Principle: Strategy Alignment

The organization’s project and programmes should be designed in a way that the ultimate objective is to reach what the senior management of the organization plans to achieve. This is the key objective of portfolio management. Strategy alignment exists as one of the principles to establish this.

Investing on the right initiative to reach the organizational strategy is very important. Each initiative (projects and programmes) will result in one or more benefits. At least one benefit from every initiative must be aligned with a strategic objective for the organization. If none of the benefits from a project or a programme is aligned with at least one strategic objective, then the project’s existence needs to be questioned. This principle provides a mechanism to assess each initiative towards strategic alignment.

How is Strategy Alignment Achieved

Strategy alignment is achieved by the following:

• Having a well-documented strategy: The organization’s strategy should be clear to all employees of the firm. Market conditions and the business environment can change constantly. This can cause strategies to change and that cannot be prevented. However, it is important for strategies to be converted to objectives that can be measured and then transformed to targets for each area of the business. There are ready-made tools such as “Balanced Scorecard”, that can be used to achieve this aim.
• Connecting business cases with organizational strategy: Every project or programme must have a business case. The business case usually elaborates the benefits planned by the project. The first step is to identify the benefits of a project (or a programme). It should also indicate how the benefits can enable the organization to reach its strategic goals.

Best Practices to Achieve Strategy Alignment

The following are the best practices for achieving strategy alignment:

• Translating high-level strategy: Strategic objectives of organizations can be set at a very high level. In many cases, it might be extremely difficult to identify a direct link between a project’s benefits and a specific organizational strategy. In such cases, the portfolio office can support the project teams by identifying them or making tools available for project teams to map benefits to strategy. One such tool is “value chain analysis”.
• Strategies that are not quantified: Some organizations tend to create their strategy in qualitative terms that cannot be easily measured. The portfolio management team can support the project teams to assess how benefits align with strategy. It could be a weighting system or a pair-wise comparison. Depending on the situation, the portfolio team can devise a way of linking strategy with benefits.
• Continuous collaboration: This should take place from an early stage between the portfolio office and the strategic planning team is necessary for two-way exchange of information between the two teams. This will help the strategic planning team to understand how goals can be realistically converted to targets and will help the portfolio team to understand future plans at an early stage.
• Regular reviews: The portfolio itself should be regularly reviewed. There are many benefits of doing so. This is also covered in other topics. One of the benefits of regular reviews is that it will help us to regularly review whether the portfolio is aligned with the strategy and will reduce rework, which helps to improve quality.

Written by Inham Hassen

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