The use of project portfolios in effective strategy execution to improve business value

Abstract

A business exists to create value for its stakeholders. The desired value is articulated and realised through the implementation of the corporate strategy. It was observed and identified as a gap from the review of the literature that there is a need for a tested model on how to use project portfolios in effective strategy execution to realise business value. Furthermore the intent was to also identify salient factors that contribute to the realisation of the corporate strategy through the use of project portfolios. The objective of the research was to gain insight on how project portfolios are used in effective strategy execution to improve the value of a business. The primary question was “How could companies use project portfolios to effectively implement and execute corporate strategy to create business value?” The study sought to answer the following sub-questions: Sub-question 1: What are the reasons why companies do not execute corporate strategy effectively to create business value? Sub-question 2: What are salient factors that enable effective strategy execution through project portfolios that enable an enterprise to create value for its stakeholders? Sub-question 3: How could project portfolios be used to drive the effective realisation of strategic objectives? The research followed a multiple case study method in order to conduct an exploratory and descriptive study that involves the use of qualitative data to formulate a view on how sustainable businesses execute their strategy effectively through project portfolios. Four case organisations were explored which use project portfolios to execute their corporate strategy. Eighteen executives and senior managers were interviewed during the study. Their roles focused primarily on strategy execution and management of project portfolios. The case organisations are in the freight, research and development, mining and telecommunications industries. The review of the literature indicated that organisations need a framework that incorporates project portfolios in strategy execution and implementation in order to realise business value in response to the first sub-question of the research study. The first research question sought to understand why companies do not execute corporate strategy effectively to create business value and the insights gained from the review of the literature indicated that there was a lack of an understanding on how to implement a strategy. The tested conceptual model provides a defined, structured and controlled manner in which strategy could be executed effectively by using project portfolios. The analysis of the data gathered during the research resulted in twenty five (25) factors that are key in the execution of strategy through project portfolios to realise business value, which is in response to the second research question. A proposed conceptual model was tested against four case organisations during the study and it was found that all four case organisations applied a similar approach in executing corporate strategy through project portfolios to realise business value. However, the extent to which the proposed conceptual model was applied differed from one case organisation to the other. It was observed that the case organisations applied an approach that is aligned to the proposed conceptual model in using project portfolios to execute corporate strategy to realise business value. The results of the study showed the importance of a link from corporate strategy to results obtained from the execution of strategic objectives attained through project portfolios. The key link was a flow-through from the corporate strategy, through the strategic objectives, the measurable targets (KPIs), to the projects used to deliver the strategic objectives. The performance measured by the business enabled organisations to determine whether they are achieving expected results or not. It was noted that projects create a controlled environment through which the corporate strategy is executed. Business value was self-defined by the respondents since it meant different things to different stakeholders. It is also recommended that future research should explore and define business value since it is a concept that is central to how organisations measure performance. Furthermore, future work on salient factors for effective strategy execution through project portfolios should also consider the degree to which certain factors are key to organisations in a particular industry in order to help business leaders to hone-in their efforts. It is also recommended that future research should consider developing a strategy execution maturity model to enable organisations to assess their level of maturity in strategy execution through the use of project portfolios as the corporate strategy evolves over time.