Over the last few years I have worked with a number of different companies in helping them align their strategy to incorporate a solid business case for their ideas that flow through their innovation pipeline. When considering the development of a new offering, improving the business model, or a variation of an existing offering, building a business case is a vital step for innovation focused teams to get funding approval and launch winning projects.
The facts are that more than ever a higher number of new offerings are entering the marketplace that are better and cheaper than anything that existed before only to then be quickly displaced by another even more superior offering. This means the great disruptors that take the competition by storm can just as rapidly become obsolete. (This is more prevalent than ever) Companies have no other choice but to constantly nurture a stream of creative ideas and transform them into winning projects to sustain growth.
In the age of Agile, Lean, Design Thinking, Minimum Viable Products (MVP’s) the creation of a business case almost feels old school and primitive (Slower and more antiquated process). It surely feels like a step better suited for large and slow organizations, the ones you see getting disrupted so often now. Unfortunately, most innovation managers are misunderstanding how to use a business case in their favor to build out the right foundation for new innovations. Avoiding this critical step in the idea management workflow may be setting them up for failure by ignoring the important de-risking and idea-evaluation benefits it offers. For a better part of my career I have seen many organizations bet on the wrong ideas, double down on bad projects or missed taking great chances and just walked away from amazing breakthrough opportunities to lead in their respective markets. Developing a business case for ideas can improve your batting average. It should not be a long and tedious documentation exercise, but a way for increasing collaboration, learning and communicating the validation for an idea.
What should I include in my business case?
A clear concise and well-supported business case is the most helpful tool you can use to assess the importance and feasibility of an idea. It allows key decision-makers to quickly identify the best investments. We’re not talking about a long in the tooth business case that goes on and on but we are talking about a simple well thought-out analysis that assesses the opportunity. The business case should include the following elements:
- The market trends that are driving the need for change
- Why is the idea important and what are the risks of investing or not investing in it?
- Business need and project description
- Strategic fit
- Assumptions and forecasts
- Operational considerations and implementation
- What strategic advantage does it provide the company and how does it help foster growth?
The primary focus of the business case is to facilitate decision making which helps you see whether to move forward and if you should make additional investments in the concept or stop altogether. The maturity of a business case varies based on how far along you are in developing the idea, and reflects what has been learned about the concept to date.
A Business Case to foster effective Decision Making?
The most common issue when making an important decision is not using a business case to validate your ideas. Too often companies assume what customers want without actually validating with them. The proper use of a business case facilitates decision making because it includes a reflection of what validation work has been done, what is known about the market, and what problem the customer has, and the perceived value. Capturing these insights is critical to helping you make good decisions. This also paints a clearer picture which is oftentimes the explicit link between the investment, and the company’s strategic goals. An area we strongly like to focus on in order to drive sustainable innovation results for our clients.
A business case provides transparency inside the organization about what is being learned about the concept and the dynamic market environment you are faced with.
Business case to benefit your innovation process?
Often times I have seen too many innovation efforts moves forward without careful consideration if the concept should be developed or not. Incorporating the careful development of a business case as part of your idea management workflow is an essential step that is often ignored or paid less attention to. Effective decision making with proper analysis through your business case can help you validate the concept. A business case provides transparency inside the organization about what is being learned about the concept and the dynamic market environment we are faced with. As a decision-making tool, it adds value to the organization by helping you decide if the effort should continue. Business cases also become important historical documents for future innovation managers to learn from and a source for ideas that may have not worked in the past but are needed now.