Guideline for travelling [i.e. traveling] from vision to projects and back

Abstract

The importance of strategy execution to realise the organisational vision is increasingly being recognised, but successful execution seems to remain problematic in the business world today. There seems to remain a gap between an organisation's vision and its projects — between where we want to be and our day-to-day projects and activities. What is the best methodology available today to link and align our vision to our projects in a way that is clear and easy to communicate? In this paper a unique and highly illustrative framework or guideline is presented that has been successfully applied in Namibia, especially in the public sector. The ‘Strategy Diamond’ and ‘Strategy Mind Map’ are introduced as broad guidelines to link vision with projects. The gap is closed in a step-by-step manner through the use of ‘Essential Building Blocks’ in the ‘Balanced House’. The ‘In-House Strategy Map’ summarises the strategy. The ‘House’ details are then added and include performance indicators and targets. The arrival point is at ‘Projects’. But it should never be a one-way journey. A return flight is sought back to vision. On the way back our hypothesis is tested. Were our assumptions correct? Are our projects really contributing to the achievement of our objectives? If so, to what extent? Here we need different verification tools.

The Gap

“Execution is the great unaddressed issue in the business world today.” (Bossidy & Charan, 2002, p5)

“The execution of a strategy is more important, and more valuable, than the formulation of a strategy…Unfortunately, the vast majority of organizations fail miserably when attempting to execute their strategies”. (Niven, 2003, pp10-11)

What is the gap? The gap in this paper refers to any one or more of the following:

1.    The perceived difference between where we are now and where we as organisation wants to be in the future;

2.    The gap between what an organisation wants to achieve and its ability to achieve it;

3.    The gap between strategy planning and execution;

4.    The gaps between the following elements: vision – strategic focus areas / themes – objectives – projects;

5.    The gaps in alignment between the organisation, the units and individuals in the units.

The gaps could be in knowledge or in application of knowledge. Disciplines that could help us to close these gaps include strategic management (Kaplan & Norton, 2001), strategic performance management (Marr, 2006) project management (PMI, 2003) and organisational development (OD) (Cummings & Worley, 1997), but mostly a combination of all. The first task is to identify the nature and magnitude of these gaps.

The purpose of this paper is to present a highly illustrative guideline that has been successfully applied in the public sector of Namibia, to assist in closing the above-mentioned gaps - to link vision with projects, to make strategy execution the main day to day activity, to align the organisation with units and individuals.

Strategy

We have to start with strategic planning. Knowing who we are and where we are, we start with the end in mind – the required outcome, effect or impact. From there we will work backwards until we can determine the first step we need to take tomorrow to eventually get where we need/want to be in say 5 years from now. Our journey's purpose is a specific achievement, output, outcome or impact (effectiveness). After clarifying our strategy destination or vision, the challenge is to work out the best way to get there (through efficiency). Because we do not want to be known as efficient in thinks we should not be doing, we have to focus on the required effects first. So we become excellent by being effective (doing the right things – setting the right objectives to make the required impact) and by being efficient (doing things right the first time / doing things the best way). But effectiveness and efficiency are not enough. Style (the way in which we do things) need to be added. Few business models today address all three elements of excellence. Many focus on efficiency (e.g. TQM and BPR); others on effectiveness (strategy models such as the BSC) and others on style (TQM and various OD interventions).

The Balanced Scorecard (Norton & Kaplan, 2001) offers an excellent framework for closing this gap. The BSC path starts on a high level with Perspectives and Themes, then moves to Objectives with their Measures and Targets and finally touches the ground with Initiatives/Projects. In the following sections the author shows how the BSC methodology has been adapted for the Performance Management System (PMS) of the Namibian Public Sector – to link vision with projects. The vision is regarded as the desired future position or strategy destination and the projects the way in which we make the incremental progress towards the realisation of our vision.

The Strategy Diamond

The ‘Strategy Diamond’ (Olivier, 2004), as presented in Exhibit 1, is a strategy planning and execution framework used in the Namibian Public Sector. It depicts the strategy planning process from top to bottom, step by step; aligning corporate, unit and individual objectives and projects. The first eight stages comprise the strategic planning process and the last two strategy execution. ‘Ground level’ is reached at Stage 6 where Initiatives/Projects are identified with their resource requirements.

Strategy Diamond (Olivier 2004)

Exhibit 1: Strategy Diamond (Olivier 2004)

The organisational strategic plan is developed in stages 1 to 6. Unit plans are developed in stage 8 (cascaded from the strategic plan) that clearly state the roles of the group and individuals in performing specific duties and projects within specific timeframes and budgets. In this way the individual is linked to the vision and can clearly see his/her contribution to the organisation's vision realisation. In stages 9 and 10 the strategy and unit plans are executed and progress/performance regularly measured, evaluated and verified with a feedback loop towards continuous improvement (CI).

Strategy Mind Map

The ‘Strategy Mind Map’ (Olivier 2006) (similar to stages 2 to 6 of the Strategy Diamond) starts with the vision in the centre (high level) and then moves outwards and downwards with more and more detail until it hits the ‘ground’ with Initiatives/Projects. To realise the vision, the broad strategic themes or strategic focus areas (SFAs) are firstly chosen. Then more detail per SFA is added by means of objectives (O). After this more detail per objective is provided by means of initiatives (I) or projects. Refer to Exhibit 2.

Strategy Mind Map (Olivier 2006)

Exhibit 2: Strategy Mind Map (Olivier 2006)

The Balanced House

It has become increasingly important for all types of organisations to look at financial and non-financial perspectives, tangibles and intangibles, effectiveness and efficiency, leading and lagging performance indicators. A balanced set of objectives and performance measures are therefore required for excellent and sustainable performance. The ‘Balanced House’ as presented in Exhibit 3 (Olivier 2004) is based on the strategy models of Kaplan & Norton (2001), Farhoomand (2004) and Marr (2006). It consists of normally 3 to 6 different components (called perspectives or strategic focus areas) and is built from the bottom up (as with any house construction).

In Balanced Scorecard terminology, the foundation/floor of the ‘Balanced House’ forms the Employee Learning and Growth Perspective (E). On a solid foundation and floor, the walls of the organisation can now be built. This is represented by the Internal Processes (P) Perspective. The roof represents the Financial Perspective (F) of the organisation. The top part of the roof is the Customer, Community or Citizen Perspective (C).

However, the house design starts at the top. The reason for this is that in strategy development we always have to start with the end in mind. The sun represents the organisational vision / strategic destination. For the public service, the final SFA or perspective (the rooftop) is mostly expressed in terms of a required socio-economic-environmental impact (C) according to its mandate. To enable this outcome or impact, financial performance (F) is required, especially with regard to a local authority. But to perform well financially (on both the cost and income sides), it has to perform well with its internal processes (P) by e.g. providing excellent infrastructure services. This would only be possible by having the right resources in place as inputs. These resources form the foundation. Marr (2006) identifies and categorises the resource stock of an organisation in terms of intangible resources (HR, relational and structural), physical resources (property, plant, equipment, ICT, materials, infrastructure, etc.) and monetary resources (cash, loans, investments, budget, etc.).

The story of the ‘Balanced House’ of Exhibit 3 is that to build a successful and sustainable house, we need to put several components in place (the foundation, walls, roof, etc.), by firstly considering the four conventional BSC perspectives. It tells us that there is a sequence in house construction; that we cannot expect the walls and roof to stand the storms of time, unless we build on a solid foundation.

The ‘Balanced House’

Exhibit 3: The ‘Balanced House’

Essential Building Blocks

Now that we have identified the main components of our ‘House’, having ensured that it is balanced, we can now look at more detail. What are the ‘Essential Building Blocks’ (EBBs) in each component/SFA/perspective? The ‘In-House Strategy Map’ is developed from top down and can look as depicted in Exhibit 4. We now need to put all the pieces of the puzzle in place. Only when we have found all the pieces (or EBBs) of the puzzle, we would be able to see and enjoy the beautiful picture. When looking for the few EBBs (which are the strategic objectives – normally 10-30 in number), they need to be connected in a lead-lag relationships, following a general trend from Inputs – Processes – Outputs – Outcomes (as shown in Exhibit 4).

The ‘Essential Building Blocks’ in the ‘Balanced House’

Exhibit 4: The ‘Essential Building Blocks’ in the ‘Balanced House’

A strategy map is constructed linking the various strategic objectives (EBBs) in a very clear manner for everybody to understand. It is summarising the organisation's strategy or BSC and should be supported by the strategy story/narrative.

SMART Objectives

These essential building blocks or objectives have to be made SMART (Specific, Measurable, Agreed to/Aligned, Realistic and Timely) by means of clear measures (or performance indicators) and targets in terms of time, cost, quantity or quality. When we agree on an objective, its position should be well motivated. We should be able to answer the following two questions:

  • How will we know that we have achieved our objective (when the building block is in place)?
  • How can we know the progress we are making towards achieving the objective?

Arriving at a Portfolio of Projects

The purpose of initiatives / projects is to close the performance gap; to achieve beneficial change defined by SMART strategic objectives. Turner (1999, p8) presents five project functions or elements that needs to be managed to achieve the set objective – the four primary knowledge areas (PMI, 2003) on the outside with the supporting organisational capacity on the inside. See Exhibit 5 below.

The five functions of project-based management (Turner 1999)

Exhibit 5: The five functions of project-based management (Turner 1999)

We normally have many project or initiatives – they can be current, approved and proposed for future execution. The challenge is to choose the right projects or best projects to achieve our strategic objectives; those adding the most value.

Projects have to be prioritised, because we can physically only handle so many projects at a time due to human and structural resources; because of restraints in financial resources and due to interdependencies of projects. The typical response to managing scarce resources against an unlimited demand is to come up with some type of prioritisation process to ensure that projects are approve and funded that will provide the most value. But how do we know that we are applying our resources towards the highest value projects?

We first need to understand our overall business strategy and where we are trying to move our organisation. This will determine the projects that are most important. Project portfolio management has strategic organisational objectives as a starting point, as depicted in Exhibit 5. Only with ‘SMART’ objectives (in our strategy map), can projects be identified, selected and prioritised to achieve these objectives. A well-defined process for project selection and prioritisation should be developed to maximise the chances of projects contributing to the achievement of these strategic objectives.

The choice of projects normally starts with the listing of all current, approved and proposed projects. This is then followed by the mapping of these projects on a grid – to determine which projects could contribute to achieve the chosen strategic objectives. The grid will show gaps as well as duplications of projects per objective. Projects should be chosen to support all objectives in a balanced way – to prevent too many projects per objective as well as no projects per objective. The Balanced Scorecard Collaborative (2007) proposes the following process to prioritise strategic initiatives (projects):

  1. Create criteria (for both weighting and scoring) to be used in evaluating strategic initiatives;
  2. Create a common format (business case) to review the strategic initiatives for prioritisation;
  3. Evaluate and prioritise the strategic initiatives using the stated criteria and business case;
  4. Prioritise initiatives with the leadership team.

An example of criteria with their weights is: Strategic importance (40%); Cost (15%); Duration (15%) and Interdependence of initiatives (15%); Risk (15%). Initiatives with the highest scores are then selected and included on the LFM / Scorecard (Refer to Exhibit 6).

With the strategy map summarising our strategy (Exhibit 4), we now need to record the details in a table format. This table is sometimes called a Logical Framework Matrix (LFM) and sometime a Scorecard (BSC term). Exhibit 6 shows an example of such a table for a SFA A and Objective A1. To achieve this objective (with two performance indicators and clear targets), we now arrive at the point where we select the best projects/initiatives to achieve the specific objective(s). In this example, we have selected 3 initiatives (A1.1, A1.2 and A1.3), with a broad indication of responsibility, cost and scheduling over our 5 year planning period. Based on our selection process, we believe that with this selection of projects, we have the best chance of achieving objective A1. This link from SFA to Objective to Initiative is presented below and refers to the Strategy Mind Map of Exhibit 2.

Scorecard example PMBOK® Guide

Exhibit 6: Scorecard example

PMBOK® Guide

These selected and approved projects now need to be planned, executed, controlled and closed out according A Guide to the Project Management Body of Knowledge (PMBOK® Guide) knowledge areas and processes.

Finding the Way Back

What is the way back? Why do we need to find the way back? The way back in this paper is defined as verification. Any strategic plan remains a hypothesis that needs to be tested. The selections we made, based on certain assumptions, have to be tested. This testing is called ‘verification’ and can take many forms. One type is the so-called vertical verification as illustrated in Exhibit 7 below.

Vertical verification

Exhibit 7: Vertical verification

Some of the questions to be answered in vertical verification are:

  • Are the individual performances contributing to group performance as indicated in the unit plans?
  • Are all the unit plans contributing to achieve the organisational strategy (in a supportive structure)?
  • Are we achieving our objectives by means of the chosen projects?
  • Is the achievement of our objectives leading us to our vision / strategic destination?

References

Balanced Scorecard Collaborative (2007), Mapping Strategy using the Balanced Scorecard, Training presented to the Office of the Prime Minister – February 2007, Windhoek, Namibia.

Bossidy, L. & Charan, R. (2002), Execution – The discipline of getting things done, Crown Business: New York.

Cummings, T.G. & Worley, C.G. (1997) Organization Development and Change, South-Western College Publishing, Cincinnati, Ohio.

Farhoomand, A. (2004) Managing the e-business transformation, USQ Bookshop, Pre-print edn, Pearson Education.

Kaplan, R.S. & Norton, D.P. (2001) The Strategy-Focussed Organization – How Balanced Scorecard companies thrive in the new business environment, Harvard Business School Publishing Corporation.

Marr, B. (2006) Strategic Performance Management, Elsevier: Oxford, UK.

Niven, P.R. (2003) Balanced Scorecard – Step-by Step for Government and Non-Profit Agencies. John Wiley & Sons, Inc.: New Jersey.

PMI (2003) A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Project Management Institute: Pennsylvania, USA.

Rohm, H. (2003), Improve Public Sector Results with a Balanced Scorecard: Nine Steps To Success, The Balanced Scorecard Institute. Retrieved from: http://www.balancedscorecard.org/files/BSCFinalPresentation.pdf

Turner, J.R. (1999) The Handbook of Project-Based Management – Improving the processes for achieving strategic objectives, McGraw-Hill: England.

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.

© 2007, Anton Olivier
Originally published as a part of 2007 PMI Global Congress Proceedings - Budapest

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