5 Principles Of A Lean Business Case

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When environments, technologies, development practices evolve, it can take years for management practices to catch up. Business schools will still teach outdated practices for some time and management positions will often protect and reinforce their positions. Just consider for a moment that senior leaders are unlikely to want to embrace cultural changes which challenge or remove the behaviours which made them successful. I believe this is currently the situation with the good old business case which unfortunately still exists in it’s antiquated format in many businesses today.

Many businesses and particularly large enterprises still mandate the need for traditional business plans/cases for them to steer the path of internal budget allocation. The logic that often gets presented to defend such cases is that aside from being a standard practice, people want to know what they are funding and the business case provides that insight. It also correlates the strategic direction to operational spend and is an integral artefact to navigate political landscapes and operational allocations. That is all fine in theory, but remember just because it’s written down, it doesn’t in anyway mean that it’s fact. Business cases are projections at a point of time where the environment and competitive landscape are at a particular state and can only be observed and presented with limited information. Most of the projects written are at best, a well thought out and over complicated, long winded “educated” guess.

Now don’t get me wrong, I am not by any means suggesting that you should abolish plans altogether and jump into anything and everything that would be foolish and chaotic. I’m suggesting that the business case in its traditional format is not treated as an oracle into the future and we can develop a lot of what the business case aims to achieve iteratively.  Let’s therefore ensure the business case is recognised for what it is and keep it focused, lean and up to date with evidence. It’s not-static and the projections and statements should be considered to be living information subject to regular review.

So in practice what does that mean?

    1. Keep the business case strategic. – Market and environmental forces should be analysed and inform your path ahead. If there is legislation or obvious competitor trends, yes knowing these should inform your business strategy. This can be a useful guide and lightweight tools such as the business model canvas can help support this.
    2. Distinguish fact from hypotheses – Call out and prioritise the riskiest assumptions and start with those first. Facts are only true when you have experiments which you can repeat over and over and achieve the same result. Some facts can also cease to remain true when the environment changes, particularly considering customer behaviour.
    3. Make lot’s of little bets – The phrase Build it and they will come” was aptly coined in the hit film “Field Of Dreams”. In reality the majority of products and businesses fail. Therefore your brilliant idea is statistically subject to do the same likelihood, despite how much you believe in it. Make small bets using quick, cheap lean experiments to reduce the cost of failure and to double down on success. The best way to have a good idea is to have lots of ideas – Linus Pauling
    4. Focus on outcomes not delivery outputs – Your operational plans should be directional and not restricted to delivery outputs. Focusing on goals and outcomes will promote more discovery and responsiveness which is particularly important for new ideas. As you search for a business model, use methodologies and metrics which evolve. 
    5. Inspect and adapt through evidence – Progress your idea through a series of inspect and adapt iterations. Your product and business model should evolve as your refine your path to the customer. Therefore your business plan isn’t created upfront, but created overtime using data and evidence.

The 5 steps above should challenge the way you consider budget and resources allocation to projects. If your business plan evolves from small ideas and experimentation, so should your budget. Your delivery methodologies should also do the same. Just because you have a factory, it doesn’t mean all ideas should go into mass production for the benefits of efficiency as soon as you have an idea that you think will change the world. Efficiencies are achieved first by responsiveness until you have a mass market to serve and need to reach faster than your competitors. This could also be described loosely of going from a complex/complicated state with higher levels of uncertainty to the simple state where you have more predictability. The practices are not and should not be the same to support each state. The traditional business case has a tendency to go from the idea into mass production which is a risky strategy.

If you’re interested in the topic shared above, we will be looking to share more depth on the practices we have introduced at Pearson through our work developing the Lean Product Lifecycle. This includes some of the fundamental changes we have made to governance and budgeting as well as product development and management.

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