Strategy & Execution Alignment – Comparing 3 Project Investment Approaches
Use an objective approach that drives the right decisions to help orchestrate transformation
In today’s dynamic enterprise, it’s difficult to keep strategy aligned with execution. An objective approach is required to drive the right decisions that help orchestrate transformation, but which is the right approach for your organization?
What good is a strategy that can’t be delivered on?
For most organizations, the projects that are approved rarely align with what the organization really needs. And since most work is only ever managed to the triple constraint of time, cost and scope, very little attention is given to how well that work aligns to strategic goals. More projects are typically approved than can be delivered, changes happen across the lifecycle, and goals and objectives are frequently missed. This is the broken system many organizations use, and to fix it, something has to change.
Adopting both top-down and bottom-up controls
The good news is that making those changes is easier than ever, thanks to two recent developments. First, planning is shifting from an annual cycle to a more frequent and dynamic planning approach. And organizations are also now doing a better job connecting the work being done – execution, with the work that is needed – strategy.
Many organizations are evolving from a project-focused to a products-orientated approach. This approach more directly connects the work being done with the purpose for that work – which means investing and managing where the benefit will be delivered. Strategy is decomposed into products, programs, or initiatives, and that’s the level where funding and governance happens. This has the effect of shifting those elements closer to the strategy, and gives the teams doing the work the freedom to define and deliver the the best way they see fit.
Evolving The Digital Model
The advantage to evolving your planning in this way is that it helps the organization embrace the tri-modal reality by effectively making it irrelevant at the funding and governance level, It also allows the organization to adjust and reallocate funds at the program or product level based directly on strategic need.
This approach is better, but it shouldn’t be the ultimate destination. Indeed, it’s not that different from a programs-orientated approach, and those have been around for decades – managed and funded at the level where program managers define the underlying projects. It also only focuses on discretionary investments., so whether they’re called products or programs, they still don’t represent everything the business does.
Moving to a capability-based approach
Truly mastering strategic portfolio management requires a capability-aligned investment approach, in which the business can truly consider, invest in and execute against all business and IT assets across the enterprise. This is the key to directly connecting all work, no matter how it’s executed, with the reason that the work is being done – to deliver and/or enhance the capabilities needed to drive transformation.
By making that connection much more direct it becomes far easier to make decisions to adjust or pivot in response to new threats and opportunities. It’s also much simpler to understand the impact of such decisions, and far simpler to execute on the changes that are approved. Leaders can now see their business in 360 degrees – operational and
discretionary spend are connected and there is complete visibility to everything through the lens of strategy delivery.
Breaking down 3 approaches to project investment planning
Most organizations still use some form of top-down project planning, but this can be sub-optimal if demand and innovation are not aligned with strategic imperatives. Ideally, the project management execution methods that an organization uses (Agile, waterfall, or back-of-the-napkin) helps enable the PMO to more effectively align execution with strategy, organizations typically turn to one of these three investment approaches for project planning:
- Project-driven planning
- Program-driven planning
- Capability-driven planning
Project-driven investment planning
The most common approach to investment planning, the project-driven method has been used for many years to support traditional annual planning processes.
How does it work?
It involves defining and prioritizing business strategy with the key stakeholders, which often occurs in silos. During the annual planning window, project requests are captured across the enterprise, typically in silos and disconnected from the strategy. A business case is completed, including an impact assessment against the prioritized strategies, and semi-sophisticated techniques are then used to prioritize, optimize and select the best portfolio under varying budgetary constraints.
Pros
- Easy to implement, familiar and widely accepted
- Aligns with annual planning processes across organization
- Often tightly aligned with finance and business processes
Cons
- Planning often occurs within silos
- Risks choosing best from a bad list of projects
- No mechanism to easily connect priorities to strategy
Summary
This approach is fine as far as it goes, but it does have one main frailty. The execution is generated disconnected from the strategy, and the strategy was only used to select what was considered to be the best of whatever was teed up. In this situation, there’s really no way to know with certainty whether the right demand has been identified. In essence, this process simply selects the best of what could potentially be a bad list of projects.
Program-driven investment planning
This approach relies on the systematic decomposition of corporate or strategic objectives into actionable and measurable business strategies.
How does it work?
Programs are created to deliver on the corporate strategy and further decomposed into the underlying execution (projects, epics, etc.). Programs are independent investment entities, created independent of – but completely integrated with – the underlying execution. These provide a natural bridge between strategy and execution. This model is commonly used as a way to govern the bi-modal reality. A program could be 100% agile, 100% traditional, or a hybrid of both.
Pros
- Avoids “picking the best from a bad list” problem
- More effectively links execution with strategy
- Works well in a mixed execution environment
Cons
- Lacks the comprehensive approach of capabilities
- May require an adjustment to the internal culture
Summary
This is a better approach than project driven planning. In this model you can say with some certainty that the execution was derived from the strategy.
Capability-driven investment planning
This most advanced approach provides a framework in which an organization can most effectively orchestrate business transformation.
How does it work?
As shown in the graphic, this approach introduces the concept of business capabilities, which represent the people, processes, and technology that are responsible for enabling each of these core operating functions of a business.
Mapping the relationship between a strategy and the key capabilities needed to realize each strategy, it’s possible to generate the right demand and/or execution. For example, if there is a strategy that has no supporting business capability, then a new capability can be introduced by funding a program. If a strategy is dependent upon a poorly performing capability, then projects and programs can be funded to enhance that capability and knock it out of the park.
Pros
- Best way to align all execution with strategy
- Enables organization to move beyond just projects
- Ultimately helps drive transformation
Cons
- Requires purpose-built portfolio management tools
- Will not work unless all stakeholders are on board
Best Approach for Aligning Strategy with Execution
Every strategic investment you make has to generate the best possible return for your business. It must contribute to the immediate goals and objectives while contributing to longer term success. You need the control that ensures all of your investments are driven from the top – keeping governance and oversight close to the strategic drivers. But you also need the freedom to execute on that strategy in the way that works best for each individual circumstance. And if you want to successfully drive digital transformation – and you do, then you need to have this perspective on everything you do.
You may still choose to deliver some of the work using projects. You’ll want to evolve some delivery to a product-based investment model with permanent, or semi-permanent, agile teams driving them forward. But capability-based investment management gives you the ultimate alignment between what you’re doing and how you’re benefitting, and that’s how you need to manage your business. Then all you need to do is plan effectively.
Use an objective approach that drives the right decisions to help orchestrate transformation
In today’s dynamic enterprise, it’s difficult to keep strategy aligned with execution. An objective approach is required to drive the right decisions that help orchestrate transformation, but which is the right approach for your organization?
What good is a strategy that can’t be delivered on?
For most organizations, the projects that are approved rarely align with what the organization really needs. And since most work is only ever managed to the triple constraint of time, cost and scope, very little attention is given to how well that work aligns to strategic goals. More projects are typically approved than can be delivered, changes happen across the lifecycle, and goals and objectives are frequently missed. This is the broken system many organizations use, and to fix it, something has to change.
Adopting both top-down and bottom-up controls
The good news is that making those changes is easier than ever, thanks to two recent developments. First, planning is shifting from an annual cycle to a more frequent and dynamic planning approach. And organizations are also now doing a better job connecting the work being done – execution, with the work that is needed – strategy.
Many organizations are evolving from a project-focused to a products-orientated approach. This approach more directly connects the work being done with the purpose for that work – which means investing and managing where the benefit will be delivered. Strategy is decomposed into products, programs, or initiatives, and that’s the level where funding and governance happens. This has the effect of shifting those elements closer to the strategy, and gives the teams doing the work the freedom to define and deliver the the best way they see fit.
Evolving The Digital Model
The advantage to evolving your planning in this way is that it helps the organization embrace the tri-modal reality by effectively making it irrelevant at the funding and governance level, It also allows the organization to adjust and reallocate funds at the program or product level based directly on strategic need.
This approach is better, but it shouldn’t be the ultimate destination. Indeed, it’s not that different from a programs-orientated approach, and those have been around for decades – managed and funded at the level where program managers define the underlying projects. It also only focuses on discretionary investments., so whether they’re called products or programs, they still don’t represent everything the business does.
Moving to a capability-based approach
Truly mastering strategic portfolio management requires a capability-aligned investment approach, in which the business can truly consider, invest in and execute against all business and IT assets across the enterprise. This is the key to directly connecting all work, no matter how it’s executed, with the reason that the work is being done – to deliver and/or enhance the capabilities needed to drive transformation.
By making that connection much more direct it becomes far easier to make decisions to adjust or pivot in response to new threats and opportunities. It’s also much simpler to understand the impact of such decisions, and far simpler to execute on the changes that are approved. Leaders can now see their business in 360 degrees – operational and
discretionary spend are connected and there is complete visibility to everything through the lens of strategy delivery.
Breaking down 3 approaches to project investment planning
Most organizations still use some form of top-down project planning, but this can be sub-optimal if demand and innovation are not aligned with strategic imperatives. Ideally, the project management execution methods that an organization uses (Agile, waterfall, or back-of-the-napkin) helps enable the PMO to more effectively align execution with strategy, organizations typically turn to one of these three investment approaches for project planning:
- Project-driven planning
- Program-driven planning
- Capability-driven planning
Project-driven investment planning
The most common approach to investment planning, the project-driven method has been used for many years to support traditional annual planning processes.
How does it work?
It involves defining and prioritizing business strategy with the key stakeholders, which often occurs in silos. During the annual planning window, project requests are captured across the enterprise, typically in silos and disconnected from the strategy. A business case is completed, including an impact assessment against the prioritized strategies, and semi-sophisticated techniques are then used to prioritize, optimize and select the best portfolio under varying budgetary constraints.
Pros
- Easy to implement, familiar and widely accepted
- Aligns with annual planning processes across organization
- Often tightly aligned with finance and business processes
Cons
- Planning often occurs within silos
- Risks choosing best from a bad list of projects
- No mechanism to easily connect priorities to strategy
Summary
This approach is fine as far as it goes, but it does have one main frailty. The execution is generated disconnected from the strategy, and the strategy was only used to select what was considered to be the best of whatever was teed up. In this situation, there’s really no way to know with certainty whether the right demand has been identified. In essence, this process simply selects the best of what could potentially be a bad list of projects.
Program-driven investment planning
This approach relies on the systematic decomposition of corporate or strategic objectives into actionable and measurable business strategies.
How does it work?
Programs are created to deliver on the corporate strategy and further decomposed into the underlying execution (projects, epics, etc.). Programs are independent investment entities, created independent of – but completely integrated with – the underlying execution. These provide a natural bridge between strategy and execution. This model is commonly used as a way to govern the bi-modal reality. A program could be 100% agile, 100% traditional, or a hybrid of both.
Pros
- Avoids “picking the best from a bad list” problem
- More effectively links execution with strategy
- Works well in a mixed execution environment
Cons
- Lacks the comprehensive approach of capabilities
- May require an adjustment to the internal culture
Summary
This is a better approach than project driven planning. In this model you can say with some certainty that the execution was derived from the strategy.
Capability-driven investment planning
This most advanced approach provides a framework in which an organization can most effectively orchestrate business transformation.
How does it work?
As shown in the graphic, this approach introduces the concept of business capabilities, which represent the people, processes, and technology that are responsible for enabling each of these core operating functions of a business.
Mapping the relationship between a strategy and the key capabilities needed to realize each strategy, it’s possible to generate the right demand and/or execution. For example, if there is a strategy that has no supporting business capability, then a new capability can be introduced by funding a program. If a strategy is dependent upon a poorly performing capability, then projects and programs can be funded to enhance that capability and knock it out of the park.
Pros
- Best way to align all execution with strategy
- Enables organization to move beyond just projects
- Ultimately helps drive transformation
Cons
- Requires purpose-built portfolio management tools
- Will not work unless all stakeholders are on board
Best Approach for Aligning Strategy with Execution
Every strategic investment you make has to generate the best possible return for your business. It must contribute to the immediate goals and objectives while contributing to longer term success. You need the control that ensures all of your investments are driven from the top – keeping governance and oversight close to the strategic drivers. But you also need the freedom to execute on that strategy in the way that works best for each individual circumstance. And if you want to successfully drive digital transformation – and you do, then you need to have this perspective on everything you do.
You may still choose to deliver some of the work using projects. You’ll want to evolve some delivery to a product-based investment model with permanent, or semi-permanent, agile teams driving them forward. But capability-based investment management gives you the ultimate alignment between what you’re doing and how you’re benefitting, and that’s how you need to manage your business. Then all you need to do is plan effectively.
