One of the more interesting errors of omission I encounter often in architecture or business transformation programs is the absence of a clear, well articulated value proposition for all interested stakeholders. We call this the “what’s in it for me” for each stakeholder from each of their perspectives. Why is this important? The benefits to the business should be obvious, right? We (the program team) firmly believe we can reduce costs, improve profitability, manage process compression, enable growth, and improve the customer experience as a result of our efforts. This is obvious, right? This is crystal clear to us. But what about the stakeholders outside of the core program team?
What is usually less clear to others is the impact and perception the proposed program or technology introduction will have across the organization. We are human after all, and the one thing I know is most humans are terrified of change – any change. This is compounded by the dynamics (some would say web) of conflicting agendas, misguided incentives, and a host of other perfectly natural attempts to optimize and guide an organization competing for scarce resources to meet its strategy goals and objectives.
For example, let’s just omit organizational (line of business) or geographic boundaries for a minute and just focus on typical roles we find in every organization and try to understand what is really important to each ( “what’s in this for me”). Examples here are vastly simplified for clarity (and generalized without industry specific needs) but I think they will help to illustrate my point.
Chief Executive Officer
- Earnings Per Share, Share Prices Appreciation
- Dividends Per Share
- Price to Earning Ratio and Market Book Value
- Value Drivers
- Leadership recognition and respect of peers in the industry
- Gross Margin
- Profitability (Margin e.g. EBIT, EBITDA, NOPAT)
- Operating Expenses
- Asset Turnover
- Working Capital Management, GMROI (for Retailers)
- Actual Employee Turnover Costs
Chief Financial Officer
- Cash Flow
- Debt to Asset, Debt to Capitalization, and Interest Coverage Ratios
- Cash Flow / Share
- Return on Total Net Worth, Return on Common Equity
- Growth (lift, where is it occurring in the business and why)
- Market or Wallet Share
- Effectiveness of Campaigns
- Selling Together (propensity)
- Not Selling Well (end of life, uncompetitive)
- Selling in What Market
- Portfolio Erosion or Segmentation Trends
- Customer Intimacy (Satisfaction)
- Their Competition
- My Next Sales Opportunity (managing the pipeline)
- What is Selling Now
- Cross-Sell and Up-Sell Opportunity Realization
As you can see this covers a very wide range of needs at the executive level in this simplified view of the world. And why we need to be very careful about the law of unintended consequences. A growth objective for example, may adversely impact profitability in the near term or cannibalize an existing product line. Or what is more common, reducing key process cycles may expose or create stress in downstream consumers of key outputs, For example, sales may be overwhelmed by new channel development through an effective introduction of customer acquisition tools or a series of highly successful marketing campaigns driven by improved analytics, one right after the other, driving up working capital needs to support new business levels. This is what I call a “high quality problem”.
Solving for this is one of the real pay-offs for using the method I will share with you. Defining the “what’s in it for me” in our stakeholder community means we can gain a better understanding of what really drives decision making in an organization. And why people do what they do (even if it doesn’t make sense to us). This also explains the optimization trade-offs that are made that sometimes leave us scratching our heads and wondering why the “killer” no-brainer investment is shelved, orphaned, or simply encouraged to just “go away”. In some cases, what we thought made sense to ourselves is viewed a real and present threat to others – not exactly what we ever want when embarking on a long difficult transformation program.
More than benefits
We are probably much closer to the real benefits and costs than our peers (they have a business to run after all) having lived through the detailed planning and development of a defensible business case and program master plan. As a result of our hard work we should be able to begin to assemble a well defined set of generalized, quantifiable benefits. The usual suspects would include:
- Improve Customer experience and loyalty
- Shorten latency and response times
- Improve Quality in Delivery (e.g. perfect order fill rates)
- Improve Time to market (cycle compression)
- Improve productivity (more value-added activity)
- Preserve intellectual capital
- Encourage reuse – standardize on a repeatable processes
- Minimize Rework
- Improve management visibility into the business
- Modernize and Simplify Business Processes and Systems
- Define core master data once and use everywhere
- Standardize tools and processes
- Adopt global data definitions, policies, and standards
- Adopt specific governance policies, procedures, and metrics
- Transform information and data from one structure and format to another
- Enrich the same data where needed or requested
- Reduce costs of operations and maintenance
This is not enough. What we have now is a solid starting point to begin associating each stakeholder to one or more of the benefits above expressed in their terms with specific examples we can all relate to.
What to do?
Armed with this understanding now it is time to roll our sleeves up and get to the real work. We should be able to tie each relevant (not all may apply) benefit to each stakeholder’s needs clearly and articulate the value proposition or “what’s in it for me” for each of them.
Using an IT Portfolio Improvement initiative as an example we would start with the collection of both direct and indirect stakeholders this program initiative would impact. More than likely based on their role they would probably agree with many of the generalized business and technology benefits cited earlier. For each of these stakeholders, we then need to describe their true interest as we understand it. For example the CIO’s true interest may be in realizing a reliable and dependable process is in place regarding cost performance of CAPx and Operating expenses for all IT investments. For project managers that want to see good performance data, there is clearly solid interest. On the other hand, other project managers may consider proper accounting a wasted exercise outside the area of project management with little or no value to themselves.
The next step is to understand where we need each stakeholder to help us succeed. In our example, the CIO is needed to sponsor the project, review and approve recommendations on implementing project solutions, and issuing communications directly to Project Managers or through a PMO group. In our example, we need to leverage those Project Managers that agree the process is broken and highlight their success to drive full scale adoption to other projects that may choose to ignore or block project recommendations and solutions.
After this is completed we need a strategy for communicating with each stakeholder to ensure success. For the CIO, we need to provide weekly updates through the PMO Director and monthly briefings we participate in directly to share project results and work products. Our strategy with the project managers is a little different. We would probably identify and include a selected group of project managers for test piloting proposed solutions. We would include this same group in progress reports throughout the project life cycle. In addition, we should plan on communicating updates and news alerts to the entire population of project managers as well to maintain a consistent repeated set of messages to encourage adoption of the piloted solution.
So when planning a program of any significant size and impact you must know your stakeholders. This means being able to clearly articulate the “what’s in it for me” for each of them, and actively managing this reality over the life of the initiative. Anything less and we risk the probability for reducing the successful adoption of our program or project.
I know this is sounds crazy, and maybe it’s just me. How many of use in the profession can truly say we have been taught to develop, refine, and deliver a professional road map based on a sound method with consistent repeatable results? Have been at this crazy business for years, and still astonished at the wide variety of quality in the results I have experienced over the years – and it’s not getting any better. Not sure I can identify why this is so, maybe it’s the consolidation and changes in the traditional consulting business (big eight to what? two, maybe) or the depreciation of the craft itself among our peers. And then again, maybe sound planning went out of style and I didn’t get the memo. No matter what the root cause(s) is want to take a little time and share some (not all) of what has worked for me with great success over the years and may make your next roadmap better. I’m no genius, just believe I have been blessed to come into the industry at a time when the large management consulting firms actually invested in intellectual property and shared this with the “new hires” and up-and-coming staff professionals. Don’t see much investment in structured thinking, communication skills, or just plain good analytics anymore, it is truly troubling. Where are the young people learning the craft anymore? Enough of the griping I beginning to sound like my parents again…
Bear in mind this not just confined to the “bigs”. What I’m going to share is works well in the boutiques as well. I have demonstrated the success of this method over the years with my experiences as a small boutique leader and several channel partners. It simply works. You will not find this in textbooks, class rooms, or in your local book store (I have looked, maybe not hard enough). You will find this in the best and brightest organizations that have adopted an optimized way to think about guiding their organizations to perform as expected (this is called experience). Now on to the summary of what I want to share, the balance will be revealed in later posts.
The Overall Pattern
At the risk of over-simplifying things, here is the overall pattern ALL roadmaps follow:
1) Clear and unambiguous understanding of the current state
- Business Objectives (not strategy or goals, quantifiable objectives)
- Functional needs
- High impact business processes or cycles
- Organization (operating model)
- Cost and complexity drivers
- Business and technical assets (some call these artifacts)
2) Future or desired end state definition
First, (know this is obvious) what are trying to accomplish? Is there an existing goal-driven strategy clearly articulated into quantifiable objectives? Sounds silly doesn’t it, and if this exists and a no one knows about it or cannot clearly communicate what the end game is we have a problem. This could be a well guarded secret. Or, what is more common the line of sight from executive leadership down to the mail room is broken, where no one knows what the true goals are or cares (it’s just a job after all) becomes a annual charade of MBO objectives with no real understanding. Some better examples I would expect include:
- Performance targets (Cash flow, Profitability, Velocity (cycle or PCE), Growth, Customer intimacy)
- Operating Model
- Guiding principals
3) Gap Analysis
Okay, now this is where the true fun starts. Once here we can begin to evaluate the Delta between who we really are, and what we truly want to become. Armed with a clear understanding of where we are and where we want to be, the actionable activities begin to fall out and become evident. Gap closure strategies can then begin to be discussed, shared, and resolved into any number of possibilities usually involving the following initiatives:
- Architectural (technology)
- Reward or economic incentives
Okay – now we have the list of actionable items now it is time to prioritize what is front of us. This is usually driven (in a technology road map) by evaluating the relative business value AND the technical complexity, plotting the results in a quadrant graph of some kind. It is critical here that the stakeholders are engaged in the collection of the data points and they are keenly aware of what they are scoring. At the end of the day, what we are doing here is IDENTIFYING what is feasible and what has the highest business value. I know, I Know this sounds obvious, and you would be astonished by how often THIS DOES NOT occur in the wild.
Okay, now we have the initiatives, the prioritization, how about sequence? In other words are there things we have to get accomplished first, before others? Are there dependencies we have identified that need to be satisfied before moving forward? This sounds foolish as well, and we sometimes we need to learn how to crawl, walk, run, ride a bike, and then drive a motor vehicle. And what about the capacity for any organization to absorb change? Hmmm… Not to be overlooked, this where a clear understanding of the organizational dynamics is critical (see number 1, this is why we need to truly understand where we are).
Now we are ready. Armed with the DELTA (current vs. desired end state), the prioritization effort (what should be done), and the optimum sequence (in what order) we can begin to assemble a sensible, defensible road map describing what should be done in what order. How this is communicated is critical now. We have the facts, we have the path outlined, and we have a defensible position to share with our peers. We have the details readily available to support our position. Now the really difficult exercise rears its ugly head. Somehow, we need to distill and simply our message to what I call the “Duckies and Goats” view of the world. In other words we need to distill all of this work into a simplified yet compelling vision of how we transform an organization, or enabling technology to accomplish what is needed. Do not underestimate this task, after all the hard work put into an exercise like this, the last thing we need to do is to confuse our stakeholders with mind-numbing detail. Yes, we need this for ourselves to exhaust any possibility we have missed something. And to ensure we haven’t overlooked the obvious – not sure who said this but “when something is obvious, it may be obviously wrong”.
So, this is the basic pattern which is how a robust road map should be developed for any organization across any discipline (business or technology) to ensure a robust, effective planning exercise. Wanted to share this with you to help you with your efforts, this is usually not an exercise to be taken lightly. We are after all discussing some real world impacts to many, all the while understanding the laws of unintended consequences (more on that later), to come up with a set of actionable steps to take along the way that just make sense. I may be just another “rodeo clown”, but this has worked for me time after time. think this may just work for you. More on this later….
Today’s tough economic environment is bringing new challenges. And an absolute focus on performance. Investment decisions should be made with a complete understanding of the impact to cash flow, profitability, velocity, growth, and customer intimacy in your IT organization. Project and Portfolio Management addresses these concerns by adopting a combination of processes based on COBIT 4.1 and VAL IT management frameworks using the right tools to ask and answer the right questions.
In portfolio management we really want to know:
- Are we doing the right things?
- Are we realizing the benefits?
The answers will help guide us to approve the right mix of work to optimize contributions to strategic objectives while providing value, at affordable cost with an acceptable level of risk. And, focus our attention to the projects generating the most significant improvements in the five (and only five) essentials in business that matter: cash flow, profitability, velocity, growth, and customer intimacy.
We use project management when we really want to know:
- Are we doing them the right way?
- Are we getting them done well?
How effective and disciplined are my delivery and project management processes? Are we finding ways to continually boost the productivity of our project management teams? Does our organization have the capability to evaluate our initiatives in a systematic and objective manner?
Asking the right questions here is critical to success. Poor project and portfolio management practices can prevent even the best organization from performing in an optimal manner. Most of the real problems begin with execution in project management where the work is planned and managed. Since this is where most of the project activity originates and is recorded, it is a critical to measuring progress to plan and evaluating performance accurately. Without an effective and disciplined project management function unplanned work begins to overtake planned activity (see my prior post on Demand Management). Because intent is not communicated clearly to stakeholders and resources committed, a significant amount of risk can be introduced into every initiative undertaken. The results are inevitable and lead to:
- Incomplete project definition leading to ongoing project extensions
- Unclear work assignments, goals, objectives, and deliverables.
- Non-value added essential work and unplanned activity ratios rise as more and more meetings and status reporting is required to communicate intent and progress.
- Scope creep or frequently changing delivery targets
- Budget overruns occur to meet the unplanned activity not accounted for
- Missed deadlines on scheduled deliverables or slippage in cycle delivery occurs
- Unusable new product or feature is created – expensive, costly rework is required
- Failure to deliver on some elements of the project scope – focus is lost
- Customer confidence and value is destroyed faster than it can be created
Now that we have met the enemy, what can be done? I plan to address some straight forward ways to improve fundamental blocking and tackling in project management practices in the coming weeks. Effective Portfolio management is built on this foundation, without getting this right you will only be left guessing at best when it comes time to make the right call.
One of the more interesting sites I have kept an eye on is the open source Method for an Integrated Knowledge Environment better known as Mike 2.0 (http://mike2.openmethodology.org/wiki/MIKE2.0_Methodology). Initially created by a team from BearingPoint, the project started as the development of an approach for Enterprise Information Management in early 2005. Much of the content of the MIKE2.0 Methodology was made available to the Open Source community in late December 2006. The contributor base includes a number of individuals, from BearingPoint and from external community. The Data Governance and Management Consortium (DGMC) is being formulated to take ownership of MIKE2.0 and to lead the extension of many aspects of the methodology.
Sean McClowry is the overall lead for the MIKE2.0 Methodology. Sean wrote much of the Overall Implementation Guide, and was the core contributor on a number of MIKE2.0 Solution Offerings as well as the overall collaborative framework that hosts the MIKE2.0 Methodology. Andreas Rindler is the architect of the collaborative framework that hosts MIKE2.0 and primarily focuses on development of content related to Enterprise Content Management, Enterprise 2.0 and the Open Methodology Framework.
There is a wealth of material to explore on this site, you can spend days wading through the details and templates provided. As an example, I encourage you to see the Data Migration solutions offering and I think you will agree this is a terrific exposition on a subject area there is just not a lot written about. Of course there is much more to be done, but this represents an invaluable resource for all of us in this profession. Thank you Sean and Andreas for making this readily available to all of us, very much appreciate all the hard work you have put into this.