The data on the failure rate of strategy execution has been widely reported and is no surprise in most organisations. The specific numbers reported vary, but the effectiveness in implementation of strategic initiatives is typically around 60%.
One organisational response has been the introduction of the Project Management Office (PMO) to support the implementation of the strategic programs. Prima facie, this offers a sensible ‘solution’. The PMO can provide the focus and resources to ensure programs have the essential project disciplines: plans and milestones are created; resources are allocated; progress is measured; and adjustments can be made.
However, a recent BCG report made a number of observations which suggest the PMO’s are not as effective as they could be. They note that “just one third of PMO leaders feel that their PMO has realised its full potential”. But BCG did note that “PMO’s that have bridged the gap between the PMO and senior leaders are able to add real value in supporting the delivery of strategic initiatives”.
Good PMO’s can add value, but only once critical organisational factors are addressed.
There has been plenty of research into why strategy execution fails, and the issues are typically not ‘project management’. The bigger issues that prevent effective strategy execution are more usually: an ineffective senior management team, weak senior management, conflicting priorities, poor communication, poor line leadership or poor coordination across the functions.
At a client workshop data produced by the PMO showed the ‘milestones planned’ versus ‘milestones completed’. While it was possible to interrogate the individual initiatives, I challenged them at a more fundamental level: “You have hit zero milestones on 9 of 15 priority one initiatives. Why?” No amount of PMO activity will address the fundamental issues of alignment and conflicting priorities.
Once these fundamental organisational issues have been addressed, then the PMO has a real opportunity to deliver value. Before that, I suspect the PMO is like fertiliser without water: largely wasted.
How effective is your strategy execution program? Do you do much better than 60% success? What are you doing to address these issues? Deal first with the strategic leadership issues: alignment, clarity, and communication. Implementing a PMO may be a solution for a later time.