Learning for competitive survival
SKEMA Business School
This paper explores value creation processes across the strategy-project system and argues that integrating learning processes from the strategy and project sides of the business can offer organisations new opportunities for competitive survival. Drawing from a resource-based foundation, theories of strategic management, dynamic capabilities, activity configurations and structuration are used to explore examples from empirical data of evolutionary learning, leading to new capabilities. The paper considers evidence from phase 1 of the research, showing how relationships between different levels of capability, for example, dynamic and operational learning, when integrated effectively, can enable firms to respond more quickly to new threats and opportunities.
Keywords: strategy-project system, dynamic capability, evolutionary learning, competitive survival
A recent survey showed that 90% of global senior executives and project management experts say: “good project management is key to the delivery of successful results and gaining a competitive edge” (Economist Intelligence Unit, 2009); however, little research has been done to fully understand how project management contributes to organisational learning and competitive advantage, and there have been few empirical studies on project management as a strategic asset (DeFillippi & Arthur, 1998; Jugdev, 2004; and Jugdev & Mathur, 2006). Nevertheless, it has long been considered that strategic resource assets contribute to a firm's competitive position and tend to be knowledge-based (Amit & Schoemaker, 1993). This paper aims to shed light on the mechanism by which evolutionary learning takes places across the strategy-project system and how project management, aided by a variety of dynamic capabilities identified by the research and the literature, plays an important role in adding value to organisations to maintain competitive survival or extend competitive advantage.
Although all organisations seek to use and develop their project management resource assets effectively, the role and function of project management in successful organisations has evolved from doing projects right (project management excellence) to doing the right projects (portfolio management) (Crawford, Hobbs, & Turner, 2006), and is now firmly focused on the relationship between project management and other knowledge domains, such as strategy, organisation learning, knowledge, and value creation (Bredillet, Thiry, & Deguire, 2005; Canonico, Söderlund, De Nito, & Mangia, 2013). Project management gives an organisation the capability to do the work of projects, that is, to get projects done. In this sense project management is a capability. Dynamic capabilities, on the other hand, reside in the potential to change resources, routines, and competences (Regnér, 2008). Recent research in project management reflects a shift in focus towards themes such as complexity, social processes, value creation, broader conceptualisations of project management and project managers as reflective practitioners (Winter, Smith, Morris, & Cicmil, 2006; Turner, Anbari, & Bredillet, 2013). This paper explores value creation through the application of evolutionary learning principles, which encompasses learning for sustainable competitive advantage in complex situations (Bosch, Nguyen, Maeno, & Yasui, 2013; Shrivastava, 1983; Yao, Liu, & Darwen, 1996).
Increasingly, scholars agree that strategy realisation, and hence innovation, growth, and long term sustainability, is achieved through an organisation's project, programme, and portfolio management (PPPM) system (Bredillet et al., 2005; Crawford et al., 2006; Jamieson & Morris, 2004; Pellegrinelli & Bowman, 1994). Further research is needed to strengthen theoretical understanding of the strategy-project system by seeking to answer questions such as: how does evolutionary learning take place and to what extent do organisations currently achieve this?
The current research contributes to this area by studying at a micro-level activity configurations in strategy-project systems and the influence of dynamic capabilities and knowledge management. The results reveal several instances of learning processes and reconfiguration of PPPM capabilities. The following sections of this paper present a brief literature review, conceptual framework and early results of the study. More detailed accounts of the research methodology can be found in Gardiner (2014) and Gardiner and Eltigani (2014).
In 2004, Söderlund published on “adding value through project management” (Söderlund, 2004) followed in 2006 by research which recognised “value creation as the prime focus of projects, programs and portfolios” (Winter & Smith, 2006). The concept of project management as a means to add value was also demonstrated by Mir and Pinnington (2014) in a study based in the United Arab Emirates (UAE) and, elsewhere, Mathur, Jugdev, and Fung (2007), Killen, Jugdev, Drouin, and Petit (2012) and Thomas and Mullaly (2008) have published on the competitive value of project management. The concept of business value and its appropriation was refined by Barney as a necessary condition for achieving competitive advantage (Barney, 1991; and Barney, 2002). Contribution to business value has also been linked to project success (Gardiner & Stewart, 2000) and culture (Chipulu et al., 2014).
In the contemporary strategy literature, value is often discussed alongside dynamic capabilities, which are considered by many to be prerequisites to achieving sustained competitive advantage in turbulent environments. The strategy literature has debated the concept of dynamic capabilities since Teece, Pisano, and Shuen's landmark publication in 1997. This paper suggests extending the application of dynamic capabilities theory into the area of project management more generally, drawing on the recent theoretical position developed by Easterby-Smith and Prieto (2008) and Neilsen (2006), which explore possible relationships between dynamic capabilities, knowledge management and learning processes. Easterby-Smith and Prieto (2008) argue that the process of learning may be a central element in the creation and renewal of dynamic capabilities. In this paper, we explore the relationship between evolutionary (strategic) learning, dynamic capabilities and the reconfiguration of organisational resources in the strategy-project system to protect and enhance competitive position.
Collis (1994) and, later, Winter (2003) have framed three levels of capability: zero level operational capabilities, which get the work done, first level dynamic capabilities, which have the ability to reconfigure resources into new operational capabilities, and second level learning, or strategic capabilities, by which an organisation can build new dynamic capabilities and transform itself into a learning organisation. In a strategy-project system, we can consider these three levels as: (1) zero level PPPM capabilities or routines that are represented by the project management practices; (2) first order dynamic capabilities dedicated to the modification of PPPM activities and routines, for example, the practices within a project management office (PMO) that shape, modify, tailor, and institutionalise the project management practices; and, (3) second order learning capabilities that trigger the creation of new and/or the modification of existing dynamic capabilities in the organisation.
A useful starting point for a methodological approach was provided by strategy-as-practice scholars, such as Easterby-Smith and Prieto (2008), Neilsen (2006) and Regnér (2008) and the structuration work of Giddens (1984). The conceptual framework that emerged from the literature is shown in Exhibit 1, modified from an earlier version in Gardiner and Eltigani (2014).
A key feature of the conceptual framework is the separation of the structural properties (rules and resources that govern the activities of the system) from the actions of actors in the system (learning and reconfiguration). In other words, the framework represents separately what organisations have (structure) from what people do (activity configurations). This is a deliberate and practical methodological shift.
The actions are outlined as activity configurations (Regnér, 2008), which means a collection of actions that form an observable set of activities that can be analysed by the researcher. The social structural properties include the organisational structure, policies, procedures, and, in particular, those related to the strategy-project system. The arrows between the structure and the activity configurations indicate that actions draw from the structural properties and that the structure itself is an outcome of actions, explained as duality by Giddens (1984). In contrast to Easterby-Smith and Prieto (2008), the action of learning is placed within the activity configurations. This is in line with perspective of “knowing in practice,” developed by Orlikowski (2002).
The data was collected in the UAE from organisations in the oil and gas, telecommunications, engineering, and real estate sectors (Gardiner, 2014; Gardiner & Eltigani, 2014). Phase 1 of the research study involved 4 interviews in different organisations, as explained above using a semi-structured questionnaire to explore at a low or micro-level the main areas in the conceptual framework. Phase 2 (which is ongoing) will report on the global study later. The interviewees were encouraged to explore how project management practices evolve and improve, followed by requests for real examples and probing into how these examples came about, for example, by chance or through some other process operating in the background. In this way, the three levels of capability could be explored without requiring the interviewer to be aware of each level; as far as they were concerned, they were just explaining the practices relating to project management and the various influences, moderators, and mediators on them. Phase 1 study organisations:
- Aviation industry, responsible for design and construction of megaprojects in the aviation industry, operating in UAE and internationally
- Telecommunications, responsible for networks and services across national territories, involved in product and service development, strategic projects, and operational rollout projects.
- SME real estate turnkey consultancy, involved in niche market in Middle East, typically involving high risk ventures that other companies choose not to compete for.
- National oil and gas company operating in UAE and other Arab nations
The four interviews resulted in about 3.5 hours of recorded interview data, which has been transcribed and analysed manually. In stage two of the research, data coding and analysis software will be used. For the purpose of this paper, the results are presented as a series of recounted practices that show relationships between the variables discussed earlier in the conceptual framework. Some remaining challenges are also described that have not been resolved yet: these can be further explored using the conceptual framework in stage two. These practices are summarised from the verbatim transcripts for brevity and shown in Table 1.
|Org||The organisational learning process and how it was invoked||Existing or new dynamic capability or knowledge management practice||PPPM system capability based on new activity configuration||Ongoing challenges|
|A||Strategic response to a major negative financial event linked to an internal process and massive rework on high quality architectural finishes.||Triggered the creation of a new organisation-wide knowledge management system.||New capabilities emerged based on projects’ lessons learnt and leading to actions: process modifications, redesigns, and additions.||To keep the learnings up to date and responsive to changing market trends as they happen.|
|B||Strategic response to an increase in the number of internal cross functional strategic projects.||Creation of a corporate PMO, which has informal mentoring and coaching relationships with the line function project managers, deliberately leaving accountability for their work in the line organisation.||New capabilities formed by influencing project managers, showing how project management adds value, helping them solve their own problems.||To increase awareness of the new capabilities and get buy-in from more project managers, who are based in line organisations.|
|A||Strategic response to market volatility.||HRM practices directed at staff retention and motivation, e.g., team recognition, bonuses, financial motivation, internal recognition, freedom to act and be innovative.||Because recognition is linked to performance, it encourages positive practices and sharing—the best people are rewarded and stay, those who do not perform tend to leave.||To identify and reward the “enablers”; to encourage the “disenablers” to move on.|
|B||Strategic response to what is happening in the market.||Focus groups, hiring experienced personal from other markets, partnerships with vendors and suppliers—we spend real money on that, plus classroom-based learning.||People learn new capabilities relevant to our culture and national context and which are based on current market needs.||Keeping ahead of the game in terms of market trends and fashions.|
|C||Strategic response to market needs in our specific niche market, which is high risk.||Tap into tacit knowledge that comes from our outsource partners—most business operations are outsourced—we provide financial incentives and a stake of the business to them.||They buy into the business model and share tacit knowledge openly to ensure the business works—we learn from this and develop new capabilities relevant to our projects.||Maintaining the balance between reward given and knowledge obtained.|
|C||Strategic response to a major negative financial event linked to an internal process and resulting in project abandonment and major losses.||Knowledge management processes ensure key learnings are captured and actioned to form new processes.||Dealing with external entities from different countries—learnt not to believe what they say even from top officials, ambassadors, and ministers—if not on paper it's worth nothing.||Learning “the hard way” is a powerful lesson; the challenge is to see it coming.|
|B||Corporate PMO response to changing organisation structure||CPMO modifies and adjusts the project management methodology, which originated as an off-the-shelf method||Project managers learn new capabilities underpinned by the evolving method in the company delivered though mentoring and in-house training.||How to increase the percentage of project managers who use the method.|
|D||Corporate PMO response to increasing numbers of cross-functional projects||CPMO started to outsource project management||Brought in new capabilities, which got up to speed within four to six weeks; added bonus was they came with new knowledge about project management processes and were willing to share.||Tapping in to the tacit knowledge available from the outsourced project managers.|
|D||Strategic response by CPMO to increasing volume of cross functional projects.||CPMO director enhances knowledge management in the business unit by bringing in external experts for events and knowledge sharing.||Knowledge from experts is shared and seen to reflect other knowledge in the company, re-enforcing its validity so that more project managers take notice.|
|A||Strategic response to a shock where contractor claimed a lot of money.||Senior managers set up operational readiness processes and now educate contractors about it.||New processes, reduces operational risks after project completion where everyone blames each other if a fault occurs.||How to improve and optimise.|
Project management research has refocused itself in recent years to incorporate multidimensional measures of project success, business results, networking, strategy execution, and the effects of culture. There is a growing realisation that project management excellence lies beyond the current bodies of knowledge and the predominantly “know-what” domains they represent and that it needs to consider the tacit or “know-how” knowledge as part of its contribution to competitive survival. The significance of this research is that it challenges organisations to focus less on the codified explicit project management knowledge, important though that is for sustained excellence, and to consider the various ways in which organisations can reconfigure their resources to add new value for competitive survival from learning episodes spanning the strategy-project system.
The results reported here show reasonable alignment with the proposed conceptual framework in Exhibit 1. Table 1 shows a series of results chains in which a learning episode is triggered by internal or external events that might impact the strategy-project system. These episodes are moderated by the organisation structure, sometimes giving rise to a new or modified dynamic capability. These in turn spawn one or more activity reconfigurations that result in new operational capabilities.
These new capabilities relate directly to the specific strategy-project system of the organisation. As such, they are embedded in the social, political, and cultural environment of the organisation. This makes them difficult to imitate, and so more likely to give competitive advantage.
Based on the results achieved so far, it is suggested that organisations should seek to understand further how dynamic capabilities, learning processes, and knowledge management can interact in ways to configure and reconfigure their resource assets to add additional business value across the strategy-project system, from simple projects to megaprojects. The literature and the research suggest that there are several key dynamic capabilities that can contribute to sustainable competitive survival in strategy-project systems: leadership, innovation, HRM, knowledge management, portfolio management, and change management.
ABOUT THE AUTHOR
Paul Gardiner is Professor of Project Management, Lead Scientific Director MSc Project and Programme Management and Business Development, and Programme Director DBA in Project and Programme Management at SKEMA Business School, France. Paul has industry experience in manufacturing and the oil and gas sector, has published over 70 scholarly works, and does research in strategic project management.
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© 2016, Paul Gardiner
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain