Written by Stuart Easton
Okay, everybody talks about the importance of the strategic alignment of your project portfolio. Your portfolio exists to support your business strategy but in this blog, I want to look at things the other way around. Let’s assume we’ve already aligned our portfolio to strategy - what benefits would we see?
What is strategic alignment of projects?
Before diving into the benefits, let’s think a little about what strategic alignment is and what it is not. Strategic alignment is not “return on investment”. It’s not “net present value” and if you’re simply using financial measures to evaluate projects you are absolutely not aligning your projects to strategy.
Strategic alignment usually includes some financial goals, but it might also include business drivers such as market share or improving distribution efficiency. Strategic goals might include things like customer satisfaction or improving quality.
When selecting projects, you typically turn your strategic goals into criteria that you use to evaluate how well a particular project is aligned to strategy and those goals can vary widely.
The benefits of strategic alignment of projects
So let’s assume you’ve gone through a project prioritization process and have selected a well-balanced, strategically aligned portfolio of projects. What are the benefits you’ll see?
1. Project success rates
In this post we look at the impact of strategic alignment on project success rates and the data on this is clear. Projects that are aligned to strategy are 57% more likely to deliver their business benefit. They are also 50% more likely to finish on time and 45% more likely to stay within budget.
2. Focus on value creation
Projects that are aligned with strategy deliver clear and quantifiable benefits to your organization. Those that are not aligned to strategy may deliver some financial benefit (they’d better!) but they don’t really help you achieve real value growth in the business. By killing off low-value projects and focusing resources on high-value ones, you will, naturally enough, deliver more value.
3. Stronger executive sponsorship
The lack of executive sponsorship is a regular complaint when it comes to delivering projects. But let me ask you this... why do your execs not engage with a project? The answer’s simple; they don’t engage because the project simply isn’t important enough. It’s not strategically aligned. Align your projects to the strategic goals of your execs and they are likely to be far more engaged.
4. Eliminate waste
We’ve all seen them - projects that just shouldn’t be there. Pet projects get jammed through, or projects that exist because they were important at some point in the past. Well, aligning projects to strategy means those projects go away… and according to the PMI, a typical portfolio has a whopping 20% of projects that are so badly aligned that they should be stopped. Imagine what you could do if you eliminate that 20% of waste (see this video for the answer...!)
5. Secure the PMO
According to ESI, 72% of PMOs are being called into question by their executives. Why? Because they are not seen to add value…. But if you see the benefits listed in points 1 - 4, you will be seen to be adding heaps of value. Don’t just survive, THRIVE!
6. Clearer resource allocation decisions
Now we’re getting a little more tactical. One benefit of picking projects that are aligned with strategy is that you have to quantify which projects add more (or less) value. This resolves one of the PMO (and resource “owner”) biggest problems; how to allocate resources. With clarity over which projects are most important, those resourcing decisions become a lot easier and a lot less political. No more “Loudest voice wins!”
7. Stronger benefits realization
How can you realize benefits that you don’t understand? Going through the process of aligning your projects with strategy means that you have to be clear about what you’re trying to achieve and that, naturally, helps you achieve it. As that great sage, Yogi Berra, said, “If you don’t know where you’re going, you’ll end up someplace else!”
8. Project team focus
And if you know where you’re going, you can use this in your kick-off planning to work out what you need to do to deliver the results. Instead of being focused on delivering a rather dry list of features, brief your team on what you’re trying to achieve, work backwards from there to “what needs to get done” and to “what key milestones and decisions are needed” and watch your project team really soar!
Strategy, your organization, your career
Okay, so we’ve looked at the benefits you’re likely to see from aligning your portfolio of projects with strategy. But what we all want to know is “What’s in it for me?”
Your organization: Simply put, the organization will be more likely to succeed and prosper. Not only is this good for your shareholders (or citizens or other stakeholders), but a well-performing organization usually translates into a happier work environment… which is nice.
Your boss: Executives lose sleep over their ability to achieve their strategic goals. Wherever you sit in the organization, from CEO to mail-man, your boss has goals they are looking to achieve. You can reduce the risk of missing those goals simply by aligning your projects to your strategic goals…. And that will help your boss sleep at night!
Your career: Senior executives typically like problem-solvers, not bureaucrats. By engaging in the whole discussion around strategic alignment, you show yourself to be adding value and to be on “their side”. Of course, when you actually “deliver the goods”, they’re going to love you… and that’s great for your career!
The importance of knowledge
There is a lot of information on the Internet about project prioritization and strategic alignment. Most of it is well-intentioned, but most is not really "best practice".
It may surprise you to learn that the topic of "how to align projects with strategy" - basically, how to prioritize projects - is a hot topic for academic researchers around the world.
In a 2017 paper, for example, the University of New South Wales compared over 100 methods of aligning projects with strategy and found that only 2 of these methods was really "suitable".
Those methods were called DEA and AHP. Of the two, I'd always recommend AHP because of its ease-of-use (that's why we built it into our project prioritization software), but the important message here is that there are processes that have been validated through research...
...and there are a lot of methods that are more like "folk remedies" that simply don't work very well.
Getting started with strategic alignment
We have created the Ultimate Guide to Project Prioritization to help you get started. This resource will help you uncover the link between strategic alignment and project success. It will also walk you through the "how to" of project prioritization to help you get started.
In any case, bite the (silver?) bullet and start working to better align your projects. It’s not just the organization that will feel the benefit!
