Business Acumen for Project Managers

Projects are tactical in nature, because it has a “defined beginning and end” (Project Management Institute, 2013).  This implies that the “what” and “why” of starting a project has already been discussed and aligned on a more strategic level.  Traditionally, when a project manager is assigned to start a project, their role is to ensure the project team is completing the project on time, in scope and within budget.  This methodology works well in a linear/highly structural environment such as construction and IT.  However, I would argue that this methodology might not be the best tool to use in a dynamic environment where frequent changes are expected to occur.  In order to deliver project successfully in today’s environment, project managers need to take a more strategic view.  Hence, PMI introduced the new PMI talent triangle® in 2015.

This change in skillset brings a positive change to project management professionals.  A quick google search reveals that a new term, “strategic project manager”, is on the horizon.  A strategic project manager goes beyond corporate fire fighting to deliver their projects, instead they utilize a strategic approach to understand and seek alignment between where the organization is going and how the project can deliver the benefits to enhance the advancement of that strategy.

In this post, I would like to talk about what does business acumen means for project manager as well as what can we do to develop our strategic and business management skills as project managers.

What is business acumen

According to Stanton, D (2017), business acumen involves learning how organizations work and why they do what they do.  This means a project manager needs to devote the time to understand why the project is being initiated and the benefits the project is expected to bring upon or after project completion.  This is a critical step in project initiation stage where a project charter is created.  For more details around how to initiate a project, please refer to one of my previous post:  “10 critical questions to be answered during a project chartering session”.

After identifying what problem the project is expected to solve, a strategic project manager needs to work with the business units to understand how their current operations and processes work.  Only after understanding the current states and the desired end goal of the project, proper planning of what needs to be done can happened.

To learn more about how to manage business functions within a project, I would encourage you to view the “Business Acumen for Project Managers” course on Lynda.com by D. Stanton.

Developing strategic and business management skills

One of my favorite quotes from management guru, Peter Drucker: “What’s measured improves”.   Since project is a tactical endeavor to achieve a strategic goal, then we must know what does success looks like and how to measure it.  Success can be broken down into two categories:  project KPI and business KPI.

To keep things relevant, it is recommended that each project should consist of 3 – 5 KPIs.  Each KPI should consist of its baseline (ie current state), its target and measurement frequency.  Some of the questions that can be use to facilitate discussions and alignment on KPIs includes:

  • How do we know if we are successful?
  • Which business unit(s) is the owner of this KPI?
  • Are there any threshold to initiate action for each identified KPI?
  • Is this an existing KPI or new KPI (that require data sourcing)?
  • Who and how often does these KPIs need to be review?

 

Final words…

Strategic and business management is an increasing important skillset for project managers.  This post only touched on the high level definition of business acumen and measuring strategic success through KPIs.  As this area of knowledge continues to evolve and gain more attention, I look forward to sharing (and hearing) more tips around this topic!

 

References

Project Management Institute, 2013. PMBOK® Guide – Fifth edition. 5th ed. Pennsylvania: Project Management Institute Inc.

Stanton, D., 2017. Business Acumen for Project Managers. [Online]
Available at: https://www.lynda.com/Project-Management-tutorials/Business-Acumen-Project-Managers/569192-2.html
[Accessed 13 May 2017].

Featured image source from:  http://cascadiapackaging.com/packaging-cost-savings-seeing-the-bigger-picture/

 

 

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