The Intersection between Business Strategy and the PMO.
Here's everything you ever need to know about the intersection between business strategy and PMOs (for now). There are three primary roles PMOs can play in supporting business strategy goals:
Here’s a brief overview of each starting at the bottom of the pyramid with the more simple and prevalent and ending with the most ambitious and least practiced role.
Strategy alignment is the concept of aligning a project idea, proposal or in-flight project with a formal business goal or strategic objective. In practice it assumes the existence of a project (or at least the idea of a project) first. As such, it can be viewed as a “bottom-up” process. This contrasts with a “top-down” process that starts with strategic objectives (see Strategy Execution below). Strategy alignment is used in conjunction with a number of other criteria, to make a case for moving forward with the project.
The potential role of PMOs in supporting strategy alignment ranges from identifying potential synergies between proposed projects and business priorities, to ensuring that strategic alignment is part of the standard project selection criteria and decision-making process, to raising the red flag if projects are “kill” candidates because they no longer align with shifting business objectives.
In this scenario, business leadership articulates a business strategy at some organizational level (corporate, business unit, IT) and then the key strategic objectives and goals are used to drive requirements and ideas for projects that execute the strategy from the top down. So, strategy precedes projects, as opposed to the after-the-fact alignment exercise of connecting projects to strategic goals.
PMOs may play a role in facilitating the ideation process. That is, they can help answer or ensure that there is an answer to the question “what projects are required to implement this strategy? PMOs can also play a key role supporting the execution of large, complex programs and projects that were born directly out of the need to execute a key strategy or business initiative (e.g., roll-out of a new strategic product program that encompasses new product development projects, supporting IT and CapEx planning projects, etc.).
Strategy execution frequently involves the management of significant internal organizational change. PMOs can be set-up for the explicit purpose of managing this change. In this case they may be re-labeled as a Change Management Office or CMO.
Strategy Decision Support
Strategy decision support refers to having a role in helping organizations decide on which strategic alternatives to pursue and where to invest resources. Strategy decision support is the most ambitious and expansive role that can be contemplated. As a result, it is the least practiced because very few PMOs or Enterprise PMOs (EPMOs) have a seat at the table where key business strategies and decisions are hatched.
However, a case could be made in some organizations that the PMO (assuming one exists) should at least be consulted at the highest level on issues of strategy viability and implementation risk, which are key factors in strategy formulation and decision-making. The PMO may be in the best position to assess program and large project risk, as well as to identify ways to mitigate risk, especially those that relate to resource, capacity and project-level budget factors. And since, PMOs may already be playing a role in strategy execution, they are in the best position to support strategic decisions -- such as “continue”, “adjust course”, or “kill” -- for in-flight programs and projects
PMOs can also provide vital input for resource investment decisions and portfolio prioritization since they may already be responsible for inventorying and monitoring project-related investments, project and resource demand, resource supply/capacity and other important baseline information used in investment planning.
The role that a PMO can or will actually play depends on the unique situation of the organization in which it resides. There is no working model for determining the role PMOs should play in supporting the business strategy, but it’s useful to understand the possibilities.