Because of projects' limited scope and short execution time, senior managers can use them to analyze operational issues, solve problems and explore new possibilities without disrupting tactical operations. Strategic management operates on long-term plans and applies information gained from projects to set the organization's future priorities. As part of the strategic management process, projects may focus on both the external customer environment and internal activities required to support better alignment of operations and strategic objectives.
Many large companies allocate a portion of their profit or operating capital for research and development – R&D -- projects. Companies select R&D projects based on an assessment of potential revenue or their desire to acquire patents and intellectual property that support strategic initiatives. The selection of R&D projects helps position an organization to test new product ideas and find ways to solve existing quality challenges, reduce defects or improve performance.
Prototype solutions developed on projects may offer a solution to customer problems or demonstrate potential products that can become part of marketing campaigns to increase an organization’s customer base. The business intelligence function of strategic management identifies future business areas for consideration. Using information on the needs of current customers or a marketplace analysis, the business analyst suggests demonstration projects to enhance the company’s competitive position.
Identifying and managing risks to business operations fall within the purview of strategic management. Areas of potential risk assessed by management include problems with customer satisfaction, product failures and competition. Not all risks can be eliminated. However, using projects to assess the business impact of risk conditions allows strategic managers to choose which risks they should address pre-emptively and which ones they can either monitor or ignore.
Strategic management continuously seeks to identify and mentor promising employees for future roles in management. By giving aspiring managers or lead technologists the opportunity to manage a project, senior managers have the opportunity to assess their potential for advancement under realistic management conditions. The role of project manager offers many opportunities for training in key skills that can later apply to operational or senior management positions, such as creating a work breakdown, assigning and monitor staff performance and managing a project budget.