Captain’s Log, Entry 8183.5—The most important step you can take to ensure business case success is to recruit and use effectively a cross-functional, cross-organizational Reference Group. Never approach case-building as a “Do It Yourself” project.
The moment it is clear that decisions or plans call for a business case, an insidious, deadly temptation begins to operate on the project manager, product manager, consultant, or salesperson responsible for delivering the business case. Even CFOs are not immune. The tempter sends this pernicious message:
“Do it Yourself!”
The temptation has a seductive logic. If you build the business case yourself, you can be sure to end up with the right results. If you bring in outsiders, there’s no telling what you might develop. And, it isn’t easy to get the time and contributions of people outside your organization. After all, what’s in it for them? “It’s better,” the tempter says, “to do it yourself.”
Take the Unnatural Response
That logic is the natural first response of most people facing the need to produce a business case. In our business case seminars and publications, we strongly urge case builders to take the “unnatural” response: recruit and use a group of people outside their immediate organizations to help design, build, and review the business case.
These are not the people who do most of the hard, detailed case-building work. These enlistees are an advisory group. We call this team a “Reference Group.”
I learned, more than a decade ago, that recruiting and taking advantage of such a group can be the most important steps anyone can take to build in business case credibility and guarantee business case success.
A Lesson From the IT Directors Dilemma
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 had said “No” to his proposal. Now he was preparing a third, final attempt.
The reason for the Committee’s “No?” The Director’s proposals projected good financial results, but the Executive Committee did not fully believe them. One Senior Vice President had been unusually negative in previous reviews. In his opinion, predicted benefits were “soft benefits,” the Director had underestimated total costs, and there was little chance that everything could be installed and working on time. He expressed these views energetically during the earlier reviews, no doubt swaying opinions on the Committee and generally souring the atmosphere each time.
Forming the Reference Group
The primary project team members for the bank’s business case were already designated when we started the final case project. This project team would do most of the time-consuming hard work: digging into databases, budgets, business plans, vendor proposals, and the like, as well as interviewing 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, a “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 recruited for the second team. We also went after high-level managers from Corporate Finance, Human Resources, and Marketing, as well as several 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, but the Reference Group was indispensable for ensuring that case results were understood and believed by the Executive Committee.
The Reference Group: Six Ways to Credibility and Accuracy
1. The Reference Group Provides Cross-Functional, Cross-Organizational Input
A Reference Group Provides Cross-Functional, Cross-Organizational Input.
This group can be a valuable source of information and guidance for the case designer. This support is vital when the subject of the case has a cross-organizational impact, 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. If the subject is bringing a new product to market, or closing a corporate site, or entering a new market, for instance, cost and benefit impacts may cross boundaries of many kinds: organizations, management levels, budget categories, and planning periods. In such cases, the Group can help define case boundaries and help fill in the cost model more thoroughly and with more authority than a project team from a single organization or function.
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 in costing and valuing operational impacts in their areas.
- Financial experts can connect the business case subject with the organization’s long-range business plan (a vital connection, when assigning a value to strategic benefits). They can explain budget issues, financial constraints, and the basis of spending decisions.
- Human resource specialists can help assess the “employee impacts” of the proposed action: job levels required, average salary and overhead costs, training requirements, hiring costs, for example. HR expertise is especially welcome when decision alternatives include, hire from within, hire externally, and outsource.
- Senior managers from the highest levels can help identify and prioritize organizational objectives: business performance objectives, financial objectives, operational objectives, and still other objectives. This information, in turn, provides a solid basis for estimating benefit values and for recommending actions.
In brief, the case will be a better case with cross-functional, cross-organizational input from the Group. That much of the team’s role is obvious. Other purposes for the team may be less obvious, but they are even more vital.
3. The Group Spreads the Sense of Ownership
The Reference Group can be the vehicle for spreading 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 that your audience will automatically appreciate your business case on its own merits simply from reading the finished document or listening to a presentation of results. 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 are most important. They must know, in other words, which assumptions play a significant role in controlling results.
- The business case cost model.
The cost model provides the rules for deciding 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. It is better not to wait until the final results are in, to begin communicating essential methods and the rationale behind them.
5. The Reference Group helps Communicate
Why is complete communication so important? 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 people who are severe critics of your proposal. The Senior Vice President I mentioned 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—to put it plainly— 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.
I went to the IT Directors’ final presentation to the Executive Committee, and you will probably not be surprised to hear he won 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.
Take Action: Build In Credibility!
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By Marty Schmidt. Copyright © 2004-2020
Solution Matrix Limited, Publisher.