Viewpoint: Value-Driven Planning

When ‘cash is king’, how do you ensure that your change initiatives will drive value into your organisation?

The simple answer is to keep value to the fore when planning your initiatives.  It’s essential to understand how each new or improved capabilityˆ you are delivering contributes value - and to deliver value-adding capabilities regularly.  To make this happen:

  • Value MapEnsure that you develop and maintain a ‘value map’ which links value through capability to component and cost and which clearly identifies how components depend on one another and how they integrate to create capabilities (see diagram).
  • Then insist that your Roadmap and Plan are ‘value-driven’ - by using the value map to combine delivery of new and improved capabilities into ‘releases’ which ensure value is delivered at the earliest practicable opportunity.
  • Make sure releases are no more than 6 to 9 months apart and that every single release contributes new value to the organisation - don’t be drawn into releases which ‘lay foundations’ without adding value.

The basic principle of the value map is that value is associated with capabilities and costs are associated with acquiring and integrating the components which deliver these capabilities.  In the first instance, it’s important to get just enough data to get a realistic idea of the relative costs and benefits of each capability.  This is not the time to get bogged down in highly detailed cost and benefit models - precision can come later when the detailed business case is put together.

Release approachEach release in the Roadmap and Plan is a stepping-stone towards the target embodied in your Blueprint - and each step must represent a complete and coherent new definition of your business.  If processes need to change, then roles & responsibilities and probably training will also need to change to remain aligned.  Similarly, if information systems are changing, it’s likely that processes & procedures will need to change too.

Fundamentally, how capabilities are allocated to releases depends on two things: the value that each capability delivers and the pre-requisites which must be in place before it can be implemented.  It goes without saying that the capabilities with the highest payback should be delivered as early as possible.  However, it is often these very capabilities that have the largest and longest lead-time prerequisites.

As always, it’s never quite this easy in practice - especially as it requires multiple disciplines (e.g. planners, business and technology architects, business case modellers) to work together effectively and there are relatively few people with the knowledge and experience to bring all the elements together.

Benefits of a value-driven approachIt’s well worth the effort, though.  The rewards can be substantial, which is particularly important in difficult economic circumstances.  Costs can be deferred, benefits brought forward, maximum outlay reduced and overall net benefit increased - all positive contributions to cashflow, affordability and value. 

At the same time, delivery risk is reduced by focusing scope only on those components which clearly contribute value and by having regular and tangible evidence that delivery is on track.

 

To see a more comprehensive description of Value-Driven Planning please click here.  (This opens a pdf file in a new window) 


ˆ  Capabilities: things your organisation can do - the services you offer and the facilities and competences you possess
  

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