The processes of translating business strategy into project management actions
Dragan Z. Milosevic
Engineering and Technology Management,
Portland State University
Proceedings of the PMI Research Conference 11-14 July 2004 – London, UK
Project management has grown rapidly in the past several decades. It is now recognized as an important management discipline with a solid body of knowledge and a wide range of applications across many industries (Shenhar & Dvir, 1996). According to Cleland (1998), the intensified need for project management stems from multiple contemporary business issues, including shortened product life cycles, narrow product launch windows, increasingly complex and technical products, and low inflation. The use of project management helps to address these issues by, for example, increasing the average life of a product (Kerzner, 2000), reducing product development times and time to market (Bernasco, Weerd-Nederhof, Tillema, & Boer 1999; Bommer, DeLaPorte, & Higgins, 2002; Fricke & Shenhar, 2000; Harrison, 1992; Hartley, 1992; Kerzner; Meredith & Mantel, 2003; Uppal, 2002), providing better integration and control over the operations in dealing with technological complexity (Davis, 1974; Fricke & Shenhar; Harrison; Oakland, 1989; Wirth, 1992), and increasing the organization's return on investment, sales, and profitability (Hartley; Ibbs & Kwak, 1997; Kerzner; Meredith & Mantel).
However, project management has not always been well deployed, well understood (Shenhar & Dvir, 1996), or really perceived as a critical business issue (Shenhar, 1999). As a result, many projects are poorly managed, leading to frequent project overruns. For example, a study by Hoch, Roeding, Purkert, and Lindner (2000) shows that 60% of projects are late. Lientz and Rea (1999) indicate that one out of two projects overruns its budget by 180% or more. And more recently, Thomas, Delisle, Jugdev, and Buckle (2002) report that 30% of all projects are canceled midstream, and over half of completed projects are up to 190% over budget and 220% late. There are multiple reasons for these problems. One of them, the focus of this research, is the failure to align project management strategy with business strategy. In particular, researchers claim that:
- Many projects are not chosen in a way that is supported by the business strategy (Meredith & Mantel, 2003).
- Most organizations treat all projects in the same way regardless of the business strategy chosen by the organization (Pinto & Covin, 1989; Shenhar, 2001). As a result, the uniqueness of business strategy may disappear when it comes down to the functional level.
The objective of this in-progress study is to develop a theoretical framework for the process of aligning project management with business strategy based on the existing literature and our observation of three companies—Intel, Armstrong World Industries (AWI), and Oregon Anesthesiology Group (OAG). This theoretical framework refers to a set of well-developed concepts related to each other through an integrated structure that can be used to describe and/or predict phenomena of the alignment. Understanding the process of project management business strategy alignment may be one of the major challenges to effective project management in today's competitive environment.
To develop a theoretical framework of aligning project management with business strategy, multiple streams of literature are significantly relevant. First of all, business strategy literature is needed to help understand the definitions of business-level strategy that should be aligned with project management. Secondly, business strategy typologies are researched to help examine the conceptual basis of different classification and to determine what specific settings are for them. Thirdly, to properly align business strategy with project management, the elements of project management are identified from the literature, including strategy, organization, process, tools, metrics, and culture. Finally, to help identify common project success criteria for the alignment, several definitions of project success are studied.
The word “strategy” originally comes from the Greek word strategos, literally meaning “the art of the general” (Hart, 1967). Subsequently, it has been widely adopted to the study of business. Definitions of business strategy vary. For example, Chandler (1962) defines business strategy as the determination of the basic long-term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary to carry out these goals. Ansoff (1965) suggests that business strategies are rules for making decisions determined by product/market scope, growth vector, competitive advantage, and synergy. Miles and Snow (1978) argue that business strategy is a pattern or stream of major and minor decisions about an organization's possible future domain. Mintzberg (1987, 1994) offers multiple definitions for business strategy—plan, pattern, position, perspective, and ploy—or what he calls “the five ‘Ps’ collection.” The commonality found in these definitions is the focus on how to better deal with competition (Tse & Olsen, 1999). Therefore, the essence of business strategy is to create competitive advantage (Hamel & Prahalad, 1989), which gives an organization a sustainable lead over its competitors for attracting customers and defending against competitive forces (Thompson & Strickland, 1995).
Business Strategy Typology
Generally, typologies refer to conceptually derived interrelated sets of ideal types (Doty & Glick, 1994). Typologies provide a means for ordering, comparing, and clustering organizations into groups that are highly symmetric and possess a similar or homogenous behavior within a somewhat heterogeneous industry environment (Fiegenbaum, McGee, & Thomas 1988). Since strategies may differ from one organization to another, classifying them into a simple typology is beneficial for several reasons, including (1) helping to develop complex theories (Doty & Glick), (2) helping to identify common characteristics of organizations (Harrison & St. John, 1998), (3) providing the basis of meaningful communication throughout the organization (Harrison & St. John), (4) helping to more effectively study relationships between strategy and other variables, such as environment, structure, and performance (Namiki, 1989), and (5) helping to develop contingency strategy research as suggested by many researchers (e.g., Herbert & Deresky, 1987; Hill, 1988).
Many studies develop typologies to classify organizations in different ways. For example, some authors develop strategic classifications for particular circumstances (e.g., Robinson & Pearce, 1985; Harrigan, 1980), whereas others focus on classifications across a wide range of business-level situations (e.g., Miles & Snow, 1978; Mintzberg, 1983; Porter, 1980). According to McKelvey (1982), a general classification is more useful than a particular classification. That is because the general classification (1) allows the make of broad predictions regarding the behavior of the classification, (2) serves as a good method for organizing functional studies, and (3) acts as a broadly inclusive and useful information-retrieval system for scientific findings (McKelvey).
Multiple typologies of business strategies have been developed and received a great deal of attention. For example, Miles and Snow (1978) proposed four types of business strategies based on the organization's strategic pattern, including defender, prospector, analyzer, and reactor. Porter (1980) suggested three types of generic strategies based on the organization's strategic positioning, including cost leadership, differentiation, and focus. Exhibit 1 shows several examples of business strategy typologies.
Exhibit 1. Strategy Typologies
Project Management Strategy
Project management strategy is considered a specialized form of management, similar to other functional strategies, which includes the means, techniques, and concepts, used by the project in making decisions and taking action throughout the course of the project (Poli & Shenhar, 2003). The essence of the project management strategy is to support the execution of the competitive strategy of an organization in delivering a desired outcome (i.e., fast time-to-market, high quality, superior service, low cost products) (Milosevic, 2003). It concerns both internally achieving the project objectives (e.g., time, cost, performance) and, at the same time, considering the external views of the project (e.g., various needs of individuals and organizations actively involved in the project or whose interest may be positively or negatively affected by project execution or project completion [PMI, 2000]). Multiple elements of project management have been identified from the literature. For example, Shenhar (1999) and Aronson, Lechler, Reilly, & Shenhar (2001) recommend the holistic framework of project management, including project strategy (i.e., objective, competitive advantage), project spirit (i.e., culture, attitude), project organization (i.e., structure, team, people), project processes (i.e., planning, implementation), and project tools (i.e., schedule, budget). Focusing on the business success aspect (Shenhar, 1999) and the execution of competitive strategy of an organization (Milosevic, 2003), project management elements are described as follows.
A project strategy is an important element of project management, defined as the approach, position, and guidelines of what to do and how to do it in order to achieve the highest competitive advantage and the best value from the project (Poli & Shenhar, 2003). Poli and Shenhar suggest that project strategy should involve the objective, product definition, competitive advantage/value, business perspective, project definition, and strategic focus.
- Objective is the reason that a project is done, the opportunities of the business, or what the organization is trying to accomplish (Poli & Shenhar). It must be well articulated, clearly stated, and shared and supported by everyone in the organization (Shenhar, 1999).
- Product definition refers to the deliverables (clearly defined product or results of a task, activity, or work package) that meet customer expectations, including the product, process, service, or project itself (Poli & Shenhar).
- Competitive advantage refers to the advantages for customers (cost, time, etc.), the project's value to the company, and/or strategic fit of the project with organizational strategy (Poli & Shenhar). It focuses on how to help the business through the project's work.
- Business perspective refers to the expectation of the business and assessment of project success (Poli & Shenhar).
- Project definition focuses on the issues, including project scope (extent of the project's deliverables and the magnitude of the available resources), project type (classification of the project), and team selection (competencies of the project manager and team members) (Poli & Shenhar).
- Strategic focus refers to the guidelines or behaviors needed for managing the project to achieve the best competitive advantage (Poli & Shenhar).
Focused as one of the traditional success factors, an organization is a grouping of systems made up of processes to get results such as products (Phelan, Reilly, & Shenhar, 2003). It involves three major elements: structure, team building, and people.
- Project structure is determined by the organizational structure of the mother organization where the project takes place (Shenhar, 1999). Structure can be functional, pure project team, matrix, or some combination of these types (e.g., functional matrix and project matrix) (Larson, Gobeli, & Gray, 1991). Other dimensions of organizational structure may include mechanistic (high level of centralization, formalization, and specialization), intermediate (medium level of centralization, formalization, and specialization), and organic (low level of centralization, formalization, and specialization) (Miles & Snow, 1978).
- Often playing a critical role for the project meeting its objectives (PMI, 2000), team building refers to activities aimed at enabling a group to become a cohesive working unit capable of functioning at the highest performance levels.
- A successful project demands highly competent people with rich knowledge and experience in many areas such as project trenches, strong business acumen, great interpersonal skills, deep technical knowledge, and an affinity for systems thinking (Frame, 1994). It is possible to view these competencies as a skill set, and each person in a project need to accomplish their tasks (Sobek, Liker, & Ward, 1998). The importance of communication, leadership, conflict management, negotiation, and personnel management has been stressed in management of people (APMBOK, 2000).
A project process refers to a sequence of step/tasks meant to create value for project customers through better quality, improved project performance, improved flexibility, and faster customer responsiveness (Milosevic, 2003). The essence of project process is to act as a support mechanism for delivering project management strategy (Milosevic). In delivering project management strategy, the project process includes multiple elements. For example, Shenhar (1999) suggests communication and information sharing, project monitoring, planning and control, decision-making, and review process; Kerzner (1998) proposes implementation of project life-cycle stages, technical activities, project management activities, and milestones; PMI (2000) identifies 39 processes based on nine knowledge areas with five project management process groups of initiating, planning, executing, controlling, and closing.
Project tools are the procedures and techniques by which project management deliverables or project management activities are accomplished (Milosevic, 2003; Shenhar, 1999). Examples include WBS, CPM, and PERT. A set of predefined project tools that a project manager can use in managing a project process is referred to as the project management toolbox (Milosevic). Project tools and project management toolbox are significant to project management strategy since they provide monitoring and feedback to help managers implement proactive responses (APMBOK, 2000). According to the PMBOK® Guide (PMI, 2000), multiple tools have been suggested for use in multiple processes, such as scope management process (e.g., project selection tools, project planning), time management process (e.g., PERT, CPM), cost management process (e.g., cost estimation tools), quality management process (e.g., cost and effect diagrams, Pareto diagrams), and team-building process (e.g., team-building activities, general management skills, reward and recognition systems, collocation, and training).
With various types of tools, APMBOK (2000) suggests two classifications of tools including (1) work content/scope management (e.g., WBS and responsibility chart) and (2) time scheduling/phasing (e.g., CPM and PERT). Several studies have examined the uses of project tools in different industries. For example, Coombs, McMeekin, and Pybus (1998) identify the lists of project tools and techniques used in different phases and types of R&D projects. Raz and Michael (2001) examine the frequency of use, the perceived contribution of usage to project success, and the extent to which the usage is associated with high performance of software and high-tech industries. Although project tools are helpful in coping with the large number of data associated with a project, there is still no best way to select and use tools (Shenhar, 1999).
Project metrics (or performance measures) refer to the measurement of how well the project strategy works (Milosevic, Inman, & Ozbay, 2001; Tipping, Zeffren, & Fusfeld, 1995), how much progress is being made toward selected goals (Major, Pellegrin, & Pittler, 1998), or how well projects are performing to date (Nicholas, 1990). According to Katzenbach and Smith (1993), metrics helps organizations by (1) transforming broad directions into specific and measurable performance goals, which help achieve small wins as the broader purpose is being pursued, and by (2) energizing and motivating employees. Meeting schedule and budget goals are no longer sufficient in today's business world (Christensen, 1999; Lim & Mohamed, 1999; Shenhar, 1999). External viewpoints of the project (e.g., actual utilization, technical advantage) also need to be considered. Project metrics may measure training (Major, Pellegrin, & Pittler, 1998; Tipping, Zeffren, & Fusfeld, 1995), customer relations (Hoch, Roeding, Purkert, & Lindner, 2000), satisfaction (Major, Pellegrin, & Pittler, 1998), financial performance, and process quality (Hauser & Florian, 1997).
A project culture refers to the behavioral norms and expectations shared by members of a project (Aronson, Lechler, Reilly, & Shenhar, 2001). The essence of project culture is to have a sense of identity with the project organization and to accept investing both materially and emotionally in the success of the projects (Graham & Englund, 1997). It is one of the most powerful forces in organizations that influence the implementation of strategies and organizational performance (Schein, 1996). Understanding the dynamics of an organizational culture and subculture structure is critical in creating cross-cultural dialogues and adoption and diffusion of new ideas to the other relevant parts of the organization (Schein).
Generally, definitions of project success vary over time (Kerzner, 2000) and there is no single best definition (Pinto & Slevin, 1988; Pinto & Mantel, 1990; Wateridge, 1995). Traditionally, the criteria to measure project success have long depended upon three well-known factors—time, cost, and performance, which are the internal objectives that need to be met for the complexities and multidisciplinary aspects of project requirements (Meredith & Mantel, 2003). Nevertheless, realization of only these three factors perhaps may not assure the success of parent organizations (Christensen, 1999; Lim & Mohamed, 1999) since this view ignores external aspects of the project such as impact of the project on the organizational mission and the creation of new market opportunities, making the traditional approach “simplistic, partial and misleading” (Shenhar, Tishler, Dvir, & Lipovetsky, 2002). As a result, the concept of the multidimensional and multicriteria approach, the so-called “stakeholder approach,” has been introduced (e.g., Beale & Freeman, 1991; Dvir & Shenhar, 1992; Pinto & Slevin, 1988; Tishler, Dvir, Shenhar, & Lipovetsky, 1996). A stakeholder approach to project success recognizes that each stakeholder group—customers, senior managers, etc.—views the project success from a different perspective based on their own interests (Wright, Pringle, & Kroll, 1992). For example, Pinto and Slevin consider two dimensions of project success, including a project dimension (time, cost, and performance) and a client dimension (use by client, client's satisfaction and increased effectiveness by using the outcome of the project). Baccarini (1999) identifies two dimensions of project success, including project management success (time, cost, quality, and the manner in which project management is conducted) and product success (the effectiveness of the project's final products, such as response time and reliability). Hauser and Zettelmeyer (1997) use R&D metrics such as strategic goals, quality/value, people, process, customers, and revenues/costs.
Processes of Translation
Overview of Business Strategy's Impact on Project Management
Business strategy (also known as generic strategy) is, by most definitions, the focus on how to better deal with competition (Tse & Olsen, 1999) by means of creating competitive advantage (Hamel & Prahalad, 1989), which gives an organization a sustainable lead over its competitors for attracting customers and defending against competitive forces (Thompson & Strickland, 1995). The example given in this paper is the framework of Porter's generic strategies, where project management elements are visualized as an organizational resource, shown in Exhibit 2.
Exhibit 2. Project Management Strategy, Process, and Tools Supporting Business Strategies
Exhibit 2 suggests that different generic business strategies require different project management foci and settings. For example, the focus of differentiation strategies (high differentiation/ high-cost quadrant) is an ability to offer customers something that is unique from competitors and, at the same time, adequately valuable for customers to pay for at the premium price. These include fast time-to-market (used as an example in Exhibit 2), high quality, superior service, and innovative technology. Therefore, in the time-to-market speed example, all project management elements (strategy, organization, process, tools, metrics, and culture) are adapted to focus on the schedule. Alternatively, the focus of low-cost strategies is establishing a sustainable cost advantage over rivals (low cost/low-differentiation quadrant) by using the low-cost advantage as a source of under-pricing competitors. Since the low-cost strategy attracts customers with the lowest cost possible, project management elements are adapted to focus on the cost. Finally, the focus of best-cost strategies is to combine the ability to offer something unique (e.g., high quality as an example in Exhibit 2), while still maintaining the minimum cost (low cost/high-differentiation quadrant). Because the key is to find the level of differentiation at a reasonable cost, project management elements of best-cost strategy aim at focusing on both cost and quality.
More details of each business strategy and expected adaptations of project management elements are explained hereafter.
The current literature indicates that project management should be aligned with the business strategy (e.g., Baker, 1974; Bard, Balachandra, & Kaufmann, 1988; Cooper, Edgett, & Kleinschmidt, 1998; Englund & Graham, 1999; Hartman, 2000). There are, however, no indications regarding how to translate the differentiation strategy into project management strategy. Our observation of Intel's projects may offer some clues. For example, many of Intel's business units pursue business strategies of differentiation including innovation and time-to-market speed. Thus, a goal is emphasizing product development projects, whose job is to rollout new innovative computer chips faster and faster. This is where project management comes into play: its strategic elements are adapted to focus on developing new chips, shrinking the chip development project cycle times, and hitting the market before the competition. Based on the authors’ observation in the research process, how the adaptation of differentiation strategy and project management elements may occur is summarized in Exhibit 3.
Exhibit 3. Expected Adaptation of Project Management Elements for Time-to-Market Differentiation Strategy
- Project strategy: The time-to-market differentiation tends to have a project strategy based on the schedule or the “drop dead” deadline. Thus, the objectives and strategic foci are creating competitive advantage in the form of fast time-to-market and passing it on to customers to help increase their value proposition.
- Project organization: Organizational structure tends to be organic. For example, most decisions may be made from the lower-level organizational members due to the limited time for decision-making. Work roles and jobs may be overlapped to speed up the projects. Therefore, the level of flexibility is relatively high.
- Project process: The procedures to describe, organize, and complete the project are flexible with an emphasis on overlapping project activities and phases to speed up the project (e.g., time management process).
- Project tools: Schedule tools such as CPM and PERT have the priority. The toolbox is schedule-driven to support the process with the focus on schedule risks. Quality, cost, and other tools are subjugated to schedule tools.
- Project metrics: Project performance is measured by the ability of projects to meet the deadline. For instance, schedule slippage (the time past a project's due date for its completion) is the standard in all reports and progress meetings.
- Project culture: Project culture is built around the time-to-market focus that projects are required to be finished at the earliest time possible. For example, a rapidly changing environment is common; decisions need to be made immediately; people are risk taking and proactive to accelerate the project cycle time; speed is rewarded.
Based on the authors’ observation of project management elements of time-to-market differentiation strategy, in formal terms:
Low-Cost Leadership Strategy
In general, the process of translating the low-cost strategy into project management strategy is absent in the literature. A look at our learning from observing projects in Armstrong World Industries (AWI) can be helpful in understanding the alignment process. AWI set itself to become the cost leader in the industry by streamlining every possible manufacturing related process and continuously lowering the bar for manufacturing cost goals. Therefore, their project management's strategic elements are focused on cost cutting and manufacturing process development projects. Based on the authors’ observation in the research process, how the adaptation of low-cost strategy and project management elements may occur are summarized in Exhibit 4.
Exhibit 4. Expected Adaptation of Project Management Elements for Low-Cost Leadership Strategy
- Project strategy: The low-cost leadership strategy tends to have a project strategy based on the cost. Therefore, the objectives and strategic foci are to minimize project cost whenever possible (i.e., minimize negative cash flow in the investment phase of the project, subordinate schedule to minimum cost).
- Project organization: Organizational structure tends to be mechanistic. For example, managers at the top may make most financial related decisions. Therefore, the level of flexibility is relatively low.
- Project process: The procedures to organize and complete the project are highly standardized and built on templates. Every project follows the same steps since standardization reduces variation and cost.
- Project tools: Cost tools have the priority. The toolbox is cost-driven to support the process with the focus on cost risks. For example, cost estimates and cost baselines are required; Gantt charts—known for their low cost of development—are used; WBS development has the minimum number of levels to make it cost effective.
- Project metrics: Project performance is measured by the ability of projects to maintain or minimize project costs. For example, resource utilization and total expense are the standard in all reports and progress meetings.
- Project culture: Project culture is built around the low-cost strategy focus that project costs are required to be minimized. For example, intensive preparation is the usual environment; people are risk-averse especially financial related risk; cost efficiency is rewarded.
Based on the authors’ observation of project management elements of low-cost strategy, in formal terms:
Similar to the absence of a process to align differentiation or low-cost strategy with project management strategy, the existing literature provides no information on how to translate the best-cost strategy into project management strategy. The authors’ observation of Oregon Anesthesiology Group (OAG) may provide some insights. OAG emphasizes having the best cost relative to its competitors whose products are of comparable quality. Accordingly, their project management's strategic elements are adapted to focus on both cost and quality goals by standardizing project management protocols in their works, including the information systems and continuous quality improvement projects. Based on the authors’ observation in the research process how the adaptation of best-cost strategy and project management elements may occur are summarized in Exhibit 5.
Exhibit 5. Expected Adaptation of Project Management Elements for Best-Cost Strategy
- Project strategy: The best-cost strategy tends to have a project strategy based on two dimensions: the cost and the quality. The objectives and strategic foci are creating the highest quality while still minimizing project cost whenever possible (i.e., finding the level of quality differentiation with a reasonable cost).
- Project organization: Organizational structure tends to be in the middle between the mechanistic and organic continuum. For example, most financial-related decisions may be made by managers at the top, whereas other decisions may be made from the members in the lower level.
- Project process: The procedures to describe, organize, and complete the project are highly standardized and built on templates. Every project follows the same steps with keen emphasis on achieving quality with minimum cost.
- Project tools: A combination of quality and cost tools has the priority. Customer voice is crucial for hitting the customer-set quality level, as are cost estimates and baselines. Other tools such as schedule, scope, and risk tools are also adapted to support the combination.
- Project metrics: Project performance is measured by the ability of projects to meet or exceed the specification of the expected products while still maintaining or minimizing the cost.
- Project culture: Project culture is built around the best-cost strategy focus requiring superior product quality at the level that still maintains the overall cost of the projects. For example, intensive preparation and trade-off consideration may be common; quality and cost efficiency is rewarded.
Based on the authors’ observation of project management elements of best-cost strategy, in formal terms:
Impact of Project Management Strategy on Project Success
As stated in these propositions, the type of business strategy influences the content and focus of project management elements. Therefore, the criteria to evaluate the success of projects are important to judge the success of the alignment and depend on the focus of project management elements. In other words, project management elements have impacted the project success (Milosevic, 2003). For example, project management elements of time-to-market differentiation strategy (e.g., Intel) aim at focusing on shrinking the chip development project's cycle times and hitting the market before the competition. As a result, the success measures are based on the schedule (e.g., schedule slippage). In contrast, project management elements of low-cost leadership strategy (e.g., AWI) have been adapted to focus on cost cutting and manufacturing process development projects. Accordingly, the success measures are built around the cost (e.g., cost performance index). Finally, project management elements of best-cost strategy (e.g., OAG) have been shaped to center on both cost reduction and quality improvement projects. Therefore, the success measures are based on both the quality and the cost.
From these three examples, in formal terms:
Theoretical Framework for Aligning Project Management Elements with Business Strategy
The main focus of this study is the process of aligning project management elements with business strategies. Such alignments are challenging because objectives of business strategy are not always well communicated or consistent with project management actions. Misalignment may cause the organization to lose the market opportunity, and recovery from misalignment is difficult. The theoretical framework in this paper is built around a set of propositions, depicted in Exhibit 6, used to describe the alignment process.
Exhibit 6. Theoretical Framework for Aligning Project Management Elements with Business Strategy
Similar to Eisenhardt's (1989) model, the findings are organized around the four previously mentioned propositions and three mediating processes. Propositions are used to connect business strategy, project management elements, and project success through statements of relationship. Numbers in Exhibit 6 represent propositions in the text. The mediating processes refer to the processes that help align project management with business strategy and are developed based on the literature. They include project selection, project planning, and project implementation. As suggested by the literature, project selection should be oriented to selecting projects that are aligned with the business strategy (i.e., Baker, 1974; Bard, Balachandra, & Kaufmann, 1988; Cooper, Edgett, & Kleinschmidt, 1998; England & Graham, 1999; Hartman, 2000). The project plan should support the business strategy and include processes to ensure that key stakeholders and team members share a common understanding of the project mission, goals, objectives, tactics, and plans that stem from the business strategy (Skulmoski & Hartman 2000). As the project progresses changes may occur. Thus, monitoring projects throughout their life cycles and taking corrective actions, if necessary, are suggested for keeping projects aligned with the business strategy (Skulmoski & Hartman).
In particular, this framework suggests that each business strategy demands an alignment process that produces a different focus and content of project management elements. Specifically, the alignment process is performed through each of the three mediating processes described next.
The process of alignment for time-to-market differentiation strategy (Proposition 1) begins in the project selection process. Here the criteria to select projects are chosen in order to support the differentiation strategy. For instance, high priority will be given to a criterion of speed-to-market such that projects whose speed (and the possibility to finish the projects on time) has the highest potential to create competitive advantage for customers and help them increase their value proposition are chosen for implementation. In the following process of project planning, the intent is to maintain such competitive advantage. Therefore, as explained in Exhibit 3, all elements of the project management strategy—project strategy, project organization, project process, project tools, project metrics, and project culture—are tailored to provide competitive advantage for customers and help them increase their value proposition. The alignment of project management with the differentiation strategy is not over here. It continues through the project implementation process as the project progresses. For example, corrective actions (e.g., fast tracking, schedule crashing) may be made to ensure that the planned speed is maintained in order to secure the desired advantage and value for the customer.
Similarly, the process of aligning low-cost leadership strategy with project management strategy (Proposition 2) is initiated in the project selection process. However, the difference is that the criteria to select projects are chosen in order to support the low-cost leadership strategy. For example, a criterion of cost will be highly considered such that projects whose cost has the highest potential to create competitive advantage for customers and help them increase their value proposition are selected for implementation. To maintain such competitive advantage in the project planning process, all elements of the project management strategy—project strategy, project organization, project process, project tools, project metrics, and project culture—are customized to provide low-cost competitive advantage for customers and help them increase their value proposition (as described in Exhibit 4). As the project continues to the implementation process, corrective actions (e.g., secure resource leveling) may be made to guarantee that the planned cost is maintained in order to obtain the desired advantage and value for the customer.
Comparable to the alignment process of time-to-market and cost leadership strategies, the alignment process of best-cost strategy and project management elements (Proposition 3) also begins in the project selection process. However, the criteria to select projects of best cost are different from those of time-to-market and low-cost since they are based on the predetermined level of quality for the minimum cost. For instance, those selected are projects whose expected product quality and expected monetary cost have the highest potential to create value, which can be passed on to the customer. In the process of project planning, all elements of the project management strategy—project strategy, project organization, project process, project tools, project metrics, and project culture—are adapted to provide best value for the customer (as illustrated in Exhibit 5). As the project progresses to the implementation process, corrective actions may be made to ensure that the expected quality level is matched by the lowest possible cost.
Finally, Proposition 4 links project management elements with project success. As suggested by Proposition 4, the determination of project success depends on the content and focus of project management elements (which are in turn influenced by the objective of business strategy). For example, time-to-market differentiation strategy influences the content of focus of project management elements based on the schedule (see Exhibit 3). Accordingly, project success measures will be focused on the timeliness (e.g. “percent of milestones accomplished” that was observed at Intel) of the project and possible schedule slippage (e.g. “negative float days” that was also observed at Intel).
This study focuses on the process of aligning project management strategy with business strategy through the observation of three companies in parallel with the findings from the existing literature. Three examples of business strategy with different focuses and contents of project management elements are discussed (Propositions 1, 2, and 3), resulting in the determination of project success (Proposition 4). The theoretical framework is developed by using (1) propositions as the connectors between business strategy, project management strategy, and project success, and (2) the mediating processes as mechanisms that companies build to ensure the proper alignment. It suggests that different business strategies demand different project management foci and contents, and therefore should have the different nature of mediating processes to align business strategy with project management strategy. The alignment process can be done differently based on the objective of the business strategy through each of three project processes: project selection, project planning, and project implementation.
The unique contribution of this paper is a framework that portrays the alignment process in a more explicit way than does the extant literature. A further contribution is in propositions that may be a useful resource to researchers for future research in this area. The main strength of the paper is that the proposed framework is developed through a combination of literature review and the authors’ observation of projects in three companies, all in different competitive markets. A limitation of this research is the small number of observed companies. In future research, more companies will be included in the study, with multiple interviews from different levels in each company. Therefore, propositions and theoretical framework may change as the research progresses.
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