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Benefits

Why Benefits Are Important for Sustainability

This post is the first of two that reinforces why project managers should focus on benefit(s) as well as output(s).  This post introduces why benefits are important for sustainability.  The follow on post focuses on the benefits to projects.  This is part of a series to help raise awareness around sustainable change delivery.

 

“… the real conflict is not between profit maximization and social responsibility…

but rather between short- and long-term thinking.“

Professor Klaus Schwab

 

Over the years, I have noticed conflicting perspectives on “strategy”, particularly between the East and the West:

  • the East has a reputation of evaluating strategy over decades and centuries, whereas
  • the West has a reputation of focusing on the upcoming few quarters until the next bonus round.

The challenge for Westerners is to understand and focus on the longer term – specifically, longer-term benefits.  The West’s short-term focus also applies to project management, where organizations and project managers are more interested in outputs than benefits.  Success is claimed too quickly after the output is delivered, and attention / resources are redirected elsewhere before real benefits from the investment are obtained.  Though a little tongue in cheek, Exhibit 1 illustrates how easily Western executives are distracted from the longer term perspective

Exhibit 1: Eleven Second Excerpt from the Disney Film Up

What are Benefits?

Let’s start by explaining what we mean by output (shorter term) and benefits (longer term).  We will also provide the context for the critical transition from output to benefits realization.  The following graphic was modified from “Managing Benefits: Optimizing the Return from Investments” Figure 2.1 – Path to benefits realization and corporate objectives (Jenner, p 18, 2014).  The definitions were taken from Table 2.1 – Outputs, capabilities, outcomes and benefits (Jenner, p 17, 2014).  Together they show a realization path for benefits.  Exhibit 2 shows this evolution with descriptions, of how corporate objectives become projects that provide outputs that ultimately lead to benefits that fulfill the objectives.

why-benefits-are-importand
Exhibit 2: Path to Benefits Realization and Corporate Objectives

 

The focus of this image is that the outputs are one small piece of the puzzle, and that benefits realization are the ultimate metric to validate the obtainment of corporate objectives.

Another graphic from “Managing Benefits: Optimizing the Return from Investments” Figure 8.2 provides a simple example showing outputs, transition management and benefits realization (Jenner, p 18, 2012).  Exhibit 3 provides another image to represent the benefits realization.

Why Benefits Are Important for Sustainability
Exhibit 3: Outputs, Transition Management and Benefits Realization (Jenner, p 18, 2014)

Exhibit 4 from “Managing Benefits: Optimizing the Return from Investments, 2nd Edition” Figure 8.2 Transition management, provides a simpler example (Jenner, p 124, 2014)

Why Benefits Are Important for Sustainability
Exhibit 4: Transition management (Jenner, p 124, 2014)

We have highlighted what a benefit is, and outlined the transition from output(s) to benefits realization.  But what are tangible examples of benefits?  The following table from “Managing Benefits: Optimizing the Return from Investments”, Table 7.3, shows a benefits measurement taxonomy:

Why Benefits Are Important for Sustainability
Exhibit 5: Benefits Measurement Taxonomy

Benefits and Sustainability

In general, the output alone is insignificant, and possibly irrelevant, without benefits. There is a perspective that with projects only 30% of the investment is spent on the actual delivery of the output, whereas 70% (often unaccounted for) is spent on the acceptance, adoption and integration of the new or improved assets (services, products or processes) into operations, resulting in the actual benefits the organisation expects from the investment.

An interesting way to view this is via the fable of the The Goose That Laid the Golden Eggs, the idiom used for an unprofitable action motivated by greed (Covey, p. 52, 2009).  The project output delivers a new asset… the goose.  The goose has the capability of producing something, with an outcome of golden eggs.  The benefit is that you can sell the eggs for money.  If you don’t take care of the goose, you lose access to the long-term benefit of generating revenue from selling the eggs.

Why Benefits Are Important for Sustainability
Exhibit 6: The Goose That Laid the Golden Eggs Idiom

Dealing with benefits for change delivery initiatives forces a long-term, big-picture, sustainable perspective taking into account cost, benefit and risk.  Are there other potential benefits that can be supported, or dis-benefits that can be mitigated?

As Exhibit 7 illustrates:

“Initiatives usually fill the value gap by enabling new capabilities – or promoting changes – through the outputs delivered by a set of projects” (Serra et al, p. 55, 2014).

Why Benefits Are Important for Sustainability
Exhibit 7: Filling the Value Gap (Serra et al, p. 55, 2014)

Exhibit 8 provides another perspective also helps highlight the numerous areas where the project manager and project team can aid in the optimal realization of benefits from the project.

Why Benefits Are Important for Sustainability
Exhibit 8: Chain of Benefits (Serra et al, p. 56 2014)

A key part of Exhibit 8 is the demonstration of the impact of intermediate benefits, dis-benefits and other benefits that can be enhanced to improve the project.  All of these empower greater benefits realization, which is more sustainable.

Consider the Boiling Frog anecdote… I remember the story of an executive working with a Fortune 100 company in the early 2000s developing strategy.  Early on, the corporation was focused on analysing their strategic horizon over decades.  Then things started to get tight, and strategy became a ten-year horizon.  Then a five-year horizon.  Then a three-year horizon (you see where this is going).  By the time strategy hit one-ish year(s), the executive left the company.  It was like the boiling frog… the corporation knew better but became desensitised to the madness.

 

Conclusion

This post has provided the foundation for benefits management and the benefits lifecycle.   For more of a project perspective please read the follow on post A Project Manager’s True Purpose: Output, Benefits or Both?

 

Series Objectives

This series is all about raising awareness of sustainable change delivery and the integral elements, disciplines and competencies associated with it.  In the graphic below, each of these elements is identified in terms of their integration in empowering for sustainability.  These elements form the basis of the GPM® Global’s P5™ Standard for Sustainability in Project Management, the GPM® Global Training Programs, and the GPM® Global Portfolio, Program, & Project Sustainability Model (PSM3™) for organizational assessment.

Sustainable Change Delivery
Exhibit 9: Organizational Sustainable Change Delivery Elements and Disciplines / Competencies

Post Script

Just as an interesting follow up to the boiling frog story courtesy of the University of Washington’s Conservation Magazine:

“If you plunge a frog into boiling water, it will immediately jump out. But if you place the frog into cool water and slowly heat it to boiling, the frog won’t notice and will slowly cook to death. So claims the myth. Indeed, everyone—from corporate consultants to politicians to environmental activists—cites the frog fable as proof that people often don’t see change happening and cannot deal with it in the aftermath.

So how did this myth begin? Maybe it arose because frogs are cold-blooded. We humans are warm-blooded: our internal thermometers measure the local temperature, and then we shiver or sweat to maintain a body temperature of around 37 degrees Celsius. But a cold-blooded frog maintains the temperature of its immediate environment. Perhaps somebody once wrongly thought that this meant frogs had an inferior or inadequate thermometer.

Or perhaps the story began with E.W. Scripture, who wrote The New Psychology in 1897. He cited earlier German research: “. . . a live frog can actually be boiled without a movement if the water is heated slowly enough; in one experiment, the temperature was raised at the rate of 0.002 [degrees Celsius] per second, and the frog was found dead at the end of 2.5 hours without having moved.”

 

References

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APM (2012). Delivering Benefits from Investments in Change: Beyond ‘Business as Usual’ to ‘Value as Usual’.

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Peter Milsom

Peter Milsom is an entrepreneurial advocate for sensible, sustainable change delivery practice. Peter has come to realize that sustainability is the perfect catalyst for Project / Programme / Portfolio / Risk / Value / Business Case and Benefits Management improvement. As an entrepreneurial methodologist Peter's unique value proposition is the vast array of tools and techniques that he brings to every engagement using the most cost effective and efficient methods based on the situation and tailored to meet your needs. This is based on his unique combination of experience and extensive training / certifications in change delivery, value / risk / benefits management business case, and business architecture.

3 thoughts to “Why Benefits Are Important for Sustainability”

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