Without a rational planning approach, your organization has no way of knowing if it has identified the right investments, or when the timing is right to even execute on those investments. Clearly, more mature planning techniques are required to truly align execution with strategy.
Over the many years we’ve been helping clients, three basic planning approaches have emerged – starting with project-driven, moving to program driven and ultimately evolving to capability-driven. To help you understand which approach works best for your organization, our experts can systematically step you through any of them – or all three – depending on your needs.
Executives across organizations typically use a project-driven approach to support annual planning. These executives often define and prioritize strategy in a silo. The process then typically captures project requests from silos across the business, which are disconnected from strategy.
Semi-sophisticated techniques are then used to map the project requests to strategy, subjecting them to varying budget and human resource constraints to identify the optimal portfolio. Since both the projects and the strategy were initially captured and defined in silos, this approach makes it virtually impossible to optimize and identify the best portfolio.
It’s a major draw-back that can result in your organization simply selecting the best of what is essentially a questionable bunch of project investments. So while project-based planning is much better than having no planning process at all, to actually generate demand from strategy, a program or capability-driven approach might be the logical next step.
Leveraging a more strategic top-down perspective, the program-driven approach begins by first defining and decomposing strategy into actionable and measurable business drivers. Multi-year programs are then created and associated to those drivers.
These programs are treated as independent investment entities – which are much more than a simple rollup of project information – which can be prioritized and funded accordingly.
These programs are then further broken down into the specific projects from which they’re comprised. This approach creates a much stronger correlation between strategy and the underlying projects with programs essentially acting as the bridge between business strategy and project execution. Taking a program-driven approach enables organizations to better align execution with strategy, and requires more sophisticated PPM capabilities and methodologies that integrate critical business controls.
The capability approach is the most advanced planning process, to which many organizations aspire. This approach recognizes the primacy of business capabilities as the ultimate driver of both discretionary and operational investments. These capabilities are defined as the core operating functions of your business – comprised of people, process and technology.
An understanding of the relationships between strategy
and capabilities enables the organization to more effectively generate high
quality demand. If an organization has strategy with no supporting
capabilities, it must generate projects or programs to on-board the
capabilities required to execute that particular strategy. A strategy that’s
dependent on a capability that’s performing poorly requires an investment in
projects or programs to improve that specific capability in order to execute on
the strategy. Following this approach ensures that all demand is generated
top-down based on an ongoing analysis between strategy and capabilities.
This approach can also be used to align operational spend with strategy. For example, IT might use it to breakdown the technology required to automate a specific capability – like an application or service that directly serves customers – engaging with the business to understand what changes are required to support that capability. With this understanding, the IT team has the traceability needed to gauge what specific enhancements are needed to the technology landscape. In this way, capabilities essentially function as the bridge between operational activities/investments and strategy.