Understanding the Definition of Success is Critical to Achieving Value

by Laura Dribin

Without a shadow of doubt, the COVID -19 pandemic forced business leaders to to re-evaluate their approach: Do we lead for speed, or do we lead for value generation? In order to answer this question; business leaders, now more than ever, need to re-evaluate their definition of success.

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In business, we are always expected to move quickly and be productive. That type of expectation has only become more important to businesses considering the COVID-19 pandemic and its aftereffects. But what truly is the value proposition to moving quickly? Is the end game of any project spend to get it done as quickly as possible? Or, to get it done right? While that may seem like a technicality or an obvious point, pursuing one over the other actually provides different results daily to corporations. Do we lead for speed, or do we lead for value generation?  

What’s the right balance? 

This “technicality” affects financial officers daily. The financial officers of most companies focus on managing discretionary spending or project work. What determines which projects get funded and how much? If an initiative gets off track, does it get additional funding? In recent years, the complexity of the digital market has created larger and more complex initiatives to be addressed in corporations. More complexity leads to bigger workloads and corresponding costs yet, often the same (unrealistic) timelines to completion remain. 

These transformational initiatives are still being managed using the same methods we have been using for decades. Measuring success by time, budget, and scope (called the “triple constraint”) creates the dilemma where middle management (including project managers) are measured by meeting the triple constraint whereas, the conundrum, executive level management is measured by getting it done right driving to value. 

In a competitive environment, getting something done doesn’t necessarily equate to value for the business. Too often we see initiatives completed and the end result is little difference (or value) to the business. With millions of dollars being spent on strategy every year, shouldn’t the goal be to achieve results that help to realize that vision? 

Driving towards change 

CFOs and “keepers of the till,” have an opportunity to make a fundamental change in determining how companies make major improvements. Measurements of any initiative will always include time, budget, and scope. Those are important tactics. Those tactics focus on the “how” something will be completed (important to remember that those are tactical measures, not strategic measures). Yet, as the financial director of any company, CFOs should be focused on the spend of any effort that can drive the company’s strategic vision.  

It is about understanding the “why” something should be done. Given that most companies reward by completion of any initiative based on getting it done on time, on budget, and within scope, this is not a minor change. Yet checking off a box is not a measure of success if the desired value has not been achieved. So, how do you start to change your culture?  

Communicate the desired outcomes - Do not dole out the funds unless there is a clear understanding of “why”? Too many projects are funded on a hope and a dream. I have had clients that agreed to go forward on starting a large effort with nothing more than a promise of remarkable things to come. And then they did not. That is why it is important that the CFO asks two simple questions every time: 

  1. What does success look like when you are all done? If the answer is, “getting it done,” do not do it! The answer to that question should always have two parts: 
    1. How will the success of this engagement impact the business strategy? 
    2. How will the company/business unit/division be different when this is complete (i.e., what should it look like if everything goes as planned)?
  2. How do you know when you are done (when is done, done)? The answer to this question should be measurable and show how you can move from a completed state to an operational one. If the effort will increase revenue, this question should address by how much. Is one-half of one percent enough? Is 50% enough? When should this project move out of project mode and become operational? 

Align all key stakeholders and communicate out - Align all the necessary sponsors and stakeholders to the same vision. Ensure that the “why” is understood and aligned among all the key executives and stakeholders involved. This point is critical and should be required to be examined prior to spending.  

I had a client spending millions of dollars for an enterprise transformation. The CFO had one idea of the expected results, and the VPs and directors running the transformation had a different idea of what success would look like. Obviously, one of the two parties was going to be disappointed. Strategic value pares down to increasing revenue, lowering costs and/or improving productivity (which can support increasing revenue or lowering costs). Once you have a clear understanding of how the money will support the company’s strategic vision you need to ensure that all the affected executives share the same vision for this effort. Once the executive team is aligned, make sure to communicate that agreed upon alignment across and down through the organization.  

Stay focused on that desired outcome - When things go wrong, know how you are going to course correct and move forward. In a standard practice for how businesses typically get things done, projects will look to cut out some of the scope from an initiative in trouble. Often, those cuts may be random to shave off some time or some budget just to get the project completed. It becomes a numbers game.  

If you are not focused on answering the question of what success looks like when you are done, chances are that you may cut critical scope thus reducing the value proposition. If you cut scope and the value return goes from 20 percent to three percent, would you be better off extending the effort another six months to increase that value return to 20 percent? Is checking off the boxes towards completion the end game—or is strategic value generation? 

Do not be so quick to pour more funding into a sinking ship! It is infrequent that an initiative in trouble will not get additional funding to complete but expected value should be any financial officer/director’s focus. If little value is to be generated, stopping a project may be the right answer. Too many organizations insist on going to the end, authorizing additional spend and time only to find little value. Think about all the other value-based initiatives that might provide better results if funded. 

Make it about value 

Look at your annual spending and examine the value that your discretionary spending achieved. If you cannot identify what spending helped your strategic vision and what did not, then I would recommend that you drive an effort to refocus your organization on how it determines and allocates funds for projects across the enterprise. Moving your organization from a standard project-based organization to a value-focused organization is not easy. It is a transformation. Project managers and middle management are all incentivized to “get things done on time, on budget, and within scope.” Yet, changing their expectations can not only help drive your business in a better direction but it aligns the overall business to “keep their eye on the ball.” Getting something done by just checking off boxes is much less rewarding than adding value to the company so that it can grow. Changing your process from tactical project measures to strategic project measures will be challenging but a value-driven effort. 

Laura is the CEO and Founder of Peritius Consulting, Inc.