Identifying Benefits

Is your organization making them up?

Identifying Benefits

…that are real and measurable is difficult and many organizations resort to wishful thinking. Research shows that many business cases are full of the benefits we want to be true but for which there is precious little evidence.  They are part of the “88.2% of statistics made up on the spot” Prof Bent Flyvbjerg at the University of Oxford calls this strategic misrepresentation.  Complex programs are particularly vulnerable to it for 3 reasons:

• Accountability is diffuse – whoever commissions the project may not be around when it is delivered
• Responsibility is shared – many people means more chance to point the finger elsewhere
• The end date is years away

In practice, project and program teams can ignore evidence which conflicts with the bright future in their program Vision. Worse, they go out of the way to find evidence that supports what they want to be true. This is called Confirmation Bias or what Rolf Dobrelli calls “the father of all fallacies.” The result is that change initiatives disappoint not because they are badly executed, but because they have the impossible goal of overstated benefits from the start. Strategic misrepresentation and confirmation bias may happen for sincere reasons.  Programs want to succeed and genuinely care about their outcomes and benefits.  It can be more sinister though – how often is the winning RFP the one which promises the most benefits at the lowest cost?  Flyvbjerg calls this “reverse Darwinism” – whoever produces the most hot air is the winner.   Procurement departments often fall for it and buyer’s remorse follows.

Managing Benefits guidance can help

Imagining a better world doesn’t make it a reality.  Identifying benefits has to be done properly to make sure they are viable and achievable.  Managing Benefits deals with this early. The first benefits management practice – Identify and Quantify Benefits – recognizes the twin problems of strategic misrepresentation and confirmation bias along with organizational factors that affect our ability to produce realistic benefits forecasts.  The Identify and Quantify practice aims to lay the basis for informed options analysis, investment appraisal and portfolio prioritization.  This is done by:

Identification of benefits

Using benefits discovery workshops, benefits mapping and customer / user insight techniques

Quantification of benefits

Overcoming cognitive biases using a range of techniques including

• Challenge and scrutiny.  This technique establishes a culture of intelligent questioning.  The hard but fair questions one might expect from a critical friend.  It provides the opportunity to say the unsayable and lets benefits management professionals look for contrary evidence.  Doing this regularly helps ensure that performance stays matched to promise
• Evidence based or Reference class forecasting.  A technique where forecasts are derived from what happened in similar (a reference class) of initiatives.
• Probability based forecasting.  Rather than using single point forecasts, probabilities can be assigned to a range of outcomes.  Another approach is to estimate using scenarios to represent optimistic, pessimistic and most likely outcomes

So if you use the Identifying Benefits practice correctly you can be more successful.  Managing Benefits training gets you off to a good start.

Paul Atkin