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Get the right perspective on our business case

 

 

 

When I was in business school, my corporate finance professor told the class “If the project has a positive net present value (NPV), you should do it.” My reaction was ‘’Hmm. I’m pretty good with spreadsheets, so I hope there’s more to it than crunching numbers until a random formula is equal to something greater than zero.”

Twenty years and many projects later, I’ve reached the conclusion that while the financial returns (e.g. Net Present Value) are a key indicator of whether a project is good, it is three other key views, or perspectives, and your ability to drive ownership and accountability to measurable targets across these views that really drive success in projects. These principles hold true whether the project is an IT implementation, an acquisition or a new product introduction.

  • Strategic Fit: How well aligned is this project with our overall corporate goals? The closer the project is to critical corporate goals, the greater the likelihood of continued executive and organizational support, even in the face of adversity. The more tangential, the more likely it is that the organization will cut and run at the first sign of distress. The project’s ability to clearly define alignment will directly impact its ability to succeed.
  • Build Capabilities: Do we have the skills needed to complete the project? Don’t assume that if you plan it, you can do the work. Research indicates that a primary driver of project failure is the inability to assemble the right resources at the right time with the right methodology. If the project is not something that is core to your business or skill set, critically evaluate your ability to fill these gaps prior to taking on the project.
  • Operational Alignment: If we build it, can we run it? Another key driver in project failure is the inattention to long term operational issues. Many business cases I’ve seen look only at the first two criteria above and fail to look at how the project will be incorporated into the run side of the business. As a result, long term benefits often lag expectations.
  • Financial Returns: Will the project achieve returns consistent with the risks taken? The elements of most business cases include: Upfront investments and ongoing operating costs balanced against long term gains in the areas of revenue attainment, cost reduction or perhaps cost avoidance.

Ownership and accountability across these four views is what ultimately drives success. Your ability to specify ownership across the areas of the business case will improve your odds. Ensuring that those responsible for each major area of the project are heard during business case reviews will also significantly improve your odds.

Chris McCall

Chris McCall

As Chairman of the Board, Chris manages The Spur Group’s strategic planning practice and has over 25 years of experience across business strategy, operations and channel management. He was part of Deloitte’s Mergers & Acquisitions service line, where he helped to develop the methodology that has been used on hundreds of integrations world-wide. He was also part of Microsoft’s Global Partner and Corporate Strategic Planning teams where he led Go-To-Market strategy for Microsoft’s largest alliance. Chris has a BA in Economics and Accounting from Claremont McKenna College and an MBA in Finance and Strategic Management from the Wharton School.