An organization that knows its business has to find ways to be effective and at the same time efficient in meeting its targets and goals. If the organization has been in existence for a long time, it means that a process of planning and conducting operations has been put in place. This, however, is not guaranteed and does not come automatically for every organization. Given the fast rate of change in our world today, organizations need to continuously adapt to these changes without losing focus on what really matters for the organization.
As such, it is important for an organization to know its goals and its objectives, the current situation and state of the organization, the external factors that influence its performance and it has to know the different strategies and approaches that can help it achieve its goals given the first three factors. As such, there is a great need for strategic planning. Strategic Planning and Portfolio Management What really is strategic planning? According to Hamel (1996), strategic planning is akin to revolution—in the way that an organization does things as well as in the way that that the organization has set itself up.
Too often, the executives and officers of any organization neglect to take a look at the rest of the organization in projecting the future. A lot of executives tend to rely on age-old principles and foundations in running the organization. More than that, formulating the strategy and the tactics of management in companies is usually in the hands of the “experts” and the “elite” planners in the organization. If this happens, then there is a great danger for the organization to follow the formulas that it has followed for a long time already. Strategic planning is important in the management of the project portfolio of an organization.
In order for a project to be included in the portfolio of an organization, there are certain criteria that have to be met. This process is not dependent on the whim of decision-makers of the organization; otherwise, the portfolio would be nothing but a conglomeration of incoherent and disconnected projects. Effective portfolio selection is a very difficult and complex process. The criteria that are considered in this process usually include economic considerations, the development of the personnel that will work on the project, and the image and branding of the company.
The decision process is not easy because most of the time the decision makers are faced with incomplete information. More than that, they also tend to be pressed by time. These decision-makers therefore have to make do with whatever information that they have and use decision support systems in arriving at their choice of portfolio (Lin & Hsieh, 2004). The decision support system, however, is not enough in selecting and managing the portfolio of the organization, what a lot of people in the corporations do not see is the direct linkage between the strategic planning process and the project portfolio management.
The portfolio selection process, together with the actual project portfolio management can be enhanced by integrating it with the overall strategic planning of the organization. This strategic planning process will help the management align together the different thrusts and objectives of the organization. After all, given deftness in managing the project portfolio of an organization, it can become a source of competitive advantage. Such competitive advantage therefore should be brought into alignment with the strategic planning process of the organization (Liedtka, 2000).
Establishing a Strategic Planning Process If an organization, however, lacks a strategic planning process, it would compromise the management of its portfolios. Also, if an organization has always relied on the traditional view and process of organizational planning, it should change its framework and start integrating strategic planning into its processes. In establishing a strategic planning process, the following pointers should be observed. The organization should identify the importance of the presence of key persons in the organization—from the most senior manager to the file and rank employees.
This way, there is a confluence of voices and points of view, which can add diversity to the planning process. Moreover, the organization should also develop a culture of excellence and innovation because strategic planning involves a breaking away from ineffective practices that hinder the effective performance of the organization (Olsen & Haslett, 2002). In addition to this, the organization should facilitate the development and gathering of new ideas that can help the organization in pursuing strategies that could revolutionize its performance.
The competencies of everyone in the organization should be included (Olsen & Haslett, 2002). This strategic planning process will go a long way in ensuring the long-term viability and even profitability of the organization. It also enables the organization to be streamlined in pursuing its goals. Project Portfolio Management If the organization succeeded in establishing a strategic planning process, it should also look into its project portfolio management (PPM), which has several components that an organization should look into. PPM addresses the effective resource allocation of the organization.
An effective PPM would ensure that the projects being supported by the organization are indeed worth the investment. An effective PPM should include the number of projects that an organization is managing as well as the important descriptions and information of these projects. In addition to this, PPM should contain the costs and projections of costs and income of each project. The scope of the project as well as the time management component of the projects should be included because these would give management an idea of how to balance the number of projects.
In addition to this, the human resource requirement of each project should be included as well as the projected needs of personnel. Moreover, the risks that the projects face should be put on the PPM and the projected issues that may arise as these matters should be known by decision makers of the organization (Dinsmore & Cabanis-Brewin, 2006). Conclusion In these days of constant technological change and uncertainly in the market, it is important for managers and decision-makers to make sure that their investments and their projects are in alignment with the goals of the organization.
No matter how good the project portfolio management of an organization, if these project portfolio is not aligned with the basic objectives of the organization, this portfolio will constitute of misdirected projects and the brand image and concentration of the efforts of the organization will be affected. This is where the strategic planning process enters the picture. If organization would implement this, they can align the different areas of the organization into a coherent set of actions, making it streamlined for efficiency and effectiveness.