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Despite clear objectives, managers often
make decisions on projects with uncertain
outcomes, which can result in failed
initiatives, missed goals and overrunning
costs. A business case is a process, a tool
and a document that builds consensus
among stakeholders and gives decisionmakers
the rational evidence they need to
give the go-ahead.
Making the Compelling Business Case
shows readers how to champion new ideas
and raise them to senior management; it
simplifies the decision-making process by
explaining the key theories and practices
behind corporate investments. These
methods can be applied to a variety of
investment decisions, including strategic
choices, capacity management, and
budget allocation alternatives. This
comprehensive and stimulating book
features insightful case-studies and
valuable hands-on tools, designed to help
executives make smart decisions and to
maximize enterprise value.
Wolfgang Messner is Associate Professor at MYRA School of Business and Director of GloBus Research.
He has been in senior management positions with
leading companies (BMW Group, Capgemini, Deutsche Bank, The Information Management
Group IMG) in Europe and India; Wolfgang has also taught as Adjunct Faculty at WHU – Otto
Beisheim School of Management, Royal Docks Business School (University of East London), and
the Indian Institute of Management Bangalore. He has written six books and now undertakes research, runs workshops
and consults globally on strategic business transformation projects. Find out more about Wolfgang.
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Tips and Tricks from the Author – How to Make Compelling Business Cases?
Maximizing value for the enterprise, for its shareholders, and especially for
its customers is the core of corporate business. And making business growth
happen by extracting value from investments is what management is all about. Yet
managers continue to pour billions of dollars into projects with uncertain
outcomes. The common management response is to insist on business cases to
select, justify, and manage investment decisions. Theoretically, this would be
the right and effective approach – but what is a business case and how to build
First and foremost, a business case is not something you can scramble together
in a few hours and while having coffee with your stakeholders; instead, it is a
project in its very own right, small but intense. Here are six essential tips and tricks
from the author's consulting practice.
Summarize the Business Case in One Sentence!
A good business case can be
summarized in one sentence and provides input to four questions:
- What is the business pain point?
- What are we proposing to do? What will be done differently from tomorrow
- How much is the investment going to be worth - after all the costs have been
taken off and risk is factored in (net present value)?
- What metrics do we use in order to make the investment measurable?
To know more about the one-sentence business case, read Chapter 1.
Know what Costs to Include!
Not all costs are part of a business case. For instance, general overhead costs
and anything which is not directly attributable to the investment proposition
does not make its way into the business case. All costs which are already
incurred before the business case investigation has started don't make it into
the calculation either; such costs are irreversibly spent and cannot be reversed
There are some more pitfalls, check out Chapter 3.
Get Your Math Right!
Only the net present value (NPV) calculation logic works for all investment
decisions; internal rate of return (IRR), payback period, or return on
investment (ROI) often look simpler at first glance, but are seriously flawed in
certain conditions. NPV always gives you the right answer.
Do you want to know why? - Refer to Chapters 2 and 5.
Your Project does not come without Risk!
Sensitivity and scenario analysis, simulations, and probability or decision
trees will help you to understand the dynamics of your proposed investment. It
often helps to start an initiative in a small way, collect empirical
information, then fine-tune, calibrate, and subsequently scale big. A big-bang
approach often fails; collecting experience and understanding the real world is
essential to succcess.
Read all about risk and uncertainty in Chapter 6.
Look into the Future!
Spending a little more today and building a strategic platform for further
activities can get your company ready with options to swiftly react to changing
environments in the future. The cheapest option today is not necessarily the
best one over the medium and long run. A management discipline called real
option management knows mathematical ways and a Nobel-prize winning formula of
making strategic flexibility visible in monetary terms.
Chapter 7 introduces you to such advanced methods of business case building.
Keep it Simple!
Overcomplicated formula and endless assumptions do not add to your credibility;
instead the tend to turn off senior management. 'I don't understand it!' is a
reaction often heard in boardrooms across the world - and your business case is
dead on presentation.
Learn how to present a business case in Chapter 8.
These were just some essential tips and tricks, but
the book has much more to offer. Are you wondering about how best to manage
stakeholders and include them into the business case process (Chapter 1)? Do you
need to know how to convert 'soft benefits' into monetary ones (Chapter 4)? How
do you ensure these benefits actually get reaped in (Chapter 9)? Do you want to
use a business case as a sales strategy (Chapter 10)? - Check out the book's
table of contents