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Value Proposition Management Delivering on Ideas John G. Mathers 2011. Business life cycle. StartupGrowthMaturityDecline. Idea. Awareness Early Adapters Small Low Low. Market Share Mainstream Growing High Moderate. Retention Late Adopters Large Flattening High. Transition - PowerPoint PPT Presentation
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Value Proposition ManagementDelivering on Ideas
John G. Mathers 2011
Awareness
Early Adapters
Small
Low
Low
Business life cycle
Value Proposition Management
Startup Growth Maturity Decline
Focus
Audience
Market
Sales
Competition
Market Share
Mainstream
Growing
High
Moderate
Retention
Late Adopters
Large
Flattening
High
Transition
Laggards
Contracting
Moderate
Moderate
Idea
Page 2
Actions by life cycle stage
Startup Growth Maturity Decline• 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
Manage by life cycle stage
Startup Growth Maturity DeclineAre 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
Key Practices throughout life cycle stages
Startup Growth Maturity Decline
Linked TeamsManagement hierarchy operates as a system of Linked Teams
Performance PlansEvery team has plan coordinating every individual’s performance throughout org
Work ReviewsSystematic and frequent focus on evaluating and controlling each other’s output
Rational Decision MakingTeams use group intelligence as organizational resources.Breakthrough Systems
Individual manage their own behavior with reliable feedback systems with immediate and accurate reporting
Strategic CommitmentManagement oversight, practices and re-creation
Value Proposition Management Page 5
4. Measuring
3. AligningValue/$
Payback
Value Proposition Management
Key practices
2. Coring
1. Owning
Idea
Stakeholder Acceptance
5. Reviewing Project Performance
7. Learning
Develop
Imp
lem
en
t6. Re-Creating/Re-Aligning
Value Proposition Management Page 6
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!!!!• 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
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
completed30%
Value Proposition Management Page 8
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 ActualOnly 12% of projects are on-time and on-budget31% have cost overruns 34% have time overruns 26% realize only a portion of planned functionality (avg 61%)
Value Proposition Management Page 9
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
Another way of looking at what’s wrong?
• Projects – 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 ToleranceLo Hi
Routine Projects
Pred
icta
bilit
y
Hi
Trouble-shooting
Negotiable
Value Proposition Management Page 11
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
4. Measuring
3. AligningValue/$
Payback
Value Proposition Management
Key practices
2. Coring
1. Owning
Idea
Stakeholder Acceptance
5. Reviewing Project Performance
7. Learning
Develop
Imp
lem
en
t6. Re-Creating/Re-Aligning
Value Proposition Management Page 13
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 Actions Key Results
Value Proposition Management Page 14
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 Actions Key Results
Value Proposition Management Page 15
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 Actions Key Results
Value Proposition Management Page 16
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 Actions Key Results
Value Proposition Management Page 17
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 Actions Key Results
Value Proposition Management Page 18
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 Actions Key Results
Value Proposition Management Page 19
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 Actions Key Results
Value Proposition Management Page 20
Seven practices in three areas
A. Careful preparation1. Owning – Establish ownership at the senior-, group-, &
project- levels2. Coring – Core project team recruitment, selection & work
plan 3. Aligning – Alignment of stakeholders / interested parties
B. Focus on managing action and change4. 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 results6. 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
failuresValue Proposition Management Page 21
Success is at the intersection
Ongoing, balanced management of all key elements is the leverage point for delivering project benefits
ValueProposition
ValueProposition
Planning
Payback
Alig
nm
ent G
overnance
Value Proposition Management Page 22
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
VPM tools
• Benefit identification• Planned cost and timing• Planned dependencies and
organizational support• Measurement benchmarks• Project structure & controlsReports:• 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
ExpectationsSatisfied
Preparation Action Results• 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
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
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
3rd PVendors
Divisions
Board
Development Team
Yes
No
Yes
Yes
Yes
ROI
ROI
Payback
Strategic positioning
Payback & quality
Competitive position
Long-term IT strategy
Strategic positioning
Strategic positioning
Integration
Worksessions, dialogue, formal authorityEngage in solution; clarify objectives
Additional information
Engage in solution; provide info & involve in decision
Legend: RE=Resistor SK=Skeptic SU=Supporter AD=Advocate
Participation
Com
mitm
ent
Hig
hLo
w
ActiveNegative
Skeptic Advocate
Resistor Supporter
Large Customers
3rd Party Vendors
Divisions
Board
DevelopmentTeams
Value Proposition Management Page 26
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
Tools: output of VPM team assessment
Bureaucracy
0
LT
PP
PWRDPM
TIC
Professional
01231
Autocracy
0
51
1
1.5
2
2.5
3
3.5
4
Linked/AlignedTeams
Project Planning
ProjectWorkReviews
DecisiveProject
Meetings
Focus: Team& IndividualContributors
NeTeam
Project
Value Proposition Management Page 28
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 InvestmentNPV Savings/Years PPE = NPV Savings
Initial Investment ROI = X 100
Value Proposition Management Page 29
Payback Period
$(3,000,000)
$(2,500,000)
$(2,000,000)
$(1,500,000)
$(1,000,000)
$(500,000)
$-
$500,000
$1,000,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Months
Co
ntr
ibu
tio
ns
Percent Functionality Delivered
0%
20%
40%
60%
80%
100%
120%
1 5 9 13 17 21 25 29 33 37 41 45 49
Months
Pe
rce
nt
Tools: output of VPM payback assessment
Project Costs by Month
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Months
Co
st
Revenues by Month
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Months
Re
ve
nu
es
Cost Savings by Month
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
Months
Co
st
Initial CurrentPayback will be delayed 5.6 months at an additional cost (delay costs + lost revenues) of $1.28M
Value Proposition Management Page 30
Risk AssessmentAbsolute
Internal Expectation 82
Current Expectation 54
Gap Assessment - 28 -
PPRisk AssessmentComparative
Market Expectation 96
Current Expectation 54
Gap Assessment - 42 -
PP
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 AssessmentComparative
Market Expectation 96
Current Expectation 54
Gap Assessment - 42 -
QQ Risk AssessmentAbsolute
Internal Expectation 82
Current Expectation 54
Gap Assessment - 28 -
Value Proposition Management Page 31
Example: Gap Analysis
Time
Co
stF
un
ction
ality
P1
P2
P3
P4P5 P6
P1
P2
P3
P4
P5
Initial Cost PlanInitial Deliverables by PhaseCurrent Cost PlanCurrent Deliverables by Phase
Value Proposition Management Page 32
Getting started (what to do first?)
The Seven Practices1. Owning2. Coring3. Aligning4. Measuring5. Reviewing6. Re-creating7. 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 tomanagement 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
3020 Bridgeway, Suite 414, Sausalito CA 94965Tel: 1 (415) 381-4660 Email: [email protected] Web:
www.eVoassociates.com
3020 Bridgeway, Suite 414, Sausalito CA 94965Tel: 1 (415) 381-4660 Email: [email protected] Web:
www.eVoassociates.com
Speeding the natural evolution of your business