Lesson 2: Project Strategy, Stakeholder Management, and Selection (Printer Friendly Format)

Lesson 2: Project Strategy, Stakeholder Management, and Selection

Introduction

As we noted in Lesson 1, projects have been referred to as the "stepping stones" of corporate strategy (Cleland, 1998). This idea implies that projects are developed in support of an organization's overall strategic vision. For example, Rubbermaid Corporation is noted for its relentless pursuit of new product development and introduction. In a very real sense, projects are the building blocks of strategies; they put an action-oriented face on the strategic edifice. Some of the examples of how projects operate as strategic building blocks include

• construction of new plants or modernization of facilities to support technical or operating initiatives such as new distribution strategies or decentralized plant operations.
• reengineering projects designed to dramatically redevelop products for greater market acceptance or business processes for greater streamlining and efficiency.
• new product lines to support changes in strategic direction or product portfolio reconfiguration.
• negotiation with supply chain members (including suppliers and distributors) to create new strategic alliances.
• reverse engineering competitors" products and services.
• enterprise IT efforts to enhance cross-organizational communication and improve efficiency in supply chain relationships.
• concurrent engineering to promote cross-functional interaction, streamline new product or service introduction, and improve departmental coordination.

Each of these examples illustrates the underlying theme that projects are the "operational reality" behind strategic vision. In other words, they serve as the building blocks that must be used, one at a time, to create the reality a strategy can only articulate.

Objectives

Think about the following lesson objectives. After completing this lesson, you should be able to:

• Understand the basic elements of corporate strategy and the importance of projects for realizing strategic goals.
• Recognize the various project stakeholders and their role in promoting project success.
• Begin to develop realistic strategies for managing project stakeholders.
• Understand a variety of project selection methods that are used to make screening decisions.
• Understand some of the basic strengths and weaknesses of these selection methods.

2.1 Strategic Management--The Context

Strategic management has been variously defined as the science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives (David, 2001). Let us consider the relevant components of this definition as they apply to project management. Strategic management, then, consists of the following elements:

• Formulating, implementing, and evaluating
• Cross-functional decisions
• Achieving corporate objectives
• Formulating Strategies
  • Developing vision and mission statements
  • Conducting an external audit
  • Performing an internal audit
  • Establishing long-term objectives
  • Generating, evaluating, and selecting strategies
• Implementing strategies
  • Managerial
  • Financial
  • Technological
  • Functional
• Measuring and evaluating performance

We will spend some time looking at each of these in more detail in the following pages.

2.1.1 Formulating, Implementing, and Evaluating

Projects, being the key ingredients in strategy implementation, play a crucial role in the basic process model of strategic management. A firm devotes significant time and resources to evaluating its business opportunities through developing a corporate vision or mission, assessing internal strengths and weaknesses, as well as external opportunities and threats, establishing long range objectives, and generating and selecting among various strategic alternatives. All these components relate to the formulation stage of strategy. Within this context, projects serve as the vehicles that enable companies to seize opportunities, capitalize on their strengths, and implement overall corporate objectives. For example, new product development fits neatly into the above framework. New products are developed and commercially introduced as a company's response to business opportunities. It is only through effective project management that firms can efficiently and rapidly respond to such opportunities.

2.1.2 Cross-Functional Decisions

Business strategy is a corporate-wide venture, requiring the commitment and shared resources of all functional areas if global plans are to be realized. The cross-functional nature of such cooperation is a critical feature of project management, bringing together experts from various functional groups into a team of diverse personalities and backgrounds. Project management work is a natural environment in which to operationalize strategic plans.

2.1.3 Achieving Corporate Objectives

Whether the organization is seeking market leadership through low-cost, innovative products, superior quality, or some combination of all these characteristics, projects are the most effective tools to allow such goals to be achieved. As we have noted, a key feature of project management is its ability to allow firms to be simultaneously effective in the external market and internally efficient in their operations; that is, it is a great vehicle for optimizing organizational objectives, whether they incline toward efficiency of production or product or process effectiveness.