1.3 The project environment: strategic planning
Projects have to be planned. Indeed, an organisation must plan to have projects. By planning we mean the process of formulating an organised method of achieving something which is to be done (such as a project) or of proceeding. Projects do not take place in isolation: they have an environment which gives birth to them and with which they interact for the rest of their lives.
The environment of the organisation
An early step in planning is the gathering of information about the environment in which an organisation operates – the market, the economy, the technology and the legislative and regulatory climate. Knowing the market implies understanding the present market an organisation and its products have, and forecasting markets for new or revised products and services.
A common starting point for strategic planning is for a group of people to prepare a mission statement for itself. The mission statement should be a brief description of what the group (which could be the entire organisation or some part of it) believes it has been organised to do. Ideally, a single sentence should encapsulate what the group believes it exists to do. Certainly it should be no more than a short paragraph. Longer statements tend to become confused and confusing, too long to read and too long to remember. It should be succinct enough to be recalled readily, and compatible with the activities the group is actually doing or is contemplating doing. You may be familiar with the following mission statement:
The Open University is open to people, places, methods and ideas. It promotes educational opportunity and social justice by providing high-quality university education to all who wish to realise their ambitions and fulfil their potential.
Through academic research, pedagogic innovation and collaborative partnership, it seeks to be a world leader in the design, content and delivery of supported open and distance learning.
There is some feeling that mission statements are influenced by fashion and of little value. This may be because many published mission statements in the past have sounded too much like public relations exercises with no substance behind them or were long and complicated. However, if they are properly written in the right spirit, they have genuine value, focusing attention on what an organisation thinks it is or ought to be doing. The good mission statement creates boundaries within which objectives can be set. For example, if it were suggested that The Open University might undertake the manufacture of computers for students and others in order to increase its income, it should be immediately obvious that this activity would fall well outside the boundaries set by its mission statement. This should signal that the proposed objective is beyond the organisation’s likely available expertise, experience and infrastructure. To attempt to meet such an objective would require major organisational change.
A mission statement is effective when it encapsulates the core values of an organisation concisely and clearly, allowing immediate comparison with any suggestions for activities. But more than a mission statement is required in order to identify what the objectives of the organisation are.
Change from above
Strategic planning sets the direction and route for an organisation at a macro level. Within business organisations it is the normal function of a board of directors to formulate the strategic plans. They will do this at least to maintain the organisation’s place in the market and to meet the requirements of their customers, and will also consider strategic plans in the search for new growth and new business. In other types of organisation, such as campaigning groups or charitable organisations or government, a comparable responsible body will exist: in the case of charities and campaigning groups, there are normally boards of trustees. These bodies formulate strategic plans for their organisation in response to changes in their environments or changes in legislation. The result of this activity is, in the end, projects because projects are one of the major ways in which an organisation can effect change. The role of a project is to move from a starting place to an end point which corresponds to a particular goal that has been taken from the strategic plans of the organisation.
Change from below and from outside
Change can also be prompted from within the organisation. A bright idea from a member of staff that appears to offer the organisation something valuable (more diversity, new income, improved ability to survive, a need among customers or users hitherto unperceived, improved quality of product or service) can develop into a project to realise that idea.
A worker at a catering firm noticed that there was no place to obtain lunch on the large industrial estate where the firm was located. They realised that many workers on the estate were having either to bring packed lunches or to travel some distance to eat, so they suggested to the management that the catering firm could open a small restaurant with a takeaway food bar in a little used area of their premises, thereby increasing their business. The resulting restaurant drew on existing space, expertise and staff, and brought in new income, which was particularly useful because all the trade was in cash and this improved cash flow, which in turn helped improve the firm’s ability to survive.
Planning activities for some types of organisation will involve a simultaneous flow of ideas from the top down and from the bottom up to generate ideas which can become organisational objectives for change.
Change often comes from outside the organisation: responses to changes in legislation might be required, work may be needed to meet a new standard, or a potential customer may approach a firm with an idea that will require change.
In the example above the worker was employed by a catering firm. What is the significance of this in the context of the preceding discussion?
It is more likely that such a suggestion will fit with the mission of a catering firm but not with the mission of other types of organisation.
The ways in which strategic planning takes place in an organisation are as varied as the organisations themselves. Planning may be conducted autocratically, through orders from the board of directors; it may be conducted consensually by wide consultation and discussion throughout an organisation; it may be proactive or reactive; it may be a mixture of these things – real life, including that encompassed by planning in organisations, is less well defined, less clear-cut and much messier than descriptions of it would lead one to believe.
In what follows we suggest some ways of planning and some tools for doing so. Our descriptions are not exhaustive. They suggest ways of proceeding which are not the only ways and which will not fit easily into all organisational cultures. We hope that what we suggest provides an orderly way to progress from an organisation’s present situation towards a future that is more the result of planning than of whim or chance. What we suggest is also a process that can be carried out in top-down fashion, starting with the highest levels of an organisation and moving downwards through divisions, groups and even to the team level.
The decision making involved in strategic planning is not trivial: there are a number of tools available to help the organisation to come to an informed decision about change. Once the questions shown in Figure 1 have been explored and their outcomes drawn up at the level of the whole organisation, they are passed downwards: a strategic plan at organisational level becomes an objective at the divisional level. The division then asks the questions in the figure again, develops the outcomes and passes the results downwards. This way of planning can also work where there is no ‘downwards’ – for example in a cooperative where groups within the organisation may use these tools and then negotiate with other peer groups.
Strengths, weaknesses, opportunities, threats
One of the commonest analytical tools is SWOT analysis (SWOT is an acronym for strengths, weaknesses, opportunities, threats). This form of analysis provides a structure for studying both the internal and the external environments of an organisation. The organisation’s strengths, weaknesses, opportunities and threats will be documented, investigated and discussed. The strengths and weaknesses generally arise in an organisation’s internal environment (present products or projects, customers, staff, morale, information flows) and the opportunities and threats arise in the organisation’s external environment (competition, economic climate, potential market, legislation). There are commonly used acronyms to help categorise these external factors. PESTLE stands for political, economic, social, technological, legal and environmental. STEEP is a rearranged form, which includes legal factors under political, and a shortened form is known as PEST (or STEP), which stands for political, environmental, social and technological. PESTLE is probably the most useful (see, for example, Harpham, 2000).
Example 3 shows the results of SWOT analysis that might be done by a company that makes computing equipment for industrial use.
- Our company has an established customer base and a growing reputation.
- Our business is currently economically viable and profitable.
- We now have an established group of salespeople, committed to our products and experienced with the products and with selling them.
- Our new wireless data collector, soon to be released on the market, is in an exciting area.
- Income is still too low to enable research and development into new areas related to our business.
- The products to date have been marketed solely for industrial needs and we have not explored other potential markets.
- Some products have low sales.
- The process of developing new products or improving existing products is lengthy, and we do not respond to customer requests quickly enough at present.
- Some products are now dated.
- Our unrelated product lines hinder sales.
- It is difficult to recruit industrial design personnel with appropriate skills and knowledge of our specialised needs.
- Significant numbers of our products have a commercial market as well as an industrial market.
- There are new areas related to our present product lines, ripe for exploration and development.
- There is customer interest in products related to our present lines but which we do not currently produce.
- Competitors might copy and modify our designs to produce an improved or cheaper product.
- We may face legal action due to the operational safety of some of our products.
- Our products are sold all over the world. So, we may be exposed to the politics in different countries.
Such an analysis can be made, not only for a whole organisation, but for any part of an organisation. A group concerned with a single product can, for example, carry out a SWOT analysis on that product and the way it is produced and marketed. One of the problems of a SWOT analysis is that it can be very subjective. For example, two people in the same company are not likely to produce the same internal and external factors (unless, of course, they get together and negotiate). So, you do have to be realistic about any analysis, which is, after all, just the first step in making a plan for action. A SWOT analysis is best carried out by a team of people who will tend to provide a more balanced view than an individual.
Having studied such analyses a board of directors or trustees may use them to decide how to emphasise or build on an organisation’s strengths, address its weaknesses, take advantage of its opportunities and avoid or reduce its threats. A project or projects (in the form of a programme or a portfolio) may then arise as a result. Although the need for the organisation to undertake a project will normally be formulated by senior management or a customer, the project itself is, as yet, unborn. There may just be an uneasy thought by someone in senior management that all is not well or that something is needed.
Carry out a brief SWOT analysis for the group or department where you work, or for a group, such as a club or affinity group, to which you belong. Try to list at least three factors in each category.