B2B Decision Making and the Business Case

Throughout our consulting work, we are often asked to help companies evaluate their opportunities and decide upon a specific strategy or course of action. The development of a business case is often a critical element in assisting and enabling senior leadership in their decision making process. This is particularly true for decisions with great financial or strategic risk and impact.

While there are many important elements to a business case, there are several key elements, which need to be thought through carefully.

An effective business case may start out simply, but a thoughtful and diligent process is required to know where you are heading. Typically this process results in:

• Clarifying the project’s objectives.
• Outlining the problem the project is intended to solve.
• Outlining the different responses to the issue that were considered with a clear explanation of the recommended course of action.

The financial model and cost/benefit analysis is one of the most critical aspects of the business case and should represent a reasonable projection of what the future might hold.

• In general, the financial model should be no more complex than the business itself and should be driven by:
  • The size of the revenue potential
  • Periods of growth after a specific change is made
  • The level of certainty about what you are modeling.
• The key to this phase is to make smart assumptions wherever information or certainty about the future isn’t clear and to spend time modeling complexity where it is critical to the decision at hand.
• Another important element of the financial model development is the scenario/sensitivity analysis. It is critical to really spend time thinking about what the future might hold and what situations are likely to arise (e.g. delays, cost overruns, revenues are too optimistic, etc.) and to show what actions and decisions really make a difference, and which do not really matter.

Finally, an in-depth implementation plan needs to be created to ensure that the organization understands what the key tasks and criteria are for success. This requires serious and thoughtful introspection about the needs of your company, the critical milestones, what risks need to be mitigated, and who will have ultimate responsibility for the different aspects and components of the project.

Have you seen any key or critical elements of a business case that made it work better for you?