HBR Guide to Building Your Business Case (HBR Guide Series)

Raymond Sheen, Amy Gallo

• Publisher: Harvard Business Review Press
• Year: 2015
• Print ISBN: 9781633690028
• eBook ISBN: 9781633690035
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Get your idea off the ground.

You've got a great idea that will increase revenue or boost productivity—but how do you get the buy-in you need to make it happen? By building a business case that clearly shows your idea's value. That's not always easy: Maybe you're not sure what kind of data your stakeholders will trust. Or perhaps you're intimidated by number crunching.

The HBR Guide to Building Your Business Case, written by project management expert Raymond Sheen, gives you the guidance and tools you need to make a strong case. You'll learn how to:

• Spell out the business need for your idea
• Align your case with strategic goals
• Build the right team to shape and test your idea
• Calculate the return on investment
• Analyze risks and opportunities
• Present your case to stakeholders

Section 1

Prepare

Chapter 1

Know the Basics of Making a Case

No matter where you work or what type of idea you’re pitching, you should follow the same basic process for any business case you develop. I’ll briefly outline it here to give you a sense of the whole before delving into the individual steps in later chapters.

Here, in section 1, “Prepare,” you learn how to put yourself in the right frame of mind. Don’t even think about constructing a logical argument yet or wrestling with the numbers—it’s much too soon for that level of detail. Instead, imagine you’re telling a story.

The story starts, as all good ones do, with a problem. This is the business need you’re trying to solve. For example: Are customers complaining about a particular product feature? Is finance struggling to produce accurate reports because of an outdated IT system? Has your company lost market share to a competitor that’s offering adjacent services?

You may spot the need yourself. Or your manager may ask you to address a concern that came up during a strategic-planning discussion or a product-line review. Once you’ve pinpointed the problem or opportunity, it’s time to identify your story’s characters:

• Your stakeholders have the authority to approve or reject your business case. They might include your boss, your boss’s boss, or your company’s senior leadership team (section 2, “Get to Know Your Audience”).
• Beneficiaries are those who stand to gain from what you’re proposing. You’ll usually have more than one group to consider, either inside or outside the organization. If you’re recommending a new IT system for the finance department, you’ll have two sets of beneficiaries: the people who run the financial reports and those who receive them.
• You’ll draw on subject-matter experts to create the case. They’re the people with insight into what it will take to solve the problem. If you’re proposing a new product, you’ll probably pull in colleagues from R&D, sales, and marketing. For any type of project, you’ll work closely with finance to come up with cost estimates.

Then you’ll consider alternatives for meeting the business need—different ways your story might play out (section 3, “Build the Case”). With the experts you’ve brought in, you’ll explore several options: Which is the most efficient? The most cost-effective? The most appropriate for the organization’s culture and capabilities?

After making the best choice in light of what you know at that point, you’ll create a very high-level project plan to roughly gauge the amount of time and resources you’ll need and the value your solution will bring. Estimating costs and benefits can be daunting for managers who are new to developing business cases. But as you’ll see in section 4, “Crunch the Numbers,” it’s pretty straightforward if you’ve got the rest of your story clearly laid out: your business need, the alternatives you’ve considered, and your recommended approach to meeting the need.

You’ll enter those numbers into a spreadsheet to determine the return on investment (ROI). A classic ROI calculation (benefits divided by cost) is static—it provides a snapshot of one point in time—so very few companies still rely on it alone. It’s better to use a more nuanced version of ROI and look at a stream of costs and benefits over months or years by examining the break-even point, payback period, net present value, or internal rate of return—or some combination of those measures (which we’ll cover in chapter 10).

Finally, it’s time to tell your story. Package it in whatever format your company uses for business cases and present it to your stakeholders. If no templates exist, create your own logical format (you’ll find suggestions and samples in section 5, “Present Your Case and Move Forward”). Above all else, your story needs to be clear—it should not be a mystery. Your stakeholders won’t be receptive if they have to puzzle out which solution you’re recommending, what divisions it will affect, or what it will cost.

Whether you get a yea or nay on your business case, you’re not done, so chapter 17, “What Next?” will walk you through the first few steps. If your case is approved, you’ll kick off your project and get started. If it’s not approved, you still have work to do, such as wrapping things up so you can easily dust off your business case in the future if need be.

Knowing the basic components of a business case will help you get into the right frame of mind to gather, polish, and present your compelling story. But before you dive into the work, you need to know what the decision makers look for in a business case.

Chapter 2

Learn How Your Company Evaluates Cases

How you tell the story of your business case depends on how your organization reviews and approves projects and initiatives.

To figure that out, you need to answer questions such as:

• Does your company have a formal process for evaluating cases? If so, what’s involved—and is it connected to other processes, such as the budget review cycle?
• Does your company review cases as they come up, or at specific times tied to your fiscal year or budgeting season?
• Do stakeholders look at projects individually or as a portfolio?
• What level of detail will your audience want? For instance, are they looking for sales projections by region, product line, year, or a combination of the three?
• Does the organization approve entire projects at once or in discrete phases?

Find out as much as you can from a colleague who knows the ins and outs of the process. Reach out to your boss and members of your internal network to connect you with someone who’s made a successful pitch. What forms should you use? Which decision makers should you talk to in advance? What types of projects typically get approved?

Large companies like GE, where I spent several years on the corporate staff, usually have a formal process with preset templates. And they typically review business cases at specific times during the year. Some other companies I’ve worked with do it as part of their annual budgeting process: Senior leaders look at a portfolio of 20 to 30 cases at a time and decide which to fund with the budget that’s available. Say they’ve got $10 million to work with. After reviewing the company’s strategic priorities, they may decide to spend roughly $5 million on product development; for instance, $3 million on compliance projects and $2 million on cost-reduction projects. They’ll evaluate the portfolio against those numbers and do the necessary juggling to hit them. Companies that review business cases annually often set aside a small portion of the budget for off-cycle opportunities that pop up throughout the year.

Many large companies also have a tollgate process. That means a project lead prepares a business case for an initial discovery phase—not for the entire project. If stakeholders give that a green light, they’ll ask the team to break the rest of the project into phases (such as design, development, testing, and commercialization, if you’re proposing a new product) and to return for approvals along the way. This allows senior managers to hedge their bets, committing more resources only as it becomes clearer that the benefits will outweigh the costs.

Though they sometimes have less structure, smaller organizations work similarly. They may have set times to review cases, for example, and approve initial phases before committing to an entire project.

One small internet service provider I worked with reviewed its business cases at a monthly leadership meeting. After going over the previous month’s sales and costs, senior managers would discuss which new projects to fund. Another company—an automotive supplier—developed business cases before responding to requests for proposals (RFPs). That exercise helped stakeholders decide whether to bid on new-vehicle projects and how aggressive their bids should be.

Regardless of company size, you’ll need to know who has the authority to approve or reject your case. In some organizations, even small projects require approval by senior leaders. The decisions may be made at the functional, unit, or regional level.

If your organization doesn’t dictate a process for business cases or you’re requesting resources during an off-cycle time, find out what others have done to get approval. Ask around to see which colleagues have a track record of success and request meetings with them to learn what materials they used, whose help they enlisted, what twists and turns they encountered, and what mistakes they’re now careful not to repeat.

Knowing what’s worked—and what hasn’t—is the best way to develop a case that stands a chance of being approved. We’ll dig into learning more about strategic priorities and figuring out who has the authority to approve your case in the next section.

Section 2

Get to Know Your Audience

Chapter 3

Figure Out Who’s Calling the Shots

The fate of your project or initiative will usually lie with a small group or even one individual.

Early on, ask your boss who will be evaluating your idea so you can build a case that speaks to their priorities (see chapter 4, “Understand Your Audience’s Objectives”). Maybe it’s your boss’s boss or the division head. Or perhaps the review committee consists of eight leaders representing different parts of the organization—and they take a vote on every idea presented.

Knowing which people will review your business case isn’t the same as understanding who makes the final decision. At one company I worked with, a committee of six executives looked at cases during the annual budget meeting. But everyone knew that the CFO had the last word.

It’s not always clear who’s calling the shots, but you can get important clues by looking at business cases that have been approved. If projects that benefit marketing often get a green light, some decision-making power may lie with the CMO. If cases from HR and finance tend to sail through, the heads of those departments may have a large say in what gets approved.

Once you’ve figured out who has decision rights, how do you appeal to that person or group? By finding sources of influence and support.

Who Has Influence?

In most organizations, there’s a dominant department—and its leader wields informal authority, regardless of his title. At P&G, marketing is king. At GE, it’s finance. And at General Motors, it’s manufacturing. You can assume that the dominant department’s objectives will trump others when decision makers review business cases.

Which area of your company has that kind of power? Projects under its purview stand the best chance of approval, especially in a close race for resources. At P&G, leaders reviewing cases will ask “Which projects promise the most market growth?” At GE, “Which ones will give us the best financial returns?” At General Motors, “Which ones will make our plants most efficient?” Identify your company’s dominant department—and cast your idea in light of its goals.

Who Will Have Your Back?

Finding a champion on the review committee—or one who’s close to it—will help you get a fair review, because she will lobby on behalf of your case. But how do you find a project champion?

Look at each member of the review committee: Whose goals and concerns will your project address most directly? That person is a potential champion. Reach out and ask what her department is trying to achieve in the coming year. Get a sense of what big projects are under way and which need more support. Explain how your initiative can help fill in gaps or address trouble spots. This is a time when your personal network will pay dividends. Work with people you know in that department or division to clarify the problem or business need that your project will address. Ask them specifically what the champion will care most about and how to address those concerns. Then, ask your contacts to introduce you to the potential champion or to set up a meeting so you can clarify the need and explain your ideas. Even if you’ve never met the potential champion, you’re more likely to get her ear since you’re working on a problem that affects her division. If she is interested, ask her to review your business case when it’s...

Table of contents

• Cover
• Series Page
• Title Page
• Copyright
• What You’ll Learn
• Contents
• Introduction
• Section 1: Prepare
• Section 2: Get to Know Your Audience
• Section 3: Build the Case
• Section 4: Crunch the Numbers
• Section 5: Present Your Case and Move Forward
• Appendix A: Avoid Common Mistakes
• Appendix B: How to Give a Killer Presentation
• Glossary
• Index
• About the Authors