GOVERNANCE

STRATEGY

AND

PROJECT MANAGEMENT

MODULE 1

Governance Definition

General Definition:

Exercise of authority, control

• A method, or systems or government or management ,

• In other words, good practices, guidelines

One might conclude that governance is a process – by which

authority is conferred on rulers, by which they make the rules,

and by which those rules are enforced and modified.

“Governance is the processes and practices which define

the strategic operating and decision-making boundaries of

an organization (or organizational unit) and how decisions

are made and implemented” Creelman, J, & Smart, A. RBPM

WHY DO WE NEED GOVERNANCE ?

• Provide structure, process and clarity to support timely and

quality decision making regarding strategy execution

• Ensure clear responsibility and accountability for strategy

execution

• Ensure leadership capacity to manage the execution of strategy,

run the day to day business, and support the realization of the

vision

• Provide a direct link to existing managerial committees and

the transition to future organization structure ensuring strategy

execution

• Ensure achievement of strategic objectives and implementation

of strategic initiatives are on time and within budget

• Facilitate building strategy execution capabilities in the

organization

• Manage strategy execution risks that could jeopardize the

realization of our vision

GOVERNANCE

STRATEGY

“Vision without action is a

daydream. Action without vision

is a nightmare”

Japanese Proverb

1-6

Allocate resources through

operating plans and

budgets that are explicitly

linked to strategy

Palladium’s Execution Premium Process (XPP)

Develop the Strategy

Translate the Strategy

Align the Organization

Link to Operations

Execute

Monitor and Learn

Test and Adapt

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6

Set our strategic priorities

Respond to shifts in our

environment and the

affects of our strategic

choices

Check our progress

and revise our

strategy as part of a

continual process

Clarify our strategy into

operational and

measureable terms

Align the organization

to our strategy and

motivate employees to

help execute

Conduct ongoing

operations and

discretionary projects

Initiatives

Processes

1-7

“A strategy is an integrated set of choices that position a firm, in an

industry, to earn superior returns over the long run.”

Stage 1: Develop the Strategy

Strategy is:

− A plan

− Short-term and long-term actions

− Destination, or end state

− A way to measure progressShows how you get to your

destination by defining goals or objectives

Strategy

PROCESS

RESOURCES

PEOPLE

Shows your destination

Vision

Source: Jan Rivkin, “Where do great strategies come from?” Harvard Business School Faculty Seminar Series Lecture

Summary: The Strategy Management Process: Building the Strategy Plan

1. Define Change Agenda

“Strategic Change Agenda”

2. Define Vision “Vision Statement”

3. Strategic Analysis “SWOT and Strategic Issues”

4. Strategy Formulation

“Value Gap and formulation techniques”

5. Strategy Mapping “Strategy Maps”

6. Measures and Targets

“Balanced Scorecard”

7. Strategic Initiatives

“Investment Portfolio”

8. Strategy Funding “Stratex”

STRATEGIC PLAN

9. Accountability “Theme Team”

Process “Methodology”

KEY:

II. STRATEGY PLANNING

I. STRATEGY DEVELOPMENT

1-9

Stage 1: Develop the Strategy

Defining the strategy fundamentals: Mission, Vision and Values

Mission Vision Values

• Most fundamental reason for

being

• Inspirational for people

• Easy to communicate

• Remains the same over time

• Visualization of what we want to

be

• It has to be Challenging

• Tangible within time-frame

• Uniqueness

• Inspirational for people

• Outline the behaviors expected

from the employees

• They are the DNA of

organizations

Give people the power to share

and make the world more open

and connected

By 2020, we will be The

Reference in Sports Excellence

World Wide

Flexibility – Honesty – Teamwork

– Responsiveness – Passion…

Cha

ract

eris

tics

Exa

mpl

es

1-10

Enhancing the Vision: The traditional vision statement leaves much ambiguity for the development of strategy

“To Be The

Best”

Vision

Strategy?

Typical Vision Statements

“We will be one of the world’s premier

companies, distinctive and successful in

everything we do”Allied Signal

“To be the best refining, marketing and

transportation company in the U.S. petroleum

industry”

CITGO

Enhanced (Quantified) Vision

“We will be the benchmark in consumer banking,

achieving a Top 2 ranking in our markets, with a

30% return on equity and $40 billion in total

assets in the next 5 years.”

“2 – 3 – 4 in 5”

1-11

At the highest conceptual level, the Balanced Scorecard is a

framework that helps organizations translate

strategy into operational objectives that drive

both behavior and performance.

Stage 2: Translating the Strategy

Strategy Maps Describe how an Organization Creates Value … and Focus Change by Clarifying Priorities

#1. Financial performance, a lag

indicator, provides the tangible

definition of value.

#2. The customer value proposition

defines the source of value.

#3. Business processes create value for

the customer and shareholder.

#4. Intangible assets must be aligned

with the key processes.

#5. Cause-and-effect relationships define

the logic that converts intangible

assets to tangible outcomes

Internal Process Perspective

Financial Perspective

Learning & Growth Perspective

Customer Perspective

Sustained

Shareholder

Value

Price Quality Time Function Relation Brand

Product/Service Attributes

Operations

Management

Processes

Customer

Management

Processes

Innovation

Processes

Productivity Revenue Growth

Relationship Image

Regulatory

and Social

Processes

Human Capital

Information Capital

Organization Capital

1-13

Natural cause and effect logic

To Build the Strategic Capabilities…

Needed to Deliver Unique Sets

of Benefits to Customers...

To Drive Financial Success...

And Realise the Vision

Equip Our People...

Financial

Results

Customer

Benefits

Internal

Capabilities

Knowledge, Skills, Systems, and Tools

The Balanced Scorecard Supports the Strategy Map

Strategic initiatives are the drivers of action

Execute strategy by managing & measuring initiatives

On Ground Time

On-Time Departure

30 Minutes

90%

Turnaround Cycle

Time Optimization

What the

strategy

is trying

to

achieve

The level of

performance

or rate of

improvement

needed

Processes and

programs

required to

reach the

target

How

performance

against the

objective is

monitored

Objective Target InitiativeMeasure

Fast ground

turnaround

Balanced Scorecard

Objective Measure Target Initiative

$XXX

Budget

Action Plan

Theme: Operating Efficiency

FinancialProfits &

RONA

Grow

Revenues

Fewer

Planes

CustomerAttract & Retain

More Customers

On-time

Service

Lowest

Prices

Fast Ground

Turnaround

Internal

Learning

Strategic Job

Ramp Agent

Strategic Systems

Crew Scheduling

Ground Crew

Alignment

1-15

From management to execution

A Strategy Framework enables an organization to establish accountability and manage

initiatives against clearly defined priorities and goals:

2 3 4

Strategy Fundamentals

Strategic Themes

Strategy Map

Key Performance Indicators &

Targets

Strategic Initiatives

Mission, Vision and values of the organization

3 – 4 areas that shape the vision

Set of strategic objectives framed on strategic themes

Set of measures for the objectives

The Strategy Execution

Stage 3: Align the Organization

Value is created by delivering

the customer value proposition

Value is created through synergy

among organization components

Employees

Shareholders

Board

CEO

Corporate

Group

Division

SBU SBUSBUSBUSBU

“Customer

Derived

Value ”

“Enterprise

Derived

Value ”

Value in organisations is created in two distinct ways

Alignment is the process through which we create synergy

1-17

Financial

Perspective

Customer

Perspective

Internal

Perspective

Shareholder

Value

Growth Production

Learning &

Growth

Perspective

Human Capital

Information Capital

Customer Value Proposition

Price Quality Availability Selection Functionality Service Partnership Brand

Product / Service Attributes Relationship Image

Organization Capital

Innovation

Process

Customer

Management

Process

Operation

Management

Process

Regulatory &

Social

Process

The Strategy Map

Production

Supply Chain

Customer

Management

Innovation

Social / Regulatory

Human Capital

Organization

Capital

Information

Capital

CORE

BUSINESS

PROCESSESINTANGIBLE

ASSETS

MANAGEMENT

Stage 4: Align Operations The Strategy Map identifies the high-level factors that must be further defined at a lower level of detail

Stage 5: Monitor and Learn

Are strategic objectives being achieved or not? If they are, then acknowledge, reward and

communicate progress. If not, then consider the following questions:

1. Will the objectives be achieved relative to the portfolio of strategic initiatives funded? If

not, then why?

2. Should the targets and deadlines for completion of these strategic initiatives be

changed?

3. Are these initiatives adequately resources (personnel, money, equipment, facilities,

training, etc.) to achieve specified goals?

4. Are the goals still realistic?

5. Should priorities be changed?

6. Should the strategic objectives be changed?

7. What can be learned from our monitoring and evaluation in order to improve future

planning activities and also to improve future monitoring and evaluation efforts?

7 8 9 10 11 12

The Operational Management Process

(ensure execution of short term plan/budget)

Time Allocation

Actions

Discuss Implications

Review Performance

The Strategy Management Process(ensure execution of the long-range strategy)

Time Allocation

Refine Strategic Issues

Discuss Implications

Review Performance

4 5 61 2 3

Develop new approaches to strategic issues between

meetings

Identify strategic

issues that

require attention

7 8 9 10 11 12

The Operational Management Process

(ensure execution of short term plan/budget)

Time Allocation

Actions

Discuss Implications

Review Performance

The Strategy Management Process(ensure execution of the long-range strategy)

Time Allocation

Refine Strategic Issues

Discuss Implications

Review Performance

4 5 61 2 3

Develop new approaches to strategic issues between

meetings

Identify strategic

issues that

require attention

KEY

Monthly Operating Review

Quarterly Strategic Review

10%

60%

10%

30%

10%

40%

50%

Stage 5: Monitor and Learn

Q1 Q2 Q3 Q4

Review Performance

• The last stage in the XPP process is critical to ensuring

long-term success of your strategy. Too often, strategic

plans are formulated and then followed blindly – without regard

to competitive changes or changes in the marketplace. Even a

well-formulated strategy must be tested periodically – even

if it is being executed to perfection – to ensure that it’s the

“right” strategy for the organization. Achieving breakthrough

results requires both a good strategy and optimal execution of

that strategy.

• Various techniques can be used to determine whether a

strategy is successful. These techniques are applied at the

“strategic” level; they differ from Operations Research in that

they are not focused on a particular process, or operational

measure, but rather on the entire strategy.

• These techniques still employ analytics; they are based on

rigorous testing rather than “gut feel,” but those analytics are

applied to a macro-level analysis of the organization’s strategy,

results, and future scenarios.

Stage 6: Test and Adapt

Adapt

&

GOVERNANCE

PORTFOLIO

PROGRAM

PROJECT MANAGEMENT

Governance in the PM Context

‘Governance refers to

the set of policies,

regulations, functions,

processes, procedures

and responsibilities that

define the

establishment,

management and control

of projects, programs

and portfolios.’APM Body of Knowledge, 6th edition

• It relates to consistent

management, cohesive

policies, guidance,

processes and decision

rights for a given area of

responsibilities

• Defined in terms of

mechanism thought to be

needed to promote it

• The function is to ensure

that an organization /

partnership fulfill its overall

purpose

• Operates in an effective and

ethical manner

• In mature project management organizations,

project management exists in a broader

context that includes program management

and portfolio management

• Organizational planning can direct the funding

and support for the component projects on the

basis of risk categories, specific lines of

business, or general types of projects

Relationship Among Project Management, Program Management, and Portfolio Management

Program & Projects Link to Org’s Strategy

1-25

A portfolio refers to a collection of projects or

programs and other work that are grouped

together to facilitate effective management of that

work to meet strategic business objectives

Portfolio management refers to the centralized

management of one or more portfolios which

includes identifying, prioritizing, authorizing,

managing, and controlling projects, programs,

and other related work to achieve strategic

business objectives

Portfolio Management

1-26

A program is a group of related projects managed

in a coordinated way to obtain benefits and

control not available from managing them

individually

Program management is defined as the

centralized, coordinated management of a

program to achieve the program's strategic

objectives and benefits

Program Management

1-27

Portfolio

Portfolios

Programmes

Projects

Projects

Projects Programmes

Programmes

Projects

Projects

Projects Other Work

Portfolio, Program and Projects

Eg: Link Strategies to Potential Projects

1-29

The Importance of Alignment

1-30

Process measurement databases

Project files

Historical information and lessons learned

knowledge bases

Issue and defect management databases

Configuration management knowledge

bases

Financial databases etc

Corporate Knowledge Base

INITIATIVE

Initiative – Definition

“A collection of finite-duration activities, projects and programs outside of day-to-day work that bring about change, and are designed to help an organization achieve its targeted performance.”

Kaplan – Norton

“It’s a broad transformational effort to create

significant strategic results for an organization.”

Strategic Initiative (SI) – Definition

1-33

What is a Strategic Initiative?

A “Good” Strategic Initiative should have:

o Accountability at the Leadership Team Level

o Clearly defined start and end dates

o Clearly defined deliverables

o A budget assigned

o Committed resource allocation (e.g., Real

Employee Hours)

An Initiative is NOT:

o Business as usual

o NOT the same thing as strategic objectives or

strategic goals

o NOT studies or analytics

For Example:

“Research and

select new

expansion

markets”,

“Automate the

whole

manufacturing

process”

For Example:

“Pay the salaries

every month,”

“Do the

maintenance”

1-34

The Value of Strategic Initiatives

Strategy Execution

(The execution of the strategic

Initiatives)

Why should organizations have strategic Initiatives?

Macro-Environment

Micro-Environment

FIRM

Societal Trends

General Economics

Disruptive Technology

Emerging Policy and Regulation

Competitors

Substitutes

Suppliers

Customers

Current

Status

Desired

Status

Organizations operate in a complex

environment where many different aspects

are subject to change…

In order not to lose competitiveness

organizations must evolve and develop long

term plans that describe the desired future

situation

The successful execution of strategic initiatives is the way to move from the current to the desired status

1-35

What Is an Initiative?

Initiatives are defined to help close the Performance

Gap.

Initiatives help close the gap

between our current and desired

performance.

STRATEGIC INITIATIVE

Get on a diet

Weight

80 Kg

KPI

Target

Actual Target

100

80

We

igh

t (K

g)

gap

KPIs and targets track our progress toward

achieving and communicating the intent of the

Strategic objectives.

KPI / TARGET

Loose weight

Strategic Objectives articulate the

components of our strategy

Where’s the Value?

Companies spend billions every year on

the “wrong” projects

Less than half of all projects are truly

aligned to a company’s strategy

Only 1 in 7 projects add value beyond

“staying even” (i.e., enhance

competitive position, differentiate

products and services, or create unique

capabilities)

Waste

Innovation

Productivity

Sustaining

Source: G. Moore presentation at Palladium Balanced Scorecard Summit, November 2005; SAP; McKinsey Quarterly and Palladium research

“Half of my initiatives achieve strategic goals. I just don’t know which half.”

70%-80% fail to deliver expected results on time and budget

WasteInitiatives

Yielding

Results

Why? Some Statistics

At strategic level:

- 84% of companies either do not conduct business cases for

their projects or perform them on select key projects only

- 89% are flying blind with no metrics in place except for financial

data

- 84% of companies are unable to realign their budgets with their

business needs

At project management level:

- 19% of projects – outright failures

- 46% constitute troubled projects

40% of projects investments fail to deliver their intended

benefits

Results? Underperforming projects of $5.2 trillion worldwide

1-38

This process is not always easy to implement, for several reasons:

Initiative Overload

Organizations with over

500 strategic Initiatives

Lack of Alignment

Initiatives not having

impact on any strategic

objective

Conflicting

initiatives

Initiatives with different

purposes for the same

objective

Inability to

prioritize the

initiative pool

Lack of agreement

amongst the top

managers on top priority

initiatives

Insufficient

resources

Initiatives usually require

extra effort from

organizations

Poor project

Management

Capabilities

Time, budget and people

management

Why? Some Statistics

Question:What is Draining the Value

from your Initiatives?Discussions

Conclusion #1In order for the company to deliver successful projects the executive management must select ‘good’

projects to implement

Conclusion # 2

In order for the company to deliver successful projects, number of projects

assigned to the company employees must not exceed some reasonable threshold; otherwise none of the projects will be

delivered successfully

Benefits of Initiative Realization

Help to Extract 80% more value

Accelerate results, help “fund” future

execution steps

Increase on-time, on-budget delivery of

strategic initiatives

Ensure effective execution and benefits

realization from strategic initiatives

Increase organizations commitment and

confidence

Increase employee engagement

Increase the likelihood of fully realizing

the overall strategy, achieving the

organizations vision and closing the

strategic value gap

Module 2