I want to tell you a story…
When considering change, a company will typically require a business case as part of the buying process. Without one it can be challenging for a company to understand the value of an investment. This is especially true for situations where a proposed change satisfies one or both of the following;
- The future state will impact the people and processes in the company heavily
- The future state will require significant level of effort to deliver the required transformation. (and by this your should read potential opportunity cost)
A business case for change will contain numbers and analysis of course. But they need to support a narrative or story, this is the vision of a future state and how it will feel for the company when they get there. It is at the narrative where you must start in your sales activity, helping the customer to feel the potential value of your proposal by working with them to build their business case story.
Why should they act?
The reasons why they need to change from the current “steady state” should be captured in the business case, displayed as the net value of the proposed new way of working. After all, a company will only take themselves through the complexity, pain [often] and challenges associated with transition if the vision of a new world feels like it is worth the effort.
For some, their driver to act are about offsetting risk. Others need to improve performance to compete more effectively. Maybe controlling the cost base to maintain shareholder return and value is the priority. Some will need to meet legislative requirements or stem the problem of staff turnover that prevents them from reaching their goals. Whatever the reason, the very concept of loss and risk is always a powerful driver for change.
For others the change is more forward looking, related to realisation of a potential opportunity for the company. New markets, new revenue streams and new capabilities often relate to one thing in commercial terms. Growth. If the company changes their approach to ‘this thing’ will it accelerate the benefits that can be realised with this strategy.
The net value (benefits-costs) considers the key benefits and also what it will take to get there. This high level business case is a key qualification question to evaluate the likelihood of a project going ahead at all.
Why should they act now?
This is all about urgency in their project timescales. It is quantified in terms of the Cost of No Decision.
If they don’t act what would be the impact on the company for every month that goes by? For some they might be unable to realise the opportunity benefits without this in place, for others they may be failing to meet legislation and risk intervention from regulatory bodies. Perhaps the cost base is spiralling out of control and affecting profitability. Whatever the driver for change is this is the part of the business case that quantifies the impact of inertia on the company performance.
Structured questioning (such as Huthwaite’s SPIN) are valuable when attempting to identify the implications of a company’s current situation. Using such an approach will allow you, early in the engagement, to understand the true drivers for change and the value of doing so. With the right insight and questioning it is possible to help the client see the potential value for the first time and this will be a powerful differentiator for you.
A good business case story accelerates change
Why act? and why now? are fundamental parts of any business case story. Without each of these it is unlikely that the client will undertake a procurement process or change from their current steady state. In our opportunity management application (DealSheet) we weight each of these questions highly to reflect their relative importance.
The person putting the case for change together will then need to get the buy in of other stakeholders. We found that on average 5.8 people were involved in a typical decision and this number spirals as the value and complexity of any change increase. With more consensus in decision making (as individuals seek to share risk) it is important that the story resonates with each party in the process to prevent potential blocking. To do this effectively is about knowing their functional and personal goals and motivations.
- No business case (why act), and the company will fail to see the reason to change and the project will stall, then fail.
- No urgency in their timescales (why act now) you risk your opportunity never quite making the approval gate as other projects take priority.
The narrative is what gets people in the company excited, engaged and supportive. The financials are there to allow for governance and financial good practice. I will add more in future posts but for now think about your vision of the future state for a customer.