An important element of the strategic planning process is the management of the organization’s projects and initiatives in the context of strategic and operational objectives. Collectively, these discretionary activities account for only a small portion of labor expended in the organization, compared with that expended in the execution of normal business processes. But the discretionary allocation of labor and time is the necessary domain of management, yet management all too often doesn’t know what the workforce is actually doing.
A crucial step in driving alignment with strategy after the strategy itself has been established is to capture the activities (projects, initiatives, call them what you will) that are already underway. A matrix of the strategic initiatives against the strategic objectives almost always reveals opportunities to improve alignment; initiatives that don’t map well to objectives, objectives with no initiatives, and in some cases, objectives with too many initiatives.
Unfortunately, many organizations struggle to even create the alignment matrix. With neither a centralized project management office (PMO) to capture and track the status of discretionary activity, nor any understanding of the labor actually being allocated to each initiative, leaders have little more than capital and expense budgets as a weak indicator of actual strategic initiative activity.Discretionary projects often have significant labor expense, but little or no capital budget. Labor is treated as a sunk cost that is allocated to business units and departments on the basis of full-time equivalent employees (FTEs), not to specific projects and initiatives. Middle managers have discretion to undertake operational improvement projects and strategic initiatives with limited senior level oversight beyond the capital budget process.
Managerial discretion is biased towards operational improvements, which tend to have more tangible benefits delivered sooner than strategic initiatives whose benefits are less tangible in the near term. The pool of labor available for discretionary efforts is the difference between total labor available, and the necessary effort to run the business everyday. Keeping the lights on always takes precedence. Whatever is left over is given over to discretionary activity, divided between operational improvement and strategic initiatives. It is generally the same people whose time can be allocated to each.
Large organizations become especially adept at optimizing the status quo; making current business processes as efficient as possible. Strategic change represents the unknown, and a greater risk of an individual manager being seen as mis-allocating his or her labor resources. So in the aggregate, little labor is left to devote to strategic change.
A more enlightened approach requires a comprehensive understanding of discretionary activity across the enterprise, captured and administered by a robust PMO function.Workforce time reporting enables executives to understand not just what projects are underway, but to manage the set of projects as an investment portfolio. When viewed this way, executives are able to reduce the total number of projects (many of which may consume resources with little progress to show for it), better balance FTEs between strategic and operational change, and drive a higher share of projects to deliver their intended value on time and on budget. In the absence of this more enlightened approach, it comes as no surprise when there is a failure to execute strategy.