Business benefits are central to getting your next project or campaign approved.
When these are financial, there is a well-trodden path to ‘doing the numbers’ for an easily approved business case if they meet the criteria.
What happens if there are other benefits, with the purely financial ones becoming marginal, or even absent? Whilst it is more challenging, there are still ways to get these projects green-lit. A recommended approach is to:
- Identify intangible benefits early and build a plan to manage them
- Define and adopt a consistent approach to make these benefits as tangible as possible
- Involve key decision makers early and continuously to obtain buy-in
- Develop a simple summary benefits case that that explains the package and presents a compelling argument.
We are seeing more and more initiatives pursuing improvements in ESG or sustainable business performance that are virtuous, may may not be comparable with other proposals with a solid P&L outcome.
This is not a dead end, and realistically there are two paths that can be followed:
- stay soft and work to the intangible benefits case
- evaluate, and promote the numerical value
At the softer end, there are five benefit areas that are commonly raised:
- stakeholder satisfaction – typically quoted as a path to favourable buying or investment decisions, which become relevant if they translate to other financial or risk management factors
- user satisfaction – a similar outcome to that above which may translate to increased loyalty and future purchases, or reduced support calls with their associated costs
- improved communication – where clarity minimises friction in transactions and aims to eliminate mistakes, which in turn improves operational efficiency
- safety – a bit more of an absolute case which manages risk and reduces consequential costs or losses
- improved brand awareness – creates favourable impressions among those not directly associated with the business, to influence their opinions positively as they make decisions as potential customers, employees or enthusiasts
So how can we make these benefits a bit more tangible and easier to put into a justified business case?
The most obvious path is to make soft benefits tangible through some form of translation or exchange rate mechanism, like an Internal Carbon Price. This gives a direct equivalence of benefit in financial terms but is subject to the believability of whatever exchange rate is chosen. This is a well covered topic with great discussion by people like Deloitte, or McKinsey, who both highlight the non-standard nature of such an exercise. This creates practical challenges as the carbon price and methodology put ne consistent through the lifecycle of their project and across the breadth of the business community that is impacted. Standardisation and consistency is key.
Another approach is to establish a link between the project benefits and another important business objective, perhaps declared in the corporate strategy, ESG strategy, business plan or investment pitch. This means a cause-and-effect link is created to show how the overall objective is enabled by the project outcomes, or obstacles are removed. It may be possible to develop an estimated contribution, perhaps in percentage terms to the business objective, and through that logic a financial value can be derived.
Going softer still, consider ranking the benefits that will be derived against each other. A common mechanism is to ask simple ‘A-or-B?’ questions that combine to place each benefit in a league table of notional significance, regardless of any numerical value.
Whatever the approach, the case logic will benefit from involving stakeholders and approvers early. Numbers-based decisions are made every day and each approver will have their personal view, or a company policy, that says what an acceptable return on investment is. The more diverse proposals presented here are more difficult to green-light quickly, so the more they know, and the better the case is constructed for them, the easier it will be for them to say yes.