The Organizational Context:

Strategy, Structure, and

Culture
Chapter 2

Learning Goals
1.

2.

3.

4.

Understand how effective project management

contributes to achieving strategic objectives.
Recognize three components of the corporate
strategy model: formulation, implementation,
and evaluation.
See the importance of identifying critical
project stakeholders and managing them
within the context of project development.
Recognize the strengths and weaknesses of
three basic forms of organizational structure
and their implications for managing projects.
2

Learning Goals
5.

6.

7.

8.

Understand how companies can change their

structure into a heavyweight project
organization structure to facilitate effective
project management practices.
Identify the characteristics of three forms of
project management office (PMO).
Understand key concepts of corporate culture and
how cultures are formed.
Recognize the positive effects of a supportive
organizational culture on project management
practices versus those of a culture that works
against project management.
3

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
business opportunities
Making cross functional decisions
Achieving objectives
4

Projects Reflect Strategy

Projects are stepping stones of corporate strategy.
The firms strategic vision 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.

change strategic direction or product

portfolio configuration

to create new product lines.

improve cross-organizational
communication & efficiency

to install an enterprise IT system.

Relationship of Strategic
Elements
Review Figure 2.2 page
36 for an example

Mission

Objectives

Strategy

Goals

Programs

Stakeholder Management
Stakeholders are 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

Top management
Accounting
Other functional managers
Project team members

External Stakeholders

Clients
Competitors
Suppliers
Environmental, political,
consumer, and other
intervenor groups
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Stakeholder Register
Used to record stakeholders of the project
Useful to build communication plans

Stakeholder Analysis

Will inform you of the interests and influence

of those involved in a project change.
Should show each person or groups interest
in the change, where interests converge, the
level of influence, and who will have a voice
in new developments.
Can be beneficial at the beginning of new
projects and when projects change direction.
Displayed in a stakeholder analysis grid

See World Wildlife Foundation example at:

http://assets.panda.org/downloads/1_1_stakeholder_analysis_11_01_05.pdf
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Stakeholder Analysis Grid

1.
2.

3.

4.

5.
6.

Begin by making a list of anyone who has interest and influence over your
project. i.e. investors, customers, general public, etc.
Use this list to weigh the interest and influence of each person.
Create the Matrix: (example - four levels per category)
Draw a box divided into four equal quadrants.
Divide each quadrant into fourths again. You should now have sixteen
boxes.
Label down the left side starting at the top with Significant
Importance, Some Importance, Little Importance, No Importance.
Label across the top starting at the left with Significant influence,
Some influence, Little influence, No influence.
Organize your stakeholders according to importance and influence.
When you are done, your matrix will be a graphic display of who holds
the most importance and influence (the group in the upper left-hand
corner) and who holds the least amount of influence and importance
(the group in the lower right-hand corner).

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Project Stakeholder
Relationships
Parent
Organization
Other
Functional
Managers

External
Environment

Project

Clients

Top
Management

Manager

Accountant

Project
Team

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Managing Stakeholders
1.

Assess the environment - Is this low key or significant?

2.

Identify the goals of the principal actors - What true

goals do the stakeholders have?

3.

Assess your own capabilities - What are your strengths

and weaknesses?

4.

Define the problem

5.

Develop solutions - Try to cover as many stakeholders

concerns as possible (80%).

6.

Test and refine the solutions it is an iterative process.

The goal is to formulate strategies to

identify and manage for positive
results.

12

Project Stakeholder
Management Cycle
Identify
Stakeholders
Implement
Stakeholder
Management
Strategy
Predict
Stakeholder
Behavior

Identify
Stakeholder
Strategy

Gather Information
on Stakeholders
Project
Management
Team

Identify
Stakeholders
Mission

Determine
Stakeholder
Strengths &
Weaknesses
13

Organizational Structure
Consists of three key elements:
1.

Designates formal reporting relationships

including the number of levels in the hierarchy
span of control of management

2.

Groupings of:
individuals into departments
departments into the total organization

3.

Functional? Geographic? Product type? Project based?

Design of systems to
ensure effective communication
coordination
integration of efforts across departments
14

Forms of Organization Structure

Functional organizations groups people

performing similar activities into
departments

Project organizations groups people into

project teams on temporary assignments

Matrix organizations creates a dual

hierarchy in which functions and projects
have equal prominence
15

A Functional Organizational
Structure
Board of Directors

Silos of work
Chief Executive

Vice President of
Marketing

Market Research

Vice President of
Production

Logistics

Vice President of
Finance

Accounting
Services

Sales

New Product
Development
Testing

Outsourcing
After Market
Support

Vice President of
Research

Contracting
Research Labs

Distribution

Investments

Quality

Advertising
Warehousing

Employee
Benefits

Manufacturing

16

Functional Structure
for Project Management
Strengths

Weaknesses

1.

Fosters development of in-depth

knowledge

1.

Functional siloing no
collaboration

2.

Projects are developed within the

basic functional structure no
change to firms functional design

2.

Lack of customer focus

-self-focusing

3.

Project team members remain

connected with their functional
group

3.

Projects may take longer as

tasked are routed from one
department to another

4.

Standard career paths

4.

Projects may be sub-optimized

17

A Project Organization
Structure
Board of Directors

Chief Executive

Vice President of
Projects

Vice President of
Marketing

Vice President of
Production

Vice President of
Finance

Vice President of
Research

Project
Alpha

Project
Beta

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Project Structure
for Project Management
Strengths

Weaknesses

1. Project manager sole authority 1. Expensive to set up and

maintain teams
2. Improved communication
across the organization

2. Chance of loyalty to the

project rather than the firm

3. Rapid decision-making
3. No pool of specific knowledge
4. Promotes the creation of
project management experts

4. Workers unassigned at project

end

5. Flexible and rapid response

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A Matrix Organization Structure

Seeks a balance
between the functional
and project
organizations
Vice President of
Projects

Vice President of
Marketing

Board of Directors

Chief Executive

Vice President of
Production

Vice President of
Finance

Vice President of
Research

Project
Alpha

2 resources

1.5 resources

1 resource

3 resources

Project
Beta

1 resource

2 resources

2 resources

2.5 resources

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Matrix Structures
for Project Management
Strengths

Weaknesses

1. Suited to dynamic
environments

1. Dual hierarchies mean two

bosses

2. Equal emphasis on project

management and functional
efficiency

2. Negotiation required in order

to share resources

3. Promotes coordination across

functional units

3. Workers caught between

competing project & functional
demands

4. Maximizes scarce resources

21

Organizational Structure
Influences on Projects

-PMBok 2004
22

Heavyweight Project
Organizations
Organizations can sometimes gain tremendous
benefit from creating a fully-dedicated project
organization
Lockheed Corporations Skunkworks

Project manager authority expanded

Functional alignment abandoned in favor of
market opportunism
Focus on external customer

23

Project Management Offices

(PMO)

Centralized units that oversee or improve

the management of projects

Resource centers for:

Support with technical details

Expertise
Central repository for lessons learned
Center for excellence

24

Forms of PMOs

Weather station
used only to monitor and track projects

Resource pool
maintain and provide a group of skilled project
professionals

Control tower
project management is a skill to be protected and
supported
focuses on establishing standards, consulting/enforcing,
and improving project management skills

25

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 level
Business environment
Geographical location
Reward systems
Rules and procedures
Key organizational members
Critical incidents

Have you heard of

The Toyota Way?

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Key Factors That Affect Culture

Development
Technology

Critical
incidents

Environment

Key
organizational
members

Geographical
location

Rules and
procedures

Reward
systems

Culture Affects Project

Management Success

Departmental interaction

Employee commitment to goals

Project planning

Performance evaluation

Attitudes

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TRADITION

Start with a cage containing five apes.

In the cage, hang a banana on a string and put stairs under it. Before long, an ape
will go to the stairs and start to climb towards the banana. As soon as he touches
the stairs, spray all of the apes with cold water. After a while, another ape makes an
attempt with the same result - all the apes are sprayed with cold water. This
continues through several more attempts.
Pretty soon, when another ape tries to climb the stairs, the other apes all try to
prevent it. Now, turn off the cold water. Remove one ape from the cage and replace
it with a new one. The new ape sees the banana and wants to climb the stairs. To his
horror, all of the other apes attack him. After another attempt and attack, he knows
that if he tries to climb the stairs, he will be assaulted.
Next, remove another of the original five apes and replace it with a new one. The
newcomer goes to the stairs and is attacked. The previous newcomer takes part in
the punishment with enthusiasm. Again, replace a third original ape with a new one.
The new one makes it to the stairs and is attacked as well. Two of the four apes that
beat him have no idea why they were not permitted to climb the stairs, or why they
are participating in the beating of the newest ape.
After replacing the fourth and fifth original apes, all the apes, which have been
sprayed with cold water, have been replaced. Nevertheless, no ape ever again
approaches the stairs. Why not? Because that's the way they've always done it and
that's the way it's always been around here.

And that's how company policy begins....

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Chapter 2 Review and

Discussion
1.
a.
b.
c.
d.

2.
3.

4.

The chapter suggests that a definition of strategic management includes four

components:
Developing a strategic vision and sense of mission
Formulating, implementing, and evaluating
Cross-functional decisions
Achieving its objectives
Discuss how each of these four elements are important to understanding the
challenge of strategic project management. How do projects serve to allow an
organization to realize each of these three components of strategic management?
Discuss the difference between organizational objectives and strategies.
Your company is planning to construct a nuclear power plant in Oregon. Why is
stakeholder analysis important as a precondition of the decision whether or not to
follow through with such a plan?
Consider a medium-sized company that has decided to begin using project
management in a wide variety of its operations. As part of their operational shift,
they are going to adopt a project management office (PMO) somewhere within
their organization. Make an argument for the type of PMO they should be adopting
(weather station, control tower, or resource pool). What are some of the key
decision criteria that will help them determine which model makes the most
sense?
30

Chapter 2 Review and

Discussion
5.

What are some of the key organizational elements that can affect the
development and maintenance of a supportive organizational culture?
As a consultant, what advice would you give to a functional organization
that was seeking to move from an old, adversarial culture, where the
various departments actively resisted helping each other, to one that
encourages project thinking and cross-functional cooperation?
6.
You are a member of the senior management staff at XYZ Corporation.
You have historically been using a functional structure set up with five
departments: finance, human resources, marketing, production, and
engineering.
a. Create a drawing of your simplified functional structure, identifying
the five departments.
b. Assume you have decided to move to a project structure. What might
be some of the environmental pressures that would contribute to your
belief that it is necessary to alter the structure?
c. With the project structure, you have four projects currently ongoing:
stereo equipment, instrumentation and testing equipment, optical
scanners, and defense communications. Draw the new structure that
creates these four projects as part of the organizational chart.
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In-class exercise: Good

Answers is Growing
Your task:
1. In your groups, prepare a two-minute briefing for the
class to identify the project and what you see as the
key elements your project will have to address.
Include a discussion of aspects of Good Answers
operations that would not be part of the project but
rather are part of Good Answers general
procedures.
2. Specifically, address the following questions:

What is the project in this scenario?

Who are the stakeholders? Create a stakeholder matrix.
What are some of the main issues that you will need to
address in this project?

32