Benefits or Value: Shaping the great debate

5 comments

A thought came to me that debates about terminologies, including the benefit vs value debate, are the most passionate while they stay in the realm of conceptual, of definitions and words.  My own experience is that when you actually try to implement a methodology, including benefits management, in order to make it work as a way of doing business, you end up combining various approaches anyway.  We ended up looking at what we get from improving performance and from changing the focus of what we do in business-as-usual, together with looking at the benefits we get from using what projects have delivered, because we realised that was the most effective way of getting some value.  Thats why we then aligned performance measurement and benefits measurement, but also because it was cheaper and made more sense to combine it then run various measurements separately.  And then we found there was a link to business planning and to how we develop our strategies .... 

Q. Are we reaching a stage of maturity where all of these [PPM] approaches are coming together to answer the fundamental question that senior managers are asking about change or are we simply debating the meaning of words?A. Whilst there are signs of growing maturity, a mechanistic and reductionist culture is the DNA of the built environment. Many 'producers' remain focused on delivering outputs at the expense of considering function; do not make a connection between output, capability, outcome and benefit and; are confused by theoretical guidance produced by academics and strategists. There are positive signs that the sector is making a genuine transition but it is step change in the smallest of steps. What is needed, is a clear and unequivocal broadcast from stakeholders (from statutory objectors to commuters), to demand a greater focus (from management, planning and delivery organisations) to achieve their (our) needs. Maturity will follow when the sector becomes more outward facing to meet the needs of society... which I gather is turning Big!On the matter of words, definitions etc., whilst the OGC's Management of Value (MoV) is a step in the right direction at arriving stating that value is the ratio of "satisfaction of need / use of resources", the guidance is unnecessarily complicated and lacks examples to show practical application at portfolio, programme and project level. Definitions are important and industry leaders must attain and communicate consensus, otherwise we will be lost at sea.

Peter asks, Are we reaching a stage of maturity where all of these approaches [strategy, business planning, performance management, benefits realisation and value techniques, including benefits management, value engineering etc] are coming together to answer the fundamental question that senior managers are asking about change or are we simply debating the meaning of words? These are two great questions. My answer to the first question would be that while we may not yet be reaching it (certainly not broadly) this should be what we are aiming for - our vision. Indeed, in the revised 2003 edition of The Information Paradox I introduced a Strategic Governance Framework, which I have subsequently evolved and expanded to a Strategic Enterprise Governance Framework (I tried to include below but technology defeated me), which is intended to show this. Note that Value Management and Benefits Management do not appear (nor does Risk Management) in the framework in that that they need to be integrated with/applied in all elements of the Framework. (Change management does, but that could certainly be debated.) Dealing with the second question, yes, we are debating the meaning of words. This is a debate that should occur, but certainly not one that should go on for too long. From long experience, I have learned that it is unrealistic to believe we will ever attain universal acceptance of the meaning of a word - we need to be clear what we mean by key words, then move on. Specifically as it relates to Benefits vs. Value (although the same debate is also happening around Programme vs. Project), the best answer I ever got to this question was from one client (in Ireland as it happens) who said, "value is whatever I think it is". Value is indeed "in the eye of the beholder". The Oxford dictionary has 13 definitions of value, the first being "the worth, desirability, or utility of a thing" - a later one includes "one's judgement of what is valuable or important".  (Note the use here of "opinion" [implicitly] and "judgement".) The closest to a more rigorous definition comes from economics with "the amount of money or goods for which a thing can be exchanged in the open market" but this immediately raises interesting examples, one described as "the value (or diamond-water) paradox" where, e.g. while water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market (source: Wikipedia). This is why, in Val IT 2.0 (not being "commercial", just illustrating) we added a practice within the Value Management domain (VG) process Establish informed and committed leadership (VG1 - appropriately!) Define value for the enterprise (VG1.4). By contrast, a benefit (again, extrapolated from Wikipedia after finding nothing particularly useful in the Oxford Dictionary) is positive contribution to national product (or other measure of value) from an economic activity or project. As such, a benefit is usually much easier to quantify and, given a clear and shared understanding of what value is in a given organization, it's (expected) contribution to value can also be made explicit (attribution is another matter!). Going back to the question, we appear to be dealing with (at least) two different issues here:  1.    Being clear and consistent about what we mean by the terms value and benefit (and other terms). Whilst those of an analytical bent will never be comfortable with this, I believe we acknowledge that value is indeed "whatever an organisation thinks/determines that it is" and stress that the first step an organisation must take is to get clarity around this. As stated earlier, a benefit is a quantifiable outcome that has the potential to contribute to value (it is important to distinguish here between contribution and attribution). At the risk of causing more controversy, I would relate project, programmme and portfolio management to value and benefits in this way: a.     A Project contains a set of activities necessary to deliver a defined capability, the use of which is expected to contribute to a benefit.  b.    A Programme contains a group of projects necessary and sufficient to deliver all the benefits required to produce the expected business value. c.     A Portfolio contains a number of programmes managed to optimize enterprise value. (Here I am referring the investment portfolio - there may/should also be asset portfolios which have the same objective.) 2.    Clarifying organisational boundaries, both within and external to APM: At the risk of sounding heretical, I find it somewhat ironic that one of the problems we identify, and are trying to help organisations solve related to benefits/value management - breaking down organisational boundaries "silos". While recognising the need for structure within and external to APM, we need to be very careful that structure, and all that it implies, helps rather than constrains us in achieving our objectives. (The same also applies to definitions in that, in providing thought leadership, we should be aware of, but not constrained by pre-existing definitions where we feel they need revisiting.)  With regard to structure, one challenge we have is that we have disciplines (not sure if this is the right word) that are (relatively) distinct and others that cross many other disciplines, or which may sometimes actually be techniques /approaches rather than disciplines. At the highest level, I could make the case that Value Management should be part of every discipline  (including, but not limited to, Project, Programme and Portfolio Management) as, to a large extent, should Benefits Management - Risk Management would also fall into this category. I could also make an argument that Benefits Management fits under the umbrella of Value Management (as a discipline or an approach/technique?). As further food for thought, The Institute of Value Management defines Value Management as per below:  Value Management is concerned with improving and sustaining a desirable balance between the wants and needs of stakeholders and the resources needed to satisfy them. Stakeholder value judgements vary, and VM reconciles differing priorities to deliver best value for all stakeholders.  VM is based on principles of defining and adding measurable value, focusing on objectives before solutions, and concentrating on function to enhance innovation. It uniquely combines within an integrated framework a value focused management style; a positive approach to individual and team motivation; an awareness of the organisational environment; and the effective use of proven methods and tools. When I first looked at IVM many years ago, their focus appeared to be very much on construction type work. This would still seem to be the case based on the statement below: Value management is used in all sectors of the economy, albeit mainly in world-class manufacturing and construction. As such, it is likely heavily into Value Engineering, which I understand to be a technique developed at General Electric Corp. during World War II and widely used in industry and government, particularly in areas such as defense, transportation, construction, and healthcare. From what I have seen, OGCs MoV initiative aligns very much with this.  

Peter said "we are now starting to see organisations integrate strategy, business planning, performance management, benefits realisation and value techniques".It would be great if this became the norm wouldn't it?  If organisations recognised that they need to create a strategy, plan for change, deliver the change and evaluate the results. Even the word 'evaluate' is a clue- it should mean in this context 'have we delivered value?' (In my mind, 'benefits' are what you would measure, to prove you have delivered 'value')Quite often organisations plan the change (or at least articulate their strategy and the end state they wish to get to), then sub-contract or delegate the delivery of lots of changes, then completely forget to manage their own people through the change or even evaluate the results- as if planning and delegation alone will make it happen!Yes, I'm all for the recognition and promotion of a more integrated approach AND some sort of 'professional accreditation' to distinguish those that can advise how to do it, from those who are still learning- like myself!

Peter,I may be jaundiced by a few things I've seen recently but at the moment I feel that not only are we debating the meaning of words, we are losing the debate. I don't mean the debate amongst ourselves. I don't think there's sufficient competition yet between the portfolio, benefits and value communities to cause too deep a schism. It's likely to come as we raise our profiles with business leaders. When it does, portfolio management will probably win because it carries more glamour in the Boardroom.However, that's for the future. What irritates me now is that practical, measurable, valuable benefits are being swept aside by the touchy-feely NLP world of Change Management. It's a world where the act of stakeholder engagement means more than the quality of the decisions they make. Everybody gets to stick their post-its onto the map of Benefits and goes away happy in the knowledge that their opinions are valued. And inside I'm weeping, "That's dumb. It's not only dumb, it's positively harmful." but I'm all alone because no-one else cares.Meanwhile we have, as you say, senior managers asking, "What am I getting...?" They are still spending first and looking for justification afterwards. If they are waiting to be told from below and the people below are being encouraged to produce rubbish then it's no wonder that business decisions are as bad as they appear.The concepts of value and benefit are bandied around by people who don't fully understand them. Those of us who do are lost in all the noise around us. When we try to help we are misunderstood or simply not heard at all.Maybe we are at the right stage of maturity but I don't yet know how we prove it and get it appreciated. Perhaps we need a badge of accreditation, something that says this person will talk sensibly to you about business results and adding value. They won't empathise with your problems or validate you as a human being (unless it adds value). They will also expect you to put some thought and effort into the process because if you ask them to make it any simpler it will become pointless (this last bit's a very personal issue). I appreciate that accrediatation is a long and tortuous journey but it might be worth considering.David