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Taxonomy for project benefits part two - Strategic benefits

As I said before, if projects had clear and consistent statements about project benefits, they’d be easier to compare and might lead to a better balanced portfolio.

 

We have looked at the specific options for financial benefits – cost reduction, increased revenue and asset enhancement. These are reasonably straightforward; we can always compare a £number with a previous value.  Strategic benefits are more difficult – what do we compare?

 

We can certainly compare our new state (the intended state when implementation is complete) with our current (pre-project) state. If our new state is a step in the direction of our published strategy, we can reasonably claim Strategic Alignment as a benefit. After all, implementing the strategy will leave the organisation in a better position.  Of course, this relies on the strategy actually being beneficial to the organisation.

Types of strategic benefit

Most organisations are in competition with other organisations (i.e. in a market). Therefore, we might choose an approach that is intended to hamper the opposition, rather than just further our strategy. We can reasonably expect that our own market position will improve relative to the competitor that we’ve blocked. For example, Santander’s long-running cashback credit card advertising reflected their competitive advantage over Barclaycard. This is because Barclaycard didn’t have cashback capability with their credit card service. We can count Competitive Advantage as a strategic benefit. The advantage to Santander being about positive brand awareness as much as any financial advantage.

 

Barclaycard (whose strategy at the time appears to have involved implementing touchless card technology) was eventually forced to respond. They did this by introducing its own cashback credit card, thereby negating Santander’s advantage. So here we have Competitive Response as a strategic benefit. Barclaycard’s market position was improved by their implementation of cashback cards. This was only done because Santander’s position forced Barclaycard into it. Santander responded by focusing on their cashback current account, which is a further competitive advantage, this time over the retail banks.

It’s generally true that experience of a discipline or activity leads to greater capability on the part of the individual.  This is a consequence of the knowledge and insights that are acquired or developed in carrying out the activity under a variety of conditions.  In the organisational context, the statement that “people are our greatest asset” is perhaps an acknowledgement of the know-how that the organisation can bring to bear to a given situation.  This may be cultural – ‘the way we do things around here’ – as well as procedural, where detailed instructions are available as to how to react.  We can reasonably claim that an organisation that knows how to respond to many different circumstances (even though none of them is required at this moment) is in a better position than the organisation whose response, when the circumstances arise, will be a passable impersonation of a rabbit caught in the headlights.  It follows, then, that the acquisition of relevant knowledge (Intellectual Property) enhances our position as an organisation, and represents a strategic benefit.

The order in which the benefits are identified:

  1. Strategic alignment.
  2. Competitive advantage.
  3. Competitive response.
  4. Intellectual property.

Reflects their decreasing relevance to current strategy.

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