3 Strategic Management Process Review/revise missionNew goals and objectivesPortfolio of strategic choicesStrategy formulationStrategy implementationProjectsExternal environment-- opportunities and threatsInternal environment-- strengths and weaknesses1234Strategic Management Process Includes Four Activities1. Review and define the organizational mission. 2. Set long-range goals and objectives. 3. Analyze and formulate strategies to reach objectives. 4. Implement strategies through projects.
5 Cause-and-Effect Worksheet Example Some projects not plannedDuplicate priority systems existCriteria are not commonly knownNo feedbackLack of project management skillsUnknown project impact on other prioritiesPlanningOvercommitted resourcesUnknown resourcesWe don’t budget for resourcesVague communications of resources requiredProjects are not achieving their desired impactSystemsLittle consistencyPriority setting criteria are not consistently applied to all projectsDifferent priority systems existSomeone else always approves projectsMany approvalsPriorities conflict with approval criteriaPriority selection reasons not documentedProject priorities can be received from all over with no central clearing houseName droppingPeople set own prioritiesSpecial interest has major impact on priorityNo feedback systemNew projects impact on existing projectsCultureOrganization power influences projectsName dropping for impactChangeable commitmentsPriorities set without regard to originAcceptable to miss datesPriorities set without company plan relationshipsPriorities set outside chain of commandShort-term vs. long-term thinkingCommunicationAversion to riskResistance to changeNo personal political riskFunctional area turf protectionNew project impact unknownPoor priority communicationsPerceived lack of direction from top managementProject criteria not commonly knownVague communication of resource requirements
6 Project Definition Project Goal Envisioned future state of solving a known problemSpecificationsTimeCostIntegration of people, time, money, activities, and skills
7 Goal Statements Statement of the desired future state involving: End UsersQuestions about utilityUpper ManagementQuestion relationship to corporate strategyEngineering FunctionsQuestions on design/development of solutionBusiness FunctionsPayback period, cost objectives, financial measures
10 Strategic Management Process 2-1Strategic Management Process
11 Financial Selection Criteria Payback ModelTime to recover project investmentInvestment $/Annual Net Savings = PBWidely usedEmphasis on Cash FlowNet Present Value (NPV)Desired rate of return(Est. Annual Cash Flow/Project Cost) X 100 = RoRCompare “RoR” of project(s) to “target”
12 Project Screening Process Project proposal ideaData collection and backupSelf evaluation of project by criteriaPriority team evaluates proposal and reviews portfolio for risk balanceAssign priority Assign resources Assign project manager Evaluate progressNeed strategic fit ROI/payback riskAbandonReturn for more informationPeriodic reassessment of prioritiesRejectHold for resourcesPursueAccept
16 “Selling” Commitment Accept “Multiple Realities” Varying Impressions and PerceptionsDevelop Broadly Specific Goal(s)Enhances “Buy-in”Consensus over Compromise“Customer” trumps other StakeholdersCompletely satisfy needs, profitably!
17 Resource Planning Establish realistic expectations Budget factors People: #s, skills, authorityMoney: buy the “needs” firstTime: plan backward, execute forwardBudget factorsCapital: physical plant and machineryExpense: payroll, travel, consumablesContingency: 10-15% for “Murphy”
18 Conflicting Project Goals Market ConditionsWindows of opportunity changeCompatibilityConflicts between activities, goals, competing interests“Politics”Senior leader support (or lack thereof)Resource AvailabilityProject prioritization/reallocation
19 Managing Conflict Influence Proaction Conflict Negotiation “Sell”; “WIFM” around goalProactionInvite criticismAdjust and communicateConflict NegotiationSeparate people from issueMaintain balanceCommunicate
20 Project Priority System Long-range plan1. Rank objectives 2. Weight objectives 3. Impact definitions and weightsProject proposals for major projectsPriority teamPrioritize major projects4. Project priority 5. Risk analysisAnnuallyOngoingAllocating resourcesAssign project managersFunctional managers identify available resourcesFeedback status- ongoing projectsMajor project priority and status reportMonthly
21 Rank Objectives Analyze objective independently in three dimensions 1. Seriousness - What is the current impact of the results of the objective on the organization?10Small impactLarge impact2. Urgency - Time factor. What will be the relative consequences of not taking action over the next 12 months?10Can deferMust take action3. Future seriousness - What is the chance of the objectives seriousness changing over time?10Decrease or remain sameDramatically increase
22 Major Project Proposal Date _______Number _______Project Title ______________________________________________________ Responsible Manager ________________Project Manager ______________________ General Support Quality Legal New product _______ _____________ Cost reduction Replacement Capacity _______ _____________ ___________ __________ __________YES NO The project will take more than 500 labor hours? YES NO The project is a one-time effort? (will not occur on a regular basis) YES NO The project proposal was reviewed by the product manager?Problem definitionDescribe the problem/opportunity.Goal definitionDescribe the project goal.Objective definitionPerformance: Quantify the savings/benefits you expect from the project.Cost: Labor hours, materials, methods, equipment?Schedule: Overall duration in months