Business Issues  



Organizational Competence for Successful Execution of Strategy:
In Search of Higher Stock Valuation, Increased Revenue Growth, Profitability and Liquidity

By Professor K C Chan


Introduction
The search for equipping senior executives with effective managerial competence through training and development is still on. This is especially critical in view of the findings of Pfeffer and Fong (2002) at Stanford University. The key findings are summarised below:
  • Not much that is taught in business schools is relevant for the corporate workplace.
  • MBA students are actually paying for the prestigious names to add to their resumes and the opportunity to network with the like-minded people.
  • Employers who hired brand-name MBA graduates did so on the basis of the school’s quality, not whether the students had acquired specific skills or knowledge with their degrees.
  • A student’s employment prospects are unrelated to his/her grades.
  • A higher degree does not necessarily lead to higher salaries.
  • Much of the US business school curriculum has remained unchanged since the 1960s.
  • Employees who receive short in-house training on business basics perform as well, if not better, than the business school graduates.
Obviously, this report, which was published in the Academy of Management Learning and Education Journal in September 2002, is causing much alarm and concern in both the international academia communities and in the global organizations.

Mintzberg and Gosling (2002) advocated that management should be taught only to people who already have management experience. It must offer an opportunity for reflection as well as learning. They examined the careers of 19 Harvard MBAs who had made it to the Top 40 of America’s 100 largest companies. They found that 10 subsequently ran into big difficulties. Generally, their companies went bust or they lost their job.

Stanford and Harvard have identified project management as a common language for work which is essential in developing effective managerial competence of a senior executive (Pfeffer and Sutton, 1999; Bowen, et al, 1994). This article examines the imperative of project management as the core competence of managers. And, more significantly, how integrated project management (IPM) is fast becoming the organizational capability for the successful execution of strategy.

Mission Critical Objective
Successful execution of a coherent strategy requires a common language for work to promote understanding and shared meaning throughout the organisation. Integrated Project Management (IPM) seeks to achieve common understanding because all strategies are converted into programs and projects as they cascade down the organisation for effective and efficient implementation.

IPM encompasses four segments. See below:


For Leading the Project Environment, this is the Awareness phase, the Sponsor’s commitment is crucial prior to project kick-off. After the rollout of a few key projects resulting in significant cost benefits, it is essential to have a Program Management Office (PMO). The main purpose of a PMO is to train, develop and maintain quality standards of Project Integration Managers, Project Managers and Project Support Officers (PSO). The outcome of this Alignment phase will result in the ability to execute.

If the company decides to adopt IPM as a key organizational capability, it is necessary to look into the ability to execute and the speed of execution. Both ability and speed cannot be compromised. Every department is using IPM as a driver of performance, leading to organizational mastery. It does take time to build the quality standards, similar to the PMO. But, over time and with the rigorous co-piloting of projects between PMO and the respective departments, the necessary IPM knowledge and skills will be internalised throughout the organization. This is the Action phase.

The final Assurance phase of the IPM endeavour is to become the Centre of Business Excellence in the successful execution of strategy. This means that IPM competence is applied with other core competences (e.g. supply chain management, business relationship management, team leadership) to exceed customers’ satisfaction while at the same time attaining company’s business results, i.e. revenue growth, profitability and liquidity.

Business Endeavour
IPM focuses on business endeavour by being faster (speed), better (quality) and cheaper (cost) than the competition. Strategic programs for integrated project management must get commitment from Top Management and senior executives based on clarity in execution to ensure that the project is strategically acceptable, financially sensible and tactically viable; the benefits accrued are enhancement in productivity, profitability and predictability, respectively. See below:


Successful Execution of Strategy
The components of IPM can be analysed as follows: Integrated means the existence of a tool / technology for speed of execution to attain excellence in communication, effective coordination and efficient connection. Project means the process and knowledge of best practice for ability to execute, thereby achieving time, quality and cost advantages resulting in being faster, better and cheaper than the competition. Management means having the right people to manage the project with the common language of work, where everyone participates as a team player, resulting in the successful execution of strategy through clarity in planning, organizing and controlling. This is only possible if the organizational culture is performance driven. Thus, IPM will enhance the organizational capability to perform, i.e. securing the business results of improved revenue growth, profitability and liquidity. See below:


PROFESSOR DR K C CHAN
is a practice professor and stragetic project management and International Business Consultant.