BOARD MEMBER’S CORNER
Use Business Alignment to Position Your Projects for Success
by Patti Phillips
Business alignment is the process of ensuring that activities, projects, and initiatives drive business results. For these purposes, an activity, project, or initiative is defined as any effort to improve performance within a company. For example, a designer of book covers may employ a new tool to reduce the time it takes to create a cover that will appeal to potential readers as well as to the publisher and author.
The business alignment process has three phases:
1. Identify stakeholder needs.
2. Develop project objectives.
3. Evaluate results.
Identifying Stakeholder Needs
Stakeholder needs represent opportunities or problems that, when addressed, can help the organization make money, save money, or avoid cost.
Payoff needs represent the ultimate opportunity for the organization. Opportunities they present may include increasing market share, reducing operating cost, engaging employees more effectively, or contributing to the greater good. These opportunities exist in pursuing new ventures and in solving old problems.
Some payoff needs are obvious. For instance:
• Print costs are 47 percent higher than industry average.
• Turnover of critical talent is 35 percent above benchmark data.
• Web-to-email conversion rate is only 0.2 percent.
However, the not-so-obvious payoff needs may offer greater potential return. Examples are:
• Become a “green” publisher.
• Enhance our brand on Google.
• Create a great place to work.
To determine the payoff opportunities for your organization, ask yourself and your team the following questions:
• What opportunities exist to make money, save money, or avoid costs?
• Do these opportunities support our strategy?
• Is it feasible to pursue a particular opportunity?
• What happens if we do nothing?
Four other levels of needs exist. From highest to lowest, they are business needs, performance needs, learning needs, and preference needs.
Business needs represent specific business measures that, if improved, will take advantage of one or more payoff opportunities. This step in identifying stakeholder needs requires that you define specific measures quickly and economically.
Business measures come in the form of hard data and soft data.
Hard data measures are categorized in terms of output, quality, cost, and time. They are objectively based and represent common, credible measures of performance. Hard data measures that are easily available include:
• profit from sales
• completion rate
• units produced
• equipment downtime
• order response
• budget variances
• unit costs
• failure rates
• error rates
Soft data measures often have to do with customer satisfaction, employee satisfaction, work habits, initiative, and innovation. While not as easy to capture, these subjective business measures are critical to many organizations. Improvement in these measures can lead to high financial payoff. Examples of soft data measures are:
• communication breakdowns
• customer complaints
• supplier complaints
• brand awareness
• social responsibility
• external awards
• employee engagement
• new products
To ensure that you are focusing on the right business measures, ask yourself:
• What are our payoff opportunities?
• What business measures need to improve for us to take advantage of the payoff opportunities?
Performance needs usually represent behavioral or action-oriented gaps that, when closed, can result in increased business performance. Needs at this level might involve:
• ineffective behavior
• dysfunctional work climate
• inadequate systems
• disconnected process flow
• improper procedures
• unsupportive culture
• insufficient technology
Uncovering the causes of problems and/or inhibitors to success may require using a variety of analytical techniques, such as:
• statistical process control
• problem analysis
• cause-and-effect diagrams
• force-field analysis
• mind mapping
• affinity diagrams
• focus groups
• in-depth interviews
• engagement surveys
The key is a sensible approach. Take account of the resources and the time needed to examine performance gaps, remembering that expert input, both internally and externally, can add to cost and duration.
Learning needs often become visible in the context of performance needs. For example, team members may have to learn a new database, new skills, and/or new procedures or processes in the course of addressing performance needs. Occasionally, communicating a new policy provides the information necessary to change performance. From time to time, an external coach can relieve an attitude problem quickly.
Measures of specific learning needs may involve:
• subject matter expertise
• job and task analysis
• management assessments
For small organizations, it’s often best to ask the people whose performance is lacking about their learning needs. The key is to recognize what knowledge, skill, or information will change performance in an effort to improve business measures.
Preference needs involve deciding on an activity, project, or initiative. When you clarify stakeholder needs beginning with the potential payoff and work down through business and performance levels, the best solution will surface.
Table 1 shows the first phase of the alignment process, along with key questions asked at each level of need.
Developing Project Objectives
In this second phase of alignment, five levels of objectives correspond to the five levels of stakeholder needs. Objectives are developed to ensure that business alignment stays intact. Developing powerful objectives at multiple levels positions a project for success.
Table 2 presents the levels of objectives and their areas of focus, with objectives at each level representing needs of various stakeholders.
Level 5—return on investment, or ROI—is the ultimate objective for an activity, project, or initiative. The comparison of monetary benefits from a project with its costs shows stakeholders that the investment is worth it. Establishing an objective at this level communicates the ultimate intended value of a project to them.
Project objectives provide direction, focus, and guidance by describing intended outcomes. Allowing stakeholders to visualize final results of projects, they create interest, commitment, expectations, and satisfaction. Objectives also help determine whether projects are tightly linked and relevant to a business. Ultimately, they help you assess the value of your work.
Objectives are a necessity, not a luxury, if you want projects, initiatives, and activities to be successful in driving your business. But what good is an objective if you do not evaluate your success in achieving it?
The final step in the alignment process, evaluation, is often considered an extra, unwanted activity. But it is through evaluation that you can see success. Evaluation should be a seamless part of what you do every day, and when you align activities, projects, and initiatives with your business by using the concepts presented here, that is exactly what it will be.
When a project is launched, the first measure of success involves reaction. The people involved will see the project as useful or not. They will perceive content to be relevant or not. They will commit to moving forward or not. Without positive reactions, the likelihood of successful change is slim. So the first step in the evaluation process is to measure the reactions of the people most closely involved.
To ensure that a project is driving results, you need to evaluate both what people know and what they do with what they know, so the second and third measures involve learning and application.
The fourth measure is business impact, because then you need to determine how change in performance affects key business measures.
But the ultimate word on project alignment comes from the fifth measure, ROI. Converting improvement in business measures to a dollar figure and comparing that figure to what the improvement cost gives you an economic measure of success.
These five types of measures are directly linked to the levels of stakeholder needs. The specific measures represent those defined in the project objectives. It is by connecting stakeholder needs, project objectives, and evaluation in this way that business alignment occurs.
Patti Phillips, president and CEO of the ROI Institute, writes, consults, and educates about measurement and evaluation; she serves on the IBPA board. She and her husband, Jack Phillips, own both the ROI Institute and the ROI Resource Center, a publishing company focused on development and distribution of measurement and evaluation content. For more information: email@example.com; roiinstitute.net.