Why Program Management is an Essential Part of Strategy Execution
Much has been written about the gap between strategy formulation and strategy execution. Alarming statistics published during the last six years of unprecedented growth prior to the recession, assert that 66% of strategies were never executed and of the remaining 34% only 50% were consistently meeting expectations and generating the ROIs predicted.
It would be logical to assume that effective management of projects would be reflected in the ability of organizations to excel in executing strategy and driving business performance. Not so! Research indicates that over the last 10 to 20 years, businesses worldwide have recognized the importance of, and have built competencies in, first project management and then portfolio management disciplines. PMI’s annual report indicates that their worldwide membership has grown in the last decade from 50,000 to over 350,000 indicating the widespread use of project management practices. During the same time frame, however, there has not been commensurate improvement in organizations’ ability to generate superior results in strategy execution.
Though the strategy execution gap is not new, managing strategic initiatives effectively and efficiently has continued to plague organizations. The recent economic crisis has made the situation even worse. As economies start to move slowly towards recovery, executives are under close watch to deliver key strategies. They are expected to excel amid ongoing financial credit crises, coincident with an exponential increase in world change – technologically, geopolitically, demographically, economically and how we view and run business. The reality is the recession is forcing all of us, professionally and personally, to transform ourselves to survive.
In addition to project and portfolio management, the community of project practitioners is now looking at effective Program Management to play a critical role in bridging the gap between formulation and effective execution of strategy. To date, however, recognition of the importance of Program Management or adoption of Program Management practices is definitely lagging behind Project and Portfolio Management even in project management mature organizations.
Programs, Program Management and Program Managers
A Gartner research paper published in Dec 2007 on the evolving landscape related to project, program and portfolio management states ‘By 2013, we see a new function evolving in many organizations, which crosses the IT business boundary and is concerned with optimized and actionable investments, aimed at achieving strategic organizational goals, typically implemented as large-scale programs.’
So what is a program? The standard definition is that it is a group of related projects and elements of ongoing operations, managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs require investment in an organization’s future and deliver benefits by enhancing current or developing new capabilities. They are the means of achieving goals and objectives in the context of organizational strategy.
This then provides a context for the need for formal Program Management. Program management is the centralized coordinated management of a program to achieve the program’s strategic benefits and objectives. Program Management facilitates optimization of costs, resources and staffing, integrates and resolves inter project dependencies and deliverables, and ensures achievement of expected benefits.
A program manager oversees and provides direction and guidance to managers of component projects and operational functions by coordinating efforts between them. Essential responsibilities of a program manager are the identification, rationalization, monitoring and control of the interdependencies between projects; dealing with escalated issues outside the control of each project; and managing the contribution of each project to the consolidated program benefits. They need much broader expertise, strategic thinking and superior capabilities related to governance, risk and change management than only project management.
Program Management is the link between a portfolio of strategic initiatives and component projects. Where possible, there are significant advantages to defining a program in support of an objective and then subdividing into component projects, instead of embarking on individual projects. This strengthens the alignment to organizational strategy and ensures better control and focus on benefits realization.
Some Common Misconceptions about Program Management:
- Programs are not simply ‘large projects’: Though a program manager should have mature project management skills to be able to influence performance of component projects they are not managing these projects – rather resolving inter-project priorities, dependencies and risks.
- Good project managers make good program managers: Not necessarily. Project managers need to focus mostly on hard objectives – on time, on budget, delivering scope with required quality. Program managers need to focus on organizational priorities and objectives and may need to alter courses of action such as cancelling projects that are on track, based on a change in strategy.
- Programs succeed if component projects succeed: History shows that even when projects are deemed successful – the benefits they were intended to generate do not materialize – which is the purpose of a program. As benefit generation goes beyond the deadline of a project, often a program’s life extends beyond the life of component projects into the realm of business operations.
Introducing Program Management into an Organization
In most organizations the identifying or creation of programs would be the responsibility of one of the following functions
- Office of Strategy Management or Strategic Project Management Office
- Portfolio Management board/council
- Central/Corporate Project Management Office
- Executive Team
Organizations that are either in early stages of implementing Program Management or are just starting to think about how to embark on the process, could follow the six steps recommended below.
Step 1: Identify initiatives best defined as programs
There are two approaches that would work – top down or bottom up.
- The top down approach involves starting with a key strategy and assessing whether the supporting initiative crosses functional boundaries, involves stakeholders with diverse potentially conflicting interests and is expected to bring about significant change and/or benefits to the organization. If so, the initiative is best implemented as a program.
- The bottom up definition of programs involves examining the portfolio of standalone projects, underway or planned, and then grouping inter-related and inter-dependent projects into programs that support and are aligned with defined strategies.
Step 2: Define target benefits:
The fundamental purpose of a program is to deliver expected benefits from organizational investment in initiatives. Defining the key benefits with a degree of specificity is important to subsequent steps in program definition.
Step 3: Develop alternative approaches to delivering desired results:
Once the key benefits are defined, if possible, develop alternative approaches to deliver the target benefits. For each approach determine risk, high level investment, time to realize benefits
Step 4: Analyze and select best options for implementation and identify component projects:
Examine options developed in the previous step and either identify or confirm projects that will deliver components of the program. Ensure that there are no gaps in benefit realization if all projects are implemented.
Step 5: Undertake stakeholder analysis and establish governance structure:
Identify all stakeholders external and internal to the organization and design the governance structure for the program to optimize communication and decision making.
Step 6: Engage the Program Manager:
Engage the most appropriate program manager for the initiative from within or outside the organization
In order to close the strategy-execution gap, complex initiatives need to be defined as programs and managed and monitored to remain aligned with strategies and deliver critical business benefits. Program Management therefore requires a multi-faceted combination of skills and experience not limited to just traditional project management. In the second part of this article, we will examine in greater detail the attributes of a successful program manager, and how organizations can build competencies in program management capabilities.
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Ruchira Chatterjee is a Managing Consultant at SPM Group Limited with over 30 thirty years of experience managing progressively larger departments and more complex programs and projects in both private and public sectors. She has held senior positions such as Program Director in Wealth Management, Director Client Services in IT, Director Model Operations in Property Casualty Division, managed Application Development and Business Systems functions and most recently has been a Managing Consultant with SPM providing consulting and program management services to clients. As a results oriented individual with developed leadership skills, along with Stakeholder Management and Management of Change competencies (people/organizational dimension, Ruchira is successful in any environment. Ruchira holds a Masters in Economics and is a certified Project management Professional (PMP) as designated by the Project Management Institute.
PMBOK 4th edition
Managing Strategic Initiatives in Turbulent Times, White Paper, SPM Group Ltd., February 2009
PMI Program Management Standards – second edition
PMI Annual Report 2008
Gartner Research Paper – Publication Date: 5 December 2007 ID Number: G00153349
IBM’s Making Change Work Study, 2008