Strategic execution is not easy – in fact, you almost always fail:

»   90% of corporate strategies are never implemented
»   70% of complex initiatives fail
»   67% of projects are either challenged or impaired

One of the continuing difficulties executives face is this ‘strategy-to-reality’ gap – the difference between desired strategic outcomes and actual business value realization. Often the best efforts fall short because in the haste to start doing rather than planning, organizations unknowingly make critical mistakes forming the project portfolio and setting up large strategic initiatives that considerably lower their odds of success.

While many organizations use an Enterprise Project Management Office (EPMO) to deliver strategy, business value realization remains marginal. Many Enterprise PMO’s underperform against desired expectations, functioning more as ‘order-takers’ than strategic partners that drive business value. How do you move from a low-performing program office to a high-functioning Enterprise PMO—or create one—in a timeframe that keeps pace with your business demands?

Strategic Execution Framework

A well-formed Enterprise Project Management Office has one mission in life: to generate business value through the excellent execution of strategic initiatives. In short, ‘to move the needle on key business metrics’. How is this possible given the devastating failure rates mentioned earlier? The odds of successful strategy delivery can be substantially increased by taking a different approach.

A successful Enterprise PMO is built upon five essential pillars:

1. Strategic alignment with the organization (that connects your initiatives to your overall strategy and ensures alignment with leadership on the Enterprise PMO mission, vision and scope)
2. Effective and strong governance (that provides oversight, sponsorship, decision making, communication and business value management)
3. Organization and leadership (including organization structure plus experienced Enterprise PMO and program leaders critical for success)
4. Portfolio management methodology and processes (including intake, prioritization, analysis and resource capacity management to provide the information to manage and maintain a healthy project portfolio)
5. Delivery methodologies and supporting processes (including well defined methodologies, processes, and tools designed to execute effectively)

These five pillars provide the framework from which to build or improve your Enterprise PMO (EPMO). Each pillar represents a set of capabilities that successful Enterprise PMO’s mature over time.

Manage Portfolio Risk to Improve Strategic Execution

Portfolio risk management is one essential Enterprise PMO capability. Taking on too much or too little risk in the project portfolio can have a similar outcome – failure to achieve strategic goals. Balancing project portfolios requires defining the amount of risk executives are willing to accept, but it doesn’t mean eliminating high risk initiatives altogether, as they may be the key investments that transform the organization.

Large complex programs fail for predictable reasons. Common pitfalls include lack of stakeholder alignment, lack of business readiness, and lack of well-executed delivery. Overcoming these pitfalls require the art of leadership more so than the science of project management. For example, influencing a stubborn stakeholder, navigating political waters, or aligning stakeholders on initiative success measures, all require strong leadership. Unfortunately, many Enterprise PMO’s grossly underestimate the people side of initiative leadership, believing that a project or portfolio management tool is the silver bullet for strategy delivery, but no tool is going to save you. Tools are no substitute for leadership.

The Key to Successful Maturity Evolution

The key to successful evolution is not doing too much too fast, but rather advance at a pace the organization can absorb. Unfortunately, many Enterprise PMO’s try to go too fast and as a result, overwhelm the organization with unnecessary sophistication with too many complicated templates and processes. It generally takes three years to achieve three levels of maturity, so taking a measured approach with periodic review and adjust cycles works best.

Initiative leaders also can’t go it alone, as the complexity of a large-scale initiative is too much for any one person to manage. Using the concept of ‘distributed leadership’, which is getting exceptional leaders in the right roles, will create leverage and leadership capacity for initiative owners. A high performing Enterprise PMO (EPMO) can serve this purpose, by how it partners. Being service-oriented, objective, keeping the best interests of the initiative leader and organization at heart, and being a trusted problem solver, will result in successful outcomes and minimize the fatigue that multi-years efforts generate.

 

Remember, the portfolio is your strategy in action

 

Why Strategic Execution (Strategy Delivery) is Hard

At the same time, PMO’s need to understand how difficult it is to deliver results. Recent studies¹ indicate that strategy implementation fails a stunning 50 to 90 percent of the time. For executives who are pressed to deliver value for their organizations and shareholders, those odds are unacceptable. Why is strategy delivery so difficult? What makes the odds of success so low?

Our experience with numerous strategic initiatives and strategic planning efforts echoes the research noted above: most organizations struggle to form and implement strategy, missing expectations and opportunities. We find that failing to deliver strategy results from three common pitfalls:

Lack of a true strategy

Aspirational statements such as “global dominance,” “best in class,” and “be number one” are goals, not strategies. Such phrases may make a good rallying cry at strategic planning meetings and business unit retreats, but do little to set up an organization for success. Rather than catchy slogans, effective strategy is a comprised of several essential elements.

First, a well-developed strategy is deliberate set of choices designed to drive tangible business value. Many organizations do not choose well and pursue everything, stretching limited capital and constrained resources beyond limits. Instead of saying yes to many ideas, focus on a few; strategy is just as much about what you won’t do as what you will do, otherwise strategy delivery will suffer.

Second, strategy must be viable, meaning it is based on an efficient and sustainable business model. Consistently poor margins, costs increasing a rate faster than revenue, and misaligned balance sheet ratios, are all financial signals that the business model is not working. A sound business model is vital for any strategy to work. Even if the business model is working, strategy will still be ineffective if it is not feasible to implement. Are you leveraging proven capabilities? Do your assets provide an advantage? Can you leverage your culture to its fullest? Many companies overestimate their ability to execute the strategy and ignore basic feasibility factors.

Lastly, the best strategies have aligned objectives and incentives. Strong strategic thinkers clearly understand the drivers undermining business performance and define a set of integrated objectives to address problems head on. These objectives work together, reinforcing one another, and have quantifiable metrics associated with them, so leaders can measure progress against expectations.

Your objectives state the results you want—while your strategy states how you will achieve them. Moreover, if you incentivize the achievement of strategic objectives, then the odds of successful strategic execution increase.

Not operationalizing the strategy—jumping into tactics

After strategic planning ends, in the haste to start doing, organizations skip an essential planning step—and unknowingly make critical mistakes that considerably lower their odds of success. Common errors include lacking the resources to execute the strategy, taking too much or too little risk with strategic projects, and not understanding how key initiatives will drive business performance.

Portfolio management is a discipline that connects strategy to execution. If you are not utilizing it, you should to improve strategy delivery results. It involves applying the tools and concepts of financial management to business, product, service or project management. It helps leaders convert strategic intent into an actionable set of investments designed to yield specific business outcomes. Effective portfolio management answers the following questions:

• How do our investments align to strategic goals?
• Are we investing in the right areas and the best opportunities?
• Has our prioritization approach led to improved business value?
• Do our teams know what’s most important and do they have enough people to do the work?
• Have we stopped projects that won’t produce value?

All these questions involve making deliberate choices. Remember, the portfolio is your strategy in action.

Leadership gaps

Branche and Bodley-Scott² said it well: “Strategy execution is the responsibility that makes or breaks executives.” We see several common leadership gaps that plague strategic execution:

Not appreciating the importance of strategic thinking

In today’s fast-changing environment, value realization needs to occur in months, not years. Leaders need well-formed strategies to compete effectively. If your company is continually reacting to, rather than leading market changes, examine whether you have defined and operationalized your strategy correctly. Emphasize strategic thinking at all levels—it’s not just for an elite few.

Communication ≠ understanding

Can your employees name your organization’s top strategic priorities? Emails and town halls are not enough to drive a clear understanding of strategy and plans. Top and middle managers must understand and buy into the strategy so that they can explain it to employees. Repeated face-to-face communication is the most effective way to gain understanding.

Behaving tactically, not strategically

Tactical managers spend little time on the ‘why’ behind strategy, which can confuse employees. Strategic leaders have a well-formed set of reasons why the organization has chosen a particular direction and they can articulate what it means to employees in ways that inspire and motivate. They balance their time between executives and front-line employees to break down organizational silos and barriers.

Invest Wisely to Advance Strategy and Drive Business Results

As competitive pressures increase, the imperative to invest wisely and to ensure those investments come to fruition also increase. Having a clear view into your portfolio of business initiatives and an effective way of allocating budget and resources to each can yield significant returns. Conflicting priorities, constrained resources and tight timelines contribute to a complex situation. While organizations have created Enterprise PMO’s (EPMO)  to help solve these problems, many are still in their infancy and are not able to deliver the type of results needed to advance their organizations’ strategies.

 

The key to successful evolution is not doing too much too fast, but rather advance at a pace the organization can absorb. Unfortunately, many EPMO’s try to go too fast and as a result, overwhelm the organization with unnecessary sophistication with too many complicated templates and processes.

 

Improve Strategic Execution by Strategically Positioning Your PMO

PMO’s should strive to position themselves as business partners, not order-takers in order to drive business results. To do this, PMO leaders should consider five key strategies, and focus on objectives that advance maturity.

PMO Governance Strategy

Governance is about decision-making and stewardship. Choosing the right project investments and ensuring that the project portfolio produces business value requires the discipline of project portfolio management – the methods for prioritizing and selecting projects based on their importance and potential for effective completion. Start by implementing the basics – for example, a project submission and review process based on a simple business case, high-level effort assessment, and an executive willing to sponsor the effort. Mature governance bodies are efficient, because they utilize detailed quantitative metrics for project valuation (risk, reward, investment, ROI), resulting in stronger alignment between business strategy and project investments. They also rely on ‘what-if’ scenario planning capabilities to consider alternative portfolio compositions, rather than frequently shifting project priorities in hopes that a magic combination will appear to meet business objectives. This type of governance drives strategic execution.

PMO Execution Strategy

While governance is about doing the right things, execution is about doing things right. As a first step, standardizing on a set of common tools, templates, and a project lifecycle enables project managers to manage in a consistent fashion. Achieving repeatable project execution involves using metrics to measure progress, using a common risk management approach, instituting change control processes, and maintaining a historical database of project performance to track execution performance over time. The PMO’s ultimate goal is improving project throughput. Measure progress toward this goal by using root cause analysis to identify bottlenecks (often resource constraints), and then implementing process improvement strategies to eliminate them. Consistent execution drives strategic execution.

PMO Skills Strategy

Superior project execution requires a high level of project management competency. Start by evaluating project manager skills and developing improvement plans. Improving project execution performance can be accomplished by using peer mentoring, project postmortems, and by matching project manager skills to project complexity. Strive to turn project managers into project leaders by helping them improve their communication, negotiation, and business skills. Alternatively, hire more experienced staff. Having the right people with the right skills also supports strategic execution.

Internal Marketing Strategy

To reposition a PMO from order-taker to business partner requires PMO maturity as well as stakeholder awareness and understanding of your vision and goals. Make the business case for the PMO by meeting one-on-one with project sponsors to understand their goals and their business. Develop a strategy to link improved PMO success to your stakeholders’ business success. If you’re able to make this connection, and begin to deliver projects on time that deliver value, then stakeholders will develop a strong preference for the services your PMO has to offer.

PMO Tools Strategy

Many immature PMOs make the mistake of believing an expensive commercial tool will solve all their problems. This rarely happens. Sophisticated commercial project portfolio management and enterprise project management tools can be highly effective providing the PMO is already mature and adept at governance and execution. Many effective PMOs, however, use basic tools that function quite well to accomplish results. The key is to match the tool to the ability of the users, and then scale up when maturity improves. Effective use of portfolio management software helps support strategic execution.

Take Steps to Mature the PMO

Conflicting priorities, constrained resources, and tight timelines will always be the norm. By focusing on governance, execution, skills, internal marketing, and tools, your PMO can mature into a business partner, not an order taker. And when the partnering begins, real business results follow.

The Bottom Line on Strategic Execution

Business luminary Morris Chang³ said it best: “Without strategy, execution is aimless. Without execution, strategy is useless.” Strategy delivery need not be elusive or high-risk. When leaders develop well-formed strategies, operationalize them using effective portfolio management, and avoid common leadership pitfalls in strategic execution, their organizations will begin to achieve desired business objectives—and the odds of success will move in their favor.

When an Enterprise Project Management Office functions as a means to deliver strategy and does its job well, significant business value is delivered. As a consultant, I helped a client set-up and run a complex initiative to transform its global multi-billion dollar business. The client aimed to transform everything about its business – from the customer experience, to all business processes, the business model, and even the entire IT infrastructure to run the enterprise. The ‘Strategy Delivery Office’ mitigated common initiative risks through its design and operation, program leadership of key workstreams, and continuous improvement mindset. As a result, the initiative consistently delivered business value.

 

¹ResearchGate: Strategy implementation: What is the failure rate? Article in Journal of Management & Organization · February 2015 DOI: 10.1017/jmo.2014.7
²“Strategy Execution is the responsibility that makes or breaks executives” —Alan Branche and Sam Bodley-Scott, Implementation: How to Transform Strategic Initiatives into Blockbuster Results – November 10, 2005.
³”Chairman Morris Chang Quotes.” Quotes.net. STANDS4 LLC, 2017. Web.

 

 

What are the five pillars of strategic execution?

Strategic alignment with the organization, effective and strong governance, organization and leadership, portfolio management methodology and processes, delivery methodologies and supporting processes

Why do companies struggle with strategic execution?

There are a few key reasons why companies struggle with strategic execution include: a lack of a true strategy, focusing on tactics and not operationalizing the strategy, leadership gaps, poorly formed strategies, and inadequate communication

How can the PMO be a partner to drive strategic execution?

The PMO can help execute strategy when five elements are in place: 1) PMO governance: have the right governance structure in place to make timely decisions, 2) PMO execution strategy: standardize project execution for consistent delivery, 3) PMO skills: turn Project Managers into Project Leaders, 4) Internal marketing: reposition the PMO from an order-taker to business partner, 5) PMO tools: use the right tools to get results