Alignment is sometimes misunderstood by a lot of folks, so let me put the real simple definition on it. Alignment is the process of keeping all the activities and resources headed in the same direction in a mutually reinforcing way.
I have learned over the years that an enterprise will consistently succeed only when all the parts are in a strong cause-and-effect relationship (alignment) with one another. I was doing some work for a very large coffee shop chain some years back and noticed that they thrived because its entire worldwide organization is aligned to ultimately focus on one thing - produce a uniquely satisfying coffee refreshment experience that encourages repeating. To be successful they have to align activities, from the almost obsessive selection of their beans, to the roasting, to the exact brewing, to the surroundings in which you drink your coffee. Every element of this company links to that goal. Make sense?
I can tell you that alignment is at the forefront of every executive decision maker's mind when faced with choices on IT investments. What do they want to know? They want to know how strong is the cause and effect between investing in IT Project Y and realizing key business objectives?
It is your job and the job of your business case development team to discover and communicate the strongest possible, truest value alignment related to the investment being analyzed. This step provides an approach.
So get your criteria that you gathered and filtered in the last step and lets check, then adjust, for that compelling cause-and-effect relationship among successively higher-level decision criteria. One to do this is to get the value matrix (whether in standard grid form or the Balanced Scorecard form) that you created in the last step so that we can visually see the alignment.
The graphic 1.2 show how to examine one cause-and-effect relationship dealing with reducing customer turnover (this is a generalization of an actual customer engagement). So as you can see that the payoff area of a criteria called "reduce customer turnover" is driven by another payoff area called "make better new-product decisions." So to summarize this entire graphic can be read as two connected sentences that will drive home the point to the decision makers:Making better new-product decisions helps make customers happier, thereby reducing customer turnover. Less turnover means having more loyal customers, which help keep competitors away, thus increasing our competitive advantage.
I call this graph a value ladder and they are especially useful for helping the decision team distinguish the forest from the trees. By grouping sets of payoff areas together in a logical cause-and-effect message, the decision team can quickly see the extent (or not) of mutually reinforcing payoff areas. You can really see this "connect the dots" result in the graphic.The Seven Tests of Alignment
So you remember in the previous steps we have set boundaries and scope, people involved with the decision have been identified. Decision criteria have been created and filtered down to a dozen or so. Now I'm going to give you the seven tests that I have used for years to make sure that the business case's alignment of payoff areas is as strong as possible. The sample answers to each test item are in parenthesis.Test 1
: Does every payoff area have a logical cause-and-effect (alignment) relationship with one or more other payoff areas? (Yes. Every payoff area either drives or is driven by at least one other payoff area).Test 2
: Are these relationships as strong and convincing as they can be? (Maybe. See Test 6 below)Test 3
Are payoff areas relatively evenly distributed among the four Balanced Scorecard levels - financial, customer, process, and employee learning and growth? (Yes. We want a business case hat addresses different levels relatively evenly).Test 4
: Does this collection of payoff areas emphasize one or the other of the two primary strategies of executives: (this will depend on your business case)Test 5
: Do the messages of individual value ladders communicate the message that resonates with the decision team? (in the customer example I gave you above, one of the payoff areas was "reduce engineering labor costs", which may not support the team's goal of "more frequent and successful new products).Test 6
: Is the language chosen to define each payoff area the most appropriate for the value message desired? (Most seem to be. However, in the case I mentioned above, what about "reduce engineering labor costs"? If the primary message management wants to hear is "market success", then lowering engineering costs may not be the way to go. This is a clue that "increase engineering productivity" in terms of producing more new products faster may be more important. Therefore, this value ladder analysis leads us to change the title of that payoff area from "reduce engineering labor costs" to "increase engineering productivity", which helps engineers create new products faster.)Test 7
: Do the monetary savings (from the main messages that we are trying to discover from the value ladder payoff areas) constitute a majority of the total savings of the entire analysis? (Yes. You can see this from your tangibles analysis that we did in the last step).
In the next step we start to dig into the "show the money" or calculate stage. Here is where we will compute realistic hard-money costs and benefits of investment options using the aligned criteria. Why do this? because as we all know, money impacts have a major influence on investment decisions.
(Note: You must be logged in to post a comment.)
If you log in and nothing happens, delete your cookies from BrianMadden.com and try again. Sorry about that, but we had to make a one-time change to the cookie path when we migrated web servers.