Why You Need to Learn Business Management and Strategy

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Today project managers need to think beyond the project. It’s not just about deadlines and budget (though they’re still of crucial importance,) but now project leaders must also have a view on the “big picture.” You have to communicate effectively with C-level executives and think strategically within your role as project manager, including how the project aligns with shifting business objectives. 

Expanding Role of the Project Manager?

First, let’s look at a little background as to where this is coming from. Last December, the Project Management Institute (PMI) implemented changes to the requirements for Professional Development Units (PDUs) to maintain Project Management Professional (PMP) certification. In a nutshell, the requirement for 60 PDUs over the course of three years remains the same, but training in certain subjects is now required as part of the effort to satisfy these PDUs. Training is now required in three areas that together comprise the new PMI Talent Triangle. These three areas include:

  1. Technical Project Management
  2. Leadership
  3. Business Management and Strategy

Whereas traditionally project managers merely had to focus on technical project management, now they need competency in all three. Yes, all this is to say as a project manager you must expand your perspective. But I’m not sounding the alarm and certainly not advocating you panic over the project management role seeming to be ever-expanding. However, it’s fair to ask if the role of the project manager is going out of scope and becoming too big – too big perhaps for a regular human being to fill? Maybe. And maybe not. Either way, the requirements are real, but you can manage by employing a fairly useful trick to acknowledge and satisfy this new demand.

Let’s take a deeper dive into the third leg of the triangle, Business Management and Strategy, and come up with a practical approach for how to incorporate business management and strategy into your project management practices without over-expanding your role as project manager.what drives business

Where Project Managers Fall Short Today

A good place to start is by taking a first look at how to better understand business management and strategy, the gap in project management knowledge that the PMI seems to have identified. The PMI pinpointed business management and strategy as a knowledge or competency gap for project managers based on its recent Role Delineation Study (RDS).

The PMI executes a RDS every few years to identify trends and changes in thinking about the project management professional and role in practice. In this most recent project management RDS, the PMI sought feedback from employers as to the skills and competencies needed in the workplace, and employers strongly indicated the need for business management and strategy skills.

Here’s the issue: it’s possible to dogmatically execute on a project successfully – and not accomplish anything. In other words, you can execute a project flawlessly by delivering it on time, within budget, and to the required level of quality…but in the end, someone might ask, “Why did we do this project anyway?”

Here’s what allows a project to veer off course like that: there’s no firm link between the organization’s business strategy and the project.

Here’s the genesis of the problem:

  1. The project is initiated and a general purpose is stated.
  2. A plan is put together to execute the project.
  3. The project plan is executed, and monitoring and control is focused on schedule, budget, and quality of a defined product.
  4. The project is completed “successfully,” only to find that it did not accomplish much.

The problem is that business management and strategy are not intertwined into the fabric of the project and the processes for managing it. While the approach to managing the project may be well shaped by project management doctrine, somewhere along the line the big picture is lost, and there is a disconnect to the original purpose.

But there is a practical remedy.

The Solution

Picture the project with its typical key measures for schedule, budget and quality. Any good project has performance metrics in place for these key variables. And they are measured at frequent intervals throughout the life of the project.

Now suppose that another set of metrics – this could be one or more measures – was added to this regular discipline of measuring project performance. What could that measurement be?

These additional measurements need to derive from the original purpose of the project. The original purpose of the project should answer the question up front, “Why are we doing this project anyway?” However, the idea here is to ask that question frequently throughout the project, and to see how you are progressing toward that objective. The objective needs to derive from business management and strategic drivers in the business.

The trick is to find the best measures that map back to the business and strategic drivers. And here’s a hint: it’s not all financial.

To take a broader view, let’s look at a metrics-driven approach, the Balanced Scorecard, where there are four categories of drivers of the business:

  1. Financial – At the enterprise level, your organization must already identify what financial success means. Is there a financial measure to which the project contributes, and can progress be tracked?
  2. Customer – At the corporate level, your company may be creating business value by re-positioning its products and services to a new group of customers. Is there a corresponding measure at the project level that relates to that initiative, and can progress be tracked?
  3. Internal Business Process – Your organization might be investing in projects that streamline processes in order to gain strategic advantage. Does your project contribute to this initiative, and can progress toward it be tracked?
  4. Learning and Growth – Human resources represents a key opportunity for most organizations, and yours probably has specific strategies in place to improve positions vis a vis human resources. Does your project contribute, either directly or indirectly, to this piece of the strategy, and how can progress be tracked?

As you can see there are a variety of types of measures that can be used within the project environment to track progress toward the original goal and purpose of the project.

Case Study

Let’s turn to a short example of how you can do this. Let’s say that you are managing a logistics project to improve the performance of delivery vehicles. The project is about designing and developing a tracking system for maintenance of delivery vehicles, and the goal will be to ultimately improve the performance of on-time deliveries, with some cost savings and process improvements along the way.

Let’s take a look at how the Balanced Scorecard categories from above relate to this project:

  1. Financial – More on time delivery should improve revenue – in the long run. It should also reduce refunds due to below par service. The project will also likely reduce maintenance costs on the vehicles by employing “predictive maintenance.” There will be some specific financial measures for these costs that you can use to gauge your progress.
  2. Customer – There is no direct repositioning to different groups of customers, so maybe this category is not entirely applicable for this project. However, improved vehicle performance, lowered cost, and streamlined processes could open up whole new possibilities for perhaps an underserved segment of the market.
  3. Internal Business Process – The business processes will definitely be impacted. Since there will be new tracking of information, the organization will need to adjust its processes to leverage this new information. What measures directly related to these processes could you use to measure progress?
  4. Learning and Growth – Process changes will definitely result in the need to do some retraining of drivers and maintenance personnel, and possibility even customer service personnel. Perhaps you can track progress in developing these new or revised training programs initially, and then their effectiveness once they are in place.

As you can see, there are some systematic ways to incorporate a wide range of relevant business management and strategy measures into your projects and manage to the big picture.

Conclusion

Your responsibilities as a project manager appear to be expanding – potentially increasing the range of skills you require — as if the dawning era of “superhuman” project managers. However, your role as a PM really already included these responsibilities – but they were not carried through explicitly as part of managing the project.

The primary gap – business management and strategy skills – is fairly straightforward to fill without overextending your responsibilities and without requiring you to earn more certifications or degrees. The key is to add hooks back to the company’s strategy and focus on some metrics in these areas throughout the project lifecycle. These new metrics go beyond financial measures into the heart of the operation – and give you a tool to speak the language of the C-level – and they originate in the existing “purpose of the project.” Rather than expanding your responsibilities as a PM, you will simply be a more well-rounded and effective project manager.

No matter how many hats you’re required to wear when leading a project, you’re hands have to always be on the right tool for the job. ProjectManager.com is that online software solution that offers real-time project analytics so you you stay aligned with the business objectives and KPIs. See for yourself by taking this free 30-day trial.

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