Value Proposition Management Delivering on Ideas John G. Mathers 2011

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

2. Business life cycle Startup Growth Maturity Decline Idea Awareness Early Adapters Small Low Low Market Share Mainstream Growing High Moderate Retention Late Adopters Large Flattening High Transition Laggards Contracting Moderate Moderate Focus Audience Market Sales Competition

3. 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

4. Manage by life cycle stage Startup Growth Maturity Decline • 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

5. Key Practices throughout life cycle stages Startup Growth Maturity Decline Performance Plans Every team has plan coordinating every individual’s performance throughout org Linked Teams Management hierarchy operates as a system of Linked Teams Work Reviews Systematic and frequent focus on evaluating and controlling each other’s output Strategic Commitment Management oversight, practices and re-creation 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 Value Proposition Management

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

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!!!! • 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

8. Completed as planned Never completed 20% 30% Not completed as planned 50% 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

9. Project Plan vs Actual Time Actual Time Plan Cost Actual Cost Plan 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%) 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%) • 6. Smaller Project Milestones (9%) • 7. Competent Staff (8%) • 8. Ownership (6%) • 9. Clear Vision & Objectives (3%) • 10. Hard-Working, Focused Staff (3%) Source: Standish Group 1995, updated 1998 and 2000 (study of 362 companies and 3,682 projects Value Proposition Management

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

11. Hi Routine Projects Predictability Trouble- shooting Negotiable Lo Hi Delay Tolerance 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 Value Proposition Management

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

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

14. 1. Owning Key Actions Key Results • 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) Value Proposition Management

15. 2. Coring Key Actions Key Results • 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) Value Proposition Management

16. 3. Aligning Key Actions Key Results • 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 Value Proposition Management

17. 4. Measuring Key Actions Key Results • 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 Value Proposition Management

18. 5. Reviewing (short-cycle) Key Actions Key Results • 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 Value Proposition Management

19. 6. Re-creating Key Actions Key Results • 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 Value Proposition Management

20. 7. Learning Key Actions Key Results • 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) Value Proposition Management

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

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

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 ofperformance in direct relationship to expected, measurable results Value Proposition Management

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

25. VPM Stakeholders Analysis Risk VPM Payback Scoring Inital Current 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 Value Proposition Management

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

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

28. Tools: output of VPM team assessment NeTeam Linked/Aligned Teams Project 4 3.5 3 2.5 Focus: Team & Individual Contributors Project Planning 2 1.5 1 Decisive Project Meetings Project Work Reviews Value Proposition Management

29. NPV Savings Initial Investment ROI = X 100 Initial Investment NPV Savings/Years PPE = 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 Value Proposition Management

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

31. P Q Q Risk Assessment Comparative Risk Assessment Comparative Risk Assessment Absolute Risk Assessment Absolute Market Expectation 96 Current Expectation 54 Gap Assessment - 42 - Market Expectation 96 Current Expectation 54 Gap Assessment - 42 - Internal Expectation 82 Current Expectation 54 Gap Assessment - 28 - Internal Expectation 82 Current Expectation 54 Gap Assessment - 28 - Tools: project risk assessment • Analysis identifies comparativeperformance gaps ("how do we compare against anticipated market expectations?") and absoluteperformance 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 P Value Proposition Management

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

33. Getting started (what to do first?) The Seven Practices • Owning • Coring • Aligning • Measuring • Reviewing • Re-creating • 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

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