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November 9, 2008

Getting management support through value

Even though I have posted on the Value Quadrant before I think it is a concept whose relevance cannot be overstated. I have used it to sell services, gain momentum and to drive changes through companies that were never going to change.

The principle complaint you hear, in every managerial discipline, about any implementation project is that there is a “lack of management support”.

This is not a problem, it is a whine. And it’s a whine because it’s your fault!

You are not speaking in their language and you have not directed your project towards the things that they care about. If you did, then you would have their support.

It’s not because they are spineless, or because they lack vision. It’s not because they are inept of because they are detached. It’s because you haven’t hit on the issues and areas that motivate them. And you haven’t told them about it in their language.

So who are these management people anyway? Often they came from a background like yours. Say, HR or sales or engineering. But today they aren’t the functional specialists that you are, not anymore.

While you are worrying about succession planning, the resource crunch and the organizational skills matrix; they are worrying about market share, revenue confidence and market confidence.

While you are thinking about obsolescence in software, changing architecture and emerging platforms; they are worrying about controlling costs, reducing waste, and cost effectiveness.

And never the twain shall meet.
If you want to break into the CEO’s attention span then you need to frame your conversation in terms that they are used to using, and terms that they care about and language that will capture their attention.

Cashable and Non-Cashable

All projects, no matter what they are focused on, deliver benefits that are either cashable, meaning they will have a direct impact on the profit and loss of the company. Or they are non-cashable, meaning that there will not be a direct impact on the company’s balance sheet.

With the exception of personal fame, or notoriety, the benefits of all projects can be captured in this way once you think about it. I would try to get away from the tangible and intangible argument right now.

I used to state benefits as tangible and intangible but it caused problems. This was particularly due to the fact that risk is tangible. You can quantify it, you can calculate it and you a forecast it with a good level of accuracy.

But you can’t feel it, and it may never occur.

This is where I used to hit problems. Moving the likelihood of a multiple fatality from 10-2 to 10-5 may mean a lot to me, but it meant little or nothing to the people I was trying to gain traction with.

A cost avoidance of 3 million dollars was pretty real to me but unfortunately I wasn’t the person who signed the checks.

So I split it into cashable and non-cashable and it was like trading night for day. Immediately it became clear that the primary concern for most senior executives lay in the cashable regions of the quadrant.

And they were always far more interested in the ability to increase revenues as a first option.

This means a lot of things. It means that when you are pitching for money you frame your justification in terms of increased revenue first. And when you choose where to start you always start with the area that will give you the greatest increases in revenue.

Be clear about this. I am not talking about projects worth up to $200,000 normally. Here I am talking about the half million dollar projects that are starting to require relatively senior signing authority.

So start with the cashable side. Revenues first, cost savings second. And then, and only then, we can start to move to the non-cashable side. Always show a preference for risk mitigation first and then lastly on knowledge.

This is the way that the majority of executives see the world when they are signing big checks.
“I am spending $500,000 and I am getting back a more reliable succession program.” Sounds like an investment you would want to make?

“Wonderful…thanks for that, now run along”

“Or, I am spending $500,000 and we have the potential of gaining $3,000,000 in increased revenues over the next two years.” That’s a lot better! More importantly, it gives them some bragging rights!

Exceptions that prove the rule

Of course, it is not always like that. BP, for example is still reeling from the PR disaster of the Houston Refinery explosion. They will be seeing safety as a primary corporate objective for some years to come.
Regulated water companies from the UK have their revenues capped by the regulator there to a predetermined level.

So they cut additional cost effectiveness and profits from reducing costs. (At the right time in their cycle they do show an interest in revenue increases, but the process is far more complicated than most other industries ever have to deal with.)

But if BP can have safety and a revenue increase, they might be even more interested. If the regulated UK utility form can have cost reduction and a financial mechanism to increase their yield on cash, then I’m sure they would be interested also.

And so on. The pitch always needs to match your client. But the value quadrant still holds true, and is still the most powerful way I have found to discuss initiatives and their impacts with any executives.

There is a lot more to this subject, but I think that’s enough for one post… (I need to write more Booklets I think)