An Overview of Business Case Thinking
Making the strategic plan implementable is crucial for any organization that's serious about the success of its strategy.
By applying 'business case' thinking to your new strategic plan, the same way it would be applied to any major investment made in your organization, you can ensure that your strategy moves in to implementation with the biggest chance of success.
In this article, we discuss why your new strategy should be treated as a major business investment, and walk through 4 critical elements of making your strategic plan something you can actually follow through.
Your Strategic Plan is a Business Investment
What are the biggest investments your organization has made in the last few years? In larger organizations, it could be major capital assets like new buildings, machinery, or an IT project, while in smaller organizations it might be a vehicle or even just computer equipment.
Maybe you go deeper and consider the funding of new roles in your team to be your biggest investment decision.
Chances are, you've been around organizations long enough to have seen significant effort and resources devoted to making an investment decision, and then put into the implementation itself (with just getting to the point of making the decision sometimes costing a significant portion of the overall implementation price tag).
In our earlier article about strategy expectation management, we briefly discussed how major strategic decisions need to be given "business case" thinking, but how often have you seen them actually treated as a "big investment"? For example:
- That decision to refocus on the 20% of your product lines that generates 80% of your revenue? (But it wasn't clear how you were going to measure the "success" of the "refocus"...)
- How about that regional restructure of your operations division that took 18 months, start to finish? (But no one really seemed to understand where or when the "benefits" would appear...)
- Maybe your organization has decided to go with a new strategy for the business in general? (But people largely just continue with their "day-jobs"...)
Regardless of whether they were good decisions or not, surely when you look at the time and effort, capital and operational expenditure, the opportunity costs, and the ongoing impact on the organization, a new strategic plan is the biggest investment most organizations make in their own development and should be given the appropriate thought for the number of organizational resources they will absorb.
What To Include in Your Strategy "Business Case Analysis"
We've all seen the business case templates that appear to be trying to break some kind of record for document weight, so it's not hard to find plenty of possible options for "key components" you need to consider in your analysis, but we think these 4 are critical.
What Are the Overall Benefits and Outcomes?
It sounds obvious, but has the organization actually thought about the overall outcome and the benefits of the investment in that outcome?
In our experience, there can be a surprising lack of clarity about the benefits, their timelines, and how they will be measured.
- Good benefit/outcome modeling will make you take a realistic view of what you think you can or should be aiming for, and importantly, allow your trusted advisers and your team to challenge those proposed benefits.
A strong, practical view of why this is a good idea will put you in the best possible position to have an implementable plan that's understood and bought in to across the organization.
Is There a Definition of Success?
Is there a definition of success? Can you look at the strategic decision and have a good idea about what success looks like and when you can expect it?
- Depending on the nature of the decision, there may not be a "final destination" (some things may be ongoing activities), but you've got to have some definition of what success looks like (even if that too is subject to controlled change as you learn during the implementation).
It may have elements that are tangible or intangible, easily quantifiable or otherwise, but if you start off without a decent idea of how you'll judge "how are we doing?", you're at a much higher risk of drifting off course.
Meaningful, Practical, and Owned Benefit Measurement
Are the benefit measurement mechanisms meaningful, practical, and owned by someone?
Too many times we define benefit measurements that would "cost" more to implement than your team has available to spend, or have no owner committed to measuring them.
- This is really hard. It's amazing how often "general support" for benefits can be found around the table in a management meeting, but ownership of realizing and measuring is so much harder to find.
Even if a measure is owned, if it's far too "idealized", it can be impractical or too expensive to undertake accurately in real life, and that will leave you struggling to understand whether or not you're being successful.
Where Will Extra Effort and Money Be Required?
The benefits won't come for free. Has the organization got a good idea of where the extra effort and money will be required, and from which activities it will be redirected?
- If you're making a case for an investment, "where's the money/time/staffing/expertise etc. coming from?" is one of the first questions that gets asked, even before you've properly defined the scope of the exercise.
But, for major strategic planning decisions, sometimes the impacts are not given due respect - the assumption that people will just be "doing different things" or "doing things differently" does not acknowledge that making the change itself takes work and compromise, which will again put you in a position where implementing your strategic plan won't get the focus it requires.
Is it in the Budget?
Has it been explicitly provisioned in the work plan and budget? If it isn't, there is a risk that your key strategic initiative will just become additional work on top of everyone's "day jobs" - and guess what, if people are measured on their mainstream work, guess where their effort will go.
Critical Success Factors (CSFs)
In our experience, this appears in many business case templates, and is then pretty much ignored - not omitted, but given limited thought by the writers and limited attention by the readers.
On the contrary, it should be one of the most important considerations in any business investment decision, because it is essentially saying:
- "What really has to happen to get the stated benefits and outcomes, and when time and resources get tight, on which things do we really need to focus?"
- "Where are the key changes in the organization going to have to happen to realize these benefits?"
So, make sure that the Critical Success Factors of your decision/implementation are well considered, well documented, and well communicated. If you put the work into defining your CSFs, they will help guide you during the implementation.
We talk about this in more detail in an earlier article about expectation management, so we won't dive in too deep here, but suffice to say that the successful implementation of your strategic decision is heavily dependent on the expectations of the people responsible for and involved in its delivery - or often more to the point, how these expectations differ.
- The organization needs to manage expectations on an ongoing basis throughout the implementation and then ongoing execution of your strategic decision, and the bigger the overall set of differing expectations, the bigger your implementation risks.
These elements are all key parts of making business investments, but too often we don't properly consider them as part of our most important strategic planning decisions.
Going back to basics and thinking in real, practical terms will help us to make better decisions, and then give us a better shot at making those changes really happen and actually stick.
What else would you put on the list of key considerations for the strategy implementation "business case"? We're always keen to hear your thoughts.