How PPM can help create a competitive advantage

by Francesco Pecoraro

The strategy of a company is defined by the way an organization decides to compete in its own market. Business strategy gives direction to the organization. To create a competitive advantage and beat the competition, companies need to recognize the competencies they need to reach those goals. Developing strategic objectives and financial goals are critical elements of strategy. At the same time, researchers report that many organizations find implementing their strategies very challenging. Most of the time, the lack of ability to successfully execute business strategy depends on inadequate collaboration, communication, and involvement across projects and business units.

Strategy execution and PPM

One of the challenges that companies often have to face is that strategy execution is measured financially and not by considering the objectives of the organization. Thanks to PPM, companies can look beyond just financial indicators. In fact, PPM helps companies align project portfolios with organizational strategy, clarifying why resources are allocated, and in doing so, it helps reduce conflicts between managers that compete for resources.

In addition, portfolio steering allows organizations to change and adapt according to the information that comes from projects and the business environment. Lastly, the creation of lessons learned is critical to allow companies to improve future projects and business strategies.

Proactive PPM

As we mentioned, PPM, along with project management, are crucial capabilities for companies that want to create a competitive advantage. So, even if effective PPM can create a competitive advantage, by simply establishing a PPM process does not bring business success to the company.

The best way to align financial goals with business strategy is proactive project portfolio management. PPM helps companies create a competitive advantage by incorporating a complete framework for managing business strategy. Companies that have PPM in place can execute their strategies in a dynamic environment; in fact, they can regularly evaluate their portfolios for strategic fit and also new opportunities.

Studies report that companies that have a high level of portfolio management also have a higher level of strategy alignment. To be successful in implementing PPM, it is more important to have a strategic alignment than choosing and prioritizing the right projects. Alignment within an organization allows us to spread the information across business units and projects. In addition, it also provides senior managers with useful information about project correlations and their connection to the goals of the organization in order to allocate resources productively.

Organizational structure

PPM is not only useful for selecting projects, but it also helps shape the structure of the organization. It has been proven that companies that align strategy and structure with information requirements are more efficient in implementing their strategies. So, alignment within the organization goes beyond just effective strategy execution, but it also has a significant impact on the organizational structure.

Organizational structures that embrace PPM practice differ from one company to the other. For instance, companies that have a strong project management culture utilize a project management office (PMO) or a portfolio project management office (PPMO) to help handle the PPM process. These roles are extremely important for strategy success. In general, aligning strategy down to the project level is critically important. The overall strategic orientation of an organization plays a critical role in the success of the portfolio. 

Keep in mind

It is important to remember that organizations often fail to understand how their cultures align with their strategic objectives.

Companies can create a competitive advantage and improve project success by involving stakeholders when aligning project management. A clear definition of the roles within the company is important for engaging stakeholders in the PPM process. At the same time, the structure and strategy of an organization determines how the company is aligned. 

Experts have shown that strategic alignment needs adjustment and learning over time in order to maintain fit. Finally, successful PPM requires communication and collaboration and a culture that supports transparency and information sharing (Kim & David, 2007).


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