Читать книгу Project Benefit Realisation and Project Management - Raymond C. Young - Страница 11

After discussing what projects are for strategy and business operations, it is time to reflect on the other side of the coin – what strategy and business operations are for the projects we deliver. The short answer is – everything. Let us start by discussing the importance of strategy.

We would like you to pause and rank the importance of the following governance issues:

 Risk and compliance – Avoid litigation, reputational risk

 Strategy and planning

 Board composition, diversity, and performance

 Government regulation

 Executive compensation – alignment with shareholder expectations of performance

 New technology and its impact on the business

Strategy is probably far more important than you think. At a minimum strategy ensures the long‐term survival of an organisation and good strategy will lead to above‐average performance. The following statistics show that these are not motherhood statements:

 For small businesses, ineffective strategy contributes to the problem of 50% surviving no longer than 5 years and 64% not surviving for more than 10 years [18].

 Poor strategy in large businesses results in underperformance. Booz Allen Hamilton found in a five‐year study of under‐performing US organisations [19] that 60% of the value destroyed was due to strategic errors, 27% due to operational errors, and 13% due to compliance problems.

 In the public sector, strategy is a confused concept [20] and we often talk about policy instead. A study of the State of Victoria in Australia, normally considered an exemplar, found $100B had been invested into projects over a 10‐year period without any evidence any high‐level policy goals had improved [9]. A follow‐up study in the State of NSW also in Australia suggested that, more generally, only one in five policy goals are positively impacted [8].

In discussing the role of a board, Henry Bosch (former chair of the Australian National Companies and Securities Commission, now ASIC) states:

The board’s first responsibility is to ensure that the organisation has clearly established goals; objectives and strategies for achieving them; that they are appropriate in the circumstances; and that they are understood by management (1995:93).

Before reading on, we suggest you go back to the earlier question and reconsider the relative importance of the governance issues. On reflection, do you find the strategy is more important than you first thought? Management consultants Booz Allen support a performance rather than a risk emphasis for governance and made the following observation around the time of the Enron, WorldCom, and Tyco scandals:

More strategic value has been destroyed in the past five years as a result of strategic mismanagement and poor execution … than was lost in all of the recent compliance scandals combined [19].

So, strategy is important. However, it is not necessarily the glamorous function that only highly paid consultants can deliver. Ever since seminal works by strategy scholars such as Henry Mintzberg, strategy has been seen as a lot less as clever planning and a lot more as juggling a number of competing priorities and conflicting goals in face of execution and operational challenges. Indeed, strategy and strategic management turn out to be a mundane and organic effort that unfolds in day‐to‐day activity.

Strategy is increasingly implemented through projects. Ideally, these projects are initiated only after a strategy has been determined. However, in practice, this is not always possible. There are many times when the strategy needs to change and in‐flight projects need to be reconsidered to respond to the environment, e.g. changes in legislation. There are other times when action must be taken before one’s strategy is fully thought through, e.g. natural disasters. This reactive mode may even be the norm in today’s turbulent times as shown by events such as the Global Financial Crisis, globalisation, rapidly changing consumer demand and the COVID‐19 pandemic. It is also worth noting that even in the ideal situation when the strategy is carefully thought out beforehand, the strategy is often poorly implemented with some leading consultants such as the Boston Consulting Group and McKinsey admitting (off the record) that as few as 10% of strategies are ever implemented effectively [5]. In all these cases, strategy formulation is not only performed separately but is actively reconsidered as an ongoing part of the implementation. This is quite a different concept to the current practice where top managers engage actively in strategy formulation but seldom consider projects to be a matter of direct concern [21].

Consider this: Boards approve around 40% of all projects [22] and the management of these large‐scale expenditures is a fiduciary duty requiring careful oversight. However, Deloitte warns that current practice is ‘tantamount to negligence’.

 50–80% of the time projects do not deliver the expected benefits? [7]

 29–46% of the time ICT projects are approved with either inadequate or no information? [23]

Nobel Laureate Daniel Kahneman reported statistics that suggest the problem is widespread with ¾ of mergers and acquisitions never paying off, most large capital projects failing to live up to expectations, the majority of efforts to enter new markets abandoned in a few years and 70% of new manufacturing plants closed in their first decade [6]. We believe it is only a matter of time before boards and their management teams are held to account for these lapses in corporate governance.

The point we are making is that it is dysfunctional for top managers to be allowed to fully delegate their responsibility because projects must succeed for an organisation’s strategies to be implemented. The evidence is now clear that top management support is the most critical factor for project success [24]. However, it is neither practical nor desirable for top managers to be overly hands‐on at the project level. The key is to get the top management feedback at the right time through the project governance process. Boards and their delegates need to know how to ‘steer’ their projects to success [16].