ABSTRACT
Most organizations have a clear division of labor when it comes to strategy work and execution work. This work is distinguished in some organizations as the business engine and the execution engine, respectively. Strategy planning and portfolio management work are parts of the business engine and usually carried out by senior managers. The execution engine comprises operational and project work, carried out by divisional managers and project teams. Because of the division in labor, misalignment can manifest due to gaps in communication and lack of sensemaking between strategy and execution personnel. When these gaps exist, they usually cause diminished organizational efficiency, effectiveness, opportunity, and optimization. This article introduces program management as the disciplined means to creating and maintaining alignment between business strategy and execution.
Introduction
Executives, leaders, operational managers, and teams within organizations face an increasing array of challenges today, not the least of which is speed of markets and complexity in product and service offerings. Beyond these challenges and those due to global expansion, advancing technologies, and competitive threats, there is one challenge perhaps even more important to overcome. That is the challenge to create and maintain alignment between organizational strategy and operational execution.
According to Pateman (2008, para 4), “Organizations' success at strategy execution, as exemplified by their results, remains low.” When such results are low, it is costly to organizations. Misalignment can manifest due to the gaps in communication and lack of sensemaking between executives working on strategy and teams focused on execution. When this occurs, the result is diminished organizational efficiency, effectiveness, opportunity, and optimization.
While most organizations struggle, some organizations do create and maintain alignment between strategy and execution much better than others. After some investigation into those doing better than the others, a commonality was revealed— they were program-oriented organizations. Pateman (2008) emphasized the need for a systematic management process to link strategy of business with execution of operations. The discipline of program management is uniquely positioned to serve as that systematic process. By taking a systematic approach with program management, an organization can realize improved business alignment between execution output and its business strategy. The program management discipline plays a pivotal role in aligning the tactical work output of multiple teams to the corporate and business unit strategy of an enterprise.
Introducing the Program Management Continuum
The role of the program manager can vary greatly from company to company (or even within different divisions of the same company). Some view program management similar to that of project managers. Other companies utilize their program management discipline as an extension of their business processes. Which do you think has the greater probability of creating and maintaining alignment between business strategy and operational alignment? Of course, the answer is: the organization that has program managers serving as an extension of their business.
Organizations where program management is viewed as part of the business management function and is linked to corporate and business unit strategy are referred to as being program-oriented. Conversely, in organizations where program management is not used to its full capacity, program management normally serves as a coordination function and an extension of project execution and as such is referred to as being project-oriented. Exhibit 1 illustrates program management orientation as a continuum with four distinct stages — Administration-focused, Facilitation-focused, Integration-focused, and Business-focused.
Exhibit – The program management continuum.
In general, organizations that are primarily project-oriented utilize program management practices as either an administrative or facilitative function. As one moves to the right of the center point on the continuum, program-oriented organizations are found that realize the potential of program management to serve as an integrator of project outcomes and linked to the business engine of the company.
Organizations typically evolve the use of program practices and, as such, move from left to right along the continuum as the needs of the business demands. However, as an organization moves from left to right (increasing its program management maturity), it is not relieved of the program management responsibilities it has left in the earlier stages of the continuum. Rather, the responsibilities are cumulative. Even if one reaches the final stage of maturity and is operating as a business-focused program management organization, there are still administration, facilitation, and integration duties to fulfill.
At the center of the continuum lies an important point, the program management point of transition. The point of transition is a philosophical decision point where the senior leaders of an organization make a purposeful and concerted choice to move their organization from being primarily project-oriented to being program-oriented. The transition point represents the formal acknowledgment by senior management regarding the importance of the program management discipline as a strategic benefit to the organization and the need to formally and actively empower the program manager to fulfill this role.
It is not being advocated here that all organizations should move across the point of transition and become program-oriented. There are many organizations that are quite successful and operate effectively as project-oriented enterprises. However, organizations that are facing many of the challenges noted above and struggling to maintain alignment between strategy and execution are likely realizing the need to generate greater business value and benefit than those currently being produced. These organizations would certainly see improved business results by transitioning beyond the center point to become a program-oriented organization. Exhibit 2 illustrates this perspective.
Moving to the right of the point of transition, improved business results are achieved. This is due in part, because programs are most often driven from the strategic goals of an organization. Strategic programs are defined by strategic objectives, and therefore it is relatively easy to define the business results desired from the creation and delivery of the program output. The qualifier to this statement is that the level of ease is dependent upon how well the firm's senior managers define their strategic goals and the caliber (or competency) of program managers employed.
Exhibit 2 – The program management continuum.
Aligning Business Strategy and Execution
The work of any enterprise is a system of management functions and critical processes aimed at converting inputs into outputs. It is, in essence, an integrated management system. Exhibit 3 illustrates such a system. The integrated management system is a coherent, end-to-end system. It includes everything from understanding market and environmental conditions, to the development of strategic goals that support a company mission, to the delivery of business value. With this analogy in mind, the integrated management system can be viewed as being comprised of two primary components: (1) the business engine and (2) the execution engine (Exhibit 3).
Exhibit 3 – The integrated management system.
The business engine consists of the strategic management, portfolio management, and program management element of the business. The execution engine consists of the team execution, project management, and again the program management elements.
The Role of the Program Manager
Program management is the overlap between the business and execution engines of the business and serves as the organizational glue that aligns strategy and action, which is necessary to deliver business value and to keep strategy aligned with execution. The role of program management in a firm's business engine is to be the delivery mechanism of the strategic goals established during the strategic management process and for achieving the business benefits established during the portfolio management process.
An organization's program managers do not create the mission or strategic goals — this is the role of senior management. The program managers do not plan and execute the project deliverables — this is the role of the project teams. The program managers do ensure the attainment of the value proposition identified by the portfolio management process by delivering an integrated solution through the collaboration and coordination of multiple interdependent projects and business functions. This ensures alignment between business strategy and project execution is established.
The role of program management in a firm's execution engine is to provide translation of business activities to execution activities, perform the integration and synchronization of outcomes from multiple projects, and help the project execution teams effectively and efficiently navigate market and organizational change.
When gaps occur between a firm's execution activities and business activities, many times it is due to ineffective translation between the two types of activities. Program management provides this critical role. For example, program management translates strategic business goals to program objectives as described previously. As part of execution, the translation must continue by translating program objectives to key project performance and success measures. This ensures that the direction, command, and control of each project are aligned to and support the strategic goals driving the program as a whole by creating traceability from strategic goals, to program objectives, to project performance.
Best Practice Companies
For program-oriented companies, it is not by coincidence that program management is at the heart of both the business and execution engines of the enterprise — it is by design. This is not to say, however, that program management is the most critical of a company's management systems. All are important and each has its function to serve. For program management that function is largely to create and maintain alignment between execution work outcomes and what the company is trying to achieve strategically.
As stated earlier, many companies perform exceptionally well without adopting program management. Many times the existence of an effective portfolio management process is sufficient to align a set of independent projects to the strategic goals of an organization. However, the need for transition to something different is triggered when the organization begins to experience a rise in complexity. This may include complexity of the solutions under development, complexity associated with the number of business functions required to be involved in creating solutions, complexity associated with the geographical distribution of work, and complexity associated with strategic alliance and co-development partnership arrangements.
The result of this rise in complexity is often realized in a misalignment between project deliverables and the business strategies within the organization. This misalignment eventually causes disruption in business results. Having worked with a number of firms to address complexity, a threshold of complexity that once reached, triggers the beginning of the disruption. For project-oriented organizations, disruption may occur because of a non-incremental increase in the number of projects required to manage the complexity, and the need to manage a large number of cross-project interdependencies.
For a number of years, some authors were advocating the need for strategic project management, where they stressed the importance for project managers to develop strategic business skills in order to fill the gap that was arising. While good in theory, in practice this makes little sense. Strategy has two sides, development of strategy and execution of strategy. Project management is best when hyper-focused on effective and efficient execution of the strategy. Becoming more ‘strategic’ does little more than serve to dilute the value of project management for an organization.
Rather, best practice organizations have found that senior leaders of organizations begin to look for a more systematic and integrative approach to solve the disruption problem caused by increased complexity and begin to explore the principles of program management as a solution.
With this, however, is the challenge to establish program management correctly within an organization and to focus on the critical aspects of program management that create the strategy-execution alignment. The critical aspects needed include: a strong program vision and documented traceability between strategy, program, and project team success measures. Exhibit 4 illustrates a number of examples that demonstrate the alignment between strategic goals, program objectives, and project success measures.
Exhibit 4: Strategy, program, and project alignment examples.
Summary
Many organizations engage in yearly strategic planning activities that focus on identifying long-range business goals, as well as high-level plans on how to achieve them. Good strategic management practices identify what an organization wants to achieve (strategic goals) and how they will be achieved (strategies) over a specified time horizon, which is typically three to five years. For product companies, strategy consists primarily of a collection of product ideas that, when turned into tangible products, contribute to the achievement of the strategic business goals. For service-oriented companies, strategy consists of a set of services that collectively contribute to the achievement of the strategic goals, and for change initiatives, strategy consists of new organizational transformation capabilities that will help achieve company strategic goals.
As an organization begins to grow and scale its offerings, maintaining alignment between work output and strategic intent often becomes a challenge. In part this is due to the increased number of offerings in the pipeline, but also the increasing number of cross-organizational groups required to be involved and, in many cases, an increasing layer of middle management. Simply stated, the link between execution output and strategic goals begins to weaken and in some firms, may eventually break if not addressed and is the reason to focus on program management. A program management discipline helps to not only deliver value for an organization, but importantly helps keep alignment between strategy and outputs — the business engine and the execution engine.
For many organizations, program management provides value to their business by serving as the organizational glue that can prevent the misalignment between execution and strategy. Program management creates a critical linkage across strategic goals, program objectives, and project deliverables focused on delivering the business benefits intended. In doing so, one can establish direct traceability between strategic goals, business success factors, and project performance measures, thus creating and maintaining alignment between organizational strategy and operational execution.