This blog is all about a very simple statistic from the PMI. It's a startling statistic, yet when you think about it it makes perfect sense.
Projects are 57% more likely to achieve their business goals if they are aligned with corporate strategy.
Fifty…... Seven…… wow!
According to the same PMI report strategically aligned projects are 50% more likely to be completed on time and 45% more likely to be completed within budget.
So no matter how you define success, strategic alignment clearly has a huge impact. This blog is going to look at why this is and what you can do to improve your own success rates.
And since 57 is the number made famous by Heinz in their “Heinz 57” marketing campaign, I'm going to uses Heinz products to help tell the story.
Heinz Baked Beans - Value and Focus
Projects that are strategically aligned typically enjoy more focus and support. Fundamentally, projects that are identified as being strategically important get more resources and, therefore, are more successful.
Whichever way you look at it, we’re assuming that you have a project prioritization process that can successfully distinguish between aligned and non-aligned projects.
And most can’t.
Researchers at the University of New South Wales looked at over 100 methods of doing prioritization (including the one the majority of people use, the kind of simple weighted scoring you see in spreadsheets and PPM tools). They concluded that only 2 methods are suitable for use in project prioritization, AHP and DEA.
To learn why this is, let's turn to our friends at Heinz.
Heinz Baked beans have been sold in the UK for over a century. They are the nation's favourite baked beans. And mine. When I lived in the US, I would go out of my way (and I mean up to 20 miles out of my way) to shop in supermarkets that sold (very expensive) British baked beans - environmentally unsound, I know, but have you ever tasted American beans? They’re so sweet…
Anyway, we Brits like our Heinz Baked beans, but are they the best? According to this article, the answer is a resounding “No!” yet Heinz sells more baked beans in the UK than everyone else combined.
In other words, the majority of Brits subjectively “value” Heinz above the competition based on brand, childhood memories, our loyalty to Enid Blyton and Miss Marple. Or something.
This apparent paradox can tell us a lot about picking the “best” projects for your portfolio.
You see, your portfolio exists to support “The Business”. “The Business” is represented, in the prioritization process, by a room full of executives each of whom perceives strategic value differently.
Value is, by its very nature, subjective and so it’s natural for the different people around the table to have a different subjective definition of what “strategic alignment” actually means.
The ability to align everyone around a common definition of what “strategic value” means is the “special sauce” (special Ketchup?) that AHP-based project prioritization brings to the table.
If you're interested in how this happens, I recently recorded a webinar touching on the science of WHY AHP works in the context of project prioritization (or pretty much any other significant business decision, for that matter).
So, a necessary condition for getting strategic alignment of projects is putting in place a good, “strategic value-centric” prioritization process and AHP (and DEA) are the ones that have been anointed by those with bigger brains than mine!
Heinz EZ Squirt Ketchup and Executive Support
The next lesson we can learn from Heinz is about EZ Squirt Ketchup. Green ketchup in a squirty bottle so you can draw smiley faces and such… Actually, it started well. Novelty drove sales, but it didn’t last and sales tanked.
The product was discontinued and product planners deep in the heart of the Heinz empire ended up with (green) egg on their face.
So it is with executive sponsorship. Just because a particular project is flavor of the day doesn’t mean that it’s really strategically aligned. Like the EZ Squirt, interest fades away, support fades and the project is left unsupported.
Again, getting explicit agreement about “what strategic value really means” is the foundation upon which strong executive support is based.
Chicago Hot Dog Sauce and Scope Creep
Possibly the most iconic Heinz product is tomato ketchup. Go on, give it a hand!
Yet in Chicago, they see ketchup a little differently to the way it’s seen elsewhere… because they don’t like ketchup on their hot dogs. Go figure. Chilli sauce? Sure (maybe that’s why it’s the Windy City?)
Yet the good burghers at Heinz (not to be mixed with burgers, of course!) thought that they should extend the “scope” of their ketchup to cover Chicago hotdogs. They put ketchup in bottles and branded it “Chicago Dog Sauce”.
Now, if that ain’t scope creep, I don’t know what is. It’s tomato ketchup. That’s all it should be!
Now, if your projects have clearly defined benefits and are explicitly aligned with strategic value, and you specifically focus on delivering that value, it means you can more easily push back on scope creep. When requests to extend scope come in, you can simply ask, “How will this change improve our delivery against these specific strategic goals?”
If it doesn’t add value, it doesn’t get done (with the obvious caveats).
In summary, it comes down to the biases we all feel when making decisions and to the fact that we are not good at juggling multiple variables at once.
The good news is that there is a methodology called the Analytic HIerarchy Process (AHP) that has been shown to be the best solution for prioritization precisely because it starts with getting strategic alignment between the humans!
Once your key stakeholders have agreed on what "strategic alignment" means, it's much easier to start measuring it... and delivering it!
Unfortunately, this is the step that spreadsheets and your typical PPM tool simply fails to deliver.