Strategy is crucial to steer an organization in the right direction.
“Large views always triumph over small ideas.” Winston Churchill
The purpose of this section is to describe the impact of strategy on determining, establishing and committing to the right projects and allocate scarce resources accordingly. Practically, the organization strategy drives the choice of projects. The right projects will deliver the strategic vision and goals of the organization.
Strategy is determined based on the outcome of the analysis of the distinctive and reproducible internal organization capabilities, expressed as strengths and weaknesses, and external environment factors, expressed as opportunities and threats. Strategy planning uses combination of techniques and tools to develop options and make informed decisions on how to take advantage of strengths and opportunities and respond to weaknesses and threats.
The goals of strategy include ensuring effectiveness of service delivery, profitability and, establishing and sustaining competitive advantage. These goals are achieved by developing agendas and action plans that will maintain product/service quality at a lower cost or improve product/service quality at the current or lower cost.
The value of strategy in an enterprise is to maximize profit and prevent or minimize losses, particularly in profit making organizations. Strategy is usually done at the corporate and strategic business units (SBUs) levels. SBU strategies are derived from the corporate strategy. A strategic business unit could be a product line, a service division, a geographical division etc. In the public sector, the corporate strategy is usually derived from the government agenda for its citizens, and the strategic business units could be the ministries, divisions, agencies or program areas. Other levels in the organization derive their plans, programs and projects, from the corporate and SBU strategies.
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Different models are used to develop strategies. A model enables clear thinking and well thought-out approach to managing the various factors, issues and implications of strategic activities and making sense of the complexities involved. A practical and versatile strategy model is a combination of different school of strategic thoughts, which include planning, learning, design, positioning, and social-cultural factors. The model in Figure 3 depicts this practical concept.
The strategists, usually business owners and executives, define the vision and agendas that drive the organization business activities. The vision drives the strategic choices of the organization. Strategy is not just about setting a vision, planning and forecasting, to maintain control. A sustainable strategy is determined by the organization’s ability to respond to predictable and unpredictable changes in the internal and external factors.
Analysis and diagnosis involve the examination of technological, organizational and environmental factors, which impact the organization performance and desired outcome. Internal factors include organization competences, policies and resources (i.e. human capital, financial, assets etc.). External factors include political, legal, economical, physical, competitive and related issues. Comprehensive analysis of the internal and external factors determines the organization SWOT (strengths, weaknesses, opportunities and threats). The SWOT report provides the required information for determining the preferred strategy or combination of strategies for the organization.
The chosen strategy drives the organization governance, structure and resource allocations, required to implement the strategy. The implementation needs to be evaluated and controlled to ensure that the organization is on track to meet its strategic goals.
Figure 3 – A Strategy Model
A learning organization promotes lessons learnt through effective engagement of stakeholders and an established feedback process to ensure free flow of information. An effective feedback process enables the development of a flexible strategy that responds to the constantly changing internal and external factors. An effective strategy requires involvement of all stakeholders to a varying degree and at different stages. A clear and reliable feedback from the stakeholders will keep the strategy alive, make it effective and responsive to change. The effectiveness of obtaining timely feedback, from the portfolio, project and operations domains, will enable the organization to respond quickly to new challenges by adjusting the strategy appropriately.
Strategy is like an elephant. You may see or focus on a part of the big picture and easily loose sight of the other parts. The key challenge is to see better and clearer, through practice, rather than relying solely on narrowed vision, experience, techniques and tools. There is no one fit-all situation strategy. Strategy is a flexible but unique endeavour to suitably position the organization to respond to the current and emerging internal and external challenges.
You may reference other organizations’ strategies, but trying to copy them could be a recipe for disaster or confusion. A strategy that makes organization ‘A’ successful may not work for organization ‘B’. In practical sense, there is no ‘best strategy’; instead, the focus should be on the preferred and appropriate strategy for a specific organization, situation and time.
No matter how smart or solid an organization strategy is, its effectiveness is only evident when the rubber meets the road. A practical strategy is flexible with room for timely feedback from reality and ability to respond quickly with rational changes in the strategy. Strategy drives the portfolio, projects and operational activities that should be established and managed to meet the strategic goals of an organization.
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Figure 4 shows the inter-relationship between strategy, portfolios, projects and operations. The linkage between projects, portfolios and strategy provides a good understanding and importance of projects initiation. As shown in Figure 4, the relationships between strategy, portfolios, projects and operations are multi-dimensional and multi-directional, which enables free flow of information.