Why do you need a critical number on all your projects?
Why do you need a critical number on all your projects?
We developed a methodology to help our clients design critical numbers for all their projects. It has become an essential part of our toolbox to ensure that a project:
- delivers value,
- serves a business objective,
- is judged on objective success criteria.
This tool is both a business and project management tool, as it aligns both views and objectives.
What is a critical number?
The business world defines it as a metric that summarizes an entire business. Several frameworks use it, such as The Great Game of Business .
It should reflect a sense of balance and result from several processes requiring collaboration between departments. It must be complex in nature and simple in measure.
What is not a critical number?
When organizations try this for the first time, they can make a few common mistakes.
Having more than one critical number will lead to indecision in the project execution. It must be unique, drive focus, and simplify decision-making. There can be a temptation to add a second one to capture a different aspect of a project’s benefits, which opens the door for a third, and so on.
A direction (increase in sales, decrease in stocks) is not enough. It must be a number. Capturing a change must be a number: e.g., Y% of increase per year, a decrease of X units per month.
Various departments may come up with different ideas. It must come from a unique source of information that all departments use.
What happens without?
BCG lists ways to increase the chances of success of digital transformation projects from 30% to 80% .
Four of these are challenging to achieve without a critical number:
- Craft a Clear Integrated Strategy
- Commit to Leadership from Top throughout to Middle
- Monitor and Measure Your Transformation Progress
- Create a Business-Led Tech and Data Platform
A critical number unlocks the possibility of implementing project governance practices and creating alignment.
How to design?
We have developed a proven, step-by-step methodology to help any company design a metric for its I.T. projects in 1 hour. It does not require any sophisticated tools (a physical or virtual whiteboard with sticky notes) and does not require any preparation from the participant.
What is essential is the list of participants to that meeting (see Attendees )
Step 1 Why
The first step of the critical number design is to list the reasons for this project. Why is this project considered? Each project has its origin in three main categories:
- Trigger Events: was there an event that triggered the project? An incident?
- Pain Points: do internal users experience pain points in the current process or system? Do customers experience pain points?
- Expected Outcome: what are the expected outcomes of this project? What is a better future that the project sponsor envisions?
This first part of the process is an ideation phase . The facilitator should welcome all ideas. Ideas will be presented in no particular order from any of the categories, often building on top of each other.
When the rate of creative ideas slows down, conclude the ideation phase. At a minimum, there should be 7-9 reasons for this project to exist on the board.
Step 2 Grouping
The next phase is a grouping phase. The objective is to regroup ideas that bring complementary perspectives to the same business objectives.
We are looking for three groups. New ideas may come up in the process. It is acceptable to add them at this stage. The more points of view the objectives reflect, the more meaningful they will be.
Naming the groups is an iterative process. The group name may evolve as more ideas come under the overarching concept.
Step 3 Measure
The third step is to design a measure for each group. This metric must reflect all the aspects listed inside the group. There could be competing metrics at this stage for each group. As for step 1, the facilitator must welcome all metrics proposed.
Step 4 Choose
There must be a choice as there should be only one critical number. This choice is crucial as it will influence many decisions later in the project. But not making this choice means that future project decisions will be challenging.
The main criteria for this choice are:
- Business impact: prioritize the ones with the most favorable business impact,
- Project impact: prioritize choices that the project will directly impact,
- Ease of measure: between two metrics of equivalent business and project impact, prioritize the easier to measure or the one with a more accurate measurement,
An elimination process can remove candidates if the choice is difficult and gradually get to the winner.
Step 5 Test
A final test is required to confirm that the winner respects the criteria for an efficient critical number:
- it is measurable (is a number)
- it aligns with business priorities,
- the project will influence it,
If any of the above is not a firm yes, the team must go back to step 4, reconsider the choice, refine the metric or change the computation formula.
How to use?
Fast-growing companies use critical numbers to focus . They use it to drive alignment in their operation and measure the progress in their aggressive growth.
It serves the same purpose for a digital transformation project, becoming the compass that confirms that we are moving in the right direction and don’t lose focus. Every time an event disrupts the project flow, the team can find back its bearings.
We introduce the concept of a critical number as early as possible in our project management practice. The best time to use this methodology is before a project is confirmed or the budget is approved. It helps clarify what will drive the project’s success.
It allows computing a budget based on the expected business outcome. It becomes as simple as reversing the return on investment formula.
It is instrumental in getting a project approved. It gives the project sponsor a tool to sell a reasonable outcome to the top management. It also protects the project sponsor from making unreasonable promises.
Because it uses business language, the top management will quickly visualize its impact.
Because the selection process looked at the project’s business impact, demonstrating the expected return on investment is easy.
At project kick-off, a unique measure of success is a reminder of the project objective. It allows for a final check before taking off. If some team members were not part of the original workshop, it aligns them.
Whenever a project decision is required, use it to assess the options.
How to rephrase typical project decisions?
- Do we need this feature? → How will this feature influence the critical number?
- Should we push the deadline by X weeks? → What benefits do we lose by delivering the critical number X weeks later than planned?
- Should we increase the project budget by Y? → How does increasing the budget by Y improve the critical number?
As it is measurable, these questions will not lead to opinions but tangible outcomes and rational decisions.
Project ends are often challenging. When a project has many stakeholders, each may have different opinions on what success and completion mean. Many projects suffer from last-minute “we cannot go live without this.”
Having a critical number simplifies the project conclusion. The only step required is to prove that the project has delivered its benefits. Furthermore, it should not be an end-of-project activity.
Monitor it throughout the project, and communicate regularly to all stakeholders. So project acceptance becomes a non-event, based on continuous monitoring of the value delivered.
Our methodology is practical, but as with any facilitation technic, it drives its value from the attendees. The right stakeholders attending will ensure that the metric is relevant and that all stakeholders adhere to it.
Who should attend?
Anybody who will assess the success of the project must attend. We want the final decision on project completion to use it, so we need all of the success assessors in the workshop.
Anybody who will be essential in delivering the project must attend the workshop to know what they are contributing to. The critical number elevates the purpose of the project beyond its deliverables.
Who should not attend?
Anybody who will observe the project for reporting or administrative purposes should not attend the workshop. At best, they will have no input; at worst, they will pollute the debate with ideas related to follow-up instead of business outcomes.
Team members who will have a minor contribution to the project don’t need to attend. A team member who provides only one piece of the puzzle will have a narrow view of the project outcome.
The ideal size for a workshop is 4 to 8. Below 5, the ideation phase may not bring enough ideas to provide value.
Wanting to plan a workshop with more than 8 participants may be the symptom of several issues:
- some of the participants should not attend (see above),
- the project has too many stakeholders, while only a few will make decisions,
- the project is too big and should be broken down into smaller ones,
How to Start?
If you are not using a critical number on your projects and want to start, you may wonder how to start. All projects will benefit from it at any stage.
We designed this methodology with new projects in mind. As soon as a project emerges, we run a workshop using the elements at hand: trigger events, pain points, and expected outcomes.
Project in Difficulty
It may seem counterintuitive to consider using a single metric on a project in difficulty, but it helps set the project back on track.
Putting a project back on track requires changing its organization, reviewing priorities, and resetting the clock. Doing so without setting a clear objective and having clear criteria for success is risky.
A workshop is an ideal first step to resetting a project, realigning all stakeholders, cleaning up the priorities, and setting a new course to success.
Project in Production
On projects in production, a critical number continuously the value delivered. In all long-term projects we support for our clients, we always reach a point when the original metric reaches a plateau. The value of any technology cannot continuously deliver increasing value on the same dimension.
When a project reaches the limit of its original metric, a workshop is required to find a new critical number that carves its path of value creation. It may trigger a new direction in the project, different technology, or improvements driven by an enhanced way to measure success.
We are Here to Help
At System in Motion, we are committed to building long-term solutions and solid foundations for your Information System. We can help you optimize your Information System, generating value for your business. Contact us for any inquiry.
You should also read
How to Design an Effective Dashboard?Article 5 minutes read
Let's start and accelerate your digitalization
One project at a time, we can start your digitalization today, by building the foundation of your future strength.Book a Meeting