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Ensuring your strategy is executed successfully  

There are only two ways to execute strategy:

1. through business-as-usual operational changes, or
2. through business initiatives and projects.

You might not be involved in the detailed nuts-and-bolts execution of your strategies and projects. Still, you do need to ensure your projects and their intended business results and value are fully delivered and that opportunities for waste are eliminated.

Projects are different from normal business-as-usual (BAU). They are delivered by people with different skill sets, through distinct control structures and investment processes. 

If you cannot successfully define, develop and deliver projects, massive strategic value is lost. It is this value destruction that makes continued poor project performance a board-level business issue, not a project issue. 

As a CEO or Board member, you need to ensure your organization’s approach to projects is business & strategy focussed rather than technically driven.

To control your future, you need to build a resilient capability for delivery so that every projects is:

• strategically relevant,
• delivered for the optimum practical cost, and
• in the least practical time.

Optimizing capital allocation for project investments

Investment Committees play the crucial role of ensuring capital is allocated to projects that directly contribute to the delivery of the organization’s strategy. The Investment Committee determines if the strategy can be delivered by controlling the funds – which projects are approved, and which are denied investment.

Yet...

Few organizations effectively measure each project’s exact strategic contribution in a detailed transparent and unarguable way. Instead, the extent of the assessment for “strategic alignment” is a simplistic “tick the box” approach that can deliver some woeful results.

Many organizations lack a mechanism to measure precisely:

• which strategic imperatives each project will contribute to,
• how it will contribute, and
• how much it will contribute.

Without this level of granular detail, you are flying blind when managing your strategy’s execution. Lack of rigorous measurement explains why the number of strategies that are not fully executed today is around 70% — the same figure as it was 25 years ago.

Investment Committees need to optimize the allocation of capital and ensure that project results are capable of being fully delivered. That way, the portfolio Return on Capital Employed will be maximized. For that, you need to both optimize capital use and also to assess the organizations' capability to deliver the project successfully.

Maximising the value and optimizing costs from projects

Over the past 40 years, organizations and CFOs, in particular, have honed their cost management skills to the n^th degree. Most projects are managed carefully to the cent.

But there is a danger of “knowing the cost of everything and the value of nothing.”  

If projects do not deliver the value intended, then it matters not what they have cost.

Value management needs to become a core focus of for every CFO. This means optimizing the value delivered and ‘banked’ from projects and weighing these against the costs of delivery.

CFOs can directly or indirectly enable or destroy the business value dimensions of project investments by the controls and processes that they set in place. For example:

• superficial get-it-approved business cases can lose or destroy value even before the project is started;
• some common approaches to “ensure benefits delivery” can inadvertently diminish the value realized.

Every CFO needs to take action to increase the returns on their investments and needs to establish organization-wide approaches to enhance the value delivered.

Governing projects to deliver the maximum value

Project Sponsors and Steering Committees need to know:

• what to do,
• when,
• why and
• how

Research that TOP and others have conducted, consistently shows that more projects fail due to poor project governance than poor project management. Business managers in governance roles (as Sponsor/Steering Committee members) are accountable for ensuring their projects are strategically relevant, viable, worthwhile and do-able. They are also accountable for the full delivery of the available business outcomes, benefits and value in the least practical time and cost. Yet, most governance teams are not clear about their governance role and wonder why they are there and what they should be doing. 

Unfortunately, the project management fraternity has positioned project governance as existing to support the project and make decisions referred to it by the project team. These activities, however, make up only about 20% of the workload and focus of an effective project governance team.

Project governance is VERY different from operational management and applying standard operational management techniques to projects can destroy the business value in an instant. The worlds of repeating BAU-operations and one-off projects are quite different and need to be managed differently. 

What project governance is, how to perform it effectively and when to take action are all new skills that most managers newly appointed to a Project Governance role need to learn.

Leading and directing project execution

Business executives and managers play a crucial role in determining the success of a project. It is they who provide the leadership and direction to the project about what the business intends to achieve. It is they who determine “what is of value” compared what it costs to achieve it.

Over the past three decades, the role of the business executive has largely, and wrongly, shifted from being the principal driver of projects to a side-lined observer aka a ‘stakeholder’.

The business’ involvement has reduced to “supporting” the project and “hoping” for the results it desires, By and large, business executives lack the tools, techniques or processes to guarantee that it receives the intended results.

Business executives must regain control of projects as it is through this means their business strategy is executed.

Business Executives need to learn how to define the desired business outcomes, benefits and value for each of their project investments so that they can successfully manage their delivery. Executives need to learn how to manage project value in addition to the current focus on controlling costs.