MODULE 1

GOVERNANCE
STRATEGY
AND
PROJECT MANAGEMENT

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

Palladiums Execution Premium Process (XPP)

Stage 1
Clarify our strategy into
operational and
measureable terms

Develop the
Strategy

Stage 2

Set our strategic priorities

Stage 6

Translate the
Strategy

Align the organization

to our strategy and
motivate employees to
help execute

Test and
Adapt

Stage 5

Stage 3
Align the
Organization

Monitor and
Learn

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

Stage 4
Allocate resources through
operating plans and
budgets that are explicitly
linked to strategy

Link to
Operations

Execute
Initiatives
Processes

Conduct ongoing
operations and
discretionary projects

1-6

Stage 1: Develop the Strategy

A strategy is an integrated set of choices that position a firm, in an
industry, to earn superior returns over the long run.
Source: Jan Rivkin, Where do great strategies come from? Harvard Business School Faculty
Seminar Series Lecture

Strategy

Vision

Strategy is:
A plan

PROCESS

Short-term and long-term actions

Destination, or end state

RESOURCES

PEOPLE

A way to measure progress

Shows how you get to your
destination by defining
goals or objectives

Shows your
destination

1-7

Summary: The Strategy Management Process:

Building the Strategy Plan
1. Define Change
Agenda

Strategic Change Agenda

2. Define Vision

I. STRATEGY
DEVELOPMENT

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

II. STRATEGY PLANNING

Investment Portfolio

8. Strategy Funding

Stratex

9. Accountability

KEY:
Process

STRATEGIC
PLAN

Methodology

Theme Team

Stage 1: Develop the Strategy

Defining the strategy fundamentals: Mission, Vision and Values

Examples

Characteristics

Mission
Most fundamental reason for
being
Inspirational for people
Easy to communicate
Remains the same over time

Give people the power to share

and make the world more open
and connected

Vision

Values

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

By 2020, we will be The

Reference in Sports Excellence
World Wide

Flexibility Honesty Teamwork

Responsiveness Passion

1-9

Enhancing the Vision: The traditional vision statement

leaves much ambiguity for the development of strategy
Vision
Strategy?

To Be The
Best

Typical Vision Statements

Enhanced (Quantified) Vision

We will be one of the worlds premier

companies, distinctive and successful in
everything we do
Allied Signal

2 3 4 in 5

To be the best refining, marketing and

transportation company in the U.S. petroleum
industry
CITGO

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.

1-10

Stage 2: Translating the Strategy

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.

1-11

Strategy Maps Describe how an Organization Creates Value

and Focus Change by Clarifying Priorities
Financial Perspective
Productivity

Sustained
Shareholder
Value

Revenue Growth

Customer Perspective
Product/Service Attributes

Price

Quality

Time

Relationship

Image

Relation

Brand

Function

Internal Process Perspective

Operations
Management
Processes

Customer
Management
Processes

Innovation
Processes

Learning & Growth Perspective

Regulatory
and Social
Processes

#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.

Human Capital
Information Capital
Organization Capital

#5. Cause-and-effect relationships define

the logic that converts intangible
assets to tangible outcomes

Natural cause and effect logic

And Realise the Vision
Financial
Results

To Drive Financial
Success...

Customer
Benefits

Needed to Deliver
Unique Sets
of Benefits to Customers...

Internal
Capabilities

Knowledge, Skills, Systems, and Tools

To Build the Strategic

Capabilities

Equip Our People...

1-13

The Balanced Scorecard Supports the Strategy Map

Theme: Operating Efficiency

Financial

Profits &
RONA

Grow
Revenues

Customer

Fewer
Planes

Attract & Retain

More Customers

On-time
Service

Internal

Objective

Measure

Target

Initiative

What the
How
The level of
strategy performance performance
is trying
against the
or rate of
to
objective is improvement
achieve
monitored
needed

Processes and
programs
required to
reach the
target

Lowest
Prices

Balanced Scorecard
Objective Measure Target

Fast Ground
Turnaround

Fast ground
turnaround

Learning
Ground Crew
Alignment

Action Plan
Initiative Budget

On Ground Time

30 Minutes

Turnaround Cycle

On-Time Departure

90%

Time Optimization

$XXX

Strategic initiatives are the drivers of action

Strategic Systems

Strategic Job

Crew Scheduling

Ramp Agent

Execute strategy by managing & measuring initiatives

From management to execution

A Strategy Framework enables an organization to establish accountability and manage

initiatives against clearly defined priorities and goals:
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

1-15

Stage 3: Align the Organization

Value in organisations is created in two distinct ways
Alignment is the process through which we create synergy
Shareholders

Board
CEO

Enterprise
Derived
Value

Corporate

Group

Customer
Derived
Value

Value is created through synergy

among organization components
Division

Value is created by delivering

the customer value proposition
SBU

SBU

SBU

Employees

SBU

SBU

Stage 4: Align Operations

The Strategy Map identifies the high-level factors that
must be further defined at a lower level of detail
The Strategy Map

Shareholder
Value

Financial
Perspective

Growth

Production

Customer Value Proposition

Price

Quality

Availability

Selection Functionality

Service

Relationship

Product / Service Attributes

Innovation

CORE
BUSINESS
PROCESSES
Production
Supply Chain
Customer
Management
Innovation
Social / Regulatory

Process

Partnership

Brand

Customer
Perspective

Image

Customer

Operation

Regulatory &

Management

Management

Social

Process

Process

Process

Internal
Perspective

Human Capital
Information Capital
Organization Capital

Learning &
Growth
Perspective

INTANGIBLE
ASSETS
MANAGEMENT
Human Capital
Organization
Capital
Information
Capital
1-17

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.
7.

Should the strategic objectives be changed?

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?

Stage 5: Monitor and Learn

Identify strategic
issues that
require attention

Develop new approaches to strategic issues between

meetings

The Strategy Management Process

(ensure execution of the long-range strategy)

Time Allocation
Refine Strategic Issues

60%
KEY
30%
10%
10%

Discuss Implications

Monthly Operating Review

Review Performance

Review Performance

The Operational Management

Process

Quarterly Strategic Review

(ensure execution of short term plan/budget)

Time Allocation
10% Actions

40%
Discuss Implications

50%

Review Performance

Q1

Q2

Q3

10

11

Q4

12

Stage 6: Test and Adapt

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 its 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 organizations strategy,
results, and future scenarios.

&
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

Relationship Among Project Management, Program

Management, and Portfolio Management

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

Program & Projects Link to Orgs Strategy

Portfolio Management

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
1-25

Program Management

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

1-26

Portfolio, Program and Projects

Portfolio

Portfolios

Programmes

Projects

Projects

Projects

Programmes

Programmes

Projects

Other Work

Projects

Projects

1-27

Eg: Link Strategies to Potential Projects

The Importance of Alignment

1-29

Corporate Knowledge Base

Process measurement databases

Project files
Historical information and lessons learned
knowledge bases

Issue and defect management databases

Configuration management knowledge
bases
Financial databases etc
1-30

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

Strategic Initiative (SI) Definition

Its a broad transformational effort to create

significant strategic results for an organization.

What is a Strategic Initiative?

A Good Strategic Initiative should have:
o
o
o
o
o

Accountability at the Leadership Team Level

Clearly defined start and end dates
Clearly defined deliverables
A budget assigned
Committed resource allocation (e.g., Real
Employee Hours)

For Example:
Research and
select new
expansion
markets,
Automate the
whole
manufacturing
process

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:
Pay the salaries
every month,
Do the
maintenance
1-33

The Value of Strategic Initiatives

Why should organizations have strategic Initiatives?
Organizations operate in a complex
environment where many different aspects
are subject to change
Macro-Environment

General
Economics

Micro-Environment
Customers

Competitors

Emerging
Policy and
Regulation

Strategy Execution

Suppliers
FIRM

Societal
Trends

Substitutes

In order not to lose competitiveness

organizations must evolve and develop long
term plans that describe the desired future
situation
Desired
Status

Disruptive
Technology

(The execution of the strategic

Initiatives)

Current
Status

The successful execution of strategic initiatives is the way to move from the current to the desired status
1-34

What Is an Initiative?
Initiatives are defined to help close the Performance
Gap.
Loose weight

Strategic Objectives articulate the

components of our strategy

KPI / TARGET
KPI

Weight

Weight (Kg)

100
gap

80

STRATEGIC
INITIATIVE
Get on a diet

Target

80 Kg

Actual

KPIs and targets track our progress toward

achieving and communicating the intent of the
Strategic objectives.

Target

Initiatives help close the gap

between our current and desired
performance.

1-35

Wheres the Value?

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

Innovation

Waste
Waste

Initiatives
Productivity
Yielding
Results

Sustaining

Companies spend billions every year on

the wrong projects
Less than half of all projects are truly
aligned to a companys strategy
Only 1 in 7 projects add value beyond
staying even (i.e., enhance
competitive position, differentiate
products and services, or create unique
capabilities)

Half of my initiatives achieve strategic goals. I just dont know which half.
Source: G. Moore presentation at Palladium Balanced Scorecard Summit, November 2005; SAP; McKinsey Quarterly and Palladium research

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

Why? Some Statistics

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

Initiative Overload
Organizations with over
500 strategic Initiatives

Inability to
prioritize the
initiative pool
Lack of agreement
amongst the top
managers on top priority
initiatives

Lack of Alignment
Initiatives not having
impact on any strategic
objective

Insufficient
resources
Initiatives usually require
extra effort from
organizations

Conflicting
initiatives
Initiatives with different
purposes for the same
objective

Poor project
Management
Capabilities
Time, budget and people
management

1-38

Question:
What is Draining the Value
from your Initiatives?
Discussions

Conclusion #1
In 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