Project Portfolio Management (PPM) helps companies select the right projects that align with their strategies to achieve their objectives. Thanks to PPM, companies are able to allocate the resources to support those projects. Even if PPM is usually used to improve project success probability and to achieve success, companies also need to consider the connection between PPM and organizational culture. Alagaraja and Shuck (2015) argue that companies can improve organizational culture by improving stakeholder involvement and strategy alignment.
Before moving on, we need to consider that to create long-term value, companies need to continually look for a competitive advantage within their field. A competitive advantage can be established when a company develops a mix of attributes that allow it to perform better than competitors (Singh, 2012). Culture, performance, and strategy are all interconnected factors in a company’s research for competitive advantage (Vele, 2013). It is important to take into account that competitors influence how companies behave with regards to performance, culture, innovation, and strategy implementation (Porter, 1985). Companies that want to improve their performance need to allocate resources in a way that drives the competitive strategy of the organization.
The way stakeholders are involved in an organization determines how resources are allocated and strategy is executed. Even though companies depend on stakeholders to execute strategy, 95% of employees either do not understand or are not informed about organizational strategy (Kaplan & Norton, 2005). In addition, at the project level, a misalignment between project execution and company strategy determines the failure of 30 percent of projects (Miller, 2002). What often happens is that organizations do not establish the link between the project plan and business strategy (Patanakul & Shenhar, 2011). As a result, this can produce a misalignment between company objectives and organizational culture. In fact, organizational culture plays a significant role in organizational performance both in terms of effectiveness and financial performance (Booth & Hamer, 2009).
Studies report that involved employees perform better than those who are not involved. When an employee finds his/her values and purpose align with those of the company, passion, and potential are unleashed.
Organizational leaders have among their duties the responsibility, and at the same time, the opportunity to manage stakeholders, but unfortunately, these leaders are often not able to manage stakeholders effectively due to the absence of a strategic plan for involving stakeholders within the overall organizational strategy. Luckily, Project Portfolio Management gives organizational leaders a strategic approach to stakeholder engagement. PPM can be seen as an effective approach to managing stakeholders in an organization. It is important to note that to obtain a higher level of stakeholder engagement and a higher probability of success; it is worthwhile to use PPM to include stakeholders in both strategy making and execution.
In any organization, strategy plays an important role because it gives companies direction and purpose. Managing the strategy of the organization gives leaders the best opportunity to meet the strategic goals. To achieve the goals of the company, leaders have to link strategy with process, people, culture, and systems.
PPM provides executives with an effective framework to manage company strategy. Many organizations that have created a high level of strategy alignment by using PPM. PPM is mainly used to select the right projects that fit with the strategy of the organization; in addition, it also allows information to be shared across the organization to business units and project teams by providing a clear understanding of the process for strategic decisions and role clarity.
So, if companies want to increase their chance of success, they have to link organizational strategy to organizational culture. Alagaraja (2013) highlights that alignment across the organization is useful in better connecting stakeholders with the strategy of the organization.
Keep in mind
PPM is usually used to improve project success probability by selecting the right projects that fit with the strategy of the organization. At the same time, to achieve success, companies also need to consider the connection between PPM and organizational culture. PPM gives organizational leaders a strategic approach to stakeholder engagement, and it also allows information to be shared across the organization to business units and project teams.
Francesco Pecoraro, PMP, PSM, PSPO, SSYB, SSGB, SSBB, CL, CC is the founder of francescopecoraro.com where he shares useful and practical information about project management, program management, project portfolio management, and agile methodology. Francesco has extensive experience as a project, program and portfolio manager, project management officer (PMO), digital transformation and strategic consultant. He is also considered a communication, public speaking, and leadership expert. Francesco writes about project methodologies, program, and portfolio management.