“However beautiful the strategy, you should occasionally look at the results.” Winston Churchill
Benefits Realization
Benefits realization is an organizational method, process, and commitment to understanding value generation from investment planning and strategy.
Why is Benefits Realization Important to Architects
Approaches to Benefits Realization
What is Rapid Value Management
As organizations push towards agility, they need an agile method for ensuring their investments and objectives can be continually inspected to ensure they are returning value. The challenge for many of those organizations is that their objectives are often measured with lagging indicators, and they lack early- and leading-indicators that allow them to determine if they will meet their objective.
The answer is to use Rapid Value Management, an iterative approach to continual value realization to ensure programs and projects are on-track to meet the objective they target.
Rapid Value Management has a secondary effect. It can also help create a more agile way to manage investment planning by allowing organizations to deprioritize programs and projects that are not showing early value and prioritize projects that are showing high early value.
Business Value Comes from Driving the Organization’s Mission
All organizations share two common characteristics. First, they exist to accomplish a mission. It doesn’t matter if the organization is Commercial Sector, Public Sector, or Non-Profit/NGO Sector, they all exist to accomplish their mission.
The second characteristic is resource constraints. All organizations have finite resources – people, money technology and time – and must apply those resources to accomplish their mission efficiently and effectively.
The challenge most organizations face is that there is little visibility on how the average employee’s daily work supports the organizations mission. Solving the visibility problem is a critical first step to creating a culture focused on delivering meaningful value to the organization. The Rapid Value Management method helps architects create a canvas that shows the mapping between programs and projects and the organizations mission. It then provides a set of value indicators used to objectively prove the value of those programs and projects.
The Architect’s Role in Value Management
The Architect is responsible for ensuring that the organization’s investments in technology and technical projects help the organization accomplish their mission as efficiently and effectively as possible.
Efficiency means driving the most value from the smallest amount of the organization’s resources. This means managing investments to reducing operating costs, manual processes, eliminating technical waste and improving time to value.
Effectively means that investments help improve the organization’s capability to execute its mission or to create new capabilities that that improve the organization’s ability to execute its mission.
The Architect needs objective data to govern program or project’s efficiency and effectiveness. They need to ability to quickly determine if an investment won’t deliver the desired outcome so they can either restructure or decommit from that investment to preserve resources.
To do that they need to rethink value indicators and ensure those indicators give them the data to govern value.
Three Types of Value Metrics
The core of Rapid Value Management is the use of three types of KPIs – early validation indicators, leading indicators and lagging indicators. Most architects are familiar with leading and lagging indicators, but agile organizations need early validation indicators to ensure investments will rturn business value.
-
Early Validation Indicators are measures that register impact within the first 90 days of a program or project. Ideally, they register impact within the first 30 days. These indicators should align with leading indicators for the program or project.
-
Leading Indicators are measures that register impact within 91 days and one year, although larger programs and projects may take more than a year to register impact. A positive impact on a leading indicator should be highly predictive that the lagging indicator target will be reached.
-
Lagging Indicators are measures that show the end success or a program or project. Ultimately a positive impact on a lagging indicator should indicate an organization’s success in meeting their goals and executing their mission.
Creating the Rapid Value Management Canvas
The Rapid Value Management method is designed to gather a group of stakeholders – objective owners, resource managers, finance managers and any other people who provide resources to a project or program.
Step One: The Organization’s Mission
To begin, get clarity on the organization’s mission and write it down so that it is visible to all participants. Often the organization’s mission is on their website, in their annual reports, or in their strategic plan. Consensus on the organization’s mission is a critical first step. Everything else decomposes from it.
Step Two: Long Term Goals
List the things the organization wants to accomplish that will take longer than one year. I’m avoiding using terms like “strategy” or “goals” because many organizations overload the definition of those terms. What one organization calls “goals” another organization may refer to as “strategy”. Instead, focus on identifying investments the company makes that take over one year to accomplish. These help us understand the longer-term accountabilities. Map these to the mission.
Step Three: Objectives
List the objectives and the supporting OKRs the organization wants to accomplish this year. Write them all down. These help us understand the short-term accountabilities. Then map them to the long-term accountabilities. Sometimes a short-term accountability will map to multiple longer-term accountabilities. That’s OK. You can map those to multiple accountabilities. The bigger challenge will be short-term accountabilities that don’t map to anything.
Step Four: Lagging Indicators
For each short-term accountability, identify the stakeholder that owns the accountability and identify the objective measure that is used to determine that stakeholder delivered the accountability. This measure is critical to this step. We won’t evaluate if it’s the best means for measuring delivery of the accountability, we just want to know what it is. This tells us what the stakeholder for each accountability cares about. It also helps us understand that communications with that stakeholder should always focus on showing how work helps them deliver their accountability.
Step Five: Early Validation Indicators and Leading Indicators
Up to this point, most of the information you will need is available from public sources or from conversations with the right people in your organization. But the information needed in this step is simultaneously some of the most important and most likely missing. In fact, this is where the disconnect between most employee’s daily work and the organization’s mission occurs. That’s because the measures in step four are most likely lagging indicators. They measure if you were successful, not if you will be successful. For that, we need leading indicators.
You will need both early validation indicators and leading indicators The best way to define these is to use the “time to influence” model to determine the indicators:
· Ask “what can we measure in the first 30/60/90 days that will give us confidence we are on-track to deliver our objective?” These are early value indicators.
· Ask “what can we measure between 90 days and one year that will give us confidence we will deliver our objective?” These are leading indicators.
· For checks and balances ensure:
o All early value indicators have a direct relationship to one or more leading indicators.
o All leading indicators have a direct relationship to one or more lagging indicators.
o All lagging indicators have a direct relationship to one or more objectives.
Programs and organizations like IASA Global can help you develop your skills in defining both types of leading indicators. If you are new to this concept, having a neutral third-party with experience in this type of analysis will be helpful.
Step Six: Mapping work to Indicators
The last step is to map the organization’s work effort to the early validation indicators. Optimally, it is best to map organizational capabilities or products. If that’s not possible, mapping programs and projects will be sufficient.
Governing with Value Maps
Creating the initial canvas may take some time. Most organizations can get an 80% complete draft done in three hours. That should be the target the first time the canvas is built. No more than three hours of effort.
The Value Map is a living canvas. New projects will be proposed, projects with little value will be decommitted, projects may update their target indicators, and resource constraints may shift priorities. The Value Map will need to be iteratively updated minimally every two weeks to reflect changes.
The Architect will need to continually inspect and report on realized value. At least once a month, every investment will need to be validated against their indicators to ensure they are returning value. Time should be taken to determine if new value indicators have come under influence, or if new value indicators have been identified. Funding and resources should be contingent on showing continual value.
BTABoK 3.0 by IASA is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. Based on a work at https://btabok.iasaglobal.org/