A framework for aligning strategy and execution

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Chief Learning Officer, IPS Learning and Program Director for the Stanford Advanced Project Management Program (SAPM)

Joseph R. Czarnecki, PMP, MSP

Vice President Product & Sales Support, IPS Learning

Abstract

Today’s dynamic, technology-infused world offers limitless opportunities for bringing new ideas to market. But even the most forward-thinking leaders with clear strategic visions typically fail to see their visions executed successfully. Their organizations struggle to effectively identify, resource, and manage the set of programs and projects that comprise the strategy. The Strategic Execution Framework (SEF) from the Stanford Advanced Project Management (SAPM) program provides ways to improve strategic execution capabilities and propel organizations through successful transformational change toward solid returns on strategic initiatives. Based on the latest research, this paper explores a practical approach for aligning the SEF’s six domains to execute strategy more successfully.

Success is the reason we do business. We want to create, then achieve, certain goals. In effect, we want to reach our own finish line. But oftentimes the things we intend to do in business don’t align with the end results. Across a range of industries, business leaders are plagued with the same pressing issues. In fact, a recent survey by The Conference Board of more than 1,000 CEOs from around the world found that innovation, human capital, customer relationships and operational excellence topped the list for the areas of focus that are driven by management action and require a well-executed business strategy.

Laying the Foundation

The Strategic Execution Framework (Exhibit 1) was developed to help companies maintain their focus and align projects with key initiatives to achieve desired results. Based on the concept that the building blocks for strategic execution are projects, the Framework defines projects as those activities put in place alongside regular operations to achieve specific goals. Everything a business does, whether it is developing new products, services, channels, and markets, comes from project-based work. Grouped together, closely related projects are called a program. In turn, the overall set of programs is your company’s portfolio, the strategies in which your company is choosing to invest. Successful strategic execution requires tightly aligning the project portfolio to the corporate strategy.

Strategic Execution Framework (SEF)

Exhibit 1 –Strategic Execution Framework (SEF).

Reaching a point of alignment and maximizing project performance is critical to successfully executing the strategies your company has identified to deliver on key initiatives. Even if you have invested in training to ensure managers have the skills to balance scope, time, cost, quality and risk, why do barriers to successful execution still exist? The missing link lies in a bigger picture that examines project-based work within the context of the overall business.

Linking strategy to execution through innovative techniques, the Strategic Execution Framework helps organizations ensure they stay focused on the initiatives essential to accelerating innovation, increasing performance, managing change, as well as scaling the business. When applied correctly, it creates an environment that transforms the way organizations think, lead, and execute. In turn, it drives increased revenues, profitability, and market share.

The Strategic Execution Framework

The framework consists of six domains easily remembered by the mnemonic: INVEST. It assists companies in retooling their approach so that they select the most advantageous strategic projects and execute them effectively.

The domains include:

Ideation: Where passion and drive originate, Ideation is your company’s understanding of what it is and how it appears in the world, expressed through its purpose, identity, and long-range intention.

Nature: Creating the conditions for strategic execution, Nature embodies the culture and structure; in other words, the environment and context within which you operate.

Vision: The ultimate destination and route, Vision includes the goals, metrics, and strategy that form the foundation for your business.

Engagement: Connecting strategy to project portfolio investments, Engagement is a clear demonstration that your company is funding the right projects that will further the strategy.

Synthesis: Carrying out projects mapped to priorities, Synthesis is where Engagement meets execution, ensuring you’re successfully executing projects and programs in alignment with the portfolio.

Transition: Turning outputs into operations, Transition is the ultimate measure of success, where you move the results of project-based work into the mainstream of your company’s operations.

Ideation: The Origin for Passion and Drive

Ideation is based on the concept of three fundamental life questions:

  • Who are you?
  • Why are you here?
  • Where are you going?

Corporate life is no exception. The way in which a company answers these questions about identity, purpose, and long-range intention creates central organizing principles that are critical to driving cohesive and consistent action.

Building Strong Ideation

Ideation consists of three components: identity, purpose, and long-range intention.

Identity is the character, image, brand, and values of a company. It is what sets the company apart from the rest and determines its ability to compete. Purpose is the fundamental reason the company exists at all. It gives people a compelling reason to come to work every day and to commit to the success of the business. Long-range intention defines the company’s long-term commitment. The seed of the desired future strategy, it is the first step in identifying strategic goals and the project investments that will be necessary to realizing them.

Your company’s ability to clarify and clearly communicate these three aspects of Ideation provides the context for leaders and their teams to make the best strategic choices as they move forward. With strong Ideation employees can make decisions that align with the identity, purpose, and intention of the business. In its absence they either guess or ask questions, wasting time and resources, leaving the company prey to its competitors.

The ability of employees to adapt to change is also influenced by the strength of your company’s Ideation. Mergers and acquisitions, strategic partnerships, or a significant shift in the competitive landscape can challenge a company’s Ideation. As your company and the market evolve, ask yourself: Is our Ideation still relevant? Does it need to be clarified? Is it being communicated effectively? Maintaining and communicating a strong Ideation can be a lighthouse for employees in times of change.

As leadership expert and author Simon Sinek has said, “If you hire people just because they can do a job, they’ll work for your money, but if you hire people who believe what you believe, they’ll work for you with blood and sweat and tears.” Strong Ideation forms the foundation on which businesses can create and sustain value as they continue to expand. Serving as a touchstone, it keeps employees focused on what ultimately matters most to the company’s future.

Bottom Line: Strong versus Weak Ideation

Companies with strong ideation become “iconic.” They’re admired not only for their innovative products, ultimate user experience or customer-focused services, but also for who they are. Organizations with weak Ideation send an uncompelling or confusing message to the market that impedes their performance. No one knows who they are or why they exist. Lacking inspiration and guidance, focused on short-term measurements or distracted by market changes, their Ideation erodes with each acquisition and management change. They disappear into oblivion as the marketplace makes room for companies that stand for something.

Ideation is seminal to the ability to identify and align strategies with ultimate objectives. One of the most valuable assets an organization can build, Ideation links strongly to two related domains—Vision and Nature. Long-range intention drives the Vision, while purpose and identity have an overwhelmingly strong impact on the components of the next domain we’ll examine: Nature.

Nature: Developing the Framework for Strategic Execution

The Nature domain focuses on an organization’s internal environment, linking culture, structure, and strategy. Nature requires that culture and structure be aligned with a company’s purpose and identity and support a viable strategy to move the company forward. Any kind of misalignment can create conditions that stymie effective and timely execution.

Getting Back to Nature

Nature is made up of three parts: culture, structure, and strategy.

Culture is comprised of the artifacts, core values, and behavior of the organization. It’s how a company gets stuff done. Structure is the way in which an organization designs relationships between areas or functions and can be defined anywhere along the spectrum from a strong matrix structure to a weak matrix, or siloed, structure. Strategy is the roadmap for an organization to achieve its purpose and goals. The optimal route depends on the company’s approach and how it is organized.

Bottom Line: Aligned versus Misaligned Nature

Your company’s ability to align these three components is critical. Leaders need to continuously look for misalignment in their environment and quickly identify what they can do to support their team and enable strategic execution, either through aligning with the organization at large or creating their own eco-system if needed. With strong alignment employees enjoy a constructive work environment that lets them get projects done with minimal roadblocks. In a misaligned environment, they spend more time and energy working against the natural order of things rather than helping move the company forward.

Creating a more aligned environment is important, but some components are more difficult to shift than others. Culture can be the most difficult and slowest to change, but must be addressed if it is misaligned with your company’s purpose and identity. A change in leadership or a significant shift in the marketplace can create this misalignment. In turn, structure must reflect your company’s culture and identity. If it doesn’t and a wholesale change across the organization isn’t feasible, then incremental modifications, such as building cross-functional coalitions to overcome functional silos, can achieve the needed alignment.

Vision: Reaching the Finish Line through Measureable Results

In the Vision domain, a company’s long-range intention becomes reality by translating it into near-term strategy with specific goals and metrics. While Vision is a familiar concept to most organizations, many can stumble in this domain because they fail to recognize the importance of discipline, communication, and agility in defining and executing their Vision.

Turning Vision into Reality

Vision has three components: Goals, metrics, and strategy.

Goals determine articulated, desired results. Without the discipline to choose goals that are tied to metrics and supported by strategy, goals are simply empty promises. Metrics are the measuring stick to evaluate progress toward those goals. Identifying the right metrics requires understanding which behaviors to reinforce to drive performance. Strategy is an organization’s roadmap to achieving its purpose and goals. The optimal path is strongly influenced by a company’s structure and culture, which are part of the Nature domain.

In Executing Your Strategy, Morgan, Levitt, and Malek state, “Organizations must set clear, well-communicated goals and then choose the best way to apply available resources to reaching those goals. Setting goals, setting standards for meeting them (metrics), and devising ways to get to the goals (strategy) are all part of the creative process. Approaching these decisions effectively requires forward-looking, positive, active choice.”

With the right goals, metrics, and strategy you have a solid foundation for success in the Vision domain. It is essential, however, that these components be widely articulated throughout the organization and be clearly defined in meaningful terms for various levels and functional areas to work cohesively. Continuous review and realignment with dynamic, external environmental factors, such as new regulations or changes in the competitive landscape, ensure your Vision remains relevant.

Bottom Line: Creating Clarity versus Confusion

High-performing organizations understand that to realize their Vision they need to focus on the future with creative and integrative thinking. They motivate employees with clear goals for which they are accountable with specific metrics. By identifying specific metrics around product functionality, quality assurance, sales and customer usage, you align various departments with this common goal. This positive pattern is repeatable and helps move the company forward in lockstep with its long-range intention or what it wants to be.

In contrast, many companies have trouble charting the path between where they are and where they want to be. Vision can’t be defined in a vacuum, but must be considered within the context of the company’s environment and long-range intention. Failure to recognize and address this misalignment can result in competing goals and metrics that work against each other, confusing customers and employees. For a company that wants customers to view it as a provider of comprehensive technology solutions, establishing some higher-level shared goals and metrics creates better alignment and a clear path that everyone can follow.

In the Strategic Execution Framework, the Vision domain focuses on reaching your company’s ultimate destination, charting the course with clarity and accountability. Heavily influenced by Ideation and Nature, Vision makes these strategic domains more real with tangible goals and metrics.

Engagement: Connecting Strategy to Project Portfolio Investments

The Engagement domain is central to strategic execution. It’s where strategy turns into action by engaging in a portfolio of project-based work that will move the business forward. The ability to choose and fund the right projects and programs is based on clarity around goals, metrics, and strategy.

Bringing the Components of Engagement into Alignment

Engagement consists of two components: strategy and the portfolio.

Strategy is the organization’s roadmap to achieving its purpose and goals. The optimal route depends on how the company is organized and how it gets things done. The Portfolio is the set of projects and programs a company plans to execute, reconciled with the resources required to accomplish them.

Success in the Engagement domain centers on the ability to align resources with strategy through the selection and execution of the right project-based work. To accomplish this, organizations must clearly articulate the strategy to leaders and their teams, and enable them to participate in the dialogue about the portfolio in order to make the best-informed decisions. They must also identify a process for establishing and managing the portfolio. You need to be able to answer questions like: Who is the portfolio sponsor? Who will decide which projects to undertake? How will they make these decisions and what decision criteria will be used? Who will identify and assign resources? Who will manage each project and program in the portfolio?

Engagement drives innovation by enabling the organization to prioritize innovation projects and allocate the necessary resources. It optimizes performance by focusing time, energy, and attention on projects that directly link to the strategy and desired outcomes. Engagement also has a direct impact on growth and scalability. A 2012 study by McKinsey & Company found that companies that adjust resource allocation across business units based on market opportunities were worth an average of 40% more over a 15-year period than those that maintain the same level of resource allocation year over year.

Bottom Line: Identifying What to Do and What NOT to Do

All organizations have limited resources. The key is to direct those resources for maximum advantage. Companies that excel have done the groundwork to design the right strategy for their organization, as well as the hard work to focus their investments on a portfolio of projects and programs that will bring that strategy to life. Organizations that fail to face the harsh reality of scarce resources can get caught in that all too familiar trap of trying to be all things to all people and being mediocre at best.

Synthesis: Executing Priority-Focused Project-Based Work

The Synthesis domain is where plans turn into reality — where companies ensure their planned portfolio of project-based work maps to the actual projects and programs that are being executed. It is the true test of an organization’s commitment to its strategy and ability to execute against it. Any gap between planned and actual reflects a lack of consistency and threatens an organization’s ability to achieve its goals.

Bringing the Components of Synthesis into Alignment

Synthesis consists of three components: the portfolio, programs, and projects.

The Portfolio is the set of projects and programs a company plans to execute, reconciled with the resources required to accomplish them. Programs are multiple, interdependent projects managed as a single unit. Projects are unique, temporary efforts defined by deliverables, schedule, and resources.

Success depends on:

  • 1.   Coherent and transparent translation of strategy into executable work
  • 2.   Consistency across planned and actual work driven by a common language and process methodology agreed upon at a high level
  • 3.   Active executive sponsorship to help overcome obstacles and ensure investment in the right opportunities so that day-to-day project and program leaders have the support they need to maintain smooth operations

To truly achieve alignment in the Synthesis domain, it isn’t enough to excel in these three areas. Companies must also be agile. In Executing Your Strategy, Morgan, Levitt, and Malek state, “What makes the Synthesis imperative so challenging is that both the planned portfolio and the actual portfolio are constantly changing in today’s business world.” The ability to bridge discipline with agility is critical. Managers and sponsors must be able to lead in a fluid environment. Processes must adapt to remain relevant in light of changing business conditions. The planned portfolio itself must evolve transparently to support shifts in strategy. And, ultimately, programs and projects must change to reflect a new reality.

Synthesis is where planning meets execution. It drives innovation by enabling the organization to invest in and act on innovation projects and overcome obstacles that may get in the way, optimizing performance by defining and managing the scope, deliverables, schedules, and resources of individual projects. Synthesis is also linked to growth and scalability; when project-based work is aligned with strategic objectives, program and project leaders have a direct impact on the company’s growth.

Bottom Line: Planning and Executing with Purpose

Companies that excel at Synthesis are disciplined yet nimble, focused yet aware. They continuously monitor and align project-based work with external indicators of strategic relevance as well as internally to make sure that the portfolio of projects and programs is being executed correctly. Having a well-defined, coordinated and transparent process to initiate new projects as strategic opportunities emerge, inject extra resources into critical but lagging projects and cancel ongoing projects that are no longer relevant are all signs that your organization has successfully synthesized planning and execution.

Organizations that don’t continuously monitor and align projects with internal and external factors threaten their own success. A recent McKinsey-Oxford study found that the largest contributing factors to project failures are unclear objectives and lack of business focus. Failing to recognize and allow for the necessary internal alignments created by shifting gears, the portfolio loses integrity, the actual work being done doesn’t match what’s planned and companies don’t realize their stated objectives.

In the Strategic Execution Framework, the Synthesis domain is where companies map project and program execution to priorities. When the actual work being done is aligned with the planned portfolio, you’re well on your way to successful strategic execution.

Transition: Turning Outputs into Operations

The Transition domain is the ultimate measure of success — moving the results of project-based work into the mainstream of operations. It is where an organization delivers on its goals or not, completing the cycle from strategy through execution.

Aligning the Components of Transition

Transition consists of three components: projects, programs, and operations.

Projects are unique, temporary efforts defined by deliverables, schedule, and resources. Programs are multiple, interdependent projects managed as a single unit. Operations are the ongoing processes of the enterprise that deliver value to the customer.

Alignment in the Transition domain is defined by how well an organization hands off its programs and projects to operations. A KPMG report on risk management for the project life cycle concurs stating, “The biggest challenges faced by organizations in maximizing the value of their projects are often derived from poor execution of change management plans during transition to business as usual state.”

Success hinges on managing two critical factors:

  • 1.   Organizational implications: By its very Nature, project-based work creates change and with change can come challenges. Project leaders and operations leaders must collaborate to minimize any disruptions that transition can create. To realize the full benefits of any project, smooth, thoughtful, and coordinated transfer of the work output to the end users or customers is essential. This requires engaging operations early and often to gain their input and support throughout the process of planning and executing the project even if they aren’t directly responsible for the project output until after the hand off.
  • 2.   Metrics consistency: The metrics established at the outset, when the organization defines its goals and strategy in the Vision domain, must map to the metrics used in actual practice when the project is operationalized. Conflicting or unclear metrics hamper performance and ultimate success. Collaboration between project and operations leaders is also important here to help ensure desired outcomes.

Transition is where project outputs are implemented, enabling companies to reap the strategic benefits that projects and programs were designed to achieve and, ultimately, realize key business initiatives including innovation, performance, and scalability. Transition makes innovation a reality by delivering innovation projects into the mainstream. It optimizes performance with a feedback loop that aligns goals and metrics from strategy creation to strategy execution. Enabling companies to bring process improvements and breakthroughs to fruition, transition is essential to reaching growth and scalability goals.

Bottom Line: Declaring Project Success

Whether a project involves adopting a new operational system or launching a new product or service, companies that excel at transition engage in collaboration from the start. They implement organization-wide processes for continually collecting and sharing lessons learned throughout the life cycle of the project-based work — not just at the end — and adjust the work as needed. Successful transitions include having the right tools and processes in place to ensure the entire company is aware of the new product, the logistics are in place to get the product to market, and the marketing program is timed to make prospects aware of the product as it comes to market. By addressing pivotal processes in advance, you ensure that a new product project successfully transitions to a newly available product in the marketplace.

Organizations that don’t involve the right players to the right degree at the right time lack the support and input necessary for project transition success. A new product may get to market only to arrive too late to make an impact; a logistics glitch could mean a lack of sufficient supply despite customer demand; or perhaps a lack of coordination with marketing means excess inventory due to lack of marketplace awareness. These are just a few of the things that go wrong, when the operationalization of projects isn’t given the proper forethought, which in turn negatively impacts an organization’s ability to achieve success and free up resources for new projects.

In the Strategic Execution Framework the Transition domain is where companies operationalize projects and programs. With an approach to anticipate and close gaps encountered during the transfer of project-based work to operations, you can safely — and proudly — claim strategic execution success.

Encouraging Transformation

The Strategic Execution Framework goes beyond a typical checklist to address a more holistic and, therefore, more effective approach to moving the business forward with an eye on the big picture.

Each of the domains presents opportunities for improvement. The framework helps you identify disconnects and barriers to successful strategic execution and can be adapted depending on your company’s strengths and weaknesses. Some companies know exactly who they are and what they want to be, but they might not have the structure to support it. Others may tend to focus on the tactical and veer away from the portfolio to engage in fire-fighting projects. And still others may have particular difficulty making the final step to embracing and institutionalizing the results of the project.

No matter which domains of the framework are more relevant for you, or what your key business initiatives may be, the Strategic Execution Framework provides a common language and way of understanding how businesses successfully execute, innovate, change, and grow. You can assess your organization within this context and make necessary adjustments to create a foundation for balanced strategic execution. When combined with these proven, innovative techniques, all managers leading project-based work can transform themselves and their organizations into true business leaders.

References

Bloch, M., Blumberg, S., & Laartz, J. (2012, October). Delivering large-scale projects on time, on budget, and on value. McKinsey Quarterly. [Electronic Version]. Retrieved from http://www.mckinsey.com/insights/business_technology/delivering_large-scale_it_projects_on_time_on_budget_and_on_value.

Hall, S., Lovallo, D., & Musters, R. (2012, March). How to put your money where your strategy is. McKinsey Quarterly [Electronic Version]. Retrieved from http://www.mckinsey.com/insights/strategy/how_to_put_your_money_where_your_strategy_is.

KPMG, LLP. (2011). Risk management and the transition of projects to business as usual. KPMG Financial Services Advisory. [Electronic Version]. Retrieved from https://www.kpmg.com/RU/ru/topics/Russian-Banking-Club/Documents/Risk-management-and-the-transition.pdf.

Mitchell, C., Ray, R., & van Ark, B. (2014, January). The Conference Board CEO Challenge® 2014: People and Performance. Retrieved from https://www.conference-board.org/publications/publication-detail.cfm?publicationid=2681.

Morgan, M., Leviit, R., & Malek, W. (2008). Executing your strategy: How to break it down & get it done. Boston, MA: Harvard Business Review Press.

Sinek, S. (2009, September). How great leaders inspire sction. Ted Talk. Retrieved from http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html.

The Strategic Execution Framework (SEF) was developed by IPS Learning, LLC and Raymond Levitt and is used in the Stanford Advanced Project Management Program, a partnership of IPS Learning and the Stanford Center for Professional Development. The SEF is described in detail in the book Executing Your Strategy: How to Break It Down and Get It Done (2008, Harvard Business Review Press).

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2014 IPS Learning LLC. All Rights Reserved.
Originally published as a part of 2014 PMI Global Congress Proceedings – Phoenix, Arizona, USA

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