The Organizational Context: Strategy, Structure, and Culture

Strategic management: the science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.^① Consists of:

• Developing vision and mission statements
• Formulating, implementing, and evaluating
• Making cross-functional decisions
• Achieving objectives^②

Organizations and project teams cannot operate in ways that ignore the external effects of their decisions. One way to understand the relationship of project managers and their projects to the rest of the organization is through employing stakeholder analysis. Stakeholder analysis is a useful tool for demonstrating some of the seemingly irresolvable conflicts^① that occur through the planned creation and introduction of new projects. Project stakeholders are defined as all individuals or groups who have an active stake in the project and can potentially impact, either positively or negatively, its development.^②

Consists of three key elements:

1. Designates formal reporting relationships, Who reports to whom?
   • number of levels in the hierarchy
   • span of control
2. Identifies groupings of
   • individuals into departments
   • departments into the total organization
3. Design of systems to ensure
   • effective communication
   • coordination
   • integration of effort across departments^①

• Functional organizations — group people performing similar activities into departments^①
• Project organizations — group people into project teams on temporary assignments
• Matrix organizations — create a dual hierarchy in which functions and projects have equal prominence^②

Organizations can sometimes gain tremendous benefit from creating a fully dedicated project organization. Lockheed Corporation’s “ Skunk works ” model (small autonomous team of highly skilled hand-picked individuals given complete freedom, the project manager is given full authority, status, and responsibility)^①

• Project manager authority expanded
• Functional alignment abandoned in favor of market opportunism, direct reporting to the highest executive levels
• Focus on external customer^②

Centralized units that oversee or improve the management of projects Resource centers for:

• Technical details
• Expertise
• Repository
• Center for excellence^①

Using a PMO as a resource center shifts some of the burden for PM activities (activity scheduling, resource allocation, monitoring, control processes, etc.) from the project manager to a support staff that is dedicated to providing this assistance^②

Three forms of PMOs, varying with degrees of control and influence include:

• Supportive, low control; consultative and provide PM resources and training^①
• Controlling, moderate control; requires compliance to adopted PM standards/processes
• Directive, high control; directly manages projects^②

In addition to the forms of PMO and varying levels of control, there are three models of PMOs with various purposes for companies:

• Weather station — the PMO is typically used only as a monitoring and tracking device (management wants to keep an eye on the status of the projects without directly attempting to influence or control them)^①
• Control tower — project management is a skill to be protected and supported (focus on improving methodology and practices and help PM apply them)^②
• Resource pool — maintain and provide a cadre of skilled project professionals (supplying project managers and other skilled professionals to the company’s projects )^③

• The third key contextual variable in how projects are managed effectively is that of organizational culture
• Definition of culture: “ organization’s culture refers to the unwritten rules of behavior, or norms that are used to shape and guide behavior, that are shared by some subset of organizational members and that are taught to all new members of the company”^①
  • Unwritten (are often not written down)
  • Rules of behavior (guidelines as to how best to react to these events)
  • Held by some subset of the organization ( may or may not be companywide )
  • Taught to all new members (New members of an organization pick up the behaviors as they observe others engaging in them)^②
• Ex: Company X has a strong supportive culture that emphasizes and rewards positive collaboration between functional groups.

Culture can affect project management in at least four ways:

• Departmental interaction: cultures that favor active cooperation between functional groups and new projects are much more successful than those that adopt a disinterested or even adversarial relationship^①
• Employee commitment to goals: A culture that promotes employee commitment and self-sacrifice through working extra hours or on multiple tasks is much more successful than a culture in which the unwritten rules seem to imply that there is nothing wrong with simply going through the motions, provided you don’t get caught.
• Project planning: activity estimation is an imprecise process, it is common for team members to give wider estimates to give themselves as much time as possible. These people are often responding to a culture that reinforces the idea that it is better to engage in poor estimation and project planning than to be late. In the contrary: Culture of trust -> honest assessments.^②
• Performance evaluation: if organizations tacitly support caution and playing it safe, their project management approaches will equally reflect this principle