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Alternative Development Warning Flag 1 – Developing Business Cases First
All business leaders are human and some get overly enamored with and excited about a particular business opportunity. These business leaders then direct either a business case or project plan to be developed which is immediately funded; circumventing the organization’s business planning process. In these cases, the initiative’s ability to meet the organization’s business objectives and goals remains uncertain and consideration of competing opportunities is forfeit. In some organizations, entire portfolios are determined in this fashion; leaving leaders blind with respect to their ability to optimally achieve the organization’s mission goals.
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Additional Information
The following StrategyDriven recommended best practices are designed to reduce the likelihood of circumventing the business planning process:
- Alternative Development Best Practice – Organizationally Developed Options
- Strategic Planning Best Practice – Shared Accountability
- StrategyDriven Podcast Special Edition 32 – An Interview with Nilofer Merchant, author of The New How
Additionally, StrategyDriven‘s Strategic Organizational Alignment model reveals the typical executive and managerial responsibilities associated with the business planning process.
Beginning with the end in mind, it is important for those developing business cases for the organization’s various ongoing operations and proposed initiative alternatives to do so in such a way that leaders can compare the cost and benefits of the proposed activities. Only when leaders can make a one-to-one comparison can they clearly understand the overall value contribution a given initiative and, subsequently, the portfolio of initiatives have for the organization. Therefore, business case developers should use a common, pre-established set of cost and benefits identification standards.
Business planning documents not only seek to communicate the organizational value of a particular ongoing operation, in-progress project, or proposed initiative, they also provide a comparative basis which decision-makers use to determine those activities the organization will pursue. In order to facilitate this comparison, decision-makers must be presented with business cases that not only present costs and benefits in a similar way but that also calculate each activity value statement in a similar manner. To do otherwise yields an apples-to-oranges comparison and leaves decision-makers guessing as to which value proposition truly represents the greatest merit.
Many exciting ideas for new product and service offerings are generated every year; often appearing as the next great pursuit that will surely propel the organization ahead of its competitors. With this view in mind, those conceiving of these ideas create business cases for leadership. Too often, these eager employees unwittingly identify every fact and figure supporting their proposition and ignored those that would shed doubt. Subsequently, the business cases developed present only a partial picture of reality; potentially omitting true shortfalls that diminished value or place the organization itself at risk.
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