Captain’s Log, Entry 8183.5 Business Case Success depends above all on business case credibility. The most important step you can take toward success is to recruit a cross-functional, cross-organizational Reference Group. Used intelligently, this group is can be key to scoring high in business case credibility. Never approach case-building as a “Do It Yourself” project.
Something sinister happens the moment it’s clear that decisions or plans call for a business case: An insidious temptation strikes the project manager, product manager, consultant, or salesperson responsible for the case. This temptation is a direct threat to business case credibility. Even CFOs are not immune. What’s the threat? It’s this pernicious message:
“Do it Yourself!”
The temptation has a seductive logic. Firstly, build the case yourself and you you end up with the “right” results. With others involved, there’s no telling how the results might turn out. Secondly, it isn’t easy to get the time and contributions of people from other organizations. After all, what’s in it for them? “It’s better,” the tempter says, “to do it yourself.” Giving in to temptation can sink your business case credibility.
Build in Business Case Credibility
Be ready! Start your case building project with a Reference Group!
That logic is a natural first response when people realize they must produce a business case. In our seminars, and publications, we strongly urge case builders to take the “unnatural” response: Recruit people outside the immediate organization to help design, build, and review your case. Call these people your Reference Group.
Reference Group members are not the people who do the hard, detailed case-building work. On the contrary, the Reference Group is an advisory group. Nevertheless, recruiting and using this group effectively can be the most important step towards business case credibility. Credibility means that stakeholders know the results are trustworthy. It means they are confident their information needs are met.
The IT Director’s Business Case Credibility Lesson
Several years ago, I worked with the Director of Information Technology (IT) at a large commercial bank who had a problem. Twice in a twelve-month period he had proposed a major IT project to the bank’s Executive Committee, and twice the Committee said “No.” As a result, he was now preparing for a third and final attempt.
The reason for the Committee’s “No?” Earlier proposals projected good financial results but the Committee did not fully believe them. One Senior Vice President was unusually negative in previous reviews. In his opinion, predicted benefits were “soft benefits.” The VP thought total costs were underestimated. The VP also doubted that the implementation schedule was unrealistic. He expressed these views energetically, no doubt swaying Review Committee opinions.
Recruiting for the Reference Group
The business case project team for the bank’s case were already in place when we started the final case project. That team would do most of the time-consuming hard work: digging into databases, budgets, business plans, vendor proposals. The project team would also handle interviews with internal specialists, external experts, IT users, and customers. Most of the project team were on the Director’s staff.
Our first action, however, was to recruit a second team for the business case project, the Reference Group. This team played a critical role in improving the quality of the case and, more important, establishing credibility.
We selected “Second Team” members with an eye to the history of the two earlier proposals that had failed. The highly critical Senior Vice President was the first person we found for the second team. We also went after high-level managers from Finance, Human Resources, Marketing, sseveral branch managers, and two members of the President’s Strategy and Planning Group.
The ten-member Reference Group met three times during two-months of case building. By contrast, the project team poured many times more person-hours into the project. Both groups were essential to building a successful case. However, the Reference Group was indispensable for ensuring that the Executive Committee understood and believed the results.
The Reference Group: Six Ways to Business Case Credibility and Accuracy
1. The Reference Group Provides Cross-Functional, Cross-Organizational Input
A Reference Group provides cross-functional, cross-organizational input.
This input can provide useful guidance for the case designer. This support is vital when the case subject impacts multiple organizations, or when the costs focus on one organization but the entire entity realizes benefits.
Product proposals, technical proposals, and infrastructure proposals often fit that description. So do many other actions in a complex business environment. When the business case subject is bringing a new product to market, for instance, the group can help define case boundaries and define the cost model with more authority than a project team from a single organization or function. The same is true when the case subject is closing a corporate site or entering a new market. In such cases, cost and benefit impacts may cross boundaries of many kinds: organizations, management levels, budget categories, and planning periods.
2. The Group Brings Critical Expertise to the Table
The Reference Group can bring other critical expertise and information to the table:
- Line managers help with costing and valuing operational impacts in their areas.
- Financial experts connect the case subject with the organization’s long-range business plan (vital when assigning a value to strategic benefits). They can also explain budget issues, financial constraints, and spending decisions.
- Human resources people can assess “employee impacts” of actions. HR people are the goto source for job levels required, salary and overhead costs, training requirements, hiring costs, for example. HR expertise is especially welcome when choosing between “hire from within,” hire externally,” and “outsource.’
- Senior managers from the highest levels can help identify and prioritize organizational objectives in business performance, finance, operations, operations, and more. This information, in turn, provides a solid basis for estimating benefit values and for recommending actions.
In brief, the case obviously will be a better case with cross-functional, cross-organizational input from the Group.
3. The Group Spreads the Sense of Ownership
The Reference Group can spread a sense of ownership for your business case widely beyond the case-building project team. It is a simple reality that people who help build something naturally begin to feel some ownership of it. In meetings and discussions, team members contribute to case design and development. Inevitably, it becomes their case coming up for review instead of just yours.
A shared sense of ownership is desirable: People do not want what they work on to fail.
4. The Group Signals Methods, Rationale, and Expectations
Do not assume your audience will automatically appreciate your business case on its own merits simply from reading the finished case or watching your presentation. A business case is successful only when it communicates successfully, and a complete business case has a lot to say.
To properly evaluate a case, your audience must understand several essential elements fully. They must know:
- Which assumptions are most important.
Which assumptions play a significant role in controlling results. - The business case cost model.
The cost model shows which costs are relevant to the case. - The benefits rationale.
This rationale presents the logic that legitimizes benefits for the case. - Significant risks and contingencies.
It is not easy to grasp these points with a single reading of a report or a short presentation by the author. The author can meet some of this challenge by using the Reference Group as a communications channel during the case-building project.
5. The Reference Group helps Communicate
Why is complete communication so important for business case credibility? Case results depend on many arbitrary judgments and assumptions, and these are natural targets for criticism. They are targets especially if you reveal them only in the final presentation or completed document.
When bringing your case into a competitive or critical setting you do not want to have to announce and defend the arbitrary elements of your case at the same time. Your second team can be an active channel for communicating several points long before the final results appear.
- Case design
- The rationale for including certain benefits
- Important assumptions
When review day comes, critics may still argue your interpretation of case results. However, you leave them little room to question your methods or data.
6. The Group Can Turn Damaging Criticism Into Constructive Contributions
Finally, you may need to use the Reference Group as a vehicle for handling severe critics of your proposal. Serious critics can damage business case credibility throughout the organization. The Senior Vice President (above) is an example. If you face people who fit that description, you may want to bring one or more of them onto the Group at the outset. As members of the team, these critics will have objected and contributed everything they have to say before the final review. Through careful management of team meetings, you can show them, respectfully, that they are on the record.
Not every critic belongs on this team, of course. There are some people who simply do not respect the respect you give them. However, when your critics indeed contribute to case design, they may even develop some sense of ownership for the case. As a result, you should have fewer critical surprises late in the game.
The Outcome
I went to the IT Directors’ final Executive Committee presentation. No surprise, he did win their approval. By creating and using a cross-organizational second team, we effectively de-clawed the cat. And, as a result, the Director established authority and credibility that would have been impossible to achieve had he stuck to the Do it yourself temptation.
Where to Go From Here: Take Action!
First-time and veteran case builders alike can start with our article online Business Case Analysis. After that, learn case design and development from the Business Case Guide or the best-selling Business Case Essentials. Download these resources and more from The Master Analyst Shop! Or, take the 3-day fast track: Learn and practice the premier case building methods at a Business Case Master Class Seminar.
To learn more on the IIBA International Institute of Business Analysis click here. For info on the IBF Institute of Business Forecasting click here. See also the Forbes Guide to GAAP Generally Accepted Accounting Principles click here. For a brief summary of Six Key Principles of Decision making click here.
By Marty Schmidt. Copyright © 2023.
Solution Matrix Limited, Publisher.
