Successful businesses often face the kind of problem that struggling businesses would die for: a plethora of interesting investment opportunities – but which one to implement first?
From my work in applying agile principles to business change programs, I’ve come to the conclusion that there are two main drivers of success in project implementation:
- Impact; and
- Time to Value
Some may argue that there are more important variables to consider (such as NPV, payback time, strategic alignment, etc.). Whilst all of these are indeed important aspects of investment decisions, in my experience it is rare that a project that either a) takes inordinate time to deliver or b) has minimal impact, is successful.
When next deciding which projects should be allocated scarce financial (and even scarcer time) resources, I would recommend using the following Impact Value evaluation matrix:
Not going to happen: If a project is going to take a long time to deliver, for little benefit, don’t even start it. It may be tempting to do so if the capital requirements are (seemingly) small, but in my experience these projects either never finish, or invariably fail to deliver even the minimal benefits articulated in the business case that supported them.
Filler: This is a project that can be completed quickly, but does not have a great impact on the performance of the organisation. Consider these as tactical projects that can be initiated at short notice (to make productive use of slack in organisational capacity).
Fundamental Shift: These are often mandatory, or ante projects (i.e. projects that you need to do to stay at the table/remain competitive) or core changes to the organisation’s direction and/or purpose. While by their very nature these projects often must be done, one must resist the temptation to only do these long, enduring projects at the expense of harvesting Gold.
Gold: these are the projects that bring money to the bottom line quickly, and should therefore be prioritised over all others. Whether it be an opportunity to quickly exploit a new market opportunity, make a considerable saving on an ongoing expense line, or significantly differentiate from the competition on customer experience, these projects are the ones that truly make a difference.
© Eric Jansen 2011. All rights reserved.