Aligning Projects to Business Strategy by John Schlichter

In a survey of 400 U.S. CEO's out this month, 65% said the next three years will be more critical than the past 50 years. Complexity, volatility, and uncertainty have been on the rise since the turn of the 21st century, making it more difficult for organizations to execute their business strategies through projects, especially those organizations that have not developed Organizational Project Management (OPM) capabilities. From the outset of the OPM3 program in 1998, we knew that organizations would need help for the foreseeable future to improve their ability to execute business strategies through projects in order to thrive in the exponential world accelerating toward us. This need has only increased over time.

That idea, that projects are the way to execute organizational strategies, was a game-changer for PMI standards, which had not been enlarged beyond addressing the management of individual projects to date. Midway through our development of the OPM3 standard in the year 2000, I asked our team to deploy a survey to gauge how well organizations align their projects to business strategy (such that projects are designed to achieve formulated strategy), the first time PMI sponsored such a survey.In that first survey, we engaged 10,000 professionals and found that only 66% of those surveyed said their organizations align projects to business strategy; and worse, only 25% said their organizations had well balanced portfolios (Schlichter John. PMI’s Organizational Project Management Maturity Model: Emerging Standards. PMI ’01 Annual Symposium, Nashville; 2001). Since 2003, PMI's whole focus has shifted to organizations and their ability to execute business strategies through projects, getting more business value from projects. In that time, we have seen many organizations dramatically improve their ability to execute business strategies through projects, but the opposite trend is also true.

In 2013, a decade after our first survey on project alignment to strategy, PMI started surveying project alignment to strategy annually, reporting that from 2013 to 2016 about half of organizations reported high alignment of projects to organizational strategy, which was slightly worse than our finding a decade earlier. And that metric dipped further from 54% in 2015 to 48% in 2016. In short, a significant number of organizations have not been aligning projects to business strategy, a phenomenon that some may say, on the whole, has not improved for nearly twenty years and appears to be getting worse gradually. What do you think accounts for this trend? Is it because the strategy is missing or outdated? Or because strategies formulated top down are not translated into projects? Or that emergent strategies developed bottom up are not aligned to formal strategies? Is it because projects created top down from strategy and projects proposed bottom up to advance strategic intent are not vetted capably? Is it a failure on the part of executives or on the part of middle management?

There are many questions, but beyond musing upon frequent causes of misalignment and well known opportunities to improve it, the more fundamental question is whether organizations actually are getting worse at this, as PMI suggests, or instead are they actually getting better but just not keeping pace with the exponential future accelerating toward us? This question may be one of the more important ones facing businesses today. As Darwin said, "It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change."

Executing Strategy Through Organizational Project Management ™ by John Schlichter

As the saying goes, “good ideas are a-dime-a-dozen.” Having a good idea simply doesn’t mean much unless it can be translated into results in the real world. Strategic plans that can’t be executed are largely useless. Planning in and of itself has its own merits, yes, but ask yourself, as an executive, how meaningful your strategies are if you cannot translate them into projects designed to enact them or if the projects meant to deliver the strategy ultimately fail. The answer is that your strategic plans are largely worthless without capable translation into projects and without capable delivery of those projects (Charan and Colvin, 1999).

Strategies are decisions regarding where and how to compete. They are decisions regarding the scope of operations and the deployment of resources. To enact strategies, projects are formulated. These may be projects to create or change a business, create technology or upgrade products, to rethink and reshape delivery, to transform organization structures or processes, to innovate supply chains, services, or marketing through new profit models, channels, brands, or ways of engaging customers. These may be collaborative endeavors, incremental actions, breakthroughs or disruptive innovations. Whatever your strategies may be, they are enacted through portfolios of projects, and one must be able to evolve or adapt one’s projects and deliver them successfully, consistently, and predictably in a complex and changing landscape. Would you like to guarantee your organization’s ability to implement its business strategies through projects? A business standard named “OPM3” was created to help you do just that. 

Your organization's strategies or decisions regarding where and how to compete are enacted through evolving networks of projects.

To begin to understand OPM3, first you have to appreciate what it means to be a standard. Cast your imagination to the 2nd millennium B.C. and the vast grassland steppes of Asia that provided fertile grazing, water, and easy passage for caravans. Merchants traveled immense distances from the shores of the Pacific to Africa and deep into Europe to trade in one of the hottest commodities of the ancient world that became the namesake of this super highway: the Silk Road. Across the Archaemenid Empire of Persia’s Cyrus the Great and then the Greek Empire of Alexander the Great, the roads grew through the ages, through the Roman Empire, the Byzantine Empire, Medieval China, and the Mongol Empire. These roads became de facto standards as the way that travel occurred, standards in reality by fact of widespread use. That is foremost what a standard is: the prevailing practice. Tacit knowledge of the paths taken by travelers on the Silk Road was translated into explicit knowledge in the form of maps that codified popular routes. That too is what a standard is: a paradigm or framework whose authority is asserted. The standard practices of traveling known routes were accompanied by rules or standards de jure (that is, officially or by law) like weights, measures, and coinage that enabled commerce. That is yet another way of understanding standards, i.e. as abstractions contrived to enable interaction.

With the onset of the Industrial Revolution and the need for high-precision machine tools and interchangeable parts, the implementation of standards in industry and commerce became highly important. For similar reasons, as projects proliferated and became the preferred method for implementing business strategies, the need for project management standards grew as well, as standards enabled people from different backgrounds and places to collaborate through shared vernaculars and methods even when they hailed from different organizations or had never met before, moving from one project to another seamlessly even though each project, by definition, produces something different or unique. Today a standard is an established norm or requirement in regard to technical systems or frameworks. For example, a framework, custom, convention, company product, or corporate standard may become generally accepted and dominant as a de facto standard. More often, a standard will take the form of a formal document that establishes uniform criteria, methods, processes, and practices de jure.  Standards may be developed privately or unilaterally, e.g. by a corporation, by a regulatory body, or by the military. Or they may be developed by trade unions or associations, or standards organizations that have emerged and solicit diverse input to develop standards voluntarily, by edict, or the formal consensus of experts.

We deployed surveys to over 30,000 professionals globally in order to define a global standard defining all of the elements of Organizational Project Management (OPM).

Against this backdrop, an international team came together in 1998, rallied by the following question I posed to them: “Can we develop a standard that helps organizations implement their strategies through projects?” By this time, standards for the management of individual projects were well known. But there was a need to meet the exponential interest in project management with a way to make project management capable in organizations. My thought was that our purpose should not be to improve project management in general but to improve the ability of organizations to enact their strategies, the raison d'être of organizations, and to improve their ability to do so through projects. To do this, we envisioned describing as a system the ways that organizations implement their strategies by integrating project, program, and portfolio management. To refer to this system, I coined the term “Organizational Project Management” or OPM. Our goal was to create a model that explained how to implement OPM or how to achieve excellence or maturity in OPM, i.e. an “Organizational Project Management Maturity Model” or “OPMMM,” a term which I rephrased as “OPM3” (indicating the three M’s in the name) simply because it was easier to say.  We deployed surveys to over 30,000 professionals globally in order to define a global standard defining all of the elements of OPM. Word-analysis software was applied to the data for affinity mapping in order to organize the data around the key concepts of OPM, and hundreds of experienced professionals poured over this material to distill it into actionable guidance.

Our large and highly experienced team (nearly 800 people across 35 countries) agreed that describing what constitutes all of the elements of Organizational Project Management was not enough. We needed to distinguish each element of OPM in terms of the steps to implement each element in an organization. For this reason, the team reverse-engineered all of the elements of OPM into their constituent parts. For example, if the respondents to our surveys to 30,000 people told us that one of the things necessary in an organization that delivers projects is highly capable sponsorship of projects, then the team decomposed that into the steps required for achieving highly capable sponsorship. The result was magnificent, including steps for establishing the strategic alignment of projects to organizational goals, steps for learning from other organizations who are implementing OPM, steps for implementing management systems and control systems, steps for ensuring projects have sponsors who are doing specific things, steps for adopting appropriate organization structures, implementing project management methods, practices, and specific techniques, steps for enacting resource allocation for OPM, steps for implementing competency management and individual performance appraisals, steps for knowledge management as well as steps for implementing a project management information system (PMIS) and establishing internal project management communities and more.

But as I looked at all of the data, I realized that it did not tell the essential story that reflected our original purpose, which was to elaborate Organizational Project Management as a system for implementing the strategies of organizations through projects. It occurred to me that to do that, we had to ensure we told one essential story that organized the wealth of insights we had collected, a story I summarized as “how to do the right projects the right way,” a slogan I announced to our team and watched ignite the imagination of hundreds of people. Today you can find this slogan in papers, articles, project management course descriptions, and book titles. That idea was that there are processes for translating strategies into projects, processes for project-portfolio and program management, and processes for initiating, planning, executing, controlling, and closing individual projects. These processes can be woven together as a system for doing the right projects the right way, recognizing that what is “right” is somewhat different for each organization but that general guidance can be represented in a way that is applicable to most organizations most of the time.

Strategy and project delivery processes can be made capable in ways that reflect your organization's strategic intent and organizational imperatives.

As our global team undertook the work of elaborating those processes for implementing business strategies through projects, in addition to leading the team I was managing a PMO that produced successful results for a private company that was subsequently sold for billions of dollars. In other words, I had been honing my craft in the corporate world. But more importantly to our agenda for OPM3, I was completing a Master’s degree in Business Administration at Emory University’s Goizueta Business School, where my leadership of the development of OPM3 was reformed in classes by the likes of Robert Kazanjian who reformed my understanding of strategy implementation, Benn Konsynski who reformed my understanding of the role of frameworks to adapt to an uncertain world galloping toward us, and George Easton who fundamentally transformed my understanding of what is possible by institutionalizing process capabilities in organizations. In one of the classes of that program, Easton taught us the fundamentals of process management, based on the idea that it is possible to determine if a process can be expected to perform within specification limits, distinguishing how much natural variation a process experiences relative to its specification limits. The basic technique is called “Statistical Process Control” or SPC, a technique that evolved over many decades through use by thousands of professionals, proving its status as an industry standard.

George Easton had my attention because he had been one of the architects of the Malcolm Baldrige Award created by the U.S. Congress and had been teaching Six Sigma since before Motorola allegedly “invented” it and GE made it famous. I realized in George’s class that this was the key that was missing from the work our team was doing to elaborate a system for doing the right projects the right way. We could not only describe the processes for choosing and delivering projects, but we could describe how to make those processes perform successfully, consistently, and predictably through SPC. I realized that although the processes of translating business strategies into projects and delivering them successfully pertained not to manufacturing or operations but to temporary endeavors, this kind of activity-system for executing strategies through projects had become highly routine work throughout the world and that we could re-purpose the techniques applied to manufacturing to this new way that would characterize work for the foreseeable future. Indeed, the Malcolm Baldrige Award was one of the 20+ models our team had analyzed as background for the development of OPM3, and it was a great privilege to have my eyes opened by one of the preeminent minds to pioneer that quality framework as a standard.

I distilled that idea as fifteen steps organized into four maturity levels, and proposed this framework to our team, which they approved:

STANDARDIZATION LEVEL
1. Establish process governance.

2. Document the process, i.e. project, program, and portfolio management processes.

3. Communicate the process to the necessary stakeholders.

4. Achieve consistent implementation of work methods.

MEASUREMENT LEVEL
5. Identify critical characteristics of the process.

6. Focus the process on the needs of the customer, and incorporate performance requirements of customers into process measures.

7. Measure the process's critical characteristics directly.

8. Identify measures upstream of the process, and ensure process users understand how other processes produce outputs that become inputs to the process.

9. Measure the critical inputs to the process.

CONTROL LEVEL
10. Develop a process control plan.

11. Implement a system for maintaining control of the process.

12. Operate the process in a stable fashion, consistently within upper and lower control limits, and update process documentation accordingly.

(CONTINUOUS) IMPROVEMENT LEVEL
13. Identify root causes of problems during operation of the process.

14. Execute continuous efforts with widespread participation directed at improving the process.

15. Integrate process improvements with systems that standardize improvements.

Today the Organizational Project Management Maturity Model (OPM3) is a standard that distinguishes the processes of project, program, and portfolio management, and applies these fifteen steps to those processes as a transformation or capability-development agenda. Supplementing this process transformation framework are nearly 200 other improvement options to implement a myriad of best practices associated with Organizational Project Management, improvement options distilled from surveys to 30,000 people and the work of hundreds of professionals who vetted that material.

Hundreds of people have applied this model in all manner of organizations.

Even though OPM was invented as the basis of OPM3, most people today are not aware that OPM3 defined the standard for OPM. They are not aware that OPM3 includes not only the system of OPM but all of the steps described above - steps that are known as "Capability Statements," including not only the 15 process improvement steps listed above and applied to all project, program, and portfolio management processes, but approximately 200 other steps distilled from surveys to 30,000 people. The reason why most people are not aware that OPM3 was primarily composed of these steps is that even though all of these steps are the essential component of OPM3, PMI made all of these steps for implementing OPM a separate commercial product that was expensive and which degraded adoption because it was expensive, which led to protests. And PMI promoted a misleading survey as a less expensive alternative to the commercial product, a survey so misleading that it effectively derailed OPM3 implementations. It is a case study in how not to manage industry standards. PMI recently announced that OPM3 shall be updated to its 4th edition and will include all of these steps for implementing OPM, which is good, but it's unclear whether PMI will remove the misleading survey when this occurs. It suffices to say a comedy of errors has been made in the management of the OPM3 standard.

In fact, now PMI is creating a separate standard they intend to name "The Standard for Organizational Project Management," which is both confusing and creates the risk of a conflict between standards, i.e. confusion between PMI's self-described "foundational standard" titled "The Organizational Project Management Maturity Model," which defined the standard for OPM in the first place based on surveys to 30,000 people, and "The Standard for Organizational Project Management," which is being created by far fewer people and without the extensive research that formed the basis of OPM3. There is a significant risk that these two standards will have non-identical definitions of OPM and non-aligned guidance for implementing OPM. But these kinds of problems are modus operandi in the development of PMI standards by committee. Do not lose sight of the forest for the trees.

Your organization's strategies or decisions regarding where and how to compete are enacted through evolving networks of projects that are adaptable, temporary, team-based problem solving processes that produce unique results, benefits, and learning, upgrading strategic planning recursively and cybernetically. In any organization with many projects, although control mechanisms are created explicitly and often in a centralized manner, the projects must adjust and adapt to each other, creating new systems and subsystems that exhibit a degree of self-organization.

The adoption of standards occurs as simple rules, customs, and rituals for project teams: simple rules that create the possibility of behavior that is independent in detail and governed by higher organizing principles, i.e. emergence. Rigid protocols in certain parts of the system create greater flexibility across the total system, enabling agility. Decision-making must occur capably to a degree that matches the demands of the environment. As performance is reported, resources are reallocated across the portfolio, project termination decisions may be made, and new projects may be initiated top-down or bottom up.

Strategy and project delivery processes can be made capable in ways that reflect your organization's strategic intent and organizational imperatives. Both the processes and the environment they occur within must be cultivated. These processes and the method for transforming both the processes and the environment that situates them have been codified as a standard, which distills prevailing practices within an authoritative paradigm or framework contrived to enable collaborative action-taking.

Hundreds of people have applied this model in all manner of organizations. Speaking for myself, I have implemented OPM3 in organizations like Automatic Data Processing, AECID, Alcatel-Lucent, Amana (Jeddah Municipality), Battelle Memorial Institute, CARICOM, Cooper University Hospital, Det Norske Veritas (DNV), European Union External Action Service (EEAS), FRTIB, Harris Corporation, Hong Kong SAR Government, Hyder, IBM, Inter-American Development Bank (IDB), Johnson & Johnson, Kurdistan Regional Government, MARTA, Melco-Crown Entertainment (China), Microsoft, National Bank of Abu Dhabi, Nationwide Insurance, Northrop Grumman, Panasonic-Mobile, Pearson Education Measurement, Popular Financial, Prudential Financial, Quality Assurance Institute (India), R.L. Polk & Co., SAP, Saudi Arabian Ministry of Interior, Studiocom, T-Mobile, TATA, Valassis, Verint, WellPoint, WorleyParsons, Xerox, and many others. We have proven that the OPM3 standard is the standard defining what OPM is and how to implement it, and we have the benchmarking data to back that up. This coming Spring I will teach the science and art of OPM to the full-time Executive MBA students of Emory University, my alma mater.

The journey of implementing Organizational Project Management in your organization and making that system capable is rife with pitfalls and decorated with failures. But others have made this journey before you, leaving well-traveled roads for you to follow and even tools for you to use, including a map, i.e. the OPM3 Capability Statements. Unfortunately, new maps are under development that may conflict with the original, and even those equipped with the best map are not necessarily qualified to lead the journey. A sailor must learn to trim the sail before crossing the Pacific, and a mountaineer must learn to detect crevasses before scaling the Alps. Even the experienced can benefit from a guide who is an expert. Join us starting in the Spring 2017 as an Executive MBA student at Goizueta Business School for an intense and exclusive experience where you are assured to learn frameworks you will use for the rest of your professional life to thrive in the exponential future accelerating toward us.