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Any project needs to have a purpose which maps directly to one or more facets of the organizational strategy. Indeed, projects are an outgrowth of organizational strategy.
This post provides a way to ensure that strategy and projects are aligned – Balanced Scorecards. The Balanced Scorecard concept is a great common sense and practical way to link organizational strategy to implementation levels, such as projects, through key metrics. One of the key aspects about Balanced Scorecard metrics is that they are not just financial, but also relate to customers, internal business processes, and learning and growth. That’s why it’s called a "balanced" scorecard – because it provides metrics on this “balanced" set of factors.
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4 Balanced Scorecard Factors
Here’s how project managers can adapt the Balanced Scorecard approach for defining success metrics for their projects to ensure they map back to strategy in a meaningful way. Start out with this short list of the four Balanced Scorecard factors, and ponder and answer the questions and considerations for any project:
- Financial - What does financial success on the project mean? Is the project about maximizing near term return, or is it more about investing for the longer term?
- Customer – Does the project create value for a current group of customers, or does it in some way re-position something operationally to service a new group of customers?
- Internal Business Process – Does the project seek to alter or improve a process – such as reduce the number of steps in a manufacturing process?
- Learning and Growth – Does the project alter the way employees develop and gain knowledge and experience?
There will be a general answer for each of these questions – but then the challenge for the project manager will be to identify meaningful and specific metrics that will measure success of the project versus the strategic factors inherent in these four areas of the Balanced Scorecard.
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Speaking of strategy…in Dec 2015, the Project Management Institute (PMI) changed the PDU requirements – requiring PMP’s to take training in each of the three legs of the new “PMI Talent Triangle". One of the legs of the PMI Talent Triangle is “Business Management and Strategy". The PMI Talent Triangle and the “Business Management and Strategy" leg are a result of a formal PMI study – called a Role Delineation Study (RDS) - of the project manager’s evolving role. That study revealed that organizations now strongly emphasis the need for project managers to have skills in the area of “Business Management and Strategy".
Thus it is that part of the role of the project manager is to ensure that, during the project, the project remains true to its strategic origins. While PM responsibilities include delivering the project on time, within budget, and to acceptable quality standards, it is increasingly acknowledged that PMs now need to maintain awareness of the strategic reason for the project, and to ensure that the project remains true to its strategic purpose.
I have introduced the idea that project managers can use the Balanced Scorecard approach to maintain the linkage between strategy and their projects. I have provided the four balanced measurement categories that PMs can use, and suggest that PMs think about these four areas for their projects and identify specific metrics for each of the Balanced Scorecard areas for their projects. By so doing, PM’s will ensure that their projects map to strategy as a key measurement of project success, in addition to meeting budget, schedule, and quality requirements.
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About the Author: John is a versatile, results-driven technologist and manager and is recognized for leveraging his broad business experience, technical knowledge and analytical skills to drive change and help organizations achieve their strategic objectives. John loves sharing ideas through his articles and is eager to hear feedback. John is also the President of PMTrainingOnline.com, which provides project management training for certification and PDUs 24x7.