You won't believe this. While the disciplines of technology innovation, software practice, project management and business strategy have always been advancing, 83 percent of organizations do not know how to achieve the business value they need.
Tech projects must contribute directly or indirectly to strategic outcomes. The good news is: The odds of accomplishing that rise if you start with and keep focus on business outcomes that the organization needs.
What categories of business outcomes do you need to focus on? Well, you could borrow three categories from the widely used Strategy Maps by Robert Kaplan and David Norton: process performance-related outcomes, customer value-related outcomes, and financial performance-related outcomes.
Process performance determines customer value experienced through the organization's products and services. Process performance itself is determined by two factors: the performance of assets (such as people) and the design of processes. Process performance-related outcomes therefore help understand how well customer value is created and delivered by the organization and experienced by customers. "Customer's time on call" is a process performance-related outcome.
Customer value determines customer acquisition and retention, which in turn determine the financial performance of the organization. Some great examples for customer value come from customers of Uber:
- Car comes to the customer — eliminates phone calls to potentially disinterested dispatchers.
- Drivers know where to go — no need to try to give them directions when you may not yourself know the route.
- Payment is cashless — no need to get stressed about whether nor not you have the right bills and coins.
Financial performance in terms of costs, revenues and profits determines the success or failure of the organization. Cost-related financial outcomes may be determined by measures such as "reduction in shrinkage" for a retail organization. Revenue-related financial outcomes may be determined by measures such as "dollars-per-day increase in sales per reservation agent" for a hospitality organization. Profit-related financial outcomes may be defined considering cost structure and revenue growth.
How a focus on business outcomes works
Let's say you have a set of strategic outcomes to target before you start your project. Great start. But how will you translate that into an architecture? Only an architecture that embeds strategic potential is worth further investments in implementing it. So we must assume you have the method and capability to perform strategy translation.
- Make clear what must be pursued in order to improve business and realize strategic needs.
- Enable business folks and the project team to have common objectives and a common language (that is, the language of business).
- Allow strategy-driven discovery and design of the right combination of technology and business innovation.
- Get you to reduce efforts on software practice tasks that matter less, thus freeing you to focus on tasks that really matter.
- Make you confident about the business, technical and project changes that need to be made.
- Better demonstrate value from tech investments by making clear where benefits are coming from.
Targeted strategic outcomes are your primary input to strategy translation. Start your project by capturing (or helping define) strategic outcomes and stay focused until you know you have an architecture that demonstrates strategic potential.