Ensuring benefits and strategy are aligned
Clear line of sight: delivering strategy through benefits
The Managing Benefits by Steve Jenner: Optimizing the Return from Investment guide states to always ‘align benefits with strategy’ as a guiding principle. It should be continually used to inform options analysis of the programme or project business case, investment appraisal of the initiative and ultimately portfolio prioritization. At these three, key investment decision points, organizations should ask themselves the following questions……
- Are we clear about the strategy and benefits to be achieved before starting the programme or project, and who is accountable for them?
- Have we translated strategy into tangible deliverables and realistic measurable benefits, and have these informed decisions on scope, time, cost, risk and design priorities?
- Is there a clear business case in place for investment of funding and people resource allocation needed to deliver the strategy and benefits in the most efficient and effective way?
- Are we clear how success will be measured and the focus on strategy and benefits realization throughout the programme or project lifecycle? If these no longer appear achievable or affordable, investment should be stopped.
By doing so, organizations enable the clear line of sight technique that seeks to ensure a transparent chain is continually demonstrated from organizational (including strategy) objectives through to benefits realization. That is, it should be clear what benefits are envisaged, when they will be realized, how they will be measured/evidenced and who is accountable for their realization as this can lead to better use of existing people and funding resources.
Given the intrinsic nature of both strategy and benefits, it’s important to firstly understand what strategy really is. Harvard Business School Professor, Michael E. Porter defined it as ‘the deliberate choice to perform activities differently, or to perform different activities, better than market competitors’ in the delivery of your organization’s value proposition. The inability to successfully deliver strategy objectives through benefits realization can lead to an inflection point.
An inflection point is defined by Andy Grove (former CEO of Intel) as the ‘point of time a business fundamentals are about to change’. For example, aerospace leader Airbus testing hydrogen combustion technology to deliver a world-first zero-emission commercial aircraft by 2035. For Airbus, the change represents an opportunity to rise to new heights (excuse the pun), while for its competitors, the inflection point could represent the beginning of the end with reduced market share.
Understanding the contribution of spending proposals to organizational (including strategy) objectives is consequently at the very heart of effective benefits management and the clear line of sight technique. This is why the strategic outline case (using Better Business Cases) explains how the programme or project will achieve the strategy objectives and business plans of the organization. The only proven technique to demonstrate this is by using a form of driver-based analysis, for example, a benefit map to show cause and effect of how the desired outcomes that enable benefits realization will be explicitly achieved. The point to bear in mind is that much of the value lies in the process of completing the benefits map, rather than the benefits map itself. That is, the focus should be on the 20% of the benefits which are likely to provide 80% of the project’s benefit value.
Like Robin Speculand (co-founder of the Strategy Implementation Institute) says “only when strategy is successfully executed (through benefits realization and benefits reporting) do you know if it was a good strategy. Only when it’s executed well do customers notice the difference. Only when the execution succeeds does it positively impact shareholder (or customer) value.” As such, ‘clear line of sight’ ensures that the collective individual and organizational action moves the pendulum from strategy towards benefits realization with a desired future state improvement in mind that we can measure.
References:
- HM Treasury, 2018, Guide to developing the project business case, viewed 10 January 2022
- Jenner, S and APMG International, 2014, Managing Benefits: Optimizing the Return from Investment, 2nd Edition. The Stationery Office, Norwich.
- Nieto-Rodriguez, A. & Speculand, R, 2021, Strategy Implementation Body of Knowledge, Strategy Implementation Institute, Singapore.
- Porter, M.E (1996). What is Strategy? Harvard Business Review. Available here.
