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Projects and Strategy

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Close the Gap Between Projects and Strategy by Lauren Keller Johnson
If your company is like most, it’s tackling more and more projects that consume expanding levels of precious resources but fail to generate commensurate business results. In Connecting the Dots: Aligning Projects with Objectives in Unpredictable Times (Harvard Business School Press, 2003), Cathleen Benko and F. Warren McFarlan maintain that U.S. companies spend roughly $2.3 trillion on projects—defined as efforts that have a discrete beginning, end, and deliverable— every year. And yet the vast majority of companies don’t have a strategy for managing their projects in a way that captures their full value and effectively maps them to the needs of the organization.
The consequence? “Close to $1 trillion in underperforming investments in the United States alone over the last five years,” the authors note. What explains this phenomenon? Companies are launching an increasingly wider range of project types as well as a far higher number of projects than in previous decades, according to Benko.
And so now the pressure is on. Companies must rein in and give focus to their ever more disparate arrays of projects, Benko and McFarlan maintain, by managing them in portfolios that both recognize the relationships among distinct projects and align them to the corporate strategy. Some companies are already finding success in doing so.

The need for alignment

The proliferation of projects in companies has been both driven and complicated by an increasing reliance on intangible assets such as technology, information flows, and relationships, and a decreasing reliance on land, minerals, and other tangible goods. Today’s projects include not only new product and channel initiatives but also efforts to improve processes (Six Sigma, for example) and drive major cultural change. In addition, more companies are

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