Benefit of Experience

Experience of Benefits, shared

Category: Benefits

  • Practical Applications

    Having looked at some useful tools and techniques, how do you use them in practice? Here are some suggestions that work in an organisation and at a personal level.

    Benefits-Oriented Enterprise

    A Venn diagram of the benefits-led enterprise, split by Inbound, Inside and Outbound aspects

    This diagram tries to show this by overlaying Benefits Management onto the Inbound / Inside / Outbound  model (Buy Side / Inside / Sell Side that some of you will recognise from business studies courses). I’ve drawn it as a Venn diagram because these items are rarely isolated from each other, there’s always a fair amount of overlapping between them.

    Even deep within any organisation we have internal customer / supplier relationships. The Buy Side / Inside / Sell Side model is appropriate to all sorts of business units.

    Looking at this from a personal point of view, the model still holds up if you consider the following loose definitions:

    • Strategy = Who you want to be
    • Inbound = What you take
    • Inside = What you do
    • Outbound = What you give
    • Performance Management = Being who you are

    The emphasis here is on the management of benefits, doing the right thing, getting the most good. The other tools we’ve looked at, such as quick decisions, goal setting and hypothesis testing will all help.

    Strategy Development (Options & Choices, Who You Want To Be)

    This is taking time to think about what affects you, what objectives you want to achieve, who gets the benefits and the pain. Goal Contribution is  a strategic business planning tool you can use for selecting and delivering successful business strategies and portfolios. Your Realisation Plan for the new strategy comes from Benefits, not pet projects, fair shares or face saving.

    It is using benefits to decide the best course of action to take, doing the right thing.

    Use the decision making tools, the time appreciation, quick decision to manage the process of choosing. Then test your hypothesis to check how good an idea you’ve just had. The Goal Contribution Map shows what you’ve chosen, why it’s a good thing and who it’s going to be good for. Adding them all together helps you choose to do the right thing.

    Strategic choices overlap all the three key areas, inbound, inside and outbound.

    Inbound (What You Take)

    This deals with how you act as a customer and take things from other people. If you know the benefits then you know the reasons why you want something and so can negotiate better with your suppliers. You will know the value of what you want and the price you are willing to pay for it. You will decide what you must have and where you can afford to compromise.

    Supplier Relationships

    Building a relationship with your suppliers is often a better way of doing business than haggling with them. Talking openly to get agreed joint aims and mutual benefits will build a solid working relationship with your key suppliers. As the customer, you create the right hand side, the goals and benefits half of the Goal Contribution Map. The supplier can then map their offered solution as the left hand side. Working together, the diagram can be improved to develop the optimum solution and a strong working relationship into the bargain.

    SLAs & Contracts’ Acceptance Criteria

    Acceptance Criteria set the boundaries of what a good solution must contain. They become a sort of, “nobody goes home until we’ve achieved…” statement. Define them in terms of the benefits to be delivered rather than the resources input to the system. Formal agreements (contracts, service level agreements) can then be made on the basis of reward for results. Your suppliers get paid on what you get out of the deal rather than how much they put into it.

    The relationships you build will influence the ‘paperwork’. Performance against paperwork in turn influences the relationships so it pays to start these well.

    Inside (What You Do)

    Business As Usual Working Practices

    Processes should be viewed from the value they add to the enterprise. This value may not necessarily be in hard financial terms but must be expressed as a benefit that managers feel is worth having. Once established, the aim of any practice must be documented in its works instructions. Stating the ‘ends’ as well as the ‘means’ reminds people why they are doing what they do. Remember that an objective is a result with a purpose. If it’s your job to give orders then, “Just do it” is out. You have to be prepared to explain why an action is necessary and how it connects to the desired result. And the first person you have to explain it to is yourself.

    Continuous Improvement

    Existing working practices should be subject to continuous improvement. Quality improvement exercises must remember to consider the ‘why’ as much as the ‘how’. Knowing your objectives also helps you improve what you do. It helps you decide the priorities of what things to improve first and suggests what the improvements should look like.

    Outbound (What You Give)

    Though I will refer to external ‘customers’ here, remember this applies just as well within the enterprise where some of us have to ‘sell’ our services to our colleagues.

    Partner Relationships

    Open dialogue with a clear understanding of agreed joint aims and mutual benefits will build a solid working relationship with our key partners. The same processes are applied here when you are the supplier as above when you are the customer.

    Customer Relationships

    If you are actively selling something then Goal Contribution is a pre-sales tool to build a solid relationship with your customer. Together you work to determine their goals and develop a solution that meets them. Shared goals and open discussion help build a partnering relationship that is more likely to succeed than the old ‘hard sell’ routine.

    The two sides of the Goal Contribution Map can be constructed in a reasonably straightforward and logical manner. The brainpower comes in making the connections from one side to the other. Having identified the customer’s needs, which alternative solutions can we offer? Having identified a feature of a new disruptive technology, which problem could it solve? If nothing more, the map can act as a conversation piece to start the customer and supplier talking to each other.

    Solution Design

    Having started the dialogue, Goal Contribution provides a good base on which to develop solutions with customers. Before they put the work out to tender, you can be actively involved in defining the customer’s needs as we work with them to map solutions to goals. This can take significant time and effort if done properly and the customer is unlikely to have the resource to duplicate this sort of exercise with our competitors. The required solution is going to have your imprint simply by your involvement in its definition. However, it will still be expressed in terms of customer benefits, meeting their goals. It will be the solution they want to buy, not apparently the one you want to sell. You should be at an advantage when the Invitation to Tender is issued.

    The best way to use the Goal Contribution Map in developing solutions is in partnership with the customer, working through a series of passes back and forth across 

    Solution Development

    As we deal with innovation and disruptive technology we are faced with recurring questions about how it is to be used. Working through the left hand side of the Goal Contribution Map builds reasons for why you should want to use a particular technology. Creating solutions in search of problems is bad if we try to force the solution onto any problem that comes our way. However, Goal Contribution provides a set of potential problems we can solve.

    You can see the organisation’s actual priorities from where  they are prepared to spend their money. The targets they set define the benefits they want delivered.

    You can do this for any customer group, from Board level right the way down to an individual with a project and some money to spend.

    This exercise builds up the right hand side of the map. We know what they want to achieve so now we can look at propositions to fit their needs. Knowing the customer side of the Goal Contribution Map will prompt for enablers and features that will connect. Features that lead to dead-ends can be dropped. A feature linked to many or major benefits is likely to be the ‘killer app’ and you can concentrate your effort on it.

    Again, the best way to use the map in developing solutions is in partnership with the customer, working through a series of passes back and forth until both sides have their optimum solution.

    Bid Summary

    When an organisation has a big piece of work to be done, they invite suppliers to bid or tender for the job. Invitations to Tender are often large, complex documents written by a number of authors. A number of people have written a lot of jargon to describe what they think they want. Suppliers submit bids responding to them which are much larger and more complex. Bids contain more jargon describing how the supplier will deliver what they think the customer thinks they want. The opportunity for poor communication and misunderstanding is tremendous. Suppliers may miss the customer’s key drivers. Customers may miss how your solution meets their needs better than your competitors.

    The Goal Contribution Map is a very strong tool for displaying graphically how our proposed solution will meet the customer’s requirements. At a glance you have the Executive Summary on one page. Obviously, you need the story to back-up the boxes on the map but the customer can wade through that for the specifics of what we will deliver, not to answer the simple question, “Will this do what I want?”

    Again, it is best built in collaboration with the customer. This not only creates the optimal solution, it helps build the relationship.

    Project Management (Solution Delivery)

    IT Project Management is the ‘home’ of benefits realisation. It’s where the original ideas came from and, I must be honest, executives still struggle to appreciate its wider appeal. You can use Goal Contribution as a differentiator between yourselves and other Project Management providers. Using what you’ve read here you can turn your projects into ones that don’t just build things and install kit but deliver actual benefits.

    Performance Management

    Performance management is a matter of measuring what’s going on and making changes to fix or improve things. There are shelf-loads of books on managing the performance of an organisation but the same principles can be applied personally as well.

    A rational scheme of performance management underpins the entire system. If you can’t measure the benefit, how do you know it’s occurred? This means having baseline figures before you make the business change and on-going measures to show the impact of the change. We need to measure the right things for the right reasons and prove that the benefits are as valuable as we expected and are actually being delivered.

    We often narrow down the things we think we can measure so far that we forget their original purpose. Customer spending that contributes to profit becomes customer satisfaction which in turn becomes number of rings to answer or sales visits per week. That’s when people start ‘gaming’ with the targets they’ve been set. The Call Centre answers instantly then fobs you off with an abrupt and wrong answer so they can get straight on to the next caller.

    Benefits management helps you choose the appropriate performance to measure, not the easy one. As mentioned earlier in the paragraph on contracts, we measure what we get out of the system, not just what gets put in. Performance management shows how well the benefits are being delivered and enables you to do something to improve the situation.

  • Schrodinger’s Benefits

    Looking inside the box

    Is a ‘Benefit’ a benefit until it’s actually used in practice?

    A cartoon of Schrodinger's cat in its box

    When does your Benefit become beneficial?

    Those of us who watch popular science programmes will have heard of Schrodinger’s Cat as it gets rolled out whenever someone mentions ‘quantum’. The mythical beast resides in a state of life/death that cannot be resolved until its box is opened and the poor cat examined.

    I was looking through a benefits register recently and it struck me that all the familiar ‘benefits’ about the time saved, processes improved and knowledge gained exist in a business version of Schrodinger’s cat-box. You can’t value them properly until you open the box, see what state they’re in and put them to some use.

    You can put the cat to 101 uses (or maybe all you can do is apologise and shield your face as it leaves the box). Likewise, the typical non-cash releasing time-saving has many uses and its value depends on what you choose to do with it and for whose benefit.

    Until you make that choice, what you have is an asset. It’s potentially useful and in many cases, you can make a fair estimate of its value but it’s not a benefit. Very few projects claim that their ultimate purpose is to create assets. Benefits Management should be even more rigorous in defining its purpose. If we can’t get the benefits right, why should we expect other people to do so?

    Image used within copyright guidelines, with thanks to Cristineagoe at English Wikipedia / CC BY-SA

  • The Goal Model

    A bit more than a Benefits Map

    Start with the end in mind.

    I’ve never been totally happy with the focus on benefits over objectives. It’s always felt incomplete. Benefits Realisation / Benefits Management doesn’t provide sufficient emphasis on purpose or strategy. Too often, benefits are rewards promised so people will permit, enable or justify decisions that have already been made.

    The Benefits Map or Benefits Dependency Network ought to be a serious tool for selecting and delivering value from change. In many cases, it isn’t used at all. In others, it doesn’t produce the quality results that it could because people drift to the small tactical benefits (rewards to keep the users happy) instead of big strategic objectives.

    The Goal Model is a type of Benefits Map. However, its scope is broader than benefits and it applies to more than projects, so I took ‘Benefits’ out of the name. By modelling Goals instead of mapping Benefits, I hope to keep the emphasis on purpose and strategy.

    The Goal Model is a picture that shows the net of resources and their cause-effect applications between an initiative (process, project, programme, portfolio) and the strategic objective(s) to which it contributes.

    Building the Goal Model

    Goal Model diagram

    This is a general summary of what the completed Goal Model will contain. It’s a map of the cause-effect nets between the Concern(s) to be addressed and the Initiative that addresses it. It’s a picture of the ‘to be’ end-state. It doesn’t include any project or business change activity that gets you to this end-state. Between the Initiative and Concern are the Means, Ways and Ends that connect them. These are split into items such as Product, Activity, etc. with some example ways to categorise the items, e.g. people, process, technology Products or Balanced Scorecard Objectives.

    Concern

    The Concerns summarise the business environment, the context in which you operate, often described as the Problem Statement that triggers a change. They may be straightforward, such as a direct order from above, or more subtle like personal beliefs and mores. PESTLE is one method of categorising Concerns.

    For the simplest change there may be only one Concern: “Our client demands that we do X”. You may face many Concerns. They will have to be sifted and prioritised if you are to manage them. Plotting them on the model is a strong visual way of appreciating what’s rational and feasible. The key Concern(s) sits closest to the Objective. The others sit further out, in decreasing importance.

    Stakeholder

    Stakeholders are the relevant actors, impacting and / or impacted by the Initiative. They may be individual people, groups or entire populations. The same stakeholder can play more than one role.

    There is only one Client. The Client is the stakeholder who wants the initiative and pays for it. Sponsor or SRO are types of Client. They act for themselves, the consumers and influencers.

    Consumers are the ones using the new initiative and / or receiving its effects, e.g. staff and their customers. They live with the results, but they may not have much direct control over it.

    Suppliers give the Client what they want. Consumers acting in the design and implementation of the Initiative are temporary Suppliers.

    Influencers is a much broader group of stakeholders, allies, adversaries and indifferents, some of whom play no practical role in the Initiative but who affect the client’s decisions. Consumers and Suppliers are groups of Influencers in that they can directly affect the Initiative. Your competitors are major Influencers.

    Initiative

    The Initiative is a bounded solution, the overall business change to be made, the programme or project. Naming it helps to set the scope and the boundaries. Its description must be concise and meaningful so people can understand what you’re making. The Client, as the ultimate stakeholder wants the Initiative for their own Objectives and Benefits. They permit the Objectives and Benefits of the Consumers, Influencers and Suppliers.

    Ends are what you want to achieve. They are Outcomes that lead to Benefits that in turn lead to Objectives.

    Objective

    Balanced Scorecard is one way of categorising Objectives. Alternatively, you may have specific local categories, e.g. the organisation’s Five Year Plan. There may be separate sets of Objectives for each stakeholder group but the Client’s take precedence. These may all be shown in the single model or acknowledged and referred out to, e.g. Supplier’s profit is their worry and external to the Client’s Initiative.

    Objectives should be SMART. Concerns might be nebulous, e.g. mission and vision statements, customer wants, etc. but Objectives must be pretty firm. If you are going to be judged on how well you achieved your Objectives, then you need an agreed way to measure them.

    Benefit

    Benefits can be split by the stakeholder group that receives them, and also by type (cash, non-cash, etc.) to inform the business case. A Benefit contributes to an Objective and comes from the Outcomes.

    Disbenefits are the negative result or detriment to a stakeholder. Categorise them the same way as Benefits.

    Outcome

    Measurable outcomes are produced by the Ways. Outcomes may be resources created / released.

    Activity

    Ways are the Activities that consumers do and how they do them. They are business processes or personal actions that use the Means and produce the Outcomes. Note that they are not business changes. They are business activities in the new ‘to be’ state, after the change has been made.

    Product

    Means are the resources that consumers use. They are new or changed assets that enable the Ways. Means begin with the Product, something provided by the Initiative that is tangible like a machine or intangible like a service.

    Feature

    Each Product has Features. These are the specific things that make the Product relevant and useful in context. Typically, they may be speed, volume or relevant capability.

    External

    Some items may be marked as ‘External’, e.g. dependencies, Means and Ways that are outside the project’s control, or the Suppliers’ Objectives beyond the Initiative. They are shown in the model in an ellipse, so they stand out from the internal stuff.

    Unlike some Benefits Maps, project work and business change don’t belong in the Goal Model. The Model is all about the ‘to be’ state and not the action that has to happen in order to get there.

    Each Product in the Means will have Product and Work Breakdowns (or Agile equivalents) from the project that created it. It’s also likely that Activities in the Ways section will also have similar breakdowns for the business changes and assumptions around them. Behind each item and connection is a set of assumptions and risks. They can’t all fit in the model, but they are important things to consider and must be recorded somewhere. Putting them all in the Model will make it unusable. However, if you have one or two critical items that you can’t afford to ignore, then annotate your Model with some brief comments.

    The Goal Model summarised

    Goal Model diagram with annotations

    A picture paints a thousand words (more like 1500 in this case…) This is the Goal Model with explanatory notes. It’s worth study and it’s worth practice. Used well, it’s a terrific tool for making strategic choices and getting the value from your change.

    For a deeper explanation of the Goal Model and how to build one, see The Goal Model in the Library.

    The complete story is in my book The Goal Model: Designing Business Decisions available from Amazon The Goal Model: Designing Business Decisions eBook : Waller, David: Amazon.co.uk: Kindle Store 

  • Start with the End in Mind

    Start with the end in mind – a good motto for life as well as work. It’s blatantly obvious but rarely done properly. The purpose behind any course of action has a direct and significant effect on the way it is undertaken. The reasons why affect the ways we go about things.

    Start with the end in mind. Why Florence Nightingale wrote her book

    If Florence Nightingale had set out just to make nursing a respectable job for the daughters of the lower-middle class then her achievements for patients would have been very different.

    Here’s a sports analogy, a football manager’s side and tactics will adapt to the objective:

    • Win at all costs
    • Put on a show for the fans
    • Play for the league points
    • Pace yourselves for the next match

    The same applies for any project, the ends affect the means and ways. Projects talk of acceptance criteria, the things that decide when the project has ended successfully, a sort of, “No-one goes home until…”

    Define your acceptance criteria in terms of objectives and benefits before you start. Don’t install the kit and then wonder what to do with it. Too often, projects leave benefits realisation until it’s too late, i.e. at the end of the project. That’s why benefits should be managed from the start.

    Some organisations demand a hard financial return.

    Some want intangible improvements like satisfaction and image.

    Usually, they want both. That’s when conflicting objectives throw a spanner in the works. That’s why clear objectives are crucial.

    Florence Nightingale and other examples are available as phone lock-screen pics:

  • Willingness to Pay

    Willingness to pay

    Dr Johnson said that patriotism was the last refuge of a scoundrel. In business, I think it’s Executives’ implicit willingness to pay.

    Willingness to Pay is often cited as a method to set a monetary value on an intangible result like satisfaction. You get the relevant people together and ask, “How much would you pay for X?” Ok, it’s open to anchoring, group-think and a host of other errors and abuses but it’s not alone in this. Asking people what score (of whatever measure) they would give X has all the same caveats. And it’s definitely better to ask than to assume.

    Unfortunately, projects don’t make much formal use of Willingness to Pay. It’s considered too subjective and tenuous a way to quantify the value they add. They don’t like asking, “What would you pay for this new capability?”, and they avoid financial measures for intangible results. Yet perhaps the ultimate ‘Willingness to Pay’ is the project sponsor who says, “I’ll buy the story I’ve been given.”

    The shoddy project starts when a sponsor is given a sales pitch or a business case and says, “I’m willing to pay £X for the comfort / satisfaction / personal gain I will get from the story I’ve just been sold.” Then it’s disguised in a raft of ‘benefits’ to justify this decision. All the output measures and PR stories that the project will generate as it proceeds won’t hide the sad fact that it all hangs on a single decision based on an unconscious willingness to pay. A bit of sensible, honest analysis at the start can prevent this.

    I work from the basis that a benefit is a result that a stakeholder perceives to be of value. Where I think we often go wrong is that we don’t identify (or admit to) the genuine stakeholders or understand their perception of value. Even the most shoddy and disastrous project will deliver some benefits. Unfortunately they will be the wrong benefits for the wrong people.

    Typically, we believe our programme is so wide ranging, so culture-changing and so flexible that we couldn’t possibly put a price on the benefits. That’s when we should look at the stakeholders and make an honest admission of just who benefits from all the work. That’s when we might discover that the stakeholders who gain financially are the people being paid to do the programme. The people who gain satisfaction are the ones who sponsor the programme. As for the people being done to, the end users and customers, they’re not getting much out of it at all.

    Let’s look at value. I believe that any benefit can be expressed in financial terms. It’s simply (simply!) a matter of currency conversion. That said, the accuracy and consistency of that financial value will vary widely over time and between situations and subjective opinion. Our personal willingness to pay varies with our knowledge of the market, our mood and the cash in our pocket. Multiply that by all the people involved in a business programme and financial value will always be a moving target.

    This is why some people argue against hard cash statements. Within programmes and projects it’s possible to compare benefits by means of local weighted scoring systems. In the end though, these turn out to be a local currency. Be they Brownie Points, Beer Tokens or Corporate Achievement Indices, they are still a currency and as such, can be converted by market forces into other currencies just like £ to $.

    Market forces set the value of products and services. The numbers drop out of the system. At least they do where the market is established. In creative and innovative projects the firm numbers just won’t exist so we have to stretch the error bars and invest a bit more to mitigate the extra risk.

    The Public Sector has its own, unique problems here. Putting a value on human health, wellbeing and happiness in a political context is never going to be straightforward. However, there are ways and means. It is a matter of coming to an agreement on some common standards. Given the size of populations involved, even rough statistical estimates will do. After all, the accountants have been apportioning costs this way for years. Unfortunately, rational argument alone will not suffice here. Politics, pressure groups and personal agendas all get in the way of a common agreement.

    If we accept that any common standards are going to be loosely defined to begin with then we can do something here. NICE know about the cost effectiveness of medicines, HSE can tell you how much to spend on avoiding death and injury. Ask DfE what illiteracy will cost someone over their lifetime.

    A catalogue of reference benefits would be really useful. It will need both credibility and content though. I suspect the content exists in penny packets. Apart from the Civil Service examples there must be plenty of big firms’ economists and little firms’ Benefits Managers who’ve got their own ready-reckoners. I know I’ve got mine. That’s where the credibility falls down at the start because no-one knows what’s already out there.

    So, if this article strikes a chord get in touch. Let’s see what we can create to make our Willingness to Pay explicit and give our programmes and projects a more rational value.

    Meanwhile, as Dr Johnson didn’t say, “Implicit willingness to pay is the last refuge of a scoundrel”.