the organizational context: strategy, structure, …muji.unila.ac.id/pm/bahan/pinto_pm3_ch02.pdfthe...

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

The Organizational Context:Strategy, Structure, and

Culture

02-01 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 2 Learning ObjectivesAfter completing this chapter, students will be able to:

Understand how effective project management contributes to achieving strategic objectives.

Recognize three components of the corporate strategy model: formulation, implementation, and evaluation.

See the importance of identifying critical project stakeholders and managing them within the context of project development.

Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects.

02-02


Chapter 2 Learning ObjectivesAfter completing this chapter, students will be able to:

Understand how companies can change their structure into a “heavyweight project organization” structure to facilitate effective project management practices.

Identify the characteristics of three forms of project management office (PMO).

Understand key concepts of corporate culture and how cultures are formed.

Recognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.


Projects and Organizational StrategyStrategic management – the science of formulating,

implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Consists of:

Developing vision and mission statements

Formulating, implementing and evaluating

Making cross functional decisions

Achieving objectives

02-04


Projects Reflect Strategy

A firm wishing to… …may have a project

redevelop products or processes to reengineer products or processes.

changes strategic direction or product

portfolio configuration

to create new product lines.

improve cross-organizational

communication & efficiency

to install an enterprise IT system.

Projects are stepping stones of corporate strategy

The firm’s strategic development is a driving forcebehind project development

Some examples include:


Relationship of Strategic Elements

Mission

Objectives

Strategy Goals Programs

Figure 2.202-06

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02-07

“… the business of

supplying system

components to a world-

wide nonresidential

air conditioner market.”

Mission

Objectives

a. 14.5% ROI

b. Non-decreasing dividends

c. Socially-conscious image

Strategies

a. Existing products in existing

markets with image

maintenance

b. Existing products in new

markets (foreign, restricted)

c. New products in existing

markets (significantly improve

image)

Goals

Year 1: 8% ROI, $1 dividend,

maintain image, unit cost

down 5%


improve image


improve image

Year 4: 14% ROI, $1.10 dividend

Programs

1. Product Cost Improvement

Program (PCIP)

2. Image Assessment Program

(IAP)

3. Product Redesign Program

(PRP)

4. Product Development Program

(PDP)

FIGURE 2.3 Illustrating

Alignment Between

Strategic Elements and

Projects

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice HallCopyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Stakeholder ManagementStakeholders are all individuals or groups who have an active

stake in the project and can potentially impact, either positively or negatively, its development. Sets of project stakeholders include:

Internal Stakeholders

• Top management

• Accountant

• Other functional managers

• Project team members

External Stakeholders

• Clients

• Competitors

• Suppliers

• Environmental, political, consumer, and other intervener groups

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Project Stakeholder Relationships

Figure 2.4


Managing Stakeholders

1. Assess the environment

2. Identify the goals of the principal actors

3. Assess your own capabilities

4. Define the problem

5. Develop solutions

6. Test and refine the solutions

02-10


Project Stakeholder Management Cycle

2. Gather information

on stakeholders

7. Implement

stakeholder

management

strategy

4. Determine

stakeholder

strengths and

weaknesses

5. Identify

stakeholder

strategy

6. Predict

stakeholder

behavior

3. Identify

stakeholders’

mission

1. Identify

Stakeholders

Figure 2.5


Organizational StructureConsists of three key elements:

1. Designates formal reporting relationships 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 for effective communication coordination integration across departments

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Forms of Organization Structure

Functional organizations – group people performing similar activities into departments

Project organizations – group people into project teams on temporary assignments

Matrix organizations – create a dual hierarchy in which functions and projects have equal prominence


Functional Organizational Structure

02-14Figure 2.6


Functional Structures

Strengths Weaknesses

1. Firm’s design maintained

2. Fosters development of

in-depth knowledge

3. Standard career paths

4. Project team members

remain connected with

their functional group

1. Functional siloing

2. Lack of customer focus

3. Projects may take longer

4. Projects may be sub-

optimized


Silo Effect Found in Functional Structures

02-16Figure 2.7


Project Organizational Structure

02-17

Figure 2.8


Project StructuresStrengths Weaknesses

1. Project manager sole

authority

2. Improved communication

3. Effective decision-making

4. Creation of project

management experts

5. Rapid response

1. Expensive to set up and

maintain teams

2. Chance of loyalty to the

project rather than the

firm

3. No pool of specific

knowledge

4. Workers unassigned at

project end02-18

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Matrix Organizational Structure

02-19

Figure 2.9


Matrix Structures

Strengths Weaknesses

1. Suited to dynamic

environments

2. Equal emphasis on

project management and

functional efficiency

3. Promotes coordination

across functional units

4. Maximizes scarce

resources

1. Dual hierarchies mean

two bosses

2. Negotiation required in

order to share resources

3. Workers caught between

competing project &

functional demands

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Heavyweight Project Organizations

Organizations can sometimes gain tremendous benefit from creating a fully-dedicated project organization

Lockheed Corporation’s “Skunkworks”

Project manager authority expanded

Functional alignment abandoned in favor of market opportunism

Focus on external customer


Manager’s Perceptions of Effectiveness of Various Structures on Project Success

02-22

Figure 2.10


Project Management OfficesCentralized units that oversee or improve the

management of projects

Resource centers for:

Technical details

Expertise

Repository

Center for excellence


Forms of PMOs Weather station – monitoring and tracking

Control tower – project management is a skill to be protected and supported

Resource pool – maintain and provide a cadre of skilled project professionals

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PMO Control Tower

Performs four functions:

Establishes standards for managing projects

Consults on how to follow these standards

Enforces the standards

Improves the standards


Alternative Levels of Project Offices

02-26

Figure 2.11


Organizational CultureThe unwritten rules of behavior, or norms that are used to

shape and guide behavior, is shared by some subset of organization members and is taught to all new membersof the company.

Unwritten

Rules of behavior

Held by some subset of the organization

Taught to all new members


Key Factors That Affect Culture Development Technology

Environment

Geographical location

Reward systems

Rules and procedures

Key organizational members

Critical incidents

02-28


Culture Affects Project Management

Departmental interaction

Employee commitment to goals

Project planning

Performance evaluation


Summary Understand how effective project management contributes

to achieving strategic objectives.

Recognize three components of the corporate strategy model: formulation, implementation, and evaluation.

See the importance of identifying critical project stakeholders and managing them within the context of project development.

Recognize the strengths and weaknesses of three basic forms of organizational structure and their implications for managing projects.

02-30

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Summary Understand how companies can change their structure into

a “heavyweight project organization” structure to facilitate effective project management practices.

Identify the characteristics of three forms of project management office (PMO).

Understand key concepts of corporate culture and how cultures are formed.

Recognize the positive effects of a supportive organizational culture on project management practices versus those of a culture that works against project management.

02-31 02-32

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