Process-based project prioritization ensures alignment between transformation and strategy. By identifying the strategic impact of processes and maturity of processes, you create a foundation for prioritizing transformation which impacts the most critical areas (high impact, low maturity) and therefore maximizes value delivered.
To execute a strategy successfully, a focus of improvement initiatives on processes with a high impact on the strategy is required. It is not only important to have a good strategy, but also how to execute it (Kirchmer, Franz 2014) through the appropriate business model and the enabling processes (Scheer 2018). The inability of organisations to effectively execute their strategy is a major factor limiting their success. A company only competes with about 15-20% of its processes (Kirchmer, 2017). Identifying these high impact processes allows you to address process transformations and improvements in the right areas that are most important within the context of your current strategy. This ensures that your organisation focuses efforts on the right processes with the greatest impact on the execution of a business strategy. In a research study, The Gartner Group showed that only 13% of organisations reach their yearly strategic goals (Cantara, 2015). Aligning the performance improvement initiatives to the business strategy is key for achieving business targets. Focusing on the high impact processes can yield best results while minimising risk. Results are highly company-specific business processes where this really delivers competitive advantages and processes following industry common practices where this is sufficient (Kirchmer, Franz, 2014). Prioritising the right processes will improve value and success rate of strategic projects, increase the focus of teams around strategic goals, and build a strong competitive advantage.
When evaluating an organisation’s strategic initiatives, it is important to assess the impact of the projects and processes to ensure that you achieve best value for your organisation. You prioritise projects addressing the high impact, low maturity processes to execute systematically on your strategic goals. These are the processes where improvements have the biggest value potential since the process has a high impact on the strategy, but it currently performs only in or even under the industry average (Kirchmer, Franz 2014). Once you have identified the high impact, low maturity processes and related improvement projects, you can develop a roadmap to get your strategy executed without boiling the ocean (Kirchmer, Franz, 2012).
Figure 1: Strategy Management Dashboard
Transparency over the impact of projects, processes, and their alignment with strategy is required. This can be managed through an appropriate dashboard. An example of such a dashboard, is shown in figure 1. It helps stakeholders identify improvement and transformation requirements in the context of a specific business strategy and maintain project portfolios aligned with the execution of this strategy.
In the context of project prioritisation to enable a strategy implementation, the Hoshin Kanri management approach is sometimes mentioned. This is a seven-step procedure used in strategic planning. Strategic goals are communicated throughout the organisation and then turned into action (Jackson, 2006) (Wikipedia 2020). A key component is the “Policy Deployment Matrix” or “X Matrix” that is used to define specific actions, linked to the strategy and related to appropriate metrics. This approach operationalises the strategy well though a hierarchic break down. However, the actions are not positioned in an end-to-end process context but become part of a more general continuous improvement approach. This can lead to the typical issues of traditional improvement approaches that progress in one area leads to issues in another. Therefore, we expand the traditional Hoshin Kanri thinking to come up with a process-led, pragmatic and effective prioritisation approach enabling systematic strategy execution (Benedict, e.a., 2019) (Kirchmer, 2014).
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