Many organisations have a well-defined and well-scoped strategic process. Frequently this process is augmented by a broader idea capture which provides insights and suggestions for the tactics associated with the implementation of the overall strategy. What is recognised, however, is that regardless of the process which is used to set strategy, the critical challenge is the actual execution of that strategy. Indeed, as is widely recognised, weakness in execution, not weakness in strategy, is a primary reason for CEO failure. Knowing this, it is important to tie the strategic theory governing the business to the experience of project management. Without this linkage, either the project portfolio ignores the needs of the business or the strategic goals are empty, with no support at the executive level. It is clear that this is an area which businesses must get right for long-term success.

Strategy needs to come before portfolio ranking and selection. In order to select the right set of projects, strategic goals must be defined in advance. Furthermore, the strategic goals should ideally be relatively limited. Having a small number of goals helps to keep the goals memorable and at the necessary high level, thus avoiding the blurring of strategic goals with the tactics for their implementation. Of course, the process of linking projects to strategic goals is critical. If the projects an organisation undertakes do not reflect its strategy, then what does? It is much less likely that operational work has a strategic impact relative to projects, which are more likely to create some level of change within the organisation.

Though the strategic goal definition must come before project selection, it must not be rushed. Selecting the right strategy is imperative for defining a portfolio which will have a strong impact on the future of the organisation. A poor strategy which is executed flawlessly is still a failure.

Linking projects to strategic goals, however, is only one step in the ranking and evaluation process for a project portfolio. The most important projects are the ones which provide the most business value. Business value, measured using a variety of means, might be a way to create more customers, retain the ones you have, or create a new market altogether. It is important that value is clearly defined and assessed, and that the organisation uses analytical techniques which are thoroughly defined and accepted throughout the organisation. It might be a way to release products faster, to make more money on support, or to spend less money on support. Business value will be unique for your organisation and your projects.

In the ranking process, however, there are some common approaches (detailed in the supplemental articles for this week) which corporations have found to work. The ranking process should be standard across the corporation, so that 'apples are compared to apples'. Another approach is to have the ranking process involve collaboration across the organisation, so that not just one individual or organisation makes the decisions. These and other approaches are essential to ensure buy-in from the organisation to the overall results.

For this week, discuss the following questions:

1. Assess and explain the advantages and disadvantages of the different methods for evaluating projects and rank portfolios. Discuss how project evaluations can be used to make decisions on individual projects-especially in the termination of projects.

2. Discuss the advantages and disadvantages of the methodology outlined in the Sharpe and Keelin article. How were these individuals able to gain buy-in to the approach which they used for this portfolio evaluation within the SmithKline-Beecham organisation?