the business strategy is and how effective the business operations are. In an organization, people perceive that strategy is at the highest management level, while operation is at the floor level. For implementing it, the strategy has to be converted into operations. There may be disconnect in between the strategy and operations, which will eventually lead to poor implementation.

This is experienced by many organizations. On the other hand, there are organizations, which are effectively working on strategy and operation issues and have transformed themselves into value driven growing organizations.

This article explores the basic premise of strategy and operation in an organizational perspective. The article brings out the importance of the linkage between strategy and operations, in achieving the organizational goal. It also shows how Project Management can be the bridge between strategy and operations and covers that Project Management is the language of implementation.

2          Relevance of Strategy and Operations

2.1       Strategy is the journey to Goals

What is then strategy all about? Strategy is the master plan that reflects the organization’s vision, mission, and objectives. It is the term for the collective and actionable steps to implement operating programs and achieve goals.

In fact, goals are destinations and not the journey. Strategy is the journey. Goal can be as expression of what the organization aspires. For example, a company may have a strategy aimed at positioning itself as a market leader.

The company can set about to achieve this strategic objective by improving product marketability, offering superior variety, quality, best prices, unmatched warranties and unmatched customer service. These are the components of the market leader strategy. This will lead to define the strategy in specific terms.

 

2.2       Operations make results happen

What does ‘operation’ mean? ‘Operation’ means transforming a set of inputs in to desired set of outputs. This transforming is through a definitive processes. The process starts with the concept of operations. It finds out the validation whether strategy is complete, accurate and effective for the intended purpose. The inputs are generally the resources.

The operating activities will depend on the desired outputs and the available resources to deliver those outputs. That means a process of synchronization of activities should be in place.

It is important that, at the planning stage, a forecasting is done with reasonable reliability, on the execution process to achieve the desired outputs.

2.3       So, the linkage is significant

The business is successful if it implements the strategy and achieves the planned business outcomes. (See Fig.1) Today, in many organizations, the business is carried out in fire-fighting way; i.e. a crisis is managed without considering any contingency plan, on ad-hoc basis. This type of crisis management may lead to another crisis. Unless the strategic intent is defined in terms of plans that are actionable, the process of operation looses direction and control.
 

Fig. 1 Desired Position of an Organization

3          Can Project Management Bridge The Gap?

3.1     Interest groups in the business environment

In any business, the most important component is its stakeholders. Stakeholders will try to maximize their value proposition. Considering the possible conflicting interests of the stakeholders, the business priority must find a way to go forward. Every organization likes a scenario of low cost and high returns. A gradual improvement will be noticed when the organization moves from ‘low cost-low return’ scenario to ‘low cost–high return’ scenario.

This movement requires basic organizational dynamics. The points for success for an organization which may also play key role here are: understanding the customer, understanding business environment, identifying problem at an early stage, timely decision and optimizing resource utilization.

So there is a need of a comprehensive well synchronized system, which covers all these dynamic issues.

3.2       The Changing Face of Business

Over the last couple of decades, the businesses have undergone rigorous changes. The technological superiority and economic facilitation have enabled the business functions to spread across nations. This has opened up new opportunities in greater profitability and market share. At the same time the threat of lost focus and scarcity of resources has challenged business functions. The limitation on investment and human capital has required that resource deployment decision be made through better understanding of business requirements and priority.

The need to innovate and urgency of time-to-market have made product development an integral part of the business process. Therefore, identification and mobilization of constraining resources will facilitate the business process.

3.3       What is a Project?

A Project is temporary endeavor undertaken to create a unique product and service.1. It may be undertaken at any level of an organization. As discussed, every organization performs work involving either operation or projects, which, in some cases, may overlap.

Operations and projects have some common characteristics, which are as follows:

• Both are performed by people
• Both are constrained by resources
• Both have to be planned, executed and controlled.

3.4       Why are projects undertaken in an organization?

Projects are undertaken to achieve the organization’s strategic plans. Projects are a process through which the strategy is implemented. Multiple projects may run simultaneously to achieve the business goal, but there is a possibility that same resources are needed for more than one project at the same time. So there will be a trade off in resource allocation.  The decision maker has to make prudent and justifiable choices. Reality in many organizations is that only twenty percent resources are contributing to growth in the projects. These resources are either capable to manage projects or overburdened.

3.5       Project Management is the language of Implementation

Project management is project-oriented process2. As projects are defined in terms of specific objectives and constraint, the way of achieving of project objective is a process. 

As the languages have certain framework and dynamics to convey the message, project management has its own framework and dynamics to integrate the plan sequence in term of management of scope, time, quality and cost. Also to integrate production sequence in terms of management of information, contract, human resources and risk, to attain the success, the project management has its own framework.

This is done keeping in view of stakeholders’ satisfaction and the constraining / facilitating factors that are present in the business environment. So, from implementation perspective, project management is more than a facilitating factor. Project management is the latest management concept. It has an edge over the traditional management practices in implementing strategy. Project management is a discipline combining all other disciplines. It is evolved from the realities of the implementation issues.

3.6       The relevance of project management

Project management is the application of knowledge, skills, tools and techniques to meet project requirements. Project management involves the process of initiating, planning, executing, controlling, and closing. Hence, irrespective of the level of the organization, project management contains structured sequential process.

In an organization, the process can be seen as portfolio management (the policy level decision making), program management (multiple projects to deliver the business goal) and project management (to achieve specific goal/s through a particular project). The concept of project management is synchronizing the process of attaining the business goal in realistic terms. (See fig.2)

 

 

Fig.2.  The project management linking strategy and operation

 

4          Value Addition through Project Management

Business is all about adding values to product and services at different stages. Value additions may be in terms of product improvement, pricing, place and time to market. Depending upon the business environment and type of business, some forms of value- add gets critical in success of the business.

Project management can add value to business. How?

Often one wishes “if product could have been delivered a couple of weeks earlier’ or “the market could be competed on price front through cost optimization” or “it would have been appropriate if there was a contingency plan at the right time’. Project management may not provide the unique solution, but it can facilitate the process to proceed in the right direction to get the desired level of output. The critical factors in the business have undergone changes over the years with globalization. The meeting of the time schedule and quality has become the key issue. On the other hand, the restructuring of organization in terms of cost reduction, efficiency building and better information flow can lead to better productivity. (See Table 1.)

Project management is a good facilitating process in adding values. Project deals with the real life possibilities and threats on day-to-day basis. So the monitoring and control is more realistic and effective in the project framework.

Project management maturity (PMM) assessments reveals that companies with higher PMM deliver projects on time and budget. Higher PMM means increased ‘Schedule Performance Index’ (SPI) and ‘Cost Performance Index’ (CPI). The SPI and CPI are ratios of total original authorized duration or budget versus total final duration or cost, respectively.

Table 1:  Converting concerns into opportunities in light of new business changes

 

5          Conclusion

The project management is emerging as a profession all over the world. In the new economic era when all business plans have to be considered within the parameters of appropriateness and resource constraints, the importance of understanding and communicating the customers’ need and delivering the result as per the acceptance criteria has become a challenge.

The global synchronization of business, offshore out sourcing of resources and validating results across a variety of stakeholders calls for standardized communicable work terminology and process description. This has facilitated the faster business communication at all levels. It has speeded up delivery process and generated faster feedback of performance. International bodies like Project Management Institute have established professional standards and certification to ensure the quality of project management, so that PM Professionals actually make significant impact on the outcome of the business processes.

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References:

1Project Management Institute, A Guide to the Project Management Body of Knowledge, 2000, Project Management Institute, USA.

Meredith Jack R, and Mantel Jr. Samuel J, Project Management-A managerial approach, fourth edition, John Wiley & Sons, 2002.

2Widerman R. Max, A Framework for Project and Program management Integration, Project Management Institute, 1991.

William Ibbs and Justin Reginato, Quantifying the value of Project Management, Project Management Institute, 2002

http://scpd.stanford.edu Bill Kern, Stanford Society for Professional Development, Converting Strategy into Action.