There are a few key reasons why strategic alignment increases the business benefit of a project: You may ask how the same project can deliver different benefits based on its alignment - so let's dive into that in more detail. More specifically, the dollar return of a project has been proven to be higher when that same project is done in a strategically aligned way, versus being done outside of alignment to the strategic plan. But did you know that strategic alignment actually has the wonderful halo effort of creating additional business value from projects themselves? OK so we've looked at how you can save money from not doing unaligned things.
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I'll walk you through how to use this formula below! Part 2: Increased Project Success of Unaligned Projects * (Benefit of Successful Project)) of Unaligned Projects * (Average Capital Investment + Wages Lost)) + (No. The formula you want to use to calculate this benefit looks something like this:īenefit = (No. I'm afraid you'll need to work those out for yourself! Also, another note - I'll be referencing 'Benefit of Successful Project' repeatedly in these sections - so scoot on down to the notes to check out my methodology of calculating this for your business. Organizations differ wildly based on what they do, and so these parts of the article will be focused more on methodology rather than giving you hard dollars figures. I promised to help you actually quantify the returns around improving strategic alignment and I'll make good on that promise - but, there are some caveats.
Quantifying the benefit of reducing wasted efforts Sufficient to say, if you do allow for projects that are not strategically aligned, you need to ensure that this accounts for less than 10% of your overall activity. There's a whole debate about whether any project should exist outside of your plan, but we'll leave that for another time. There will occasionally be times when unaligned projects need to exist - perhaps for compliance reasons, or other 'keep the lights on' reasons that don't make it into the strategic plan. It could be the pet project of a senior executive, a legacy project that has carried over from before the organization had a clear strategy or just a poor approval process around new project initiation. Unaligned projects happen for all sorts of reasons. And perhaps most importantly.the opportunity cost from not working on other things.
Hourly wages of people involved in the projects.Capital investment costs for the projects.The costs of these unaligned projects are actually far larger than you think when you consider: To give you an idea, when we implement Cascade, we typically find that anything up to around 40% of all the projects that get loaded into the platform doesn't have clear alignment to strategy. How many of the projects in your organization are not actually helping drive towards one of your agreed upon focus areas? The easiest way to think of this is from a project perspective since there's more data and research available for projects than the more broad concept of 'goals' - but you can easily extrapolate these same benefits to Objectives, Initiatives, KPIs and more.
Below, we've outlined two major benefit areas resulting from strategic alignment, as well as an examples of how to can go about quantifying this benefit. Let's start off by looking at the 'return' side of our ROI. In other words - this post is all about helping you to create a Return on Investment (ROI) around strategic alignment. Creating true strategic alignment isn't easy, and requires focus, human effort and sometimes financial investment.Īs such, it's important that organizations have the ability to quantify both the cost of creating strategic alignment, with the return from doing so. But when it comes to quantifying that value, things get a little trickier. Most of the people we speak to are already pretty sold on the value that strategic alignment brings.
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