Converting Strategy to Execution With a Project Management Office

It is a time-honored tradition, whether it’s done at a strategic retreat or in the boardroom: The annual credit union strategic planning session. Executives teem with optimism and vision while promising this year will be different. The data would suggest the odds are against all those promises and confidence.

In reality, 90% of them will fail to execute their strategy successfully, according to the requisite strategic read “The Balanced Scorecard.” This should give pause to any leader serious about the future of their credit union. If an organization is prepared and takes strategy seriously, why do most fail in successfully executing their strategy?

A leader must focus on what is controllable, and discount the forces that are out of their control, such as abrupt market changes, black swan events and force majeure. Most strategic failure comes from misapplication of resources and accountability, and most strategic leaders will say that is what initiative owners and key performance indicators are for. To be frank, many of those initiative owners do not have the excess capacity to drive strategy-enabling programs or projects; most already have full-time duties.

While having owners is necessary, it falls short of what is actually needed. The missing layer between strategy and tactics, something that is recognized by the U.S. military, is the operational layer. The operational layer translates and executes strategy. It is the primary resource controller and executor of tactical-level actions to a greater end.

Knowing this, it is easy to understand how a project management office fits into a credit union. The PMO is the business equivalent of that operational layer; it is the execution arm of strategy. The PMO plans and uses programs and projects as tactical-level engagements to enable initiatives. In turn, a PMO enables the overall enterprise strategy.

Most likely, credit union leaders have already embraced practices suggested in books like “The Balanced Scorecard” or the more application-minded “Execution Excellence.” By applying the tools and lessons in those books, ownership and accountability for strategic initiatives are often well practiced. So why are there so many late-in-the-year surprises in the form of serious misses?

Often, those late-in-the-year strategic surprises can be traced to three fundamental problems. The first is choosing strategic initiative owners who do not have the time available to drive these initiatives, or to perform the analysis to break down or decompose these initiatives into programs and projects. Second is failing to report on how those strategic initiatives are performing through the necessary projects, and third is not having resource control performed by an authority with an overall strategic view, like a PMO.

Assuming those strategic initiatives have projects involved – and most should – a PMO can work with those initiative owners to help maintain that principle of accountability. It is not a relationship of one watching the other. Rather, it is a relationship of staying true to what is committed and helping each other when issues arise (pro tip: Issues always arise).

In the instances where a project manager other than the initiative owner is assigned to these projects, the accountability principle is even stronger because it creates a chain of accountability: The project manager to the initiative owner, and both to the overall strategic picture. It is a best practice to keep the chain of accountability where mutual help is beneficial. And revealing problems early is critical; this prevents December from rolling in to uncover that most of the strategic plan was not successfully executed.

Accountability is further enabled when the PMO maintains regular reporting on the progress of the programs and projects that enable the strategic initiatives. These reports provide leadership with a snapshot view of how the organization is performing on the programs and projects necessary to realize the envisioned strategy. There are many ways to report the progress of the organization through the fog of uncertainty, which is converting strategy to execution.

Generally, the best reports are simple, easy to understand, and show the general health of the programs and projects that enable the strategic initiatives. A composite report of “Stoplight” and the Gantt chart are favorites. “Stoplight” gives leaders a quick view of the health of the programs or projects using the common red-amber-green indicators. The Gantt chart shows the estimated duration of effort.

Reporting from an independent and mission-focused PMO is critical for alerting leadership of potential problems, risks and threats to the strategic plan. This allows leaders to reforecast or pivot to changes in the organization or market. Typically, every-other-week reporting is frequent enough at a strategic level. Some organizations may find monthly sufficient. However, less frequent reporting runs the peril of discovering problems far too late.

For organizations that do not have a PMO, resource control can be very difficult. Most will use a decentralized resource control, which frequently bottlenecks in IT. The result is an inefficient use of resources that are often not queuing projects to build off each other. Even worse, this practice will at times result in projects that actively conflict with each other.

Like the operational level practiced in the U.S. military, the PMO acts as a key resource control. The PMO has the strategic vision incorporated in its planning and can see what projects truly are strategy-enabling and which are low-value projects. The PMO’s lateral view allows it to make resource decisions that are impossible to make with decentralized resource control.

Often at the year’s end, the executive team will look back and see little or marginal completion of the overall strategic plan. This is typically the result of not knowing the true capacity of the credit union to execute projects. Over time, the PMO will accumulate data that becomes an input into future strategic planning cycles. With this data, credit union leaders will have a much better picture of what their true organizational throughput is.

Despite all the advantages of a PMO, it does require an organization to have a clear strategic plan that is decomposed into strategic initiatives with owners. Those initiatives become programs or projects, the “what we are doing.” The strategic plan must have metrics and KPIs, which become the “how well we are doing.” The strategic plan must be realistic and leaders need to be patient with it. A strategic plan that is being changed weekly is neither strategic nor a plan.

Credit union leaders frustrated by year-over-year lackluster strategic performance would likely find a PMO to be the exact solution needed for the organization. A PMO allows a credit union leader to turn strategy into execution, identify problems early on and have better visibility on the overall performance of the organization. If all other attempts at strategy without a plan for execution have already failed, a PMO might be the thing your credit union needs to succeed.

Ray K. Ragan is Assistant Vice President of Project Management for Vantage West CU. He can be reached at 520-617-4014 or raymond.ragan@vantagewest.org.