The Organizational Context: Strategy, Structure, and Culture

The Organizational Context:
Strategy, Structure, and Culture

Chapter 2
© 2007 Pearson Education 2-1

Projects and Organizational Strategy
Strategic management – the science of

formulating, implementing and evaluating cross-
functional decisions that enable an
organization to achieve its objectives.
Consists of:
– Developing vision and mission statements
– Formulating, implementing and evaluating
– Cross functional decisions
– Achieving objectives
2-2
Projects Reflect Strategy
Projects are stepping stones of corporate strategy
The firm’s strategic development is a driving force
behind project development
Some examples include:
A firm wishing to… …may have a project

redevelop products or processes to reengineer products or processes.
changes strategic direction or product to create new product lines.
portfolio configuration
improve cross-organizational to install an enterprise IT system.
communication & efficiency
2-3
Relationship of Strategic Elements
Mission
Objectives
Strategy Goals Programs

Fig 2.1
2-4
Stakeholder Management
Stakeholders are all individuals or groups who have
an active stake in the project and can potentially impact,
either positively or negatively, its development.
Sets of project stakeholders include:
Internal Stakeholders External Stakeholders

• Clients
• Top management
• Competitors
• Accountant
• Suppliers
• Other functional managers • Environmental, political, consumer,
• Project team members and other intervenor groups
2-5
Project Stakeholder Relationships
Parent
Organization
Other External
Functional Environment
Managers
Project Top
Clients Management
Manager
Project
Fig 2.3 Accountant Team
2-6
Managing Stakeholders
1. Assess the environment

2. Identify the goals of the principal actors
3. Assess your own capabilities
4. Define the problem
5. Develop solutions
6. Test and refine the solutions
2-7
Project Stakeholder
Management Cycle
Identify
Stakeholders
Implement Gather Information

Stakeholder on Stakeholders
Management
Strategy
Project
Management Team
Predict
Identify
Stakeholder
Stakeholders
Behavior
Mission
Identify
Stakeholder Determine
Strategy Stakeholder
Fig 2.4 Strengths &
Weaknesses
2-8
Organizational Structure
Consists of three key elements:
1. Designates formal reporting relationships

– number of levels in the hierarchy
– span of control
2. Groupings of:
– individuals into departments
– departments into the total organization
3. Design of systems for

– effective communication
– coordination
– integration across departments
2-9
Forms of Organization Structure
• Functional organizations – group people
performing similar activities into departments
• Project organizations – group people into

project teams on temporary assignments
• Matrix organizations – create a dual hierarchy in

which functions and projects have equal
prominence
2-10
Functional Structures for Project
Management
Strengths Weaknesses
1. Firm’s design maintained 1. Functional siloing
2. Fosters development of in- 2. Lack of customer focus

depth knowledge
3. Standard career paths 3. Projects may take longer
4. Project team members remain 4. Projects may be sub-

connected with their functional optimized
group
2-11
Project Structures for Project Management
1. Project manager sole authority 1. Expensive to set up and
maintain teams
2. Improved communication
2. Chance of loyalty to the
project rather than the firm
3. Effective decision-making
4. Creation of project 3. No pool of specific knowledge

management experts
4. Workers unassigned at project
5. Rapid response end
2-12
Matrix Structures for Project Management
1. Suited to dynamic 1. Dual hierarchies mean two
environments bosses
2. Equal emphasis on project 2. Negotiation required in order

management and functional to share resources
efficiency
3. Promotes coordination across 3. Workers caught between

functional units competing project & functional
demands
4. Maximizes scarce resources
2-13
Heavyweight Project Organizations
Organizations can sometimes gain tremendous benefit
from creating a fully-dedicated project organization
Lockheed Corporation’s “Skunkworks”
• Project manager authority expanded

• Functional alignment abandoned in favor of market
opportunism
• Focus on external customer
2-14
Project Management Offices
Centralized units that oversee or improve the
management of projects
Resource centers for:

– Technical details
– Expertise
– Repository
– Center for excellence
2-15
Forms of PMOs
• Weather station – monitoring and tracking
• Control tower – project management is a skill to

be protected and supported
• Resource pool – maintain and provide a cadre of

skilled project professionals
2-16
Organizational Culture
The unwritten rules of behavior, or norms that are used to shape
and guide behavior, is shared by some subset of organization
members and is taught to all new members of the company.
Key factors that affect culture development

– Technology
– Environment
– Geographical location
– Reward systems
– Rules and procedures
– Key organizational members
– Critical incidents
2-17
Culture Affects Project Management
• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation
2-18

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The Organizational Context:

Strategy, Structure, and Culture

© 2007 Pearson Education 2-1

Strategic management – the science of

A firm wishing to… …may have a project

Strategy Goals Programs

Sets of project stakeholders include:

Internal Stakeholders External Stakeholders

1. Assess the environment

Implement Gather Information

1. Designates formal reporting relationships

3. Design of systems for

• Project organizations – group people into

• Matrix organizations – create a dual hierarchy in

2. Fosters development of in- 2. Lack of customer focus

3. Standard career paths 3. Projects may take longer

4. Project team members remain 4. Projects may be sub-

4. Creation of project 3. No pool of specific knowledge

2. Equal emphasis on project 2. Negotiation required in order

3. Promotes coordination across 3. Workers caught between

Lockheed Corporation’s “Skunkworks”

• Project manager authority expanded

Resource centers for:

• Control tower – project management is a skill to

• Resource pool – maintain and provide a cadre of

Key factors that affect culture development

• Employee commitment to goals

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