Thinking Strategically for Project Managers

So let's get to the basics of what it takes to think strategically. I will focus for how on the teachings of the strategy guru himself, Michael Porter, who wrote "Competitive Strategy" and came up with Porter's "five forces of strategy" which will help you to think more strategically.

What makes this easy for project managers is that Michael Porter has set up a simple visual model - a framework - for strategic analysis that resembles in many ways the Project Management Body of Knowledge (PMBOK) framework.

So let's go back for a moment and look at what the PMBOK is all about. First and foremost, it is a framework. Project Managers around the world over the years have collaborated to break down project management into its essential components to form a framework. Most important, the PMBOK is not prescriptive, as for example PRINCE2 is. It does not tell you what to do, but rather provides a way to see projects in a holistic way, so that you can develop effective project plans and put them into action.

Similar to what the PMBOK is for project management, Michael Porter's "five forces of strategy" can be thought of as a framework for holistically thinking about strategy. I don't consider it to be "prescriptive" but rather a framework.

There are plenty of references out there for Porter's framework, but I'd still like to show you here. But I'd like to focus on explaining it in a way that relates it particularly to projects.

Michael Porter's five forces of strategy

Here are three questions you can ask, relative to your projects, for each of the five forces of strategy illustrated in Porter's framework:

  1. Degree of Rivalry - Does your project enhance your company's position against the competition. For example, a. Does it consolidate the industry in any way, reducing industry concentration in your company's favor? b. Does it promote industry growth such as to increase the size of the market in which your company participates? c. Does it increase cost of a customer who might want to switch from your product to a competitive product?
  2. Supplier Power - Does your project enhance your company's position relative to suppliers? For example, a. Does it change the inputs to processes or products within your company so as to enhance your company's bargaining position with suppliers? b. Does it alter your inputs from suppliers, making them more commodity oriented, thus reducing your dependence on suppliers? c. Does it give your company the ability to economically produce a currently outsourced product (forward integration)?
  3. Buyer Power - Does your project enhance your company's position relative to Buyers? For example, a. Does it reduce your company's cost per unit, or effectively increase the cost to competitive products? b. Does it enhance the value of the product or service to make it less sensitive to price level? c. Does it increase the urgency or desire of buyers to buy your company's product?
  4. Barriers to Entry - Does your project enhance your company's position by making it more difficult for new companies to enter the market? For example, a. Does it reduce your company's product costs in a way that is difficult to match, especially by a new entrant to the market? b. Does it raise the bar on the level of investment required to enter into competition? c. Does it provide easier access to networks for selling or distributing your company's product, raising the bar for your competition?
  5. Threat of Substitutes - - Does your project enhance your company's position by reducing the threat of substitute products and services? For example, a. Does it make buyers less likely to want to consider switching to a competitive product? b. Does it enhance the value proposition to your customers by giving more value relative to the price? c. Does it reduce the relative value to price provided by competitors?

In summary, to begin to develop some strategy skills and strategic analysis muscle, you need a strategy framework that helps you ask meaningful questions that will related your projects to your company's strategy. What questions make the most sense for your project?

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>