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PART 2- DECISION-MAKING TO REALIZE

GOALS

PART 2- DECISION-MAKING TO REALIZE

GOALS

Screening Added Value Initiatives

Screening Added Value Initiatives

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Where we are on the management cycle.Where we are on the management cycle.

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The Realities We FaceThe Realities We Face

Resources are LimitedThere is a Competition for FundsSometimes the Winner is the Best

Sales PersonFinancial Decision Rules Don’t

Always Match Operating Decision Rules

Financial Returns And Efficiency Will Continue To Be Powerful.

Resources are LimitedThere is a Competition for FundsSometimes the Winner is the Best

Sales PersonFinancial Decision Rules Don’t

Always Match Operating Decision Rules

Financial Returns And Efficiency Will Continue To Be Powerful.

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SAVI modelSAVI model

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Introduction to Chapter 6Introduction to Chapter 6

Two of the difficult issues facing today’s manager are:

Finding the optimal solution to a problem Communicating the findings to a decision-maker.

The framework for an integrated analysis in decision making is called Total Impact™ Business Case

Analysis

Two of the difficult issues facing today’s manager are:

Finding the optimal solution to a problem Communicating the findings to a decision-maker.

The framework for an integrated analysis in decision making is called Total Impact™ Business Case

Analysis

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LINKING BUSINESS CASES TO STRATEGIC PLANS

LINKING BUSINESS CASES TO STRATEGIC PLANS

As stated previously in the context of Total Impact the broad objectives are to improve performance in the areas of:

Financial efficiency and effectiveness, Sustainability of the economic

environment, Stewardship of the natural

environment, Safety of employees and the public and Service to the customer.

As stated previously in the context of Total Impact the broad objectives are to improve performance in the areas of:

Financial efficiency and effectiveness, Sustainability of the economic

environment, Stewardship of the natural

environment, Safety of employees and the public and Service to the customer.

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LINKING BUSINESS CASES TO STRATEGIC PLANS

LINKING BUSINESS CASES TO STRATEGIC PLANS

The “Total Impact Business Case” follows the decision making path that has been created by the strategic phase of the management cycle.

The “Total Impact Business Case” follows the decision making path that has been created by the strategic phase of the management cycle.

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Business Case and the Management Cycle

Business Case and the Management Cycle

Figure 6.1 Figure 6.1

Needs Assessment

Operating plans and budgets

Project management

Performance Management

“Total Impact” Business case

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What is a Business Case?What is a Business Case?

A completed business case is a report (a document or an oral presentation) that a decision has been reached regarding a particular problem or opportunity being faced by the organization.

A completed business case is a report (a document or an oral presentation) that a decision has been reached regarding a particular problem or opportunity being faced by the organization.

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Figure 6.2, The Five C’s of business casing

Figure 6.2, The Five C’s of business casing

Complete Tell the whole story.

ConsistentEveryone in your organization should use the same format

Concise Don’t offer too much information.

Not Contrived

Be careful that relationships between costs and benefits are logical.

Use Common

Sense

If you can convince yourself that the solution proposed is the best possible solution, then you will also be able to convince others

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What is a Business Case Analysis?

What is a Business Case Analysis?

A business case analysis is; a systematic process of evaluating a cross section of

alternatives against criteria that match strategic

goals to arrive at the best solution to a

problem.

A business case analysis is; a systematic process of evaluating a cross section of

alternatives against criteria that match strategic

goals to arrive at the best solution to a

problem.

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Two Related StepsTwo Related Steps

Step 1 is to find the best solution to a problem by preparing a complete business case analysis using a decision model.

Step 2 is to put the findings of the analysis into a report that will be convincing for a decision-maker.

We begin with the first step.

Step 1 is to find the best solution to a problem by preparing a complete business case analysis using a decision model.

Step 2 is to put the findings of the analysis into a report that will be convincing for a decision-maker.

We begin with the first step.

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COMPONENTS OF A BUSINESS CASE

COMPONENTS OF A BUSINESS CASE

A structured approach:

Identifies all aspects of a proposal in enough detail to give a decision-maker confidence that the analysis is complete.

Provides justification for the recommended solution by evaluating and choosing from alternative courses of action.

A structured approach:

Identifies all aspects of a proposal in enough detail to give a decision-maker confidence that the analysis is complete.

Provides justification for the recommended solution by evaluating and choosing from alternative courses of action.

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Convince those with the authority to approve that:Convince those with the

authority to approve that:the problem or opportunity is realthe alternative chosen is the best

available The investment makes the best

use of limited resources.

the problem or opportunity is realthe alternative chosen is the best

available The investment makes the best

use of limited resources.

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consider some or all of the following factors:

consider some or all of the following factors:

The possibility of multiple goals that conflict with each other.

The fact that projects have life cycles. The range of alternatives is getting

wider as technology improves. Impact of the expenditure decision

across organizational boundaries. Dynamics of the change process, and

the need to address risks and uncertainty in a rapidly changing world.

The possibility of multiple goals that conflict with each other.

The fact that projects have life cycles. The range of alternatives is getting

wider as technology improves. Impact of the expenditure decision

across organizational boundaries. Dynamics of the change process, and

the need to address risks and uncertainty in a rapidly changing world.

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PROBLEM SOLVING PROCESS

PROBLEM SOLVING PROCESS

In practice, poorly defined problems are subjected to faulty analysis and people sit around arguing about which option to choose!

In practice, poorly defined problems are subjected to faulty analysis and people sit around arguing about which option to choose!

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Figure 6.3 PROBLEM SOLVING MODEL

Figure 6.3 PROBLEM SOLVING MODEL

NON-FINANCIAL ANALYSIS

NON-FINANCIAL ANALYSIS

FINANCIAL ANALYSISFINANCIAL ANALYSIS

MAKE A CHOICEMAKE A CHOICE

IMPLEMENTATION PLAN & FOLLOW UP

IMPLEMENTATION PLAN & FOLLOW UP

PROBLEM STATEMENTPROBLEM STATEMENT

CRITERIACRITERIA

ALTERNATIVESALTERNATIVES

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DEFINING THE PROBLEM/ OPPORTUNITY

DEFINING THE PROBLEM/ OPPORTUNITY

Proper problem definition or identification of an opportunity is the most important, and often one of the most neglected elements of a business case preparation.

The problem statement should guide a decision-maker to a full analysis of all logical alternative solutions.

Proper problem definition or identification of an opportunity is the most important, and often one of the most neglected elements of a business case preparation.

The problem statement should guide a decision-maker to a full analysis of all logical alternative solutions.

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Problem definition involves the following steps:

Problem definition involves the following steps:

1. Identify your present position2. Identify why the present position is

undesirable3. Identify the position you would like to be

in, (set an objective)4. Identify why the new position is desirable

A problem statement identifies, in future terms, the impact on the organization if the problem is solved.

1. Identify your present position2. Identify why the present position is

undesirable3. Identify the position you would like to be

in, (set an objective)4. Identify why the new position is desirable

A problem statement identifies, in future terms, the impact on the organization if the problem is solved.

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Four Levels of Problems and Opportunities, (Fig. 6.4)

Four Levels of Problems and Opportunities, (Fig. 6.4)

Level Analysis

Strategic How does a new division fit with the Mission and strategic goals?

Project How will the division be defined in terms of the types of products and services it carries?

Component The names of the specific brands and the descriptions of specific services?

Operational Where do we get materials and labour?

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problem-solving activities are valuable

problem-solving activities are valuable

They challenge thought processes and force creative thinking.

They encourage us to examine situations from different perspectives, frequently causing new and better methods to be employed.

They usually act as a catalyst for personal learning by the people involved.

They quite often carry the seeds for new opportunities.

They challenge thought processes and force creative thinking.

They encourage us to examine situations from different perspectives, frequently causing new and better methods to be employed.

They usually act as a catalyst for personal learning by the people involved.

They quite often carry the seeds for new opportunities.

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IDENTIFYING PROJECT GOALS

IDENTIFYING PROJECT GOALS

The goals should address both the immediate short‑term purpose and the long‑range goals of the expenditure. In general, goals should pass the SMART test.

SpecificMeasurableAchievable Result OrientedTime limited

The goals should address both the immediate short‑term purpose and the long‑range goals of the expenditure. In general, goals should pass the SMART test.

SpecificMeasurableAchievable Result OrientedTime limited

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7 types of projects7 types of projects

1. Expand to meet an increase in customer demand.

2. Introduce a new division or revenue stream.3. Maintain current technical performance.4. Decrease in future capital and/or operating

costs.5. Change for technical improvement.6. Introduction of a new process to improve

quality of customer service.7. Change in processes to satisfy non-financial

factors such as public perception, environmental issues, employee morale etc.

1. Expand to meet an increase in customer demand.

2. Introduce a new division or revenue stream.3. Maintain current technical performance.4. Decrease in future capital and/or operating

costs.5. Change for technical improvement.6. Introduction of a new process to improve

quality of customer service.7. Change in processes to satisfy non-financial

factors such as public perception, environmental issues, employee morale etc.

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Strategies for defining goals

Strategies for defining goals

Seek:

Avoid:

Build:

Restore:

Seek:

Avoid:

Build:

Restore:

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SummarySummary

The problem/opportunity statement is the most important element of the decision model.

Perhaps the best way to summarize the findings of his chapter is to use a “Problem Statement Checklist”, (figure 6.7).

The problem/opportunity statement is the most important element of the decision model.

Perhaps the best way to summarize the findings of his chapter is to use a “Problem Statement Checklist”, (figure 6.7).

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Closing RemarksClosing Remarks

This chapter begins a four part discussion of problem solving.

Chapters 7, 8 & 9 will walk you through the remainder of the decision making model.

Remember that the primary purpose of this model is to Screen Added Value Initiatives.

This chapter begins a four part discussion of problem solving.

Chapters 7, 8 & 9 will walk you through the remainder of the decision making model.

Remember that the primary purpose of this model is to Screen Added Value Initiatives.