How Do You Measure Your Project's Strategic Contribution?

Assessing Your Strategic Contribution Assessment Process

‘Alignment’ Is Inadequate

Measuring 'strategic alignment' (as most organizations do) is wholly inadequate. You can ‘align’ yourself to a cause by believing in it and talking about but actually doing nothing about it. ‘Alignment’ is a very weak word with a weak action commitment.

‘Aligning’ your project to a strategy is worthless. In fact, it is worse than worthless as it is actually dangerous, as it gives the impression that you are measuring strategic contribution when you are only measuring some level of ‘alignment’.

This inadequate measurement is made worse by projects ‘aligning’ to high-level strategic statements that are so general that it would be hard to define a project that did not ‘align’ to at least one strategy.

Measuring Contribution

You need to measure each project's ‘strategic contribution’ at the detail level. You need to measure:

How and how much does each project contribute to each strategic imperative that will deliver the strategy?

Let us explain...

Strategic Imperatives

The level of contribution needs to be scored at the ‘strategic imperative’ level.

Strategic imperatives are the drivers that will deliver the strategy. "Reducing operating costs" is to high a level, too vague to be a useful basis for assessing strategic contribution.

However, “Reductions in material costs” may be an imperative for one organization whereas “Reductions in SG&A costs” may be an imperative for another organization’s strategy. The strategic imperatives, like the strategy itself, are unique for each organization.

An average size organization can have 20-30 strategic imperatives. A large organization will have over 40. Each imperative is weighted (on a scale of 1-to-5) in terms of its relative importance to the delivery of the strategy.

To be claimed, the project's contribution needs to be intentional. The assertion that your project may impact some strategic imperative is not good enough; any strategic contribution claimed (and justified) must be an intended impact. It is amazing how inventive some project and governance teams can get when claiming strategic contributions that ‘may’ occur.

Level Of Contribution

The measurement of the strategic contribution needs to differentiate on a consistent basis between a marginal and massive contribution. So, for each strategic imperative, a set of contribution levels (on a scale of 0-to-3) need to be defined so that diverse projects’ contributions will be comparable. This is really quite simple (but very business specific).

For example, if “Reduction in material costs” is a strategic imperative then it could be that:

Simple, easy to understand and easy to normalize if people start over-estimating the value of their impacts.

Tracking Your Strategy's Execution

Now it may seem like I am describing an alien land as currently they merely ‘tick a box’ to align their project to a strategy statement and move on. (This ‘tick a box’ is the standard of strategic contribution the brand name consultancies implement and use.)

Apart from the vagueness of merely ticking 'alignment', this approach fails the other requirement of a strategic contribution assessment tool (SAT), to enable the subsequent tracking of the strategy’s execution at a level that is meaningful.

When you score each project’s strategic contribution at the strategic imperative level, where each imperative is organized under its respective strategy, you can immediately identify which strategies are being over or under delivered.

A SAT puts you in control of your strategy’s execution AND immediately identifies strategically irrelevant projects.

Strategic Contribution Assessment

Does your strategic contribution process

1. Measure ‘contribution’ not ‘alignment’?

2. Identify and weight between 20 and 40 ‘strategic imperatives’ that will cumulatively deliver your strategy?

3. Measure strategic contribution at the detailed strategic imperative level?

4. Measure each project's contribution to each imperative? (NB Many contributions will be '0')

5. Cull peripheral strategic contributions that the project is not set up to deliver?

6. Differentiate between the different levels of contribution on a consistent, comparable basis?

7. Enable your strategy’s execution to be clearly and easily tracked and reported?

In Conclusion

Any answers of “No” or “Not really” or “Not consistently” point to a deficient process that is allowing your organization to waste money and misdirect funds and resources. This can be extremely expensive in terms of foregone future profitability and reduced shareholder value as well as compromised operations and strategy execution.