Describing Value

The purpose of this lecture page is to begin the process of defining the value of your project to the project owner, organization, industry, or the world. This process begins this week by simply describing the value verbally and getting comfortable with a few definitions of value. Next week, you will move from a verbal description to one that quantifies, to the extent possible, the benefits and costs associated with your project.

Value and Purpose

If there is one thing in common for virtually all personal and work-based projects, it is that they somehow create value. We all make decisions every day on whether to embark on a project based on it providing some kind of value. I say “some kind” because it isn’t always as straightforward as the rules of accounting or financial decision models might indicate and may even be extremely difficult to quantify in economic terms.

• How many projects have you done with only a vague idea of how it would end, in terms of its precise benefits and costs?
• How many times have you undertaken projects both at home and at work that simply “make sense” but you or your organization can be vague about the actual definable benefits and costs?

Let’s swap out “make sense” for the word “purpose” and build from there. We can probably agree that any project has a purpose and that few, if any, projects exist without one. So, if you haven’t thought about it until now, stop and reflect for a moment on your project and what its purpose is. Based on purpose we can now seek to understand its value.

Project Value

While we may often feel that our projects need to keep moving forward without any clearly articulated value, this value undoubtedly exists and may be based on widely held assumptions or even intuition, which is grounded in experience. While every change or project in the workplace doesn’t need to receive a thorough financial or economic analysis, it is still instructive to have clarity about the value inherent in any proposed change project, even if it seems difficult to measure.

The difficulty of measuring the impact of a change is not insignificant. Think about how many changes we all make to work processes, software, or even organizational structure with only a minimal amount of analysis and real data. Avoiding analysis paralysis is real in the workplace. That said, the purpose of this module is to help you to define value and to move your project in the direction of more clarity and specificity in defining its impact.

What’s Changing?

Defining a project’s value could easily grow to a long list of possible direct and indirect changes that cover a wide range of certainty. There are changes to business processes or technology, for example, that have well-defined costs and benefits based on experience and real data. At the other end of the spectrum are projects for which we have no reliable data or for which the changes are also very indirect and difficult to measure.

In this part of the course and your project, you are asked to simply think through the possible impact of your change. We will do that without using numbers (I can hear the sighs of relief from here!).

Let’s walk through it:

1. Begin with the “low hanging fruit” of the most obvious benefits to your project. These would generally be well-understood outcomes based on experience (data) either in your own organization or as documented by others. This begins, of course, with direct changes in important performance indicators or other benefits. Some examples might be reducing the amount of time required for a given process, needing fewer resources to complete a task or work product, higher output for the same amount of labor or additional sales volume.

2. Next, sticking with positive changes, we might identify other positive impacts (benefits) that may be much less direct but still observable and, hopefully, measurable. These might include, for example, the eventual redeployment of resources to other areas of work having more value or the ability to reconfigure parts of the organization in the longer run. A change in one part of the organization might, for example, result in very small but noticeable positive changes that might otherwise be overlooked.

3. Next, with the possible benefits now identified it is time to look at the dark side…those dreaded costs. As much as we’d like to avoid them, we have to admit that there is no free lunch and that there will be costs or negatively impacted performance indicators needing to be recognized somehow. Like the benefits above, there are “costs” that are easily defined so look at those first. Capital investments, for example, in new hardware, software, a new product or even adding personnel all have well-understood costs.

Beyond that, you may need to, again, look at any indirect impacts and think about costs that are only indirectly associated with your change and not easily measured, let alone quantified in economic terms. Frequently a change in one part of the organization may create additional work, at least temporarily, that needs to be understood if you are being completely honest about assessing your project’s value.

So where to begin?

In my opinion, you should start with the benefits. While it may depend on the nature of your project, it is easier to think through the benefits first. If nothing else, the opportunity for a positive impact is emotionally uplifting and generates energy about really understanding your project’s impact! Don’t feel constrained in this exercise by tradition and rules, either real or imagined. Begin with the most obvious benefits and work outward from there to changes that are indirect, subtle, and difficult to measure. Go ahead, write them down and, if necessary, add a short sentence or two describing what the change is and how it may be positively impacted by your project.

Next, think of any changes that either result in additional costs or negative changes to the organization. For example, a new software customer service management and sales system may result in greater efficiency in multiple departments along with higher sales but negatively affect customer technical support in the need for more personnel or more coordination time with another department.

• Are there other departments affected?
• Will the accounts receivables department be impacted? Other changes?

You get the idea!

Take a Deep Breath

Remember, that at this point we are not yet using actual numbers but just thinking through where and how this project creates value! Doing that means going beyond enthusiasm for the most obvious benefits but must also include indirect benefits as well as all direct and indirect costs!

The point here is to relax, take a deep breath, and realize that there is probably no perfect “right” answer. If possible, check in with a learning partner or a colleague and make it fun. Yes, fun. You have an opportunity to brainstorm all of the impacts, both positive and negative, to your project. Even in the absence of having to use a single real number, just bringing clarity to how your project will change your life, your organization or the world is the exciting and rewarding part of leading change.