It can be difficult to determine which technology and business initiatives or programs are worth pursuing, spending more time investigating or eliminating altogether.
Here are five 5 critical elements of business planning that may make it easier to identify the strengths and weaknesses of any new business initiative that you are undertaking.
1. The market element
The market element should have you asking this question: Is the market for our product or service attractive and available? To see if it is attractive, look at things like trends, growth, the competitive landscape and barriers to entry. You may have a great product or service but if the market is shrinking rapidly, it's probably not a good place to invest. To see if the market is available, you need to identify who your consumers will be and work out how you are going to reach them.
If you have a great product but no way of reliably getting it in front of our potential clients, it should serve as a warning that you have more homework to do.
2. The offerings element
The offering element should have you asking this question: Do we have a well-defined product and can we deliver it? One of the best ways to tell if your product is defined enough is can you state it in a way where it is clearly understood and easy for a person to say ‘yes’ or ‘no’ to wanting it.
If you can’t articulate it clearly or if explaining it causes confusion, you probably need some more work on your offerings element. In response to can you deliver it, you must be clear that you have the technical capabilities to build, deliver and supply it.
3. The operations element
The operations element should have you asking this question: Can it be consistently and reliably delivered over time? The offerings element had you answer whether or not it is technically possible. Now, you must demonstrate that it can be duplicated consistently and reliably.
Think of the operations element the way a chef would look at a recipe. If you put the ingredients together in the same way and the same order, the result will be the same time after time.
The ‘organisational chart’ or different roles required also come into play in your operations element. Ask yourself, “who needs to do what along each step of the journey, and what are the skills and capabilities that they need to do it successfully?”
4. The financial element
The financial element will have you asking this question: Are the financial rewards worth the investment of time, money and resources required? Or as succinctly stated in the movie Jerry Maguire, “Show me the money!”
Look at how much financial investment is required, the projected return or investment or rate of return, the length of the payback period, and network present value. Ask if these returns cover the cost of capital while also looking at the opportunity cost. That is, if you make an investment here, what other opportunities would you have to skip?
5. The competitive or co-operative element
The fifth element answers this question: Why you?
Through the above elements, you may have found you have a great service that you can deliver consistently and reliably to an attractive and available market that provides a great financial return.
Now, the final question is why should your potential client get this product or service from you and not someone else? If you say no one else is offering it, why should someone buy from you after someone starts offering it after they see you delivering it?
To be successful in addressing this element it is also critical that you properly define your competition. Competition is anyone competing for the same dollar of your client. For example, if you were opening a restaurant, your competitors are not just other restaurants, they are any place you client could spend their money of an evening.
Lastly, look to see how you can switch this element from competition to cooperation – find a way to work cooperatively with people who you thought were your competitors.
If you analyse an initiative, plan, project or strategy and it can effectively answer all 5 of the above elements, you probably have something worth pursuing.
If all 5 elements can’t be answered, you either have some additional work to do to answer the element or may have a reason to eliminate it.
Lou Markstrom is the co-author of Unleashing the Power of IT: Bringing People, Business, and Technology Together, published by Wiley as part of its CIO series. Over the past 25 years, he has worked with over 35,000 people to create high performance organisations, teams and individuals.