Organizational Project Managemnet Maturity Model by mnv12974

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									Current Issues in                                                                                                                   SPRING 2007


Technology Management
HOWE SCHOOL ALLIANCE FOR TECHNOLOGY MANAGEMENT
                                                              HSATM                                                                 VOLUME 11,
                                                                                                                                        ISSUE 2




Why Companies Need
to Adopt a Strategic Approach
to Project Management                                                                                                 Joca Stefanovic
                                                                                                                   and Aaron Shenhar
Background
According to the conventional project man-       es, or to provide improvements in existing       research used a combination of qualitative
agement approach, projects are successful        ones. Thus, companies typically initiate         and quantitative methods, employing first a
if they meet time, budget, and performance       projects to create new value that is impossi-    case study research approach, followed by
goals. Yet studies show that most projects       ble to achieve within the framework of           an empirical statistical field study.
are late, over budget, and do not deliver
their expected objectives. Furthermore, even
after completion, many projects do not con-      We tested how the level of maturity of the project
tribute to their company’s business success.          on each dimension related to project success.
We hypothesize that additional focus on
the strategic aspects of projects will greatly   ... we found that higher strategic focus is associated with
contribute to the improvement of project            better impact on the customer, better business results,
performance. This research, which was
funded by the Howe School Alliance for
                                                      and better preparation for the future.
Technology Management, relates to the fol-
lowing questions: (a) To what extent do          ongoing operations. In a paradoxical way,
                                                                                                  Research Description
projects focus on their strategic and busi-      however, since the establishment of modern
ness aspects during project execution?           project management as a formal discipline,       Expanding on previous research on strategy
(b) Does a higher strategic focus improve        it has focused primarily on the operational      in project management, we embarked on
the chances of project success?                  aspects, namely on executing processes in        questions about the recognition of strategic
                                                 the most efficient way.                          value of projects, and the consequences of
Using a combination of qualitative and
                                                                                                  project management style. We were look-
quantitative research methods, we found          Many surveys show that most projects do
                                                                                                  ing for evidence that projects of high-strate-
that while project teams often recognize the     not meet their expected goals. For example,
                                                                                                  gic value are recognized as such and are
strategic value of projects, they still manage   a Standish Group study showed that over
                                                                                                  managed differently from other projects.
their projects according to the conventional     70% of projects were either total or partial
                                                                                                  In particular, we asked whether there are
approach. We used a new three-dimension-         failures, failing to deliver on time, budget,
                                                                                                  practices, behaviors, and considerations
al strategic project management maturity         or specifications. Moreover, out of the proj-
                                                                                                  present in project management that can be
model, which assesses projects according         ects that successfully met their time, budget
                                                                                                  associated with strategy implementation,
to their focus on operational excellence,        and requirements goals, many did not
                                                                                                  and whether strategy-related behavior in a
strategic focus, and inspired leadership.        deliver the expected business results to their
                                                                                                  project helps improve the project’s success.
We tested how the level of maturity of the       parent companies. It appears that tradition-
                                                                                                  Moreover, if the answer to the last question
project on each dimension related to proj-       al project management processes and tools
                                                                                                  is yes, we sought to learn what other condi-
ect success. Among other things, we found        are not sufficient for guaranteeing modern
                                                                                                  tions influence this relationship.
that higher strategic focus is associated with   project success.
better impact on the customer, better busi-                                                       We defined a strategic project management
                                                 In this research, we hypothesized that while
ness results, and better preparation for the                                                      maturity (SPMM) model at the project level,
                                                 most projects focus on efficiency, they at the
future.                                                                                           which consists of three dimensions: opera-
                                                 same time ignore the strategic aspects of
                                                                                                  tional excellence, strategic focus, and
Introduction                                     the business. Furthermore, we also hypothe-
                                                                                                  inspired leadership (see Figure 1). We
                                                 sized that an increased strategic focus may
Organizations initiate projects to create                                                         employed the following definitions:
                                                 be associated with better business success
new, unique products, services or process-
                                                 as well as success in other dimensions. Our         • Operational excellence: the extent to

                                                                                                                         Continued on next page
                                                                                                 descriptive for all items, correlations
                                                                                                 between SPMM dimensions and project
                                                                   The Findings                  success items, confirmatory factor analysis,
                                                                   Phase 1—Case                  as well as regression calculations.
                                                                   Study
                                                                                                 We first calculated the SPMM scales’
                                                                   On the operational            means (Figure 3). As expected, operational
                                                                   focus dimension, about        excellence had the highest score of 2.67,
                                                                   half of the cases ranked      followed by strategic focus (2.33), and
                                                                   high, and half ranked         inspired leadership received the lowest
                                                                   low (Figure 2).               score (2.05).
                                                                   However, on the strate-       The averages are industry-wide and
                                                                   gic focus dimension,          worldwide.
                                                                   only 20% ranked high.
                                                                                                 We next looked at the correlation between
                                                                   Interestingly, the correla-
                                                                                                 these dimensions of maturity and project
                                                                   tion between the opera-
                                                                                                 success of various dimensions, such as proj-
                                                                   tional and strategic
                                                                                                 ect efficiency, customer satisfaction, team-
                                                                   dimensions was virtually
                                                                                                 work effectiveness, business success,
                                                                   zero. This supported our
                                                                                                 preparing for the future, and overall suc-
                                                                   initial assumption that
                                                                                                 cess. Correlation analysis showed many
                                                                   these two dimensions
                                                                                                 significant correlations. For example, team-
                                                                   are independent.
Figure 1: Operational excellence, strategic                                                      work effectiveness correlated with all other
focus, and inspired leadership                  Fourteen of the projects had high strategic      project success dimensions, supporting the
                                                importance to their organizations. Out of        conventional wisdom that teamwork success
      which project management activities       these, only five exhibited a high degree of      goes hand-in-hand with other aspects of
      (such as planning, execution, monitor-    strategic focus. On the operational dimen-       project success.
      ing, and control) focus on completing     sion, about two thirds of the projects
                                                                                                 The identified significant SPMM scale
      the project within time, budget, and      ranked low.
                                                                                                 associations of project success factors were
      specification goals.                      Among the 21 projects whose goal was not         (Figure 4):
   • Strategic focus: the extent to which       highly strategic, two-thirds ranked high on
                                                                                                    • Operational excellence is associated
     project management activities that         the operational dimension, whereas only
                                                                                                      with efficiency
     relate to planning, execution, monitor-    one was assessed as having high strategic
     ing, and control, focus on the expect-     focus.                                              • Strategic focus is associated with
     ed business results from the project                                                             business success
                                                When correlation coefficients were calculat-
     outcome.                                   ed between project goal (coded as highly            • Strategic focus is associated with
   • Inspired leadership: the ability of a      strategic or not) and the project manage-             customer satisfaction
     project manager to inspire the project     ment style dimensions, the only significant
                                                                                                    • Strategic focus is associated with
     team, to induce team bonding, and to       positive correlation was found between
                                                                                                      future prospects
     ensure team effectiveness.                 project goal and the strategic dimension of
                                                project management style. This result sug-          • Strategic focus is associated with
Finally, we defined the project’s strategic     gests that a strategic approach is present            overall success
value as the project’s potential contribution   more often in projects where strategic value
to long-term organizational goals.                                                                  • Inspired leadership is associated with
                                                is recognized.
                                                                                                      teamwork effectiveness
The research had two phases. The first
phase employed a qualitative case study
approach on 35 documented cases, and its         ...the only significant positive correlation was found
goal was to confirm the theory and prepare
for the second phase. The second phase
                                                between project goal and the strategic dimension of
was quantitative, and involved statistical      project management style.
data on 164 projects from different coun-        This result suggests that a strategic approach is
tries. The goal of this phase was to test the         present more often in projects where strategic value
strategic project management maturity
(SPMM) model on a large number of proj-
                                                        is recognized.
ects and assess the relationships among the
three dimensions of the model and project       Phase 2—Empirical Research                       Overall, we found that in most projects
success dimensions. We expected that this                                                        goals were typically identified as either
                                                Our database included 164 project ques-
examination would help us examine our                                                            operational or strategic. This demonstrated
                                                tionnaires, which were analyzed statistical-
major research hypothesis.                                                                       awareness of what projects mean to their
                                                ly. We calculated standard statistical

                                                                                                                     Continued on next page
                                                      tional goals and projects with strategic     goals. Inspired leadership relates to the
                                                      goals. It is much less clear, however,       project manager’s activity to enable team-
                                                      whether this recognition materializes        work processes, team bonding and effective
                                                      during the project execution process.        cohesion.
                                                      As we found, striving to achieve strate-
                                                                                                   It comes as no surprise that operational
                                                      gic goals through projects is in most
                                                                                                   excellence predicts project efficiency.
                                                      cases reduced to aligning initial project
                                                                                                   However, operational excellence predicts
                                                      goals with organizational strategy and
                                                                                                   neither one of the other project success
                                                      maintaining the project’s execution
                                                                                                   dimensions; e.g. operational excellence will
                                                      within the triple constraint. In this man-
                                                                                                   not translate to customer satisfaction or
                                                      ner, strategy-related behaviors are
                                                                                                   business success. This finding makes it nec-
                                                      mostly expressed by operational behav-
                                                                                                   essary to focus attention on other project
                                                      iors.
                                                                                                   management maturity dimensions as well,
                                                      This approach may work for projects          unlike what is assumed in current project
                                                      with short-term operational goals. In        management practices.
                                                      these cases, it may be possible to focus
                                                                                                   Strategic focus seems to be a key element
                                                      project management on operational
                                                                                                   in achieving customer satisfaction, business
Figure 2: Strategic vs. operational goal                                                                           success, future prospects,
projects                                                                                                           and overall success.
                                                                                                                   Practically, all lasting, post-
organizations, and what the expected proj-                                                                         project, effects are predict-
ect outcomes are. In addition, most of the                                                                         ed by strategic focus.
respondents clearly identified and                                                                                  Inspired leadership predicts
described their firm’s strategy, and                                                                                teamwork effectiveness. We
explained how it is connected to their proj-                                                                        expected it to influence
ect goals.
                                                                                                                    other success elements as
However, most of the project teams consid-                                                                          well, especially customer
ered project strategy to be simply an align-                                                                        satisfaction, but it seems
ment of the project’s operational goals with                                                                        that the effect is only indi-
the firm’s strategy by ensuring that the pro-                                                                       rect, through teamwork
ject’s triple constraint (time, budget, and                                                                         effectiveness.
performance goals) is in agreement with
                                                                                                                  The implications of these
the organizational goals. In these cases,
carrying out the company’s strategy had                                                                           findings to management are
been reduced to effectively executing a                                                                           clear. Having project goals
project within the specified triple constraint.    Figure 3: Means of SPMM dimensions: Industry - and             initially aligned with busi-
Strategic focus is generally not recognized,       world-wide                                                     ness strategy and hoping
and usually there is no strategic alignment                                                                       that this will guarantee
in monitoring and controlling activities.                                                       achieving the project’s strategic goals is not
                                                  excellence and still achieve successful proj-
                                                                                                enough. Instead, a conscious, on-going
Conclusions and Implications                      ect outcomes. In projects of high-strategic
                                                                                                evaluation of project activities against its
for Managers                                      importance, explicit focus of the project’s
                                                                                                strategic goal alignment is necessary.
                                                  strategic goals is
Our case study analysis indicates that most                                                     Similarly, just managing the project’s opera-
                                                  necessary; neglecting it may have an
projects are still managed today in an                                                          tions, without focusing on the team process-
                                                  adverse effect on project success.
operational manner. Furthermore, the                                                            es, is not enough either. Here too, a con-
majority of projects with high strategic val-     The larger scale empirical findings con-      stant effort to enable team processes, team
ues are also managed operationally, while         firmed that project management styles could   bonding, and team effectiveness is neces-
almost all projects with operational goals        be distinguished according to three dimen-    sary.
are managed operationally. This, we               sions: operational excellence, strategic
                                                                                                We thus believe that a new form of project
believe, indicates that in spite of the strate-   focus, and inspired leadership. Operational
                                                                                                management standard is needed. In addi-
gic importance placed on projects, the tra-       excellence measures the degree to which a
                                                                                                tion to the operationally focused
ditional approach still dominates the field.      project manager manages the project effi-
                                                                                                approach, strategy- and teamwork-related
                                                  ciently and keeps it within the planned time
The analysis shows that most project man-                                                       focuses should be developed and included
                                                  and budget constraints. Strategic focus
agers and organizations recognize the                                                           within the current practices. Project man-
                                                  measures the degree to which a project is
strategic importance of a project and can                                                       agement needs to focus on business goals
                                                  executed to fulfill the intended business
distinguish between projects with opera-                                                        achievement and value creation, and not
                                                                                                   • When managing a project, project teams
                                                                                                     need to learn how to focus on the strategic
                                                                                                     and leadership aspects of the project, not
                                                                                                     just its operational efficiency. They need to
                                                                                                     develop a specific project strategy and
                                                                                                     focus the team’s activity on creating com-
                                                                                                     petitive advantage as well as future
                                                                                                     prospects from the project.

                                                                                                   • Project reviews by top managers should
                                                                                                     include examination of the strategic
                                                                                                     progress of projects, their expected
                                                                                                     success on all dimensions, and their
                                                                                                     relevance in the market given the changes
                                                                                                     and dynamics in the competitive
                                                                                                     environment.

                                                                                                   Further research is clearly needed. Because
Figure 4: Maturity dimensions and their impact on project success factors                          operational excellence is well researched,
                                                                                                   new research directions could be on the
                                                                                                   strategic focus and inspired leadership
just on achieving the triple constraint.             the project. It should be assessed on sev-    dimensions. For example, one may ask
                                                     eral major dimensions such as efficien-       whether strategic focus is more important for
The major elements of this recommended
                                                     cy, customer satisfaction, team effective-    project success in high-uncertainty or high-
approach can be summarized as follows:
                                                     ness, business success and preparing for      technology projects, than it is in low-tech
• Projects should be seen as part of the             the future.                                   projects. Is inspired leadership more impor-
  strategic business processes in the organi-
                                                 • Project managers should be accountable          tant in certain industries than in others? And
  zation; their goals should be to contribute
                                                   for achieving the business results and other    is strategic focus more important for projects
  to the business success of the organiza-
                                                   success dimensions, and not just the triple     with external versus internal
  tion and not just meeting time, budget,
                                                   constraint.                                     customers? ■
  and performance goals.
                                                 • Projects should be selected according to
  • Project success should be defined              their contribution to the company’s
    up-front to set the expectations from          strategy and long term goals.




   About the Authors:
                       Dr. Aaron J. Shenhar (ashenhar@stevens.edu) a world leader in project management and technology management
                       scholarship, is Institute Professor of Management and founder of the Project Management Program at the Howe School of
                       Technology Management at Stevens Institute of Technology. He was named “Engineering Manager of the Year” by the
                       Engineering Management Society of IEEE in 2000, and was the first recipient of the Project Management Institute Research
                       Achievement Award in 2003. Prior to his academic career, he was involved in managing projects, innovation, R&D, and
                       high technology businesses for almost 20 years, participating in all phases of engineering and management, from project
                       manager up through the highest executive posts.

                       Dr. Shenhar holds degrees in engineering, statistics, and management, including a Ph.D. in Electrical Engineering from
                       Stanford University. His newly-published book, Reinventing Project Management: The Diamond Approach to Successful
                       Growth and Innovation, is the first project management book published by Harvard Business School Press.

     Joca V. Stefanovic (jstefano@stevens.edu) has extensive experience in the computer business, embracing development, marketing/sales,
     and support. He founded and grew to the multi-million sales level a company dealing in computers and other high-tech equipment. He also
     founded a software development company that develops products for large international companies and distributes products for automatic
     personal and material identification. Mr. Stefanovic holds an M.Sc. degree in Electrical Engineering from the University of Southern
     California, Los Angeles, and an M.Sc. in Technology Management from Stevens Institute of Technology.
     He is currently working towards a Ph.D. in project management at Stevens, where he teaches the Introduction to Project Management course
     at the Howe School.

								
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