A manager at an airline recently wrote me, “one of the biggest challenges we have here is that all projects seemed to be deemed strategic or part of a larger strategic initiative and priority is constantly changing through the year. I am looking to get some practical tools and techniques to help get clarification from stakeholders on priority and help them see what is important from a strategic perspective and how they need to relate back to larger corporate objectives.”
As a general rule, a given business unit should have no more than 5 or so strategic initiatives active at any moment. Too often, though, this is not the case and the organization is unable to reap the benefits offered by using strategic initiatives as a tool for closing performance gaps.
600 Strategic Projects. No Way!
A while back, KoltoKan (a disguised name for a large NYSE-traded organization), let me peek into its portfolio of projects and programs for the purpose of offering suggestions on how to identify the true strategic initiatives from the other imperatives. The initial list contained 600 designated strategic projects, and it was clear to most that more focus was needed.
Over the next months, they company was able to winnow the list down from 600 to about 100 by simply having a conversation among executives: Which of these are most important and urgent?
Most organizations face a similar situation: Each initiative – or proposed initiative – has an owner somewhere in the organization who believes in it and wants to secure (or preserve) funding and resources. When it comes to setting priorities, strategic coordination more difficult because organizations have flattened and decentralized. Given this, it is no wonder that executives collectively struggle with (or avoid altogether) cross-functional or cross-organizational prioritization exercises.
Having reduced the number from 600 to 100, KoltoKan’s project portfolio analysts were congratulating themselves and deserve some recognition for making progress.
Regardless, 100 strategic projects is still too many when the benchmark should be approximately 5 strategic initiative programs, each with a good charter and leadership.
WHAT is your strategy? Not: WHERE is your strategy?
During my involvement with KoltoKan, I would whisper and sometime directly challenge the analysts with the an observation: “I’m not sure that you have a strategy.” My reasoning is simple,
A good strategy provides a filter for determining which of many “strategic” projects should be aggregated and passed into the select list to attain the designation of strategic initiative.
KoltoKan listened to my whispers but respectfully disagreed. They provided me a set of presentation slides, anchored by a graphic with a nifty slogan. The document had passed by the eyes of a well-know consulting firm (Bain) and the graphic had been was posted across KoltoKan’s many facilities.
Their evidence did not convince me that they had a strategy. They had documents labeled “strategy” produced by “strategy” meetings; but, they were confusing goal setting and mission statement writing with strategy.
The fundamental issue, I think, is a legitimate confusion over the meaning and purposes of strategy. Although many people regard strategy as a document or set of presentation slides, they are confusing the artifacts with the information contained in the artifacts.
The confusion is compounded because of the way that people interchange the words strategic with strategy. The word, strategic – as a modifier – is a way of saying that the thing being modified is judged as important: a strategic decision is more important than a regular decision, a strategic goal is more important than another goal, etc.
What is important – that is, strategic – is subjectively determined by the individual!
By contrast, we can develop a more objective definition of a strategy as a coordinated set of policies and actions to address performance problems and opportunities in the context of creating advantage over rivals.
How to Prioritize Strategic Initiatives
I know that there are thousands of organizations like KoltoKan that have huge portfolios of projects and programs. Some have Strategy Offices and even more are adopting Enterprise or Strategic Project Management Offices. They need a way to prioritize.
Here are four recommendations :
Recommendation 1: Get clear on the differences between Corporate, Business, and Functional Strategy. Start with the concept of a business strategy as one that is organized to deliver one strong value proposition over the competition. (I like the Business Model Canvas as a tool for defining a business and distinguishing it from others). See my prior article at this link for more explanation.
Recommendation 2: Examine strategic planning documents with a skepticism. Often, people confuse goals with strategies, so validate those things proposed as strategy. You might want to read a series of articles on reviewing strategy documents, starting with this link .
Recommendation 3: Strategic initiatives exist to close performance gaps. You can learn more by following this link.
Recommendation 4: Keep the number of strategic initiatives small. You can find the data and reasoning supporting the recommendation at this link.
A final recommendation is this: understand the definition of a strategic initiative as an endeavor intended to accomplish three inter-related outcomes: 1) achieving a strategic intent, delivering important benefits to strategic stakeholders, and 3) transformation of the organization. All strategic initiatives are programs, and benefit from the use of program management tools.
There are many tools and techniques that we can use to analyze a portfolio, create strategies, and rank prioritize them. What are your favorites?