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Alternative Selection Warning Flag 2 – An Initiative for Every Executive
Senior executives typically ascend to their elevated positions through the contribution of significant organizational value. While these individuals’ daily activities provided ongoing benefit throughout their careers, there is seldom a more value adding opportunity than successful leadership of a strategic initiative or large-scale project. Consequently, senior leaders seeking further career development and advancement covet these initiatives; sometimes resulting in the creation of such projects to satisfy an individual’s need rather than an organizational one.
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About the Author
Nathan Ives is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan’s complete biography, click here.
Contemporary business leaders embrace the mantra of continually doing more with less. Each and every day, managers and employees are challenged to produce ever-increasing quantities of goods and services at higher and higher quality levels. All other things remaining equal, there are limits to what any individual or workgroup can do. Beyond these limits, output declines and quality suffers.
No organization can do it all. Resource limitations drive leaders to choose from those activities that will maximize the benefit derived from the assets the organization does possess. What is not commonly done, however, is the discontinuation of some ongoing activities not deliberately selected for funding. Consequently, these activities draw precious resources away from the more value-adding activities thereby diminishing the organization’s overall effectiveness.
All organizations face resource constraints inhibiting the accomplishment of all proposed work. Some organizations resist prioritizing initiatives commonly resulting in the completion of lower value activities ahead of those with a higher return on investment. Such an approach diminishes the value returned to stakeholders and represents an abdication of management’s responsibilities.
More and more prevalent in business case evaluations today is the concept of the total cost of ownership whereby organizations evaluate the collective expense associated with a given initiative or asset over its entire life. Comparing initiatives on this basis alone however, fails to consider the offsetting benefits the organization would realize over the investment’s lifetime as calculated during return on investment (ROI) estimations. In order to effectively compare competing proposals, organization leaders should evaluate the total value of ownership of each investment alternative.
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