Strategy Implementation Session 3 - Projects

1. Image not licensed for web distribution. Strategy ImplementationSession 3 - Projects

2. Agenda • Knowledge Management Memo • Projects & Strategy • Wyeth Discussion • Wyeth Update • Break • Projects • Strategic issues & missteps

3. Knowledge Memo • Due in 1 week (class 5, Friday Jan 30) • Based on your experience, identify an area of knowledge that could create value for an organization where you have worked. • Explain why the knowledge is potentially a valuable resource. • Why is it not being fully utilized? • Propose changes to acquire or use the knowledge more effectively and explain why they would work. • Discuss potential cost of changes. • Recommend changes yes/no.

4. Where are we?

5. How do you judge your friends? Words Actions LinkedIn Facebook

6. How can we best understand a company’s competitive position?

7. Current strategic position is the sum of past projects, failed & realized.* Strategic Plan Deliberate Strategy Unrealized Strategy = Failed & ignored projects Realized Strategy Emergent Strategy *Hat tip: Figure 1-2 Strategy Safari, Mintzberg et al.

8. Strategy happens through discrete projects. Current Operations Tackling Performance & Opportunities

9. Projects & Programs • Project • Discrete packet of work • Temporary initiative • Specific goals • “Clearly defined packages of work, bound by deadlines and endowed with resources including budgets, people, and facilities.” → Not the ongoing activities of delivering a product or service. • Program • Collection of interdependent projects

10. Wyeth Preparation Questions • Questions • Why has Wyeth lagged in drug discovery?How does the ‘new way of working’ (NWW) aim to address this? • Why are cooperation and sharing essential to meet the new goals? • What do you see as some of the potential pitfalls of the NWW? Can Ruffolo succeed in raising the targets again? Class 2 – Strategic Planning

11. Wyeth: New Way of Working (NWW)

12. Wyeth: My Take

13. Wyeth Update • See related slides

14. Break

15. MLM’s Strategy Execution Framework Ideation Nature Vision Strategy Portfolio Synthesis Transition

16. Issues for Engaging the Project Portfolio. Governance=Sponsorship Matching Projects & Resources Monitor & Reshape the Portfolio

17. I. The effectiveness of project governance is determined by sponsorship. • Creates responsibility & accountability • Allocates resources • Creates decision capabilities to adjust as things change => Time to decision indicates effective sponsorship

18. Sponsorship bridges the gap between strategic outcomes and project outputs. Expectations for sponsors Expectations for Project Managers Clear data for decisions Provide current info Regular progress reports Manage day to day issues Aware of larger goals Responsive to changes Identify problems early Clear goals for advocacy • Translate goals into actionable terms • Support resource acquisition • Political guidance • Identify risks • Responsive decisions • Available • Manage conflicts • Advocate

19. II. Matching projects & resources. • Identify potential projects and programs • Develop criteria to prioritize investments • Dealing with overload

20. Project metrics are a huge potential strategic lever.

21. Project outputs and strategic outcomes are very different measures. • Project outputs “project parlance” • Focused on Deliverables: • Systems to design • Hardware to build • Training programs • Delivery schedules • Strategic outcomes “strategy speak” • Value for customer (differentiation) • Operational benefits (cost advantage) • Examples: • Reliable travel on short-haul flights • Everyday low cost shopping • Best information right away => What was your diagnosis of the AT&T Odyssey debacle?

22. Critical projects will have outputs linked to strategic outcomes. • Southwest Airlines (figure 4-5) • Objective = Fast ground turnaround • Measurement = on-ground time, on-time departure • Target = 30 minutes & 90% • Initiatives = cycle time optimization =>What are Apple’s strategic outcomes? • What I-phone customers want: • Photo texting • Copy & paste • Working flash • Browser crash • Wifi synch • Landscape emails • Hide icons • “Ask and ye shall not receive” – Apple ignores them all w/update: • Google streetview, podcasts, app ratings, mic, location sharing.

23. Criteria will differ for addressing performance gaps & opportunity gaps. • Performance gaps “working in the business” • Eg: launch CRM • DCF, Margin • Risk • Share • Lead time • Opportunity gaps “working on the business” • Eg: new product release • Key metrics • Cycle times • Process costs • Quality & service

24. III. Review & re-Align to maintain strategic engagement. Cycle Time: How often do significant changes happen? • Review Time: Report and evaluate twice as often. • Sunk cost fallacy: don’t be afraid to drop projects • that are no longer addressing key strategic outcomes. Where did Motorola go wrong with Iridium?

25. Project Engagement Issues • Sponsorship determines the strategic effectiveness of the portfolio. • Projects give leading metrics that should link closely to strategic objectives. • Review & re-align twice as often as changes occur in related projects and the environment.

26. Common Missteps with Engaging the Project Stream • Projects don’t reflect strategy • Action ≠ Words • Weak sponsorship environment • Poor Monitoring & Metrics • Inability to React to Changing Projects • Especially dealing with interdependence in fast-track programs • Eg: NASA, Lockheed, Airbus, Boeing

27. Next up: Business Processes & Zara • Questions • How sustainable do you think Zara’s competitive advantage will be? How might it fail? • How well does Zara’s advantage travel globally? • What is the best way to grow the Zara chain? • What other strategic recommendations would you make to the Inditex CEO? • First Case Update: Team 2 Class 2 – Strategic Planning

28. Image not licensed for web distribution. On a sheet of paper: What was your takeaway from the case? What was the main point of class? What was the most confusing point from class?