What is Innovation Management?

Innovation management is a combination of the management of innovation processes, and

change management. It refers to product, business process, marketing and
organizational innovation.Innovation management includes a set of tools that allow managers
plus workers or users to cooperate with a common understanding of processes and goals.
Innovation management allows the organization to respond to external or internal opportunities,
and use its creativity to introduce new ideas, processes or products. It is not relegated to R&D; it
involves workers or users at every level in contributing creatively to an organization's product or
service development and marketing.

Eg: Franchising, iPhone, Paypal, IKEA (Augmented Reality, mail order), L’O’real make up
genius app

Basic Concepts of Innovation

Innovation in its modern meaning is "a new idea, creative thoughts, new imaginations in form of
device or method". Such innovation takes place through the provision of more-effective
products, processes, services, technologies, or business models that are made available to
markets, governments and society.

Organization for Economic Co-operation & Development (OECD) is an intergovernmental

economic organisation with 36 member countries, founded in 1961 to stimulate economic
progress and world trade. According to OECD ‘Innovation is production or adoption,
assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal
and enlargement of products, services, and markets; development of new methods of
production; and the establishment of new management systems. It is both a process and an
outcome.’

Two main dimensions of innovation are degree of novelty i.e. whether an innovation is new to
the firm, new to the market, new to the industry, or new to the world and kind of innovation i.e.
whether it is processor product-service system innovation. In recent organizational scholarship,
researchers of workplaces have also distinguished innovation to be separate from creativity, by
providing an updated definition of these two related but distinct constructs.

Workplace creativity concerns the cognitive and behavioral processes applied when attempting
to generate novel ideas. Workplace innovation concerns the processes applied when attempting
to implement new ideas. Specifically, innovation involves some combination of
problem/opportunity identification, the introduction, adoption or modification of new ideas
relevent to organizational needs, the promotion of these ideas, and the practical implementation
of these ideas.

Factors Affecting Innovation

The major determinant factors affecting innovation are
 1) Individual Level:

Personality, motivation and cognition ability are the main influencing factors at the
individual level.

2) Group Level

Structure, climate, leadership and task characteristics are the group level factors.

3) Organizational Level

Structure, culture, strategy and resources were the influencing factors at organisational
level.

Unit 2

New Ventures and Business Plan

A venture is any major undertaking or project that requires the risking of time and/or money.
A venture is a project or activity which is new, exciting, and difficult because it involves the risk of
failure. A business venture is a new business that is formed with a plan and expectation that
financial gain will follow. As the business gets off its feet, additional investors may become
involved by providing support and capital to expand development and marketing of the venture.

A business plan is a written document that describes in detail how a business, usually a new one,
is going to achieve its goals. A business plan lays out a written plan from a marketing, financial
and operational viewpoint. As a communication tool, it is used to attract investment capital, secure
loans, convince workers to hire on, and assist in attracting strategic business partners. The
development of a comprehensive business plan shows whether or not a business has the
potential to make a profit.

https://prezi.com/rquacqvm6z_w/scope-and-value-of-business-plan/

Types of business plans include, but are not limited to, start-up, internal, strategic, feasibility,
operations and growth plans.

Start-Up Business Plans

New businesses should detail the steps to start the new enterprise with a start-up business plan.
This document typically includes sections describing the company, the product or service your
business will supply, market evaluations and your projected management team. Potential
investors will also require a financial analysis with spreadsheets describing financial areas
including, but not limited to, income, profit and cash flow projections.

Internal Business Plans

Internal business plans target a specific audience within the business, for example, the marketing
team who need to evaluate a proposed project. This document will describe the company’s
current state, including operational costs and profitability, then calculate if and how the business
will repay any capital needed for the project. Internal plans provide information about project
marketing, hiring and tech costs. They also typically include a market analysis illustrating target
demographics, market size and the market’s positive effect on the company income.

Strategic Business Plans

A strategic business plan provides a high-level view of a company’s goals and how it will achieve
them, laying out a foundational plan for the entire company. While the structure of a strategic plan
differs from company to company, most include five elements: business vision, mission statement,
definition of critical success factors, strategies for achieving objectives and an implementation
schedule. A strategic business plan brings all levels of the business into the big picture, inspiring
employees to work together to create a successful culmination to the company’s goals.

Feasibility Business Plans

A feasibility business plan answers two primary questions about a proposed business
venture: who, if anyone, will purchase the service or product a company wants to sell, and if the
venture can turn a profit. Feasibility business plans include, but are not limited to, sections
describing the need for the product or service, target demographics and required capital. A
feasibility plan ends with recommendations for going forward.

Operations Business Plans

Operations plans are internal plans that consist of elements related to company operations. An
operations plan specifies implementation markers and deadlines for the coming year. The
operations plan outlines employees’ responsibilities.

Growth Business Plans

Growth plans or expansion plans are in-depth descriptions of proposed growth and are written for
internal or external purposes. If company growth requires investment, a growth plan may include
complete descriptions of the company, its management and officers. The plan must provide all
company details to satisfy potential investors. If a growth plan needs no capital, the authors may
forego obvious company descriptions, but will include financial sales and expense projections.

Need for a Business Plan

1. To prove that you’re serious about your business. A formal business plan is necessary to
show all interested parties — employees, investors, partners and yourself — that you are
committed to building the business.

2. To establish business milestones. The business plan should clearly lay out the long-term
milestones that are most important to the success of the business.

3. To better understand your competition. Creating the business plan forces you to analyze
the competition. All companies have competition in the form of either direct or indirect competitors,
and it is critical to understand your company’s competitive advantages.

4. To better understand your customer. Why do they buy when they buy? Why don’t they
when they don’t? An in-depth customer analysis is essential to an effective business plan and to
a successful business.

5. To enunciate previously unstated assumptions. The process of actually writing the

business plan helps to bring previously “hidden” assumptions to the foreground. By writing them
down and assessing them, you can test them and analyze their validity.

6. To assess the feasibility of your venture. How good is this opportunity? The business plan
process involves researching your target market, as well as the competitive landscape, and
serves as a feasibility study for the success of your venture.

7. To document your revenue model. How exactly will your business make money? This is a
critical question to answer in writing, for yourself and your investors. Documenting the revenue
model helps to address challenges and assumptions associated with the model.
8. To determine your financial needs. Does your business need to raise capital? How much?
The business plan creation process helps you to determine exactly how much capital you need
and what you will use it for. This process is essential for raising capital for business and for
effectively employing the capital.

9. To attract investors. A formal business plan is the basis for financing proposals. The business
plan answers investors’ questions such as: Is there a need for this product/service? What are the
financial projections? What is the company’s exit strategy?

10. To reduce the risk of pursuing the wrong opportunity. The process of creating the
business plan helps to minimize opportunity costs. Writing the business plan helps you assess
the attractiveness of this particular opportunity, versus other opportunities.

11. To force you to research and really know your market. What are the most important trends
in your industry? What are the greatest threats to your industry? Is the market growing or
shrinking? What is the size of the target market for your product/service? Creating the business
plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace.

12. To attract employees and a management team. To attract and retain top quality talent, a
business plan is necessary. The business plan inspires employees and management that the idea
is sound and that the business is poised to achieve its strategic goals.

13. To plot your course and focus your efforts. The business plan provides a roadmap from
which to operate, and to look to for direction in times of doubt. Without a business plan, you may
shift your short-term strategies constantly without a view to your long-term milestones.

14. To attract partners. Partners also want to see a business plan, in order to determine whether
it is worth partnering with your business. Establishing partnerships often requires time and capital,
and companies will be more likely to partner with your venture if they can read a detailed
explanation of your company.

15. To position your brand. Creating the business plan helps to define your company’s role in
the marketplace. This definition allows you to succinctly describe the business and position the
brand to customers, investors, and partners.
16. To judge the success of your business. A formal business plan allows you to compare
actual operational results versus the business plan itself. In this way, it allows you to clearly see
whether you have achieved your strategic, financing, and operational goals (and why you have
or have not).

17. To reposition your business to deal with changing conditions. For example, during
difficult economic conditions, if your current sales and operational models aren’t working, you can
rewrite your business plan to define, try, and validate new ideas and strategies.

18. To document your marketing plan. How are you going to reach your customers? How will
you retain them? What is your advertising budget? What price will you charge? A well-
documented marketing plan is essential to the growth of a business.

19. To understand and forecast your company’s staffing needs. After completing your
business plan, you will not be surprised when you are suddenly short-handed. Rather, your
business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother
expansion.

20. To uncover new opportunities. Through the process of brainstorming, white-boarding and
creative interviewing, you will likely see your business in a different light. As a result, you will often
come up with new ideas for marketing your product/service and running your business.

Steps in the preparation of Business Plan

The format of a Business plan may include the following.

 Executive summary -- a snapshot of your business

 Company description -- describes what you do
 Market analysis - research on your industry, market and competitors
 Organization and management -- your business and management structure
 Service or product -- the products or services you’re offering
 Marketing and sales -- how you’ll market your business and your sales strategy
 Funding request -- how much money you’ll need for next 3 to 5 years
 Financial projections -- supply information like balance sheets
 Appendix -- an optional section that includes résumés and permits
Steps to follow to write a compelling business plan are the following

1) Extensive Research

Consider spending twice as much time researching, evaluating and thinking as you spend
actually writing the business plan. To write the perfect plan, you must know your company,
your product, your competition and the market intimately. It’s your responsibility to know
everything you can about your business and the industry that you’re entering. Read
everything you can about your industry and talk to your audience.

2. Determine the purpose of your plan.

A business plan, as defined by Entrepreneur, is a “written document describing the nature of the
business, the sales and marketing strategy, and the financial background, and containing a
projected profit and loss statement.” However, your business plan can serve several different
purposes.

As Entrepreneur notes, it’s “also a road map that provides directions so a business can plan its
future and helps it avoid bumps in the road.” That’s important to keep in mind if you’re self-funding
or bootstrapping your business. But, if you want to attract investors, your plan will have a different
purpose and you’ll have to write a plan that targets them so it will have to be as clear and concise
as possible. When you define your plan, make sure you have defined these goals personally as
well.

3. Create a company profile.

Your company profile includes the history of your organization, what products or services you
offer, your target market and audience, your resources, how you’re going to solve a problem and
what makes your business unique. When I crafted my company profile, I put this on our About
page.

Company profiles are often found on the company’s official website and are used to attract
possible customers and talent. However, your profile can be used to describe your company in
your business plan. It’s not only an essential component of your business plan; it’s also one of
the first written parts of the plan.

Having your profile in place makes this step a whole lot easier to compose.
4. Document all aspects of your business.

Investors want to make sure that your business is going to make them money. Because of this
expectation, investors want to know everything about your business. To help with this process,
document everything from your expenses, cash flow and industry projections. Also, don’t forget
seemingly minor details like your location strategy and licensing agreements.

5. Have a strategic marketing plan in place.

A great business plan will always include a strategic and aggressive marketing plan. This typically
includes achieving marketing objectives such as:

 Introducing new products

 Extending or regaining market for existing products
 Entering new territories for the company
 Boosting sales in a particular product, market or price range. Where will this business
come from? Be specific.
 Cross-selling (or bundling) one product with another
 Entering into long-term contracts with desirable clients
 Raising prices without cutting into sales figures
 Refining a product
 Having a content marketing strategy
 Enhancing manufacturing/product delivery

“Each marketing objective should have several goals (subsets of objectives) and tactics for
achieving those goals,” states Entrepreneur.

“In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of the
marketing tasks for the year ahead. In the implementation section, you focus on the practical,
sweat-and-calluses areas of who, where, when and how. This is life in the marketing trenches.”

Of course, achieving marketing objectives will have costs. “Your marketing plan needs to have a
section in which you allocate budgets for each activity planned," Entrepreneur says. It would be
beneficial for you to create separate budgets for for internal hours (staff time) and external costs
(out-of-pocket expenses).
6. Make it adaptable based on your audience.

“The potential readers of a business plan are a varied bunch, ranging from bankers and venture
capitalists to employees,” states Entrepreneur. “Although this is a diverse group, it is a finite one.
And each type of reader does have certain typical interests. If you know these interests up-front,
you can be sure to take them into account when preparing a plan for that particular audience.”

For example, bankers will be more interested in balance sheets and cash-flow statements, while
venture capitalists will be looking at the basic business concept and your management team. The
manager on your team, however, will be using the plan to “remind themselves of objectives.”

Because of this, make sure that your plan can be modified depending on the audience reading
your plan. However, keep these alterations limited from one plan to another. This means that
when sharing financial projections, you should keep that data the same across the board.

7. Explain why you care.

Whether you’re sharing your plan with an investor, customer or team member, your plan needs
to show that you’re passionate and dedicated, and you actually care about your business and the
plan. You could discuss the mistakes that you've learned, list the problems that you’re hoping to
solve, describe your values, and establish what makes you stand out from the competition.

When I started my payments company, I set out to conquer the world. I wanted to change the way
payments were made and make it easier for anyone, anywhere in the world to pay anyone with
few to no fees. I explained why I wanted to build this. My passion shows through everything I do.

By explaining why you care about your business you create an emotional connection with others
so that they’ll support your organization going forward.

Need for Market Research

It’s easy to dismiss the importance of marketing research. After all, when you first think of a
business idea, spending hours on market research is the last thing on your mind. Most of us would
rather start making and selling products right away than think about the value of marketing
research.
But for any type of business, there's a real need for market research. This is especially the case
for small businesses, where the first few months can prove to be precarious. New businesses
need sales and customers as soon as possible, and market research can ensure that those sales
and customers don’t stop coming.

What Is Marketing Research?

Before you can understand the importance of marketing research, you need to know what it is.
Market research isn’t about a specific method or activity, it’s just what businesses call their attempt
to learn more about their target customers.

While tasks like surveys and focus groups can help, they aren't absolutely necessary, and they
aren’t the only things you can do to research your target market. Here are some tasks that can
be part of your market research:

 Have short conversations with contacts who are part of your target market. Let’s say
you’re looking to launch a wedding photography service. Talk to your contacts who have
been married or who are engaged and ask them about their experience in hiring and
working with a wedding photographer. Even a five-minute conversation can give you
insights on how to run your business.
 Look up Facebook groups relevant to your target market. This can help provide you a free,
low-effort way to reach target customers online and ask them questions. Eventually, you
can go back to these groups to promote your business, if the group rules allow for it.
 Add a survey form to your website. If you already have a website for your small business,
you can offer potential customers a small discount in exchange for filling up a survey. This
tutorial on online market research forms can help you get started.

The above activities are just a handful of tasks that could be part of your market research. In fact,
you can classify any task as a market research activity as long as you end up knowing your target
market’s needs, behaviors, and preferences.

The Importance of Marketing Research

These are the seven reasons why market research is important, especially for smaller teams and
businesses:
1. Easily Spot Business Opportunities
After you’ve done your market research, it'll be clear to you who you want to reach out to (your
target customers), where you can reach them (your marketing channels), and what they're
interested in. Once you’ve defined these, you’ll be able to easily spot business opportunities. For
example:

 Form partnerships with other businesses. Learning about who your customers are, such
as their demographics, can help you find other small businesses that serve them. You can
approach these businesses for joint promotions that'll be mutually beneficial.
 Create profitable order upgrades. Knowing the other products and services that your
customers tend to buy can help you come up with add-ons, product bundles, and upsells
that increase the average value of each order.
 Find new locations to sell to. Knowing the geographical areas where most of your target
customers live will allow you to create compelling targeted campaigns that suit the needs
and culture of that area.

2. Lower Business Risks

Around half of businesses with employees don’t survive past the fifth year, according to data from
the Bureau of Labor Statistics. The way to make sure that your business survives for longer is to
ensure that you've got a steady stream of sales and customers. To do that, you need market
research.

Regular market research will be your way to check in with your current customers and potential
customers to ensure that you’re still meeting their needs. Here’s how you can apply this:

 Test new designs and products before launching. Before you go all-in on a dramatic
change for your business, you can test it on a smaller subset of your audience to see if
the change would be welcome. For example, if you plan to do a redesign of a popular
product, show the new design to your most frequent buyers. Test or ask them if they’re
more likely to buy the new design versus, an alternative new design, or the old design.
 Find out why customers don’t come back. Ideally, your small business should have
recurring customers. If they don’t come back, you can conduct a survey of previous
customers or set up a focus group to find out why you’re not making any repeat sales.
 Get insights on problem areas. If your most popular product sees a big drop in sales for
three consecutive months, you need to find out how to fix it before it ruins your profits
 completely. Survey your most frequent customers about the product and find out where
the problem lies. It could be anything from a decline in the product quality or a glitch on
your online store. You’ll never know unless you ask.

3. Create Relevant Promotional Materials

If you’ve ever wondered what text or images to put on your fliers, website, or social media
accounts, with thorough market research, you’ll know exactly what to do. Since target customers
have already expressed all their wants, needs, and frustrations with you, you’ll know exactly what
to address and how to address it when you start creating your marketing materials.

For example, author Tiffany Sun surveyed her readers to find out which problems they’re trying
to solve. Instead of coming up with blog topics or headlines in a vacuum, she uses the results of
this survey to brainstorm compelling topics.

Here are some other ways your marketing materials will be easier to create:

 Knowing whether customers see your products and services as a necessity or as a luxury
can help you design your product labels, brochures, and website that fits their perception.
 Identifying the age range of your customers can tell you the type of language you’ll be
using in your promotional materials. You'll write differently when addressing retired Baby
Boomers than you would when addressing young professionals.

4. Know Where to Advertise

One of the problems that small business owners face is a limited budget. Because of this, your
marketing budget should be optimized to give you the best returns possible. Your market research
can help ensure that you’re reaching your intended audience in the channels where they’re most
likely to see your message.

These are some of the budgetary tasks that your market research can help with:

 Buying ads on social media. If your market research shows that your target audience
spends most of their time on Instagram and almost never use Twitter, you’ll know to direct
most of your social media ad budget to Instagram and forget about Twitter.
 Placing flyers and posters. Knowing the physical spaces where your customer spends
their time will tell you where you can best place your advertising. For example, university
students are likely to be on campus, so placing ads for that market means that you can try
 bulletin boards on campus or outside local establishments that their crowd tends to
frequent.
 Targeting ads. Online ads such as social media ads and pay-per-click ads can often be
targeted with precision. This means that you can target based not just on the usual
demographic data, but also based on online behaviors, life stage, and interests. If you truly
know your customers, you'll be able to maximize the potential for targeting. For example:
here are some of the targeting options for Facebook Ads:

5. Outsell Competitors
The business that knows their customers more tends to win more. If you can beat your
competitors at finding out your customers’ needs and you aim to fulfill those needs, you've got a
better chance of standing out from the competition. Here are some ways you can use market
research to outsell competitors:

 Target dissatisfied customers. Asking target customers about their frustrations with your
competitors’ products or reading their product reviews can help you improve your own
products and market them to an audience ready to switch brands.
 Find an underserved customer segment. Your market research might reveal that there's
a segment of the market that your competition has neglected. This will give you a new
customer segment to reach out to.
 Identify unaddressed customer needs. During your market research, you might uncover
some customer pain points or desires that you don’t see addressed in your competitors’
marketing materials. Try including them in your own marketing and see if the results show
an increase in sales.

If you need to know more about conducting market research with competitors in mind, here are
some helpful guides:

6. Set Better Goals for Your Business

When business owners set goals for their business, it’s typically related to growth in sales or
customers. But without market research, you won’t be able to know if your goal is achievable and
how to achieve it in the first place.

You might say that you want to double sales by the end of the next quarter. How would you know
if this goal is feasible if you don’t know whether the size of your target market is more than twice
the size of your current customer base? Without knowing the current size of your potential market,
you’ll just be setting arbitrary goals.

With market research, you’ll be able to determine the specific directions you want to grow your
customer base. For example, do you want to grow your customers via a new untapped market
segment? Or do you still have room for growth among your current target audience?

If you need help setting growth goals for your business, the following tutorials can help:

7. Decision-Making Becomes Simple

The need for and importance of marketing research frequently comes up when making tough
business decisions. Instead of having arbitrary criteria for the decisions you make as a business
owner, you can always go back to your market research report. Based on that report, will this
decision lead to more customers? Will you be able to reach more people who are likely to buy
from you? Will it be clear to them that your business can meet their needs?

While not all decisions should be solved by market research, many of them can be, such as:

 where to spend your advertising or marketing budget

 whether there’s a demand for a new product you want to make
 if you should open a storefront in a new location
 which products to discontinue and which ones to merely improve
 how to price all your offers

There's a real need for market research because it provides you with solid facts. Through market
research, you'll make more informed decisions rather than resting the fate of your business on
guesswork.

Operating Plans and Financial Plans

An Operational Plan is a highly detailed plan that provides a clear picture of how a team, section
or department will contribute to the achievement of the organisation's goals. The operational
plan maps out the day-to-day tasks required to run a business and cover.

The plan covers the what, the who, the when, and how much:

What - the strategies and tasks to be achieved / completed

Who - the individuals who have responsibility for each task strategy / task

When - the timeline for which the strategies/tasks must be completed

How much – the financial resources available to complete a strategy/task

An operational plan draws directly from agency and program strategic plans to describe agency
and program missions and goals, program objectives, and program activities. Like a strategic
plan, an operational plan addresses four questions:[citation needed]

 Where are we now?

 Where do we want to be?
 How do we get there?
 How do we measure our progress?
The operations plan is both the first and the last step in preparing an operating budget request.
As the first step, the operations plan provides a plan for resource allocation; as the last step, the
OP may be modified to reflect policy decisions or financial changes made during the budget
development process.[citation needed]
Operational plans should be prepared by the people who will be involved in implementation.
There is often a need for significant cross-departmental dialogue as plans created by one part of
the organization inevitably have implications for other parts. [citation needed]
Operational plans should contain clear objectives of them

 activities to be delivered
 quality standards
 desired outcomes
 staffing and resource requirements
 implementation timetables
 a process for monitoring progress

Financial Plan

A financial plan is a comprehensive document that includes details about your cash flow,
savings, debts, investments, insurance and other elements of your financial life. A good financial
plan takes the stress out of setting and prioritizing goals, and maps out clear strategies for
achieving them.
Understanding the Financial Plan
Whether you're going it alone or with a financial planner, the first step in the creation of a
financial plan involves getting together a lot of bits of paper or, more likely these days, cutting
and pasting numbers from various web-based accounts into a document or spreadsheet.

The following steps in creating a financial plan may, of course, be completed by an individual or
a couple.

Calculating Net Worth

You're about to learn your current net worth. List all of the following:
  Your assets: This may include a home and a car, some cash in the bank, money
invested in a 401(k) plan, and anything else you own of value.
 Your liabilities: These may include credit card debt, student debt, an outstanding
mortgage, and a car loan.

Your total assets, minus your total liabilities, equals your current net worth.

Determining Cash Flow

You can't create a financial plan without knowing where your money is going every month now.
Documenting it will help you see how much you need every month for necessities, how much
might be left for saving and investing, and even where you can cut back a little (or a lot).

One way to get this done is to skim through your checking account and credit card statements.
Collectively, they should be a fairly complete history of your spending. If your expenses vary a
lot seasonally, it's best to go through an entire year, count up all the expenditures in each
category, and then divide by 12 to get an average monthly estimate of your spending. This way,
you won't underestimate or overestimate what you spend on utilities, or forget to account for
holiday gifts or a vacation.

The main elements of a financial plan include a retirement strategy, a risk management plan, a
long-term investment plan, a tax reduction strategy, and an estate plan.
Document how much you've paid over a year in basic housing expenses like rent or mortgage
payments, utilities, credit card interest, and even home furnishings. Add categories for food,
clothing, transportation, medical insurance, and non-covered medical expenses. Document your
real spending on entertainment, dining out, and vacation travel. Don't overlook cash withdrawals
that may be used on sundries from shampoo to sodas.

As you look over your own financial records, your personal spending categories will stand out.
You may have an expensive hobby or a pampered pet. Document the costs.

Once you add up all these numbers for a year and then divide by 12, you'll know exactly what
your cash flow has been.

Considering Your Priorities

The core of a financial plan is a person's clearly defined goals. They may include funding a
college education for the children, buying a larger home, starting a business, retiring on time, or
leaving a legacy.

No one can tell you how to prioritize these goals. However, a professional financial planner may
be able to help you choose a detailed savings plan and specific investments that will help you
tick them off, one by one.

KEY TAKEAWAYS

 A financial plan documents an individual's long-term goals and creates a strategy for
accomplishing them.
  The plan should be highly individualized to reflect the individual's personal and family
situation, risk tolerance, and future expectations.
 The plan starts with a calculation of the person's current net worth and cash flow.

Corporate Planning
Corporate planning is the act of creating a long-term plan to improve your business. A
corporate plan examines a business’s internal capabilities and lays out strategies for how to
use those capabilities to improve the company and meet goals. Think of a corporate plan as a
roadmap laying out everything you need to do to achieve your future goals and reach new
levels of success. The plan looks at each sector of a business and makes sure that all parts
are aligned, working towards similar goals. Corporate planning is often looked at through a
SWOT analysis (strengths, weaknesses, opportunities, threats). Further, it usually starts with
broad goals and works its way towards a much more detailed analysis, laying out exactly how
objectives will be reached. The following elements tend to be in a corporate plan:

Vision statement: You company’s vision statement broadly defines what goals you
are working to achieve. This statement is where you hone in on your business’s focus
and what you want to accomplish over the next three-to-five years. Think big, but
remember that you will have to create a strategic plan to back these goals up. So
always make sure that your goals can be defined as SMART goals (strategic,
measurable, achievable, realistic and time-based).

Mission statement: A good mission statement lays out how you will achieve your
vision statement in a few sentences. It should illustrate what you plan to offer or sell,
the market you are in, and what makes your company unique. A mission statement is
like an elevator pitch for your entire strategy. It effectively communicates who you are
and what you want to do in a few lines.

Resources and scope: Part of corporate planning is taking stock of everything you
currently have going on in your organization. You'll look at your systems, products,
employees, assets, programs, divisions, accounting, finance and anything else that is
critical to meeting your vision. This part is almost like making a map of your current
organization. It gives you a bird’s eye view of everything your company has going on,
which helps you create a plan for moving towards the future.

Objectives: Next, you need to lay out your business objectives and how you plan to
measure success. This is a good time to hone in on that SMART planning to ensure
that your objectives are strategic, measurable, achievable, realistic and time-based. A
vague goal such as “improve brand reputation” is meaningless without a solid measure
of success in place. A SMART goal would instead be “improve brand reputation by
placing the product in five positive media stories by the end of Q1.”

Strategies: Now, it’s time to illustrate the strategies you plan to use to meet the
objectives of your company. These strategies could be anything from introducing new
products to reducing labor costs by 25 percent, depending on the goal. Your strategies
should directly address the objectives you have laid out in your corporate plan, and
 include a plan of action for how you will implement them. These are the nitty-gritty plan
details.

Process of Investment decisions

Definition: The Investment Decision relates to the decision made by the investors or the top
level management with respect to the amount of funds to be deployed in the investment
opportunities. Simply, selecting the type of assets in which the funds will be invested by the firm
is termed as the investment decision. These assets fall into two categories:

Long Term Assets

Short-Term Assets

1. The decision of investing funds in the long term assets is known

as Capital Budgeting. Thus, Capital Budgeting is the process of
selecting the asset or an investment proposal that will yield returns over a
long period.

2. The first step involved in Capital Budgeting is to select the asset, whether
existing or new on the basis of benefits that will be derived from it in the
future.

3. The next step is to analyze the proposal’s uncertainty and risk involved in
it. Since the benefits are to be accrued in the future, the uncertainty is
high with respect to its returns.

4. Finally, the minimum rate of return is to be set against which the

performance of the long-term project can be evaluated.

5. The investment made in the current assets or short term assets is termed
as Working Capital Management. The working capital management
deals with the management of current assets that are highly liquid in
nature.

6. The investment decision in short-term assets is crucial for an organization

as a short term survival is necessary for the long-term success. Through
working capital management, a firm tries to maintain a trade-off between
the profitability and the liquidity.

7. In case a firm has an inadequate working capital i.e. less funds invested
in the short term assets, then the firm may not be able to pay off its
current liabilities and may result in bankruptcy. Or in case the firm has
more current assets than required, it can have an adverse effect on the
profitability of the firm
 8. Thus, a firm must have an optimum working capital that is necessary for
the smooth functioning of its day to day operations.

Expenditure of Different Types

For the accounting purpose expenditures are classified in three types:

Capital Expenditure is an amount incurred for acquiring the long term assets such as land,
building, equipments which are continually used for the purpose of earning revenue. These are
not meant for sale. These costs are recorded in accounts namely Plant, Property, Equipment.
Benefits from such expenditure are spread over several accounting years.

E.g. Interest on capital paid, Expenditure on purchase or installation of an asset, brokerage and
commission paid.

Revenue Expenditure is the expenditure incurred in one accounting year and the benefits from
which is also enjoyed in the same period only. This expenditure does not increase the earning
capacity of the business but maintains the existing earning capacity of the business. It included
all the expenses which are incurred during day to day running of business. The benefits of this
expenditure are for short period and are not forwarded to the next year. This expenditure is on
recurring nature.

Eg: Purchase of raw material, selling and distribution expenses, Salaries, wages etc.

Deferred Revenue Expenditure is a revenue expenditure which has been incurred during an
accounting year but the benefit of which may be extended to a number of years. And these are
charged to profit and loss account.

E.g. Development expenditure, Advertisement etc.

Formulation of Capital Expenditure

Formulation of capital expenditure is the first stage in the investment decision making & total
project life cycle. Conceptualisation step involves pre- formulation of ideas generated by owner
relating to expansion, renovation etc.

Capital Expenditure Formula is used for calculating total purchases of assets made by the
company during a given period of time and it is calculating by adding the net increase in the
value of Plant, property and equipment and Deprecation expense during the particular fiscal
year.

CAPEX Formula = Net Increase in PP&E + Depreciation Expense

Appraisal and Evaluation

Appraisal is the judgment or assessment of the value of something, especially a formal one.
Evaluation is an assessment, such as an annual personnel performance review used as the
basis for a salary increase or bonus, or a summary of a particular situation.

Estimation of Cost of Project

Project cost estimation is the process of predicting the quantity, cost, and price of the
resources required by the scope of a project.

Since cost estimation is about the prediction of costs rather than counting the actual cost, a
certain degree of uncertainty is involved. This uncertainty arises from the fact that the project
scope definition is never entirely complete until the project has been finished, at which point
all expenses have been made and an accountant can determine the exact amount of money
spent on resources.

Cost estimation, therefore, is like ‘looking into a crystal ball’.

Different reasons: investment decisions, comparing alternative plans, budgeting, cost control,
and validation

Cost estimates are prepared to different ends throughout the project lifecycle. Up front, the
goal is to provide input for investment decisions. The cost estimate is used to determine the
size of the required investment to create or modify assets. It is also during the early phases
that alternative plans are considered that need to be priced. The cost estimate is a deliverable
that serves the decision-making process at each gate of the project lifecycle.

Later in the project, the budget is determined from a more extensive cost estimate that also
serves as a baseline for project controls and earned value measurement. As such, it is
maintained up-to-date and in synchronization with the planned schedule. By comparing
expenses and progress information with the baseline estimate, an indication of the project’s
performance is obtained that allows the cost control and project management to steer the
project.

The tools and techniques used to compile estimates vary widely per project type, phase and
size. Early on, when the level of scope definitions is premature, capacity scaling, parametric
and factor methods may be used. When the scope gets better defined and with more detail,
so do the estimates, but effective cost estimating also requires an understanding of the work
that needs to be carried out. While a number of advanced tools exist to assist the estimating
process in the determination of quantities, cost and hours, it is still a process that requires
judgment and experience to come to a confident result.

Financing

Financing is the process of providing funds for business activities, making purchases or investing. Financial
institutions such as banks are in the business of providing capital to businesses, consumers, and investors to
help them achieve their goals. The use of financing is vital in any economic system, as it allows companies to
purchase products out of their immediate reach.
Put differently, financing is a way to leverage the time value of money (TVM) to put future expected money
flows to use for projects started today. Financing also takes advantage of the fact that some will have a surplus
of money that they wish to put to work to generate returns, while others demand money to undertake
investment (also with the hope of generating returns), creating a market for money.

 Financing is the process of funding business activities, make purchases or investments.

 The main advantage of equity financing is that there is no obligation to repay the money acquired
through it.
 Equity financing places no additional financial burden on the company, though the downside is quite
large.
 Debt financing tends to be cheaper and comes with tax breaks. However, large debt burdens can lead
to default and credit risk.
 The weighted average cost of capital (WACC) gives a clear picture of a firm's total cost of financing.

There are mainly two types of Financing. Equity Financing and Debt Financing.

Equity Financing
"Equity" is another word for ownership in a company. For example, the owner of a grocery store chain needs to
grow operations. Instead of debt, the owner would like to sell a 10% stake in the company for $100,000, valuing
the firm at $1 million. Companies like to sell equity because the investor bears all the risk; if the business fails,
the investor gets nothing.

At the same time, giving up equity is giving up some control. Equity investors want to have a say in how the
company is operated, especially in difficult times, and are often entitled to votes based on the number of shares
held. So, in exchange for ownership, an investor gives his money to a company and receives some claim on
future earnings.

Some investors are happy with growth in the form of share price appreciation; they want the share price to go
up. Other investors are looking for principal protection and income in the form of regular dividends.

Advantages of Equity Financing

Funding your business through investors has several advantages, including the following:

 The biggest advantage is that you do not have to pay back the money. If your business
enters bankruptcy, your investor or investors are not creditors. They are part-owners in your company,
and because of that, their money is lost along with your company.
 You do not have to make monthly payments, so there is often more liquid cash on hand for operating
expenses.
 Investors understand that it takes time to build a business. You will get the money you need without
the pressure of having to see your product or business thriving within a short amount of time.

Disadvantages of Equity Financing

Similarly, there are a number of disadvantages that come with equity financing, including the following:

 How do you feel about having a new partner? When you raise equity financing, it involves giving up
ownership of a portion of your company. The smaller and riskier the investment, the more of a stake
the investor will want. You might have to give up 50% or more of your company, and unless you later
construct a deal to buy the investor's stake, that partner will take 50% of your profits indefinitely.
 You will also have to consult with your investors before making decisions. Your company is no longer
solely yours, and if the investor has more than 50% of your company, you have a boss to whom you
have to answer.
Debt Financing
Most people are familiar with debt as a form of financing because they have car loans or mortgages. Debt is
also a common form of financing for new businesses. Debt financing must be repaid, and lenders want to be
paid a rate of interest in exchange for the use of their money.

Some lenders require collateral. For example, assume the owner of the grocery store also decides that she
needs a new truck and must take out a loan for $40,000. The truck can serve as collateral against the loan, and
the grocery store owner agrees to pay 8% interest to the lender until the loan is paid off in five years.

Debt is easier to obtain for small amounts of cash needed for specific assets, especially if the asset can be
used as collateral. While debt must be paid back even in difficult times, the company retains ownership and
control over business operations.

Advantages of Debt Financing

There are several advantages to financing your business through debt:

 The lending institution has no control over how you run your company, and it has no ownership.
 Once you pay back the loan, your relationship with the lender ends. That is especially important as
your business becomes more valuable.
 The interest you pay on debt financing is tax deductible as a business expense.
 The monthly payment, as well as the breakdown of the payments, is a known expense that can be
accurately included in your forecasting models.

Disadvantages of Debt Financing

Debt financing for your business does come with some downsides:

 Adding a debt payment to your monthly expenses assumes that you will always have the capital inflow
to meet all business expenses, including the debt payment. For small or early-stage companies that
are often far from certain.
 Small business lending can be slowed substantially during recessions. In tougher times for the
economy, it's more difficult to receive debt financing unless you are overwhelmingly qualified.

Estimation of Profitability
Profitability is best described as the firm’s ability to earn financial profit/gain from a specific
project.

It depends on the cost-income ratio and is a measure of project operational efficiency. The net
profit, technically, is the revenue business ends with after paying all the direct expenses such as
production costs, and other expenses related to the operational and business activities.

Estimation is a major method to determine project profitability. The key project parameters
like cost, performance and time etc. are measured over time to determine the benefits project
may incur in future. Calculating the cost-income ratio provides an understanding
that operating expenses shouldn’t exceed operating incomes of the project to ensure smooth
running. The project expenses are required to be kept in check in order to maintain healthy
project profitability.
 Also, operational efficiency is closely linked to profitability. More efficient projects generate
more profits and hence operate with higher profitability. An efficient project runs with lower
operational expenses and consumption of resources but produces desired results.

The success of a project is the ultimate goal of any company but more for the ones where the
outturn account depends on projects, For example- Programming, design, construction, and
consultancy companies etc. Any company that undertakes projects for its clients should
consider the profitability of each project as the most significant goal.

The following are the major steps involved in the process of Project Profitability:

 Defining the scope

When it comes to scope, there arises this big question about what should be included or
excluded. Clients tend to consider a broader scope than project leaders which often leads to a
difference in perception and conflicts affecting project profitability eventually.

Defining the scope of a project should be considered utmost important as it’s the first
ladder and a key factor in project profitability.

 Estimation of required resources

This is also a crucial step to ensure a proper planning. It involves breaking down the tasks
involved and producing a bottom-up estimation to confirm that the overall estimation is in line
with the plan and action that is to be put in place. Sometimes, there isn’t sufficient time to decide
the commercial offer for the client which can lead to hurried and incorrect estimations based on
past data. To avoid going wrong, the estimate should include as much detail as possible
on the profiles needed for each activity. Also, it should be based on historical data as well as
the current scenario.

 Detailed Planning

The break-down of tasks and their estimation should be considered with utmost importance for
the careful planning of the future tasks. It is needed to avoid any additional major project costs
which may arise during a single or multiple stages of project implementation.

Focus on keeping a realistic expectation about the delivery date so that client doesn’t
expect anything at an unreasonable level. It will help you save any situation which may
add up to the delivery cost.

 Right workforce

The project team is the vital factor in turning project estimates and planning to reality.
Maintaining quality and meeting client expectations should be the goal. Cutting down on labor
force can turn out to be more expensive in the long run. Employing under-talented people with
no relevant experience or little motivation may save you few bucks at the moment but will
 eventually become a cost for the company since they will either take too long to complete a task
or screw up the quality altogether. It will also impact client credibility immensely.

High-performing teams are capable of significantly increasing project profitability.

 Risk Identification

The risk is inevitable. Every project is in risk radar by default which requires analyzing and
assessing. Risks with small or negligible potential impact must be taken with a pinch of salt and
not spend a lot of money in avoiding or mitigating such risks. Those risks with the greatest
exposure, i.e. those whose impact and likelihood are average or high, should be managed and
may require specific actions to guarantee project profitability.

It would be wise to establish a safety margin in the cost to be paid by the client
depending on the degree risk posed by the project.

 Analyze profitability at the beginning

Project profitability should be analyzed much before the project even begins to ensure proper
onboarding of client and also with the resources and hope and client contracts other services in
the future. At any event, this fact and the level of profitability to be expected from the project
should be ascertained.

 Foster clear and open communication

Communication plays an important role in project profitability. Open, clear and timely
communication within a team helps in identifying issues and challenges at the right time.
Conflicts, misunderstandings and poorly communicated information could ruin a project
altogether and effective communication can avoid that situation.

Effective communication with client enables the right sync of expectations and also
helps in identifying stumbling block that may arise.

 Efficient recording and managing Data

We all know how important “Data” is for the project management. Feelings and anecdotes in
management may provide a comfortable progress and advancement, but only objective and
recorded data will be able to provide the accurate information needed for efficient management.

It is essential for the team to understand the importance of tracking information and
undertaking data entry on a regular basis.

 Track profitability at all times

A proper tracking of project profitability is the most important aspect and should not be left until
the end, once the project is executed. Tracking should be undertaken constantly, regularly
 monitoring project status to date and taking any necessary steps when unforeseen deviations or
circumstances are identified.

If deviations are identified timely and corrective actions are at a place, maximum
profitability can be ensured.

 Project deviations

Deviations, small or big, are to be considered as a caution of something not going right. Even
though small deviations don’t require a lot of your productive time, they shouldn’t be completely
ignored. These deviations are often the symptom of a larger problem, meaning it is important to
project them into the future and gain a clear picture of the situation.

The Earned Value technique is one of the useful tools for making project status
projections.

 Taking a lesson from past mistakes

If the relevant information and data regarding the project are recorded properly, it becomes
easier to analyze what went wrong or what factors made certain projects achieve greater
profitability than others. One should learn from both the mistakes and successes since
mistakes make you cautious and improve and successes let you stay motivated and
stick to the goal.

 Using the right tools and equipment

Any project is futile if the right tools and technologies are not used in the execution. It is
important to use the right tools (without generating a high cost for the project) that ensures swift
and efficient project management, help estimate and plan, record and analyze data and allow
the team flexibility to work on complex situations and from remote locations.

Summary

Creating a culture of project profitability is a top priority for engineering and consulting firms.
Project-based ERP systems provide the framework to keep all employees — project managers,
resource planners, and financial managers — focused on the same goals and the right metrics
to drive profitability and cultural change. Optimized for the way professional services firms work,
project-based ERP gives project managers one place to control all aspects of their projects from
planning and capture to invoicing and reporting. Using a system specifically designed for the
way they work gives project managers the ability to focus on the bigger picture of profitability,
cash flow, and resource management while continuing to do innovative work.

Processing for Administrative Approval

For every work, it is necessary to obtain, in the first instances the concurrence of the competent
authority of the administrative department requiring the work. The formal acceptance of the
proposals by the authority is termed as Administrative Approval of the work.

Administrative approval is depending on the organisational set-up of the corporate

establishment. Also depends on the magnitude of the projects.

It starts with the approved Budget Proposal of the project.

After the proposal is initiated by the Project team with Preliminary Project Report(PPR, received
from the Architect / Consulting agency, or its own in-house department) , it goes first for
Technical approval of the Project with recommendation of its associate finance.PPR also
justifies the methodology how the project will be executed, ( like Global Tender/ National level
Tender, or even Limited Tender ).

Technical Authority, with relevant remarks , puts it up to the CA, the Competent Authority, ( with
ratification by CA’s own associate finance).

After CA’s approval, the proposal returns backwards in the same route, ultimately to the Project
Manager with all the remarks , who has to revise the proposal. Revised proposal is again placed
to the CA, in the same manner mentioned above, for approval.

The modified proposal, as approved, is sent to the Consulting Agency for preparation of Detail
Project Report ( DPR ). DPR includes everything in detail including all Tender Documents,
Tender Purpose Drawings etc.

Same procedure is again followed to get it approved by CA.

National Projects include many more Government Agencies, including scrutiny by Appointed
Parliamentary Committees.

Harvard Business Review

1. How do you define innovation? Something different that has impact.

2. What are different types of innovation? Innovation is more than whiz-bang technology;
consider different strategic intents (e.g., create a new category, extend current business) or
innovation mechanisms (e.g., new product, distribution channel, marketing approach).
3. How do I spot opportunities for innovation? Go to the source: the customer you hope to
target.
4. Which customers should I target? Look beyond your best customers to those who face a
constraint that inhibits their ability to solve the problems they face in their life.
5. What should I look for? As Drucker said, “the customer rarely buys what the business
thinks it sells him;” look for a job-to-be-done, an important problem that is not adequately
solved by current solutions.
6. How should I look? Start with deep ethnographic research; avoid focus groups!
7. How do I come up with an idea? Remember the Picasso line “good artists copy, great
artists steal;” seek to borrow ideas from other industries or geographies.
8. What is disruptive innovation? An innovation that transforms a market or creates a new
one through simplicity, convenience, affordability or accessibility.
9. What is the best way to disrupt a market? Embrace the power of trade offs. Seek to be
just “good enough” along historical performance dimensions but introduce new benefits
related to simplicity or affordability.
10. What does “good enough” mean? Performance above a minimum threshold to
adequately solve a customer’s job to be done; sacrificing performance along traditional
dimensions can open up new avenues to innovate.
11. What is a business model (and how do I innovate one)? How a company creates,
captures, and delivers value; codifying the current business model is the critical first step of
business model innovation.
12. How can I “love the low end”? Build a business model designed around the low-end
customer’s job-to-be-done.
13. How do I know if my idea is good? Let patterns guide and actions decide; remember Scott
Cook’s advice that “for every failure we had we had spreadsheets that looked awesome.”
14. How can I learn more about my idea? Design and execute “high return on investment”
experiments to address critical unknowns.
15. How can I get other people behind my idea? Bring the idea to life through visuals and
customer testimonials.
16. How long does it take new businesses to scale? Almost always longer than initial
projections; be patient for growth and impatient for profits.
17. Why is innovation so important? The “new normal” of constant change requires
mastering perpetual transformation.
18. Why is innovation so hard? Most organizations are designed to execute, not to innovate.
19. Who are your influences? Academics like Clayton Christensen and Vijay Govindarajan,
leading-edge innovative companies like Procter & Gamble and Cisco Systems, and
thoughtful writers like Michael Mauboussin and Bill James.
20. How do I encourage innovation in my organization? Stop punishing anything that
smells like failure, recognizing that failure is often a critical part of the innovation process.
21. What is “the sucking sound of the core?” The pull of the core business and business
model that subtly influences new ideas so they resemble what the organization has done
before.
22. What is an innovation “safe space”? An organizational mechanism that protects
innovators from the sucking sounds of the core.
23. How should I form and manage innovation teams? Keep deadlines tight and decision
makers focused.
24. What is in a good innovation strategy? Overall goals, a target portfolio for innovation
efforts, a mechanism to allocate resources to achieve that portfolio, and clearly defined
goals and boundaries for innovation.
25. What is the best way to manage an innovation portfolio? Make sure you correctly
capture current activities and measure and manage different kinds of innovations in
different ways.
26. What does ‘prudent pruning’ mean? Recognizing that destruction is often a critical
component of creation.
 27. What role should senior executives play in innovation? A big one.
28. How can I personally become a better innovator? Practice – innovation is a skill that
can be mastered.
29. How can I find more resources for innovation? Shut down “zombie projects” that are a
drain on corporate resources.
30. How can I more quickly turn good ideas into good businesses? Remember what Edison
said – genius is “1% inspiration and 99% perspiration;” get ready to sweat.
31. Has anyone built the ability to innovate at scale? An increasing number of companies,
such as Google, Apple, Procter & Gamble, Amazon.com, Cisco Systems, Godrej & Boyce
and General Electric.

UNIT 3

Execution of Projects

Project execution (or implementation) is the phase in which the plan designed in the
prior phases of the project life is put into action. The purpose of project execution is to
deliver the project expected results (deliverable and other direct outputs). Typically, this
is the longest phase of the project management lifecycle, where most resources are
applied.
During the project execution the execution team utilizes all the schedules, procedures
and templates that were prepared and anticipated during prior phases. Unanticipated
events and situations will inevitably be encountered, and the Project Manager and
Project Team will have to deal with them as they come up.
In the standard division of project management discipline this phase is called "Project
Execution and Control"; the term "control" is included here because execution is not a
blind implementation of what was written in advance but a watchful process where doing
things goes along with understanding what is being done, and re-doing it or doing it
differently when the action does not fully correspond to what was intended. This "control"
is an integral part of project management and is a necessary task of the project
manager. As such it is different for project evaluation as generally conceived in aid
programmes, where evaluation is usually performed by a team different from the project
execution team ( e.g. the programme manager, the quality support officer, etc.), so as to
independently verify the quality and the efficacy of the work done.
When the whole team is close-knit control, monitoring and evaluation move hand in hand
supporting and giving added value to each other. A possible way of differentiating project
control by project evaluation is to say that while "control" is done by the project manager
(that include monitoring of subordinates and self evaluation) evaluation is generally done
directly or through a group by the line manager of the project manager and is an activity
occurring in the "shared field" between project and programme management.

The key elements of project execution is the ability of working effectively in the team and
the ability of remaining faithful to project scope while facing unpredicted events and
difficulties.
The main elements of project execution are:
 Conduct Project Execution Kick-off event, where the Project Manager conducts a meeting to
formally begin the Project Execution and Control phase, orient new Project Team members,
and review the documentation and current status of the project.
 Manage Project Execution, where the Project Manager must manage every aspect of the
Project Plan to ensure that all the work of the project is being performed correctly and on
time.
 Manage CSSQ (Cost, Scope, Schedule, and Quality), where the Project Manager must
manage changes to the Project Scope and Project Schedule, implement Quality Assurance
and Quality Control processes, control and manage costs as established in the Project
Budget.
 Monitor and Control Risks, where the project develops and applies new response and
resolution strategies to unexpected eventualities.
 Gain Project Acceptance where the project manager acknowledge that all outputs delivered
have been tested, accepted and approved, and that the products/services of the project has
been successfully transitioned to the expected beneficiaries.
Project execution (or implementation) is the phase in which the plan designed in the
prior phases are put into action. The purpose of project execution is to deliver the project
expected results (deliverable and other direct outputs). Typically, this is the longest
phase of the project management lifecycle, where most resources are applied.
During the project execution the execution team utilizes all the schedules , procedures
and templates that were prepared and anticipated during prior phases. Unanticipated
events and situations will inevitably be encountered, and the Project Manager and
Project Team will have to deal with.
In the standard division of project management discipline this phase is called "Project
Execution and Control"; the term "control" is included here because execution is not a
blind implementation of what was written in advance but a watchful process where doing
things goes along with understanding what is being done, and re-do it or do it differently
when the action does not fully responds to what was meant for. This "control" is an
integral part of project management and is a necessary task of the project manager. As
such it is different for project evaluation as generally conceived in aid programmes,
where evaluation is usually performed by a team different from the project execution
team ( e.g. the programme manager, the quality support officer, etc.), so as to
independently verify the quality and the efficacy of the work done. (see also establishing
a M&E system; Manage the current project/programmes revising scope and schedules.)
When the whole team is close-knit control, monitoring and evaluation move hand in hand
supporting and giving added value to each other. A possible way of differentiating project
control by project evaluation is to say that while "control" is done by the project manager
(that include monitoring of subordinates and self evaluation) evaluation is generally done
directly or through a group by the line manager of the project manager and is an activity
occurring in the "shared field" between project and programme management.

Project Organization- Need of a project organization

A project organization is a structure that facilitates the coordination and implementation
of project activities. Its main reason is to create an environment that fosters interactions
among the team members with a minimum amount of disruptions, overlaps and conflict.
One of the important decisions of project management is the form of organizational
structure that will be used for the project.
 Each project has its unique characteristics and the design of an organizational structure
should consider the organizational environment, the project characteristics in which it will
operate, and the level of authority the project manager is given. A project structure can
take on various forms with each form having its own advantages and disadvantages.

One of the main objectives of the structure is to reduce uncertainty and confusion that
typically occurs at the project initiation phase. The structure defines the relationships
among members of the project management and the relationships with the external
environment. The structure defines the authority by means of a graphical illustration
called an organization chart.

A properly designed project organization chart is essential to project success. An

organization chart shows where each person is placed in the project structure. An
organization chart is drawn in pyramid form where individuals located closer to the top of
the pyramid have more authority and responsibility than members located toward the
bottom. It is the relative locations of the individuals on the organization chart that
specifies the working relationships, and the lines connecting the boxes designate formal
supervision and lines of communication between the individuals.

Functions of a project department

The project organization is the structure of the project. It’s created separately, with specialists
and workers from various departments. These personnel work under the project manager.

Project organization is a process. It provides the arrangement for decisions on how to realize a
project. It decides the project’s process: planning how its costs, deadlines, personnel and more
will be implemented and by which project management tools. The project organization is then
presented to the project stakeholders.

Areas of Responsibility
There are three areas of competence and responsibility in a project organizational structure:
project leadership, project team and project board. The project leadership is responsible for the
management of the project, and the project team implements the project. The project board is
the decision-making body that defines project success and whether or not a project must be
canceled.

Types of Project Organizational Structures

There’s a variety of project organizational structures. Here are three:

 Functional is when the organizational departments are grouped by areas of specialization. In

this case, the project is usually executed in a silo environment.

 Projectized is when the entire organization is organized by the project.

 Matrix has teams report to both a functional manager and project manager, sort of a hybrid
of the previous two structures.

 Organic project organization embraces flexibility.

 Virtual is when the project manager is the hub in the network.

 Multi-division means that functional groups are decentralized.

Understanding what type of organizational structure to use determines a project’s management.

The structure provides the bones for the project, and therefore the project plan must align itself
with the structure. This is usually done with a project organization chart.

Project Organizational Structure Charts

Figuring out what structure to make a project organization is only the start of organizing a
project. The real work is implementing and applying that project organization. That’s why a
project organization chart is so important. It establishes the formal relationships between the
project manager, project team, development organization, the project itself and project
stakeholders.
Best Practices
The project manager creates the project structure, which must meet the project needs
throughout its phases. The project organizational structure, however, cannot be too rigid or too
loose, but strike the right balance between those two points. The object of a project organization
is to help the team achieve the project goal and do their best. Therefore, a project manager
must analyze their team members’ strengths for the start and, when assigned, ask them if
they’re comfortable in their roles.

While the project organization chart fosters collaboration in a cost-effective way, avoiding
duplication and overlaps of effort, it has only limited value. That’s because it is only illustrating a
hierarchical relationship among the team, not how they’ll do the work. That said, it is still a
valuable tool and part of any well-planned project or portfolio.

How to Make a Project Organization Chart

The project organization chart will identify the roles and responsibilities of the team, but also
detail those team members selected for those roles. This includes identifying training if needed,
recognizing how to allocate resources and determining appropriate ways to involve stakeholders.
To do this, there are six steps to take.
1. Identify Personnel
First, who are the people that are related to the project scope? These are those who have an
impact on the project. They are the key staff. These people can run the gamut from marketers to
salespeople, department heads and IT personnel to consultants and support staff, etc.
2. Create Senior Management Team
The next step is to get a team who is responsible for the project. These are, of course, those
individuals with a vested interest in the project and are committed to its success. This team is
usually made up of project sponsors or the client, though it can also include experts who offer
guidance throughout the project.

3 Assign Project Coordinators

There’s a need to have a point person, or group at the mid-to-low management level, to carry
out duties that fall to this level. This person or group will help synchronize team tasks. The
number of coordinators will be determined by the size of the project, but always focus on three
areas of a project: planning, technical and communications.

4. Note Stakeholders
Outside of the team that will execute the project, it is key to identify the stakeholders, as they
are also impacted by the project and participate in the project development.

5. Identify Training Requirements

Sometimes teams are proficient at their tasks and with the tools that have been furnished to
help them. Sometimes they’re not and need a period of training before the project can be
executed. This is the point where any training that is needed is established and offered to the
team. The project coordinator is usually who manages this task of upskilling team members.

6. Create Project Organization Chart

Finally, it’s time to develop the project organization chart. First, review the previous steps and
then make this visual representation of how the people in the project will collaborate, what their
duties are and where they’re interrelated. You can use a free network diagram tool, such as
Google Draw, and when done have it disseminated to the necessary parties.

The project organization chart must have the primary decision-makers listed. Each person
involved in the project must have an assignment and identified role and the responsibilities of
those roles clearly defined. Any links connecting roles must be identified, as well as all the
stakeholders. Be sure that the reporting and communications channels are also defined and
described.
Project Sanction Letter and contents

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Types of Projects

(1) Manufacturing Projects:

Where the final result is a vehicle, ship, aircraft, a piece of machinery etc.

(2) Construction Projects:

Resulting in the erection of buildings, bridges, roads, tunnels etc. Mining and petro-
chemical projects can be included in this group.

(2) Management Projects:

Which include the organization or reorganization of work without necessarily

producing a tangible result. Examples would be the design and testing of a new
computer software package, relocation of a company’s headquarters or the
production of a stage show.

Finalization of Strategies for the execution of Projects

What is Project Execution?

During the five process groups of the project life cycle, there are multiple objectives and
outcomes for each phase. After the project initiation and the planning processes, the execution
of the project begins.

Successful CEOs Ram Charan and Larry Bossidy define execution in their book Executive: The
Discipline of Getting Things Done: “Execution is a specific set of behaviors and techniques that
companies need to master in order to have competitive advantage. It’s a discipline of its own.”

Project execution is the third phase of the project life cycle and one of the most vital of the
project phases. It is the phase where you will construct your deliverables and present them to
your customer and key stakeholders. This is usually the longest phase of the project life cycle
and predictably the most demanding.

Project execution’s key purpose is to complete the work defined in the project management plan
and to meet key project objectives. During this phase a project leader will focus on these key
processes:

 Managing people

 Following processes

 Communicating information to all key stakeholders, sponsors and team members

Now that we’ve covered that, what can program and project managers do to help their
organizations close those gaps and add value along the way?

Closing the Execution Gap

There are two pieces to closing the gap:

 Aligning the strategic plan goals and objectives

 Executing in the program and project delivery of outcomes that meet those objectives

Closing that execution gap, also know as the strategy gap, is one of most frustrating challenges
facing business leaders today. The execution gap is a perceived gap between a company’s
strategies and expectations and its ability to meet those goals and put ideas into action.

6 Execution Gaps to Watch Out For

Over the last several years, there have been numerous books focused on how to solve the gaps
regarding strategy and execution. These books suggest that sponsors are critical to filling theses
gaps, as well as implementing a well-defined framework.

Organizations that implement an executive strategy to turn strategic goals into business value
will discover the “larger system” for success – the C-suite executives, middle management,
project manager and project team.

Earlier this year, another book was released called Filling Execution Gaps by Todd
Williams. Williams’ book takes it one step further to clearly identify “six execution gaps” to close
for realizing repeatable project success.
Per the latest PMI Pulse of the Profession 2017, “C-suite continues to be largely focused on
bridging strategy formulation and execution and tackling technology and business disruption.”
Williams’ research reveals the gaps we’ve been missing.

Williams’ research identifies six primary gaps that prevent successful project execution:

 Absence of common understanding

 Disengaged executive sponsors

 Misalignment with strategic goals

 Poor change management

 Ineffective corporate governance

 Lackluster leadership

Shouldn’t it be more complicated than this? The reality is that fixing each gap individually is not
the solution. The real challenge is finding solutions, developing actions plans and implementing
strategy to fix all six gaps. According to Williams, it’s not rocket science, but understanding how
each gap affects your program initiatives is key to the most critical phase of your project –
execution.
Strategic Tips to Improve Project Execution
Let’s review some strategies to promote successful project execution.

1. Begin with the End in Mind

It’s a good idea to consider the alignment of strategy with your program or projects and the
projected final outcomes. A big problem with going from concept to implementation is simply a
lack of clearly defined goals and objectives.

Executives who cannot define what they want accomplished can hardly expect project leaders to
understand their strategy and lead their projects with any level of meaningful contribution.

2. Gain Buy-in from Your Core Team

Executives require the efforts of others. Executives must be able to effectively communicate to
sponsors, program and project managers what they want done and, more importantly, why they
want to do it.

Clear and concise communication is vitally important. A well-defined project up front will help
earn the buy-in from your team and stakeholders, and it sets the stage for your team.

Furthermore, explaining the vision behind strategic decisions gives this core team a deeper
understanding of how their knowledge and work will contribute to the larger whole. Without this
understanding it is easy for them to feel isolated instead of feeling like engaged participants in a
meaningful enterprise. Using collaborative project management software is an ideal way to keep
everyone working as a team while keeping sight of primary objectives.

3. Project Leaders Get Their Projects Across the

Finish Line
To make sure strategies get put into motion, you must make sure you have the talent with the
right project leadership skill sets to manage the project. Today, PMI recognizes the need to have
a trio of skill sets in the areas of leadership, strategic and business management, and technical
project management.

Emotional intelligence and self-awareness continue to be essential skillsets for project leaders.
You also need to better understand yourself to lead others. Plan to acquire any just-in-time
training so you have the necessary working knowledge for your role on the project. Every project
leader should have a personal career roadmap in place to fill behavior or competency gaps.

4. Build a High Performing Team

You should aim to build a highly qualified team that can help define the right strategies and
alignments for your programs and projects. Project leaders that can align their vision and
work with their teams will successfully deliver key programs and projects. The alignment of
vision and strategy to implementation will help you close those gaps.

5. Monitor Progress and Performance through

Accountability
Implementing any strategy involves meetings to discuss the various projects and programs that
will be required. Meetings are critical to help bring together the focus in this phase to do the
following:

 Manage people

 Follow processes

 Communicate information to all key stakeholders, sponsors and team members

Meetings are a great way to firm up agreements, document actionable items, identify
risks/issues and hold your team members accountable to follow through to produce results.

Keep the line of communication open throughout the project. Make sure to follow up before,
during and after meetings regarding outstanding action items, issues and risks. Make sure not to
micromanage, and adjust your leadership style based on the situation and the team member.
ProjectManager.com has project dashboards for monitoring and tracking—Try it free!

6. Listen to Lead
Project leaders don’t have crystal balls to see the future to avoid unknown risks and issues. What
they can do is tap into the collective knowledge of their team. Listening is an underutilized
skillset of many leaders, and if you want to close gaps, you need to learn to listen.

Rely on input and feedback from your team, stakeholder and customers as required. Be prepared
to filter out any information that doesn’t add value.

7. Be Open and Flexible

Every project is unique. Project leaders must be nimble, adaptable and flexible to adjust and
correct their projects. The project execution phase will reveal unanticipated problems or issues,
so project leaders must be prepared to pivot and make tactical changes.

8. Celebrate Incremental Achievements Along the

Way
How do you eat an elephant? One bite at a time. Break down the project execution phases into
smaller parts. Celebrate at each phase. Celebrate milestones, quick wins and refinements to
improve processes and performance.

The execution phase will be one of your longest phases and will take the most time and energy
from your team. It’s a great time to boost morale and acknowledge team efforts.

9. There Is No “I” in Team

There are no projects that are completed successfully without the efforts of your
team. Acknowledge and give credit to your team for being instrumental to the success of the
program or project. Project leadership is all about growing other leaders in your
organization. Also, any great leader knows that the success of their programs and projects is
because it’s a team effort.
10. Champion a New Reality
Failure is hard to recognize without hindsight, so should we champion a new reality? I’ve seen
many projects and programs complete their implementation only to be a considered a failure in a
few years. Fail fast, fail forward.

Organizations that focus on alignment of their vision and strategy in programs and projects will
yield a higher rate of project success. It’s clear that the closing of these gaps improves an
organizations’ ability to produce repeatable best practices and reap a return on investment.

Remember the words of business and management guru, Michael LeBeouf, “A satisfied customer
is the best business strategy of all.”

Using ProjectManager.com for Project

Execution
Strategy and theory will only get you so far when it comes to execution: you need the right tools
to ensure that your project plan becomes a success. ProjectManager.com has a powerful suite of
tools to help you execute your project plan. Our online Gantt chart is dynamic, so as team
members complete their tasks, you can watch their progress update in real time on the graph.
This helps you ensure that the project is being executed on time and according to plan.
The Gantt chart helps the managers, but our task management tools help the team members
execute their daily tasks. Our award-winning software features a “My Work” section where team
members can see all of their assigned tasks, their priority and when they’re due. Plus, they can
update progress, add comments and attach files tasks so all the work stays project-centric.
Transparency is key for good execution, and ProjectManager.com has it in spades.
Engagement of Consultants