Paint Two workers, a manager Tile placement Two workers, a manager Finishing Two workers, a manager 7. Risk analyses and risk management policies As is the case in any project management scenario, some risks are inherent in the project of refurbishing the garden area of an abandoned house by establishing a swimming pool and a seating area next to it. It is possible through good strategic management of the undertake project to minimize the risk, but it is impossible to completely eliminate all the risks associated.
As the objective of the owner is to use the swimming pool as a luxury feature in order to increase the price of the house in the demand season, the project sponsor does not want the project to go over budget, have a bad quality of construction, or cause delay.
Any of these three negative elements would contribute significantly to worsening of the profit-making ability of the project sponsor.
To account for this situation involving risk that are related to the project, performing a structured risk management is a recommended operation Roberts, Strategic risk management policy is a management approach in which all the risks that have a possibility of occurrence are identified beforehand to increase preparedness. After identifying all of the risks, the next step taken in strategic risk management process is to make efforts to mitigate the risks and develop a contingency plan to deal with the risk factors Molenaar, All of these processes are performed with the intent to make the project least susceptive of negative impact of risk factors.
In this project of developing a swimming pool in the abandon house garden area, the process of risk management is performed using the method of risk registers. The table formulated below represents a risk register for this project, which identifies relevant risks regarding this project while also noting the mitigation strategy and contingency plan. References Marcelino-Sadaba, S. Project risk management methodology for small firms. International Journal of Project Management, 32 2 , pp.
Molenaar, K. Norman, E. Phillips, J. The Project Management Scorecard. Portny, S. Project Management For Dummies. Rebiere, O. Roberts, P. Salma, S. ICoBM , pp. Virine, L. Walter, M. Decision to Use Portfolios Project Portfolio Project Selection Criteria Reviewing Project Portfolio Management Project Portfolio Management Transition and Implementation To Summarize Additional Sources of Information Discussion Questions User Checklist Principles of Project Management Project Authority Authority, Responsibility, and Accountability Defining Authority Power Matrix Implications The Power to Reward Reverse Delegation What is Responsibility?
What is Accountability? Project Organization Charting Traditional Organizational Chart Linear Responsibility Chart Work Packages Work Package-Organizational Position Interfaces Developing the LRC Project Management Maturity Organizational Productivity Improvements Project Management Maturity Models Total Organizational Capability Maturity Model Assessing Project Management Maturity Building a Mature Capability Benchmarking Competitive Intelligence Project Planning The Importance of Planning Planning Realities A Conceptual Model of Planning Project Planning Model Project Planning Process Project Planning Considerations Work Breakdown Structure Project Schedules Scheduling Techniques Project Life-Cycle Planning Project Planning Elements Plan Format Project Management Manual Project Planning Work Packages Management Realities Project Partnering Types of Project Partnering Arrangements Examples of Project Partnering Arrangements Managing Partnered Projects Technical Aspects of Partnered Projects Partnering Challenges and Benefits Outsourcing Project Management Project Management as an Outsourced Service Outsourcing Trends Selecting an Outsource Provider Outsourcing Project Management Services and Products Project Management Outsourcing Guidelines Outsourcing Potential Project Management Information System The Project Management Information System Information Failures Value of the PMIS Describing a PMIS Uses of the PMIS Information Characteristics and Attributes Sharing Information Information Value Technology and the PMIS Planning for the PMIS Project Monitoring, Evaluation, and Control Project Control Cycle Steps in the Control Cycle Monitoring and Evaluation Management Functions Evaluation When to Monitor and Evaluate Planning for Monitoring and Evaluation Who Monitors and Evaluates?
Post-Project Reviews Configuration Management and Control Level 4: Does the right things. Effective Leader. Is efficient and effective in organizing resources to accomplish stated goals Level 3: and objectives. Does things right. Competent Manager. Uses high level of individual capability to work effectively Level 2: with others in order to Contributing Team Member achieve team objectives. Makes productive contributions through Level 1: motivation, talent, Highly Capable Individual knowledge, and skills.
Source: Adapted from J. Given the strategy formulation and implementation. The strategy process consists of two parts: strategy formulation which results from strategy analysis and strategy implementation. Corporate Headquarters Strategy Where to compete?
How to compete? In short, it concerns the execution of strategy. It is helpful cess that concerns the to break down strategy formulation and implementation into three distinct areas—corporate, choice of strategy in business, and functional. Three generic business strat- strategy implementa- egies are available: cost leadership, differentiation, or value innovation. Different corporate and business strategies will require different activities across the the organization, coor- various functions.
Although we generally speak of the firm in an abstract form, individual employees make strategic decisions—whether at the corporate, business, or functional levels. Corpo- rate executives need to decide in which industries, markets, and geographies their com- panies should compete. They need to formulate a strategy that can create synergies across business units that may be quite different, and determine the boundaries of the firm by deciding whether to enter certain industries and markets and whether to sell certain divisions.
They are responsible for setting overarching strategic objectives and allocating scarce resources among different business divisions, monitoring performance, and making adjustments to the overall portfolio of businesses as needed.
Business strategy occurs within strategic business units SBUs , the standalone divisions of a larger conglomerate, each with its own profit-and-loss responsibility. General managers in SBUs must answer business strategy questions relating to how to compete in order to achieve superior performance. Within the guidelines received from corporate headquarters, they formulate an appropriate generic busi- ness strategy, including cost leadership, differentiation, or value inno- vation, in their quest for competitive advantage.
Phelan M. Many observers believe that Brewer alone divisions of a is being groomed to become the next CEO of Starbucks. Each functional manager is responsible for decisions and actions within a single functional area. These decisions aid in the implementation of the business-level strat- egy, made at the level above see Exhibit 2. Facebook, with some 35, employees, is a far-flung internet firm—its various services are available in more than languages and it has offices in more than 30 countries.
Part of the problem was the inferior quality of the mobile app; Zuckerberg had initially built Facebook for the desktop personal computer, not for mobile devices. LO 2.
What do we want to accomplish ultimately? How do we accomplish our goals? What commitments do we make, and what safe guards do we put in place, to act both legally and ethically as we pursue our vision and mission? The vision is the first principle that needs to be defined because it succinctly identifies the primary long-term objective of the organization. Strategic leaders need to begin with the end in mind. This process of creating and implementing a vision begins with the formulation of both business and corporate strategies that enhance the chances of gaining and sustaining competitive advantage.
It ends with the cre- ation of a strategy that enables a firm to implement its vision. This is an iterative process that can be compared to designing and building a house. You need an approved blueprint in place before construction can even begin. The same holds for strategic success; it is first created through strategy formulation based on careful analysis before any actions are taken.
The goal is to provide affordable zero-emission mass-market cars that are the best in class. SpaceX is a spacecraft manufacturer and space transport services company, also founded by Elon Musk, whose inspirational vision is to make human life multi planetary. To achieve this goal, SpaceX aims to make human travel to Mars not only possible but also affordable. Moreover, SpaceX also sees a role in helping establish a self-sustainable human colony on Mars.
An inspiring vision helps employees find meaning in their work and value beyond monetary rewards. It gives them a greater sense of purpose. People have an intrinsic motivation to make the world a better place through their work activities.
Strategy Highlight 2. This statement effectively learning. TFA corp members spend two years teaching in economically disadvantaged communities across the United States.
Although TFA ini- tially targeted college seniors, today it recruits both grad- uates and professionals to help achieve the following TFA vision: One day, all children in this nation will have the opportunity to attain an excellent education.
Approximately on its head the social perception of teaching—she turned 95 percent of all school principals working with TFA mem- a seemingly unattractive, low-status job into a high- bers say they have made significant strides with their stu- prestige, professional opportunity.
Furthermore, a study commissioned by the U. In the first four months after creating TFA, Kopp re- Department of Education found that students being taught ceived more than 2, applicants.
She marketed the by TFA corps members showed significantly higher idea by passing out and posting flyers in college dorms. Of the problems standing between the ideals of a nation I loved total number of applicants that TFA receives annually, ap- and a starkly disappointing reality; who were bound by a proximately 15 percent are accepted; this is roughly equiv- fierce belief that all children, from American Indian reser- alent to the admission rate of highly selective universities vations in South Dakota to Oakland to the Rio Grande such as Northwestern, Cornell, and University of Califor- Valley to the Bronx, should have the opportunity to write nia, Berkeley.
Compared to the national average of people their own stories and fulfill their true potential. For instance, applica- reflection of the population they teach. TFA corps mem- tions in the last few years have dropped an estimated bers receive the same pay as other first-year teachers in 35 percent over three years , causing TFA to fail to meet their respective local school districts.
That vision statements can inspire and motivate employees in the nonprofit sector comes as no surprise. But can for-profit firms inspire and motivate just as well?
The answer is yes; a truly meaningful and inspiring vision—no matter if of a nonprofit or for-profit firm—makes employees feel they are part of something bigger, which can be highly motivating. When employees are highly motivated, firm finan- cial performance can also improve. For example, visionary for-profit companies such as 3M and Walmart provide aspirational ideas that are not exclusively financial; as such, they tend to outperform their competitors over the long run.
Tracking the stock market performance of companies over several decades, strategy scholars found that visionary companies outper- formed their peers by a wide margin. When followed too strictly, it can generate unexpected challenges that can be difficult to overcome.
Do vision statements help firms Evaluate the strategic gain and sustain competitive advantage? It depends. The effectiveness of vision statements implications of product- differs by type. Customer-oriented vision statements allow companies to adapt to changing oriented and customer- environments.
Product-oriented vision statements often constrain this ability. This is because oriented vision customer-oriented vision statements focus employees to think about how best to solve a statements. The company approached Christensen after it had made several changes to its milkshake offerings based on extensive customer feedback but sales failed to improve.
Rather than asking customers what kind of milkshake they wanted, he thought of the prob- lem in a different way. Surprisingly he found that roughly half of the shakes were purchased in the mornings, because customers wanted an easy breakfast to eat in the car and a diversion on long commutes.
A customer focus made finding a solution much easier. You could say that the restaurant company had a product orientation that prevented its executives from seeing unmet customer needs. Product-oriented vision statements focus employees on improving existing products and services without consideration of underlying customer problems to be solved.
Our environments are ever-changing and sometimes seem chaotic. The increased strategic flexibility afforded by customer-oriented vision statements can provide a basis on which companies can build competitive advantage. A product-oriented vision defines a business in terms of a good or service provided. Product-oriented visions tend to force managers to take a more myopic view of the competitive landscape.
Consider the strategic decisions of U. When they started in the s, their short-distance competition was the horse or horse-drawn carriage. There was little long-distance competition e.
Because of their monopoly, especially in long-distance travel, these companies were initially extremely profit- able. Not surprisingly, the early U.
Technological innovations changed the transportation industry dramatically. After the introduction of the automobile in the early s and the commercial jet in the s, consumers had a wider range of choices to meet their long-distance transportation needs. Rail companies were slow to respond; they failed to redefine their business in terms of services provided to the consumer. Had they envisioned themselves as serving the full range of transportation and logistics needs of people and businesses across America a customer-oriented vision , they might have become successful forerunners of modern logistics companies such as FedEx or UPS.
Recently, the railroad companies seem to be learning some lessons: CSX Railroad is now redefining itself as a green-transportation alternative. It claims it can move one ton of freight miles on one gallon of fuel. However, its vision remains product-oriented: to be the safest, most progressive North American railroad.
A customer-oriented vision defines a busi- ness in terms of providing solutions to customer needs. Exhibit 2. In contrast, companies that define themselves based on product-oriented statements e. The lack of an inspiring needs-based vision can cause the long-range problem of failing to adapt to a changing environment.
Customer-oriented visions identify a critical need but leave open the means of how to meet that need. Customer needs may change, and the means of meeting those needs may change with it. The future is unknowable, and innovation is likely to provide new ways to meet needs that we cannot fathom today.
Communication needs have persisted throughout the millennia,. Alibaba: To make it easy to do business anywhere. Customer-Oriented Vision Statements Better World Books: To harness the power of capitalism to bring literacy and opportunity to people around the world. Facebook: To make the world more open and connected. GE: To move, cure, build, and power the world. Nike: To bring inspiration and innovation to every athlete in the world.
SpaceX: To make human life multi planetary. Walmart: To be the best retailer in the hearts and minds of consumers and employees. Warby Parker: To offer designer eyewear at a revolutionary price, while leading the way for socially conscious businesses.
Today, we use connected mobile devices to move information over long distances at the speed of light. The problem to be solved—moving information over long distance—has remained the same, but the technology employed to do this job has changed quite drastically.
Consider how Ford Motor Co. Before Ford entered the market in the early s, people traveled long distances by horse-drawn buggy, horseback, boat, or train. But Henry Ford had a different idea. He succeeded, and the automobile dramatically changed how mobil- ity was achieved. Fast-forward to today: Ford Motor Co. Note that it does not even mention the automobile.
By focusing on the consumer need for personal mobility, Ford is leaving the door open for exactly how it will fulfill that need. In the near future, Ford is likely to provide vehicles powered by alternative energy sources such as elec- tric power or hydrogen. Moreover, vehicles will be driven autonomously, and thus a human driver is no longer needed. With this expected shift to arrive in the near future, automobiles will unlikely be owned personally but rather rides will be provided on demand by ride hail- ing services such as Uber or Lyft.
In the far-reaching future, perhaps Ford will get into the business of individual flying devices. Throughout all of this, its vision would still be relevant and compel its managers to engage in future markets.
Consider Intel Corp. Intel designed the first commercial microprocessor chip in and set the standard for microprocessors in In the internet age, though, the standalone PC as the end-product has become less impor- tant.
Customers want to stream video and share selfies and other pictures online. These activities consume a tremendous amount of computing power. To reflect this shift, Intel in changed its vision to focus on being the preeminent building-block supplier to the internet economy.
Although its product-oriented vision statements did not impede performance or competitive advantage, in Intel fully made the shift to a customer-oriented vision: to delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live. Intel accomplished superior firm performance over decades through continuous adapta- tions to changing market realities.
Intel regularly changed its vision statement after it had accomplished each successful transformation. It is also interesting to note that customer-oriented visions also frequently change over time.
Over the last decade or so, Tesla completed several steps of its initial master plan as detailed in ChapterCase 1 , including providing zero-emission electric power generation options Step 4 , through the acquisition of the SolarCity. Tesla, there- fore, no longer views itself as a car company but as a fully integrated clean-tech company. To reposition Tesla as an integrated clean-tech energy company, in Tesla changed its official name from Tesla Motors to simply Tesla, Inc.
Taken together, empirical research shows that sometimes vision statements and firm performance are associated with one another. A positive relationship between vision state- ments and firm performance is more likely to exist under certain circumstances: The visions are customer-oriented.
People sometimes use the terms vision and mission interchangeably, actually does—the products and services but in the strategy process they differ. A vision begins with the infinitive form of a verb starting with to. As discussed in Strategy Highlight 2. The mission is often introduced with the preposition by. To be effective, firms need to back up their visions and missions with strategic commit- ments, in which the enterprise undertakes credible actions.
Such commitments are costly, long-term oriented, and difficult to reverse. As mentioned in ChapterCase 1, Tesla is investing billions of dollars to equip its car fac- tory in California with cutting-edge robotics and to build the Gigafactory producing lithium- ion batteries in Nevada.
A core values is essential for values statement matters because it provides touchstones for employees to understand the long-term success. It offers bedrock principles that employees at all levels can use to manage complexity and to resolve conflict. A company sion, for both internal whose culture is silent on moral lapses breeds further moral lapses. Over time such a culture conduct and external could result in a preponderance of behaviors that cause the company to ruin its reputation, interactions; it often at the least, or slide into outright legal violations with resultant penalties and punishment, at includes explicit ethical the worst.
Organizational core values are the ethical standards and norms that govern the behavior of individuals within a firm or organization. Strong ethical values have two important func- tions. Second, once the com- dards and norms that pany is pursuing its vision and mission in its quest for competitive advantage, they serve as govern the behavior of guardrails to keep the company on track. For instance, Teach for America TFA has a set of core values that focus on transformational change through team-based leadership, diversity, respect, and humility.
These values guide TFA corp members in their day-to-day decision making. It aids each corp member in making ethical and value-based decisions in teaching environments that can often be quite stressful. One last point about organizational values: Without commitment and involvement from top managers, any statement of values remains merely a public relations exercise. Employ- ees tend to follow values practiced by strategic leaders.
Organizational core values must be lived with integrity, espe- cially by the top management team. Unethical behavior by top managers is like a virus that spreads quickly throughout an entire organization. Take, for example, Volkswagen VW , the largest carmaker by volume worldwide. Although one of its long-time marketing slogans was Truth in Engineering, this did not pre- vent the forced resignation of VW CEO Martin Winterkorn in the fall of —a conse- quence of an emissions cheating scandal dubbed Dieselgate.
Moreover, in , Winterkorn was indicted on fraud and conspiracy charges. When programmed and installed, the software for these devices enabled emissions controls when the vehicle was on a test stand. However, the device disabled emissions controls when the vehicle was in daily driving mode on public roads.
Ironically, the fines alone were much higher than the cost of equipping the diesel engines with the appropriate pollution controls. An effective strategic management process lays the foundation for sustainable competitive advantage.
Strategic leaders design a process to formulate and implement strategy. Here we turn to the process or method by which strategic leaders formu- place by strategic lead- late and implement strategy. When setting the strategy process, strategic leaders rely on ers to formulate and three approaches: implement a strategy, which can lay the foun- 1. Strategic planning. Scenario planning. Strategy as planned emergence. This order also reflects the sequence of development of these approaches: We begin with top-down strategic strategic planning, followed by scenario planning, and then strategy as planned emergence.
The third begins with a data-driven strategy process through which strategic plan but offers a less formal and less stylized approach.
Each approach has its top management strengths and weaknesses, depending on the circumstances under which it is employed. Top executives tie the allocation of the annual corporate budget to the strategic plan and monitor ongoing perfor- mance accordingly. Appropriate organizational structures and controls as well as gov- ernance mechanisms aid in effective implementation.
Top-down strategic planning more often rests on the assumption that we can predict the future from the past. The approach works reasonably well when the environment does not change much. One major shortcoming of the top-down strategic planning approach is that the formulation of strategy is separate from implementation, and thinking about strategy is separate from doing it.
Information flows one way only: from the top down. Another short- coming of the strategic planning approach is that we simply cannot know the future. There are no data. Unforeseen events can make even the most scientifically developed and formal- ized plans obsolete. Under its co-founder and long-time CEO Steve Jobs, Apple was one of the few successful tech companies using a top-down strategic planning process. The company is now trying to incorporate the possibilities of different future scenarios and bottom-up strategic initiatives.
The answer is yes—but they also need to expect that unpredictable events will happen. Strategic planning in a fast-changing environment happens in a fashion similar to the way a fire department plans for a fire. Similar to top- Strategy planning down strategic planning, scenario planning also starts with a top-down approach to the activity in which top strategy process.
In addition, in scenario planning, top management envisions different management envisions different what-if scenarios, to anticipate plausible futures in order to derive strategic responses. For exam- scenarios to anticipate ple, new laws might restrict carbon emissions or expand employee health care.
Demo- plausible futures in graphic shifts may alter the ethnic diversity of a nation; changing tastes or economic order to derive conditions will affect consumer behavior. Technological advances may provide completely strategic responses. How would any of these changes affect a firm, and how should it respond? Scenario planning takes place at both the corporate and business levels of strategy.
Typical scenario planning addresses both optimistic and pessimistic futures. Do essa Ne. To model the scenario-planning approach, place the elements in the Analysis, Formula- tion, Implementation AFI strategy framework in a continuous feedback loop, where analy- sis leads to formulation to implementation and back to analysis. The goal is to create a number of detailed and executable strategic plans. This allows the strategic management process to be more flexible and more effective than the more static strategic planning approach with one master plan.
In the analysis stage, managers brain- storm to identify possible future scenarios. Strategic leaders may also attach probabilities highly likely versus unlikely, or 85 percent likely versus 2 percent likely to different future states. Although strategic leaders often tend to overlook pessimistic future scenarios, it is imper- ative to consider negative scenarios carefully.
They might go through an exercise to derive different strategic plans based on large exchange rate fluctuations of the U. How would Disney compete if the dollar were to appreciate so much as to make visits by foreign tourists to its California and Florida theme parks prohibitively expensive?
Or, they might consider the implications of tariffs being levied in the trade war between the U. The metaphor of a black swan, therefore, describes the high impact of a highly improbable event. In the past, most people assumed that all swans are white, so when they first encoun- tered swans that were black, they were surprised.
In the UPS scenario planning exercise, a terrorist attack or a complete security breach of its IT system are examples of possible black swan events. Such black swan events are consid- high-impact events.
For instance, the BP oil spill was a black swan for many businesses on the Gulf Coast, including the tourism, fishing, and energy industries. The subsequent oil spill continued unabated for over three months. It released an estimated 5 million barrels of crude oil into the Gulf of Mexico, causing the largest environmental disaster in U.
Two BP employees even faced manslaughter charges. In the aftermath of the oil spill, BP faced thousands of claims by many small-business owners in the tourism and seafood industries. These business owners were not powerful individually, and pursuing valid legal claims meant facing protracted and expensive court proceedings.
As a collective organized in a class-action lawsuit, however, they were power- ful. Moreover, their claims were backed by the U. Collec- tively, the small-business owners along the Gulf Coast became powerful BP stakeholders, with a legitimate and urgent claim that needed to be addressed. Even so, this was not the end of the story for BP. What should strategy leaders do about possible future black swan and other unexpected circumstances? In the formulation stage in scenario planning, management teams develop different strategic plans to address possible future scenarios.
This kind of what-if exercise forces managers to develop detailed contingency plans before events occur. Each plan relies on an entire set of analytical tools, which we will introduce in upcoming chapters. What strategic initiatives should we put in place to respond to each respective scenario? By formulating responses to the varying scenarios, managers build a portfolio of future options. They then continue to integrate additional information over time, which in turn influences future decisions.
Finally, managers transform the most viable options into full- fledged, detailed strategic plans that can be activated and executed as needed. The scenarios and planned responses promote strategic flexibility for the organization. It can activate a better suited plan quickly based on careful scenario analysis done earlier.
In the implementation stage, managers execute the dominant strategic plan, the option dominant strategic that top managers decide most closely matches the current reality. If performance current reality and feedback is positive, managers continue to pursue the dominant strategic plan, fine-tuning it which is then executed.
If performance feedback is negative, or if reality changes, managers consider whether to modify further the dominant strategic plan in order to enhance firm perfor- mance or to activate an alternative strategic plan. The circular nature of the scenario-planning model in Exhibit 2. Through this interactive process, managers can adjust and modify their actions as new realities emerge.
The interde- pendence among analysis, formulation, and implementation also enhances organizational learning and flexibility. As such, they lack the flexibility needed for quick and effective response.
Managers engaged in a more formalized approach to the strategy process may also fall prey to an illu- sion of control, which describes an inclination by managers to overestimate their ability to control events. According to critics of strategic planning, to be successful, a strategy should be based on an inspiring vision and not on hard data alone. They advise that strategic leaders should focus on all types of information sources, including soft sources that can generate new insights, such as personal experience, deep domain expertise, or the insights of front-line employees.
The important work, according to this viewpoint, is to synthesize all available input from different internal and external sources into an overall strategic vision. Black swan events can profoundly disrupt businesses and soci- ety. Moreover, the other two approaches to planning just discussed do not account suffi- ciently for the role employees at all levels of the organization may play. In many instances, front-line employees have unique insights based on constant and unfiltered customer feedback that may elude the more removed executives.
Moreover, hugely successful strategic initiatives are occasionally the result of serendipity, or unexpected but pleasant surprises. In , for example, online retailing was nonexistent.
Today, almost all internet users have purchased goods and services online. As a total of all sales, online retailing was about 15 percent in and is expected to double by Given the more or less instant global presence of online retailers,51 Alibaba is emerging as the leading internet-based wholesaler connecting manu- facturers in China to retailers in the West, as well as a direct online retailer. We will be glad if you revert us more.
Cleland David L. Cleland, Lewis R. Project management - wikipedia, the free planning and design; BRM practices influencing project success from a strategic perspective the field of project management. Project managers can.
Strategic design and implementation - Strategic design and implementation Why is the implementation of projects important to strategic planning and the project manager? Strategic planning establishes the. Buy, download and read Project. Project management - safari a listing of project management principles that summarize chapter content in pithy statements of enduring, The Spirit of Strategic Planning; 2.
Cleland, Review There is nothing permanent except change, advised. Cleland, d. McGraw-Hill, New York. Formats and editions of project management : Showing all editions for 'Project management : strategic design and strategic design and implementation. Mcgraw-hill: project management : book Lewis Ireland, David Cleland.
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