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Value Proposition Management Delivering on Ideas John G. Mathers 2011.

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Presentation on theme: "Value Proposition Management Delivering on Ideas John G. Mathers 2011."— Presentation transcript:

1 Value Proposition Management Delivering on Ideas John G. Mathers 2011

2 Awareness Early Adapters Small Low Business life cycle Value Proposition Management StartupGrowthMaturityDecline Focus Audience Market Sales Competition Market Share Mainstream Growing High Moderate Retention Late Adopters Large Flattening High Transition Laggards Contracting Moderate Idea Page 2

3 Actions by life cycle stage StartupGrowthMaturityDecline Business / product Intention (value) Market/business feasibility Detailed (bankable/ viable) business plan Project oversight (advisory/business) Initial funding Growth Strategy Capital Organization Marketing Investment options (private/public) Performance management Process / structure optimization Operating efficiency Strategy / management re- creation Transition options Transition strategy Business Model Cost management Value Proposition Management Page 3

4 Manage by life cycle stage StartupGrowthMaturityDecline Are we clear: What is the value? How to communicate the value? Who to talk to about the value? Stick with plan: What is our growth strategy? How do we fund our growth? What structure do we need and when? How to keep focus on our market(s)? Optimize: Performance planning and management Process / structure Improvement Operating efficiency Strategy / management re- creation Reward Results: Transition options Transition strategy Re-aligned business Model Incentives and performance management Cost management Value Proposition Management Page 4

5 Key Practices throughout life cycle stages StartupGrowthMaturityDecline Linked Teams Management hierarchy operates as a system of Linked Teams Performance Plans Every team has plan coordinating every individual’s performance throughout org Work Reviews Systematic and frequent focus on evaluating and controlling each other’s output Rational Decision Making Teams use group intelligence as organizational resources. Breakthrough Systems Individual manage their own behavior with reliable feedback systems with immediate and accurate reporting Strategic Commitment Management oversight, practices and re-creation Value Proposition Management Page 5

6 4. Measuring 3. Aligning Value/$ Payback Value Proposition Management Key practices 2. Coring 1. Owning Idea Stakeholder Acceptance 5. Reviewing Project Performance 7. Learning Develop Implement 6. Re-Creating/Re-Aligning Value Proposition Management Page 6

7 So.. what’s up with major projects today? Help me understand: –We do projects every day; they define the value of growing businesses! –We devote hundreds of billions of dollars to them! –There are thousands of classes on how to run projects, tens of thousands of books and articles, hundreds of associations devoted solely to project management! and yet >70% of projects still fail!!!! … and yet >70% of projects still fail!!!! What’s wrong? Are project –Too complicated? Too complex and sophisticated? –Too demanding? Requiring too broad a range of skills? –Too dependent on people? Too reliant on the quality of management and team members? Value Proposition Management Page 7

8 What do the studies show? 30% of major projects are never completed and 50% do not deliver as promised* Only 50% of corporations use metrics in projects, despite size, cost or timing** –>95% consider “done/not done” a metric Sources:* Study of 2000 US-based companies by Hackett Group, Atlanta, 2003 ** Study of 6000 companies worldwide by Rubin Systems, Pound Ridge NY, 1999 Not completed as planned 50% Completed as planned 20% Never completed 30% Value Proposition Management Page 8

9 What do the studies show? (continued) US companies currently spend $250 billion yearly on IT development projects alone (~ 175,000) –Of all companies studied only 12% of projects were on-time and on-budget –31% had cost overruns (average 189%) –34% had time overruns (average 222%) –26% realized only portion of planned functionality (average 61%) Corporate professionals assessment of successful projects (in order of importance): 1. User Involvement (19%) 2. Exec Mgmt Support (16%) 3. Clear Requirements (15%) 4. Proper Planning (11%) 5. Realistic Expectations (10%) Source: Standish Group 1995, updated 1998 and 2000 (study of 362 companies and 3,682 projects 6. Smaller Project Milestones (9%) 7. Competent Staff (8%) 8. Ownership (6%) 9. Clear Vision & Objectives (3%) 10. Hard-Working, Focused Staff (3%) Cost Plan Cost Actual Time Plan Time Actual Project Plan vs Actual Only 12% of projects are on- time and on-budget 31% have cost overruns 34% have time overruns 26% realize only a portion of planned functionality (avg 61%) Value Proposition Management Page 9

10 Identified areas of failure The reasons given for failure include –Ownership: too often senior management has not considered the project in light of realistic expectations for results and clearly committed – through budget – to the effort –Stakeholders: often internal and external stakeholders/ influencers are not clearly identified and included until they are impacted by ongoing project activity –Alignment: too often alignment is attempted as new stakeholders are identified rather than through a focused and directed effort at the start and regularly during the effort –Changes: often market and internal surprises demand immediate and reactive changes in deliverables/timeframes –Management: too often performance problems at the bottom of the organization tend to be escalated late as emergencies rather than arise as part of regular, normal reporting Sources: General compilation of comments from Standish and Hackett studies Value Proposition Management Page 10

11 Another way of looking at what’s wrong? management of VALUE PROPOSITION through the life of the effortProjects – like many business activities – are too often addressed as routine activities rather than a demanding management of VALUE PROPOSITION through the life of the effort Delay Tolerance Lo Hi RoutineProjects Predictability Hi Trouble- shooting Negotiable Value Proposition Management Page 11

12 What is Value Proposition Management? The Value Proposition is a clear, concise, factual statement of quantifiable results from products or services – the more specific the value proposition, the easier the measurement … and achievement Value Proposition Management (VPM) is regular, ongoing oversight of pre-identified Stakeholders’ values/ benefits as new products or services are identified, developed and delivered VPM provides management with appropriate positive or negative feedback on the impact of changes during the development/ implementation cycle, with quantitative and qualitative reporting to support decision making VPM supports and enhances project management tools and senior level control through the life of the effort Value Proposition Management Page 12

13 4. Measuring 3. Aligning Value/$ Payback Value Proposition Management Key practices 2. Coring 1. Owning Idea Stakeholder Acceptance 5. Reviewing Project Performance 7. Learning Develop Implement 6. Re-Creating/Re-Aligning Value Proposition Management Page 13

14 1. Owning Feasibility review & value proposition: –Value criteria –Benefit assessment (initial deliverables) –Stakeholder benefit –Initial schedule –Initial costing –Initial risk Review –Initial benchmarks –Initial dependencies Management review Initial list of stakeholders Feasibility Initial value proposition Buy-in (senior-, group- and project-level mgmt) Initial budget Stakeholders list (first cut) Key ActionsKey Results Value Proposition Management Page 14

15 2. Coring Core project team: –Recruitment / selection –Initial work plan High-level requirements Payback assessment –Revenues or cost savings –Breakeven vs current state Project staffing Project work plan Requirements (first cut) Payback assessment (first cut) Key ActionsKey Results Value Proposition Management Page 15

16 3. Aligning Contact stakeholders & interested parties Detailed value proposition Detailed requirements Detailed work plan Detailed budget Project alignment: –Value proposition –Requirements –Work plan –Budget & human resources –Project management structure & reporting Identified stakeholders & interested parties Completed value proposition, requirements, work plan, and budget Agreed-upon overall project and reporting structure Key ActionsKey Results Value Proposition Management Page 16

17 4. Measuring Establish metrics: –Time –Cost –Resources –Scope –Quality –Action items Detailed reporting process / templates and process –Graphic representation –Hierarchy of meetings –Timing Regular reporting and decision-making process Sub- & project-level Group Senior management Stakeholders Hierarchy meeting regular agenda: Deliverables realized Cost review Critical issues / decisions Payback assessment Key ActionsKey Results Value Proposition Management Page 17

18 5. Reviewing (short-cycle) Tools selection and acquisition: –Project management –Budget –Reporting Regular project-level meetings: –Performance to plan (graphic schedule & cost) –Project and individual exception issues –Action required Regular communication across & up organization: –Exception graphical report with issues/actions highlighted –Specialized reporting Control of performance issues Regular communication to all interested parties Special management reporting: Change control Risk assessment Payback assessment Key ActionsKey Results Value Proposition Management Page 18

19 6. Re-creating Regular review and re- alignment (all interested parties): –Key issues/impacts –Decision-making –Revision of plans Special situation review and re- alignment (only as demanded by project- level impacts): –Key issues/impacts –Decision-making –Revision of plans Revised project plan impacting (as agreed by management) schedule or budget Risk assessment Payback assessment Revised metrics for reporting purposes Key ActionsKey Results Value Proposition Management Page 19

20 7. Learning Review of project performance (what worked, what did not work, & suggestions) Payback Review (final assessment of value proposition realized) Project learnings (shared across all interested parties) Payback review (shared with stakeholders only) Key ActionsKey Results Value Proposition Management Page 20

21 Seven practices in three areas A. Careful preparation 1.Owning – Establish ownership at the senior-, group-, & project- levels 2.Coring – Core project team recruitment, selection & work plan 3.Aligning – Alignment of stakeholders / interested parties B. Focus on managing action and change 4.Measuring – Selection / representation of key project performance metrics 5.Reviewing – Regular exception reporting designed and implemented at project-, middle- and senior-levels C. Considered review of results 6.Re-creating – Regular re-alignment and exception change management to adjust to shifting strategic and market realities 7.Learning – Review learnings from project successes and failures Value Proposition Management Page 21

22 Success is at the intersection Ongoing, balanced management of all key elements is the leverage point for delivering project benefits Value Proposition Value Proposition Planning Payback Alignment Governance Value Proposition Management Page 22

23 Success is at the intersection Project success is based on simultaneous attention to: Planning – ongoing alignment on vision, resources, deliverables, project plans, roles, and project management responsibilities Alignment – identification, needs assessment, and motivation of all internal and external stakeholders Governance – ongoing project management, including project monitoring, resourcing, reporting, decision-making, and individual feedback systems Payback – constant oversight of performance in direct relationship to expected, measurable results Value Proposition Management Page 23

24 VPM tools Benefit identification Planned cost and timing Planned dependencies and organizational support Measurement benchmarks Project structure & controls Reports: Stakeholder Analysis Where Did We Start?Where Are We Now? Deliverables and benefits realized Cost to date and resource utilization Reports: Current Risk Assessment Payback Assessment What Do We Do? Project issues indicators Current challenges and opportunities Reports: Recommendations for ongoing project support Value Proposition Management Assessment Customer Expectations Satisfied PreparationActionResults Clear Stakeholder Benefits Value Criteria Organization & Culture Costing & Resources Alignment & Dependencies Benchmarks Structure & Hierarchy Controls & Reporting Performance Management Issues Resolution Decision Making Deliverables Realized Benefits Realized Cost to Date Resource Utilization Project Risk Assessment Payback Assessment Value Proposition Management Page 24

25 VPM tools Stakeholder Analysis –A concise summary of all stakeholders, their perceived and real value to the project, and the strategies around commitment Team Assessment –Internal identification of project issues using indicators developed through work with hundreds of IT projects across multiple industries (focus on IT-intensive projects) Payback Assessment –Initial market value (revenues/cost savings to breakeven) versus current state or return on investment, depending on data Project Risk Assessment –Initial value proposition (strategy, functionality, market expectations, cost, time, resources) versus current deliverables Recommendations for ongoing project support –Structure, planning, alignment, reporting, decision-making, and performance management –Potential action plans VPM Payback Scoring Inital Current VPM Stakeholders Analysis Risk Value Proposition Management Page 25

26 Tools: stakeholder analysis Stakeholder (in the Outcome) Commitment (RE SK SU AD) Tactical Plan (To Move Commit) Required (for Desired Outcome) Needs (Beyond This Project) Key ? Large Customers 3 rd PVendors DivisionsBoard Development Team Yes No Yes ROI Payback Strategic positioning Payback & quality Competitive position Long-term IT strategy Strategic positioning Integration Worksessions, dialogue, formal authority Engage in solution; clarify objectives Additional information Engage in solution; provide info & involve in decision Legend: RE=Resistor SK=Skeptic SU=Supporter AD=Advocate Participation Commitment High Low ActiveNegative SkepticAdvocate ResistorSupporter Large Customers 3rd Party Vendors Divisions Board Development Teams Value Proposition Management Page 26

27 Tools: project team assessment Rapid response study of internal project team members to identify indicators of performance issues in selected areas: –Networking and alignment within organization –Team and project planning –Reviewing project results/performance –Making decisions in project work review meetings –Focus and support at the team and individual contributor level Report generates chart of areas of concern and points to active management solutions Value Proposition Management Page 27

28 Tools: output of VPM team assessment Linked/Aligned Teams Project Planning Project Work Reviews Decisive Project Meetings Focus: Team & Individual Contributors NeTeam Project Value Proposition Management Page 28

29 Tools: payback period evaluation (PPE) Initial Payback Period assessment (based on Project History) Compared with adjusted Payback Period assessment (based on Current Situation changes in deliverables/functions) Develop gap between initial plan and current “actual”; determine potential impact on market expectations Establish Risk Assessment based on gap analysis Note: Where appropriate, ROI will be determined Initial Investment NPV Savings/Years PPE = NPV Savings Initial Investment ROI = X 100 Value Proposition Management Page 29

30 Tools: output of VPM payback assessment InitialCurrent Payback will be delayed 5.6 months at an additional cost (delay costs + lost revenues) of $1.28M Value Proposition Management Page 30

31 Risk Assessment Absolute Internal Expectation 82 Current Expectation 54 Gap Assessment P P Risk Assessment Comparative Market Expectation 96 Current Expectation 54 Gap Assessment P P Tools: project risk assessment Analysis identifies comparative performance gaps ("how do we compare against anticipated market expectations?") and absolute performance gaps ("how do we perform in areas that are critical to our business?") Risk Assessment specifically identifies performance requirements being met or unmet and the potential financial and service impacts Risk Assessment is reported as a relative score across specific project deliverables relative to Pace and Quality Risk Assessment Comparative Market Expectation 96 Current Expectation 54 Gap Assessment Q Q Risk Assessment Absolute Internal Expectation 82 Current Expectation 54 Gap Assessment Q Q Value Proposition Management Page 31

32 Example: Gap Analysis Time Cost Functionality P1 P2 P3 P4 P5 P6 P1 P2 P3 P4 P5 Initial Cost Plan Initial Deliverables by Phase Current Cost Plan Current Deliverables by Phase Value Proposition Management Page 32

33 Getting started (what to do first?) The Seven Practices 1.Owning 2.Coring 3.Aligning 4.Measuring 5.Reviewing 6.Re-creating 7.Learning The Seven Practices 1.Owning 2.Coring 3.Aligning 4.Measuring 5.Reviewing 6.Re-creating 7.Learning Review concepts and practices with project teams and with management, both middle- and senior-levels Select an easily definable project as a “test case” (i.e., defined as low risk, small cost, semi-predictable, acceptable to management and with an experienced project manager and team) Review the results of the project both in terms of specifics (did it work to get the planned result?) as well as each of the seven practices Make adjustments and implement more broadly Value Proposition Management Page 33

34 3020 Bridgeway, Suite 414, Sausalito CA Tel: 1 (415) Web: Bridgeway, Suite 414, Sausalito CA Tel: 1 (415) Web: Speeding the natural evolution of your business


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