Presentation on theme: "The Organizational Context: Strategy, Structure, and Culture"— Presentation transcript:
1The Organizational Context: Strategy, Structure, and Culture Chapter 2
2Learning GoalsUnderstand how effective project management contributes to achieving strategic objectives.Recognize three components of the corporate strategy model: formulation, implementation, and evaluation.See the importance of identifying critical project stakeholders and managing them within the context of project development.Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects.
3Learning GoalsUnderstand how companies can change their structure into a “heavyweight project organization” structure to facilitate effective project management practices.Identify the characteristics of three forms of project management office (PMO).Understand key concepts of corporate culture and how cultures are formed.Recognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.
4Projects and Organizational Strategy Strategic managementThe science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.Consists of:Developing vision and mission statementsFormulating, implementing and evaluating business opportunitiesMaking cross functional decisionsAchieving objectives
5Projects Reflect Strategy Projects are stepping stones of corporate strategy.The firm’s strategic vision is a driving force behind project development.Some examples include:A firm wishing to……may have a projectredevelop products or processesto reengineer products or processes.change strategic direction or product portfolio configurationto create new product lines.improve cross-organizational communication & efficiencyto install an enterprise IT system.
6Relationship of Strategic Elements MissionObjectivesGoalsProgramsStrategyReview Figure 2.2 page 36 for an example
7Stakeholder Management Stakeholders are individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development.Sets of project stakeholders include:Internal StakeholdersTop managementAccountingOther functional managersProject team membersExternal StakeholdersClientsCompetitorsSuppliersEnvironmental, political, consumer, and other intervenor groups
8Stakeholder Register Used to record stakeholders of the project Useful to build communication plans
9Stakeholder AnalysisWill inform you of the interests and influence of those involved in a project change.Should show each person or group’s interest in the change, where interests converge, the level of influence, and who will have a voice in new developments.Can be beneficial at the beginning of new projects and when projects change direction.Displayed in a stakeholder analysis gridSee World Wildlife Foundation example at:
10Stakeholder Analysis Grid Begin by making a list of anyone who has interest and influence over your project. i.e. investors, customers, general public, etc.Use this list to weigh the interest and influence of each person.Create the Matrix: (example - four levels per category)Draw a box divided into four equal quadrants.Divide each quadrant into fourths again. You should now have sixteen boxes.Label down the left side starting at the top with “Significant Importance,” “Some Importance,” “Little Importance,” “No Importance.”Label across the top starting at the left with “Significant influence,” “Some influence,” “Little influence,” “No influence.”Organize your stakeholders according to importance and influence.When you are done, your matrix will be a graphic display of who holds the most importance and influence (the group in the upper left-hand corner) and who holds the least amount of influence and importance (the group in the lower right-hand corner).
12Managing Stakeholders Assess the environment - Is this low key or significant?Identify the goals of the principal actors - What true goals do the stakeholders have?Assess your own capabilities - What are your strengths and weaknesses?Define the problemDevelop solutions - Try to cover as many stakeholder’s concerns as possible (80%).Test and refine the solutions – it is an iterative process.The goal is to formulate strategies to identify and manage for positive results.
14Organizational Structure Consists of three key elements:Designates formal reporting relationshipsincluding the number of levels in the hierarchyspan of control of managementGroupings of:individuals into departmentsdepartments into the total organizationFunctional? Geographic? Product type? Project based?Design of systems toensure effective communicationcoordinationintegration of efforts across departments
15Forms of Organization Structure Functional organizations – groups people performing similar activities into departmentsProject organizations – groups people into project teams on temporary assignmentsMatrix organizations – creates a dual hierarchy in which functions and projects have equal prominence
16A Functional Organizational Structure Board of DirectorsBoard of DirectorsBoard of DirectorsSilos of workChief ExecutiveChief ExecutiveChief ExecutiveVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofVice President ofMarketingMarketingMarketingProductionProductionProductionProductionFinanceFinanceFinanceResearchResearchResearchNew ProductNew ProductMarket ResearchMarket ResearchDevelopmentDevelopmentAccountingAccountingLogisticsLogisticsLogisticsServicesServicesSalesSalesTestingTestingTestingOutsourcingOutsourcingOutsourcingContractingContractingAfter MarketAfter MarketAfter MarketResearch LabsResearch LabsSupportSupportSupportDistributionDistributionDistributionInvestmentsInvestmentsQualityQualityAdvertisingAdvertisingAdvertisingWarehousingWarehousingWarehousingEmployeeEmployeeBenefitsBenefitsManufacturingManufacturingManufacturing
17Functional Structure for Project Management StrengthsWeaknessesFosters development of in-depth knowledgeProjects are developed within the basic functional structure – no change to firms functional designProject team members remain connected with their functional groupStandard career pathsFunctional siloing – no collaborationLack of customer focus -self-focusingProjects may take longer as tasked are routed from one department to anotherProjects may be sub-optimized
19Project Structure for Project Management StrengthsWeaknessesProject manager sole authorityImproved communication across the organizationRapid decision-makingPromotes the creation of project management expertsFlexible and rapid responseExpensive to set up and maintain teamsChance of loyalty to the project rather than the firmNo pool of specific knowledgeWorkers unassigned at project end
20A Matrix Organization Structure Seeks a balance between the functional and project organizations
21Matrix Structures for Project Management StrengthsWeaknessesSuited to dynamic environmentsEqual emphasis on project management and functional efficiencyPromotes coordination across functional unitsMaximizes scarce resourcesDual hierarchies mean two bossesNegotiation required in order to share resourcesWorkers caught between competing project & functional demands
22Organizational Structure Influences on Projects -PMBok 2004
23Heavyweight Project Organizations Organizations can sometimes gain tremendous benefit from creating a fully-dedicated project organizationLockheed Corporation’s “Skunkworks”Project manager authority expandedFunctional alignment abandoned in favor of market opportunismFocus on external customer
24Project Management Offices (PMO) Centralized units that oversee or improve the management of projectsResource centers for:Support with technical detailsExpertiseCentral repository for lessons learnedCenter for excellence
25Forms of PMOs Weather station Resource pool Control tower used only to monitor and track projectsResource poolmaintain and provide a group of skilled project professionalsControl towerproject management is a skill to be protected and supportedfocuses on establishing standards, consulting/enforcing, and improving project management skills
26Organizational Culture The unwritten rules of behavior, or norms, that are used to shape and guide behavior, is shared by some subset of organization members and is taught to all new members of the company.Key factors that affect culture developmentTechnology levelBusiness environmentGeographical locationReward systemsRules and proceduresKey organizational membersCritical incidentsHave you heard of “The Toyota Way?”
27Key Factors That Affect Culture Development TechnologyEnvironmentGeographical locationReward systemsRules and proceduresKey organizational membersCritical incidents
29TRADITION Start with a cage containing five apes. In the cage, hang a banana on a string and put stairs under it. Before long, an ape will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the apes with cold water. After a while, another ape makes an attempt with the same result - all the apes are sprayed with cold water. This continues through several more attempts.Pretty soon, when another ape tries to climb the stairs, the other apes all try to prevent it. Now, turn off the cold water. Remove one ape from the cage and replace it with a new one. The new ape sees the banana and wants to climb the stairs. To his horror, all of the other apes attack him. After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted.Next, remove another of the original five apes and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm. Again, replace a third original ape with a new one. The new one makes it to the stairs and is attacked as well. Two of the four apes that beat him have no idea why they were not permitted to climb the stairs, or why they are participating in the beating of the newest ape. After replacing the fourth and fifth original apes, all the apes, which have been sprayed with cold water, have been replaced. Nevertheless, no ape ever again approaches the stairs. Why not? Because that's the way they've always done it and that's the way it's always been around here.And that's how company policy begins....
30Chapter 2 Review and Discussion The chapter suggests that a definition of strategic management includes four components:Developing a strategic vision and sense of missionFormulating, implementing, and evaluatingCross-functional decisionsAchieving its objectivesDiscuss how each of these four elements are important to understanding the challenge of strategic project management. How do projects serve to allow an organization to realize each of these three components of strategic management?Discuss the difference between organizational objectives and strategies.Your company is planning to construct a nuclear power plant in Oregon. Why is stakeholder analysis important as a precondition of the decision whether or not to follow through with such a plan?Consider a medium-sized company that has decided to begin using project management in a wide variety of its operations. As part of their operational shift, they are going to adopt a project management office (PMO) somewhere within their organization. Make an argument for the type of PMO they should be adopting (weather station, control tower, or resource pool). What are some of the key decision criteria that will help them determine which model makes the most sense?
31Chapter 2 Review and Discussion What are some of the key organizational elements that can affect the development and maintenance of a supportive organizational culture? As a consultant, what advice would you give to a functional organization that was seeking to move from an old, adversarial culture, where the various departments actively resisted helping each other, to one that encourages “project thinking” and cross-functional cooperation?You are a member of the senior management staff at XYZ Corporation. You have historically been using a functional structure set up with five departments: finance, human resources, marketing, production, and engineering.Create a drawing of your simplified functional structure, identifying the five departments.Assume you have decided to move to a project structure. What might be some of the environmental pressures that would contribute to your belief that it is necessary to alter the structure?With the project structure, you have four projects currently ongoing: stereo equipment, instrumentation and testing equipment, optical scanners, and defense communications. Draw the new structure that creates these four projects as part of the organizational chart.
32In-class exercise: “Good Answers” is Growing Your task:In your groups, prepare a two-minute briefing for the class to identify the project and what you see as the key elements your project will have to address. Include a discussion of aspects of Good Answers’ operations that would not be part of the project but rather are part of Good Answers’ general procedures.Specifically, address the following questions:What is the project in this scenario?Who are the stakeholders? Create a stakeholder matrix.What are some of the main issues that you will need to address in this project?