Developing a Business Case Depends on Your Organization’s Strategy

Home/Publications/Best Practices Newsletter/2006 – Best Practices Newsletter/Developing a Business Case Depends on Your Organization’s Strategy


February 2006

Developing a Business Case Depends on Your Organization’s Strategy

CIDMIconNewsletter JoAnn Hackos, CIDM Director

You want to acquire a content management system, move your team into structured development, add an XML text editor to the tools, or develop a strategy that improves the performance of your team. The way you develop your business case for support and funding to upper management depends upon the business strategy of the company you work for.

In the December 2005 issue of the Harvard Business Review, Geoffrey Moore argues that you must understand your organization’s stronger hand to plan your own strategy effectively. Moore is the author of Crossing the Chasm, which details how a company might move its product from an earlier adopter to a more mature market.

Moore describes two organizational models: complex-systems and volume-operations. He believes companies fall into one of these models, although some companies use both models. A complex-systems company has a few large and important customers, perhaps numbering in the thousands rather than the millions. Each of these customers spends a large amount of money per transaction, but the transactions, like purchasing new versions, are few and far between. As a result, the complex-systems company cultivates an intimate relationship with each of its very important customers.

In contrast, a volume-operations company has millions of customers who spend money often on products and services but in small amounts. Such companies know about their customers quantitatively rather than qualitatively. They compete by keeping prices low, which is a result of efficient internal systems.

The table illustrates the points of comparison between the two models.

Complex Systems Volume Operations
Qualitative customer research Quantitative customer research
Thousands of customers Millions of customers
Relationship oriented Efficiency oriented
High value Low price
Personal customization Mass customization
Lots of partnerships to achieve success Lots of suppliers for a standalone package
Relationship sales Easy to buy
Focus on service Minimal or no service
High overhead Low overhead

People find success in a complex-systems company by being customer-focused and innovative. They need to quickly adapt to new circumstances and be comfortable working with a novel, changing environment. In a volume-operations company, people find success by developing and conforming to rules. They need to search constantly for less expensive and more efficient processes. Where one organization model requires that people establish a high-touch environment that includes a high level of customer intimacy, the other fosters a pseudo intimacy that is the product of advertising campaigns.

If you find yourself managing in a complex-systems company, your business case depends on coming up with the most innovative approach to serving customers while, at the same time, keeping costs under control. In one such company that I’ve studied, the publications manager has been rewarded with considerable support from senior management by gathering customer information and demonstrating how the group can better meet customer needs. Their business cases for content management, XML-based authoring, process improvement, and massive restructuring of the legacy information all hinge on the customer. Certainly, they are being asked to minimize costs but not at the expense of failing to deliver what the customers need.

If you find yourself managing in a volume-operations company, your business case depends on demonstrating that you can vastly increase efficiency and productivity through automation. Everything in this environment depends upon process, systems, and tools. You can make a case for an investment in tools and changes in process if they clearly indicate a reduction in cost. The entire single-sourcing business case is designed to appeal to volume-operations companies. In fact, such companies are among some of the first to implement content management and topic-based, structured authoring. Because the information developers support a volume, systems-centric operation, their efforts to systematize information development fit well within the primary corporate culture.

You won’t be heard in a volume-operations company if your only argument for your proposed investments will result in happier, more satisfied customers but doesn’t promise cost efficiencies. You won’t be heard in a complex-systems environment if your argument focuses on efficiency with no promise that customers will be better served in the future.

Be careful, of course, if you find yourself in a mixed environment. Some companies have both models in place. Consider, for example, a company that manufactures plastic bottles for the food industry. They have a volume-centered operation in which systems, automation, and cost reduction are paramount. At the same time, they sell to a very small number of important international food distributors. Their customers are few, demanding a close and supportive relationship.

Even with this mixed model, Moore argues that such a company always develops a stronger hand, one perspective that dominates the other. As a manager, your job is to know which hand is dominant.

In addition, you may find yourself in a changing organization, especially if your company has been acquired or gone through a merger. Companies in the complex-systems world often believe they should acquire a volume-operations company in order to compete more effectively. They believe they can handle the high-level customers but also want to provide a commodity to previous customers who convert to a lower-priced competitor. Moore demonstrates that merges between differently handed companies are frequently unsuccessful. The dominant hand rarely understands the operational realities of the acquisition. He suggests that mergers and acquisitions should focus on the same hand, rather than the opposite, to be successful.

Identify the handedness of your organization. It will help you be a more successful manager, aligning your group with the major business initiatives of your senior management. href=””>CIDMIconNewsletter