ONE OF THE THREE Rs scales to be balanced in seeking to maximize organizational stakeholder value under VBM is what the authors have termed “results management.” While this may be a new term to the reader, it will surely not be a new concept. Just as risk management is the management of risk, and resource and cost management are the management of resource usage and their costs, so, too, is results management the management of activities within the end-to-end business processes designed to set and achieve a particular result for stakeholders.

To be clear about the context of the word “results” in this chapter, we remind the reader that we are referring to a “result” as what an organization aspires to achieve through a particular decision and associated actions, and not the cost or risk of successfully achieving that result. In short, it is the “return” element of a risk-adjusted return on investment analysis as originally shown in Figure 2.3 and repeated here as Figure 7.1.

While the need to manage toward the delivery of desired results will surely be recognized, the authors present a new concept for how those results need to be achieved as part of a larger set of considerations. This larger set of considerations was discussed as part of enterprise performance management (EPM) in Chapter 5 and graphically presented in Figure 5.3. That figure is repeated as Figure 7.2. In this chapter we focus more specifically on one element of that EPM effort: results management. To describe in further detail what we mean in our use of the term “results management,” let us further elaborate on Figure 7.2.

As introduced in Chapter 5, “current results” are those results currently being delivered. In many cases, evaluation of these current results raises questions on whether the balance among results, resources, and risks is ideal for the delivery of maximum stakeholder value. In such cases, organizations typically engage in considerations to adjust results, resources, or risks as a means of improving overall stakeholder value. Such discussion frequently leads to establishing targets (e.g., KPIs) for a proposed new balance of results, resources, and risks to improve stakeholder value. This is of course normal for any organization and represents the very source of organizational progress. In an organization employing VBM, specific proposed targets will be set for proposed results, proposed resources consumed, and proposed risks accepted, as discussed in Chapter 5 on EPM.

MANAGING RESULTS WITHIN EPM

Managing results is simply one of the three elements of EPM. It is important to recognize that a “proposed result” is what we intend to accomplish for one or more stakeholders. It is the setting of targets and the intended consequence of actions yet to be taken, not the final consequence of those actions. In other words, it is what we intend to deliver at a future point in time as a result of our efforts, not what we will have actually delivered after completion of those actions. Once we have delivered a set of results, we refer to those as “results accomplished.” Keep in mind that the “proposed results” of which we are speaking could be a new or improved product or service going to an external stakeholder outside of the overall organization; a product or service to an internal stakeholder that is being delivered from one part of the organization to another part of the organization (e.g., recruiting services offered by the human resources department to other portions of the organization); or even a revised process that results in the same end product or service but is delivered more cost effectively or with lower risk.

Ideally, results sought and results accomplished are identical. However, any manager typically faces unexpected challenges that may cause results accomplished to differ from results sought as initially envisioned. The results achieved may be better or worse in terms of contributing to stakeholder value than when originally set in the balancing with resources allocated and risks accepted. This change in results accomplished versus results planned and predicted may necessitate consideration of changing resources allocated or risks accepted if maximum potential stakeholder value is to be maintained. Results management is thus simply managing the activities to deliver a set of results in response to those originally sought, as illustrated in Figure 7.3, as well as the reengagement with resources management and risk management through EPM activities as changes over time may require.

FROM PROPOSED RESULTS TO RESULTS ACCOMPLISHED

If results management thus provides an ongoing reassessment of what “midcourse corrections” may be needed to ultimately deliver maximum potential stakeholder value, how are these adjustments accomplished? First, results management is actively engaged with risk and resource management in the ongoing reevaluation of the current level of results expected to be delivered. This enables consideration of tradeoffs given the current level of resources allocated to achieve those results and the risks currently being accepted. In order to have such an engagement, however, the results management process must understand the current capability of the organization in delivering results that contribute to stakeholder value. This engagement is represented on the left side of Figure 7.2 as “Today's Value.”

Second, results management considers how stakeholder value could be increased by changing the currently delivered value of products, services, or processes. To accomplish this, results management engages with resource management and risk management activities to consider options for changing and rebalancing results, resources, and risks in a manner that would improve overall stakeholder value. For example, might a new product or service be offered that creates new value for stakeholders? Might an existing product or service be modified in such a manner that a reduced consumption of resources or decreased risk to delivery of the product or service increase value to stakeholders? Could the processes used to deliver a particular product or service result in lower production cost or higher quality? Setting the targets for proposed value thus requires active engagement from a results management perspective, as well as resource management and risk management. This discussion and projection of a proposed rebalancing is represented on the right side of Figure 7.2 as “Proposed Value.”

Third, results management applies traditional project management activities to guide and monitor the progression of changes needed to move from current results to proposed results, with adjustments made as necessary. These activities are represented in the middle dashed line in Figure 7.2.

Fourth, as insights are gained during execution of the results management process and the need for possible changes impacting resources and/or risk becomes evident, results management reengages with risk management and resource management. The objective of this reengagement is to either confirm the balance among these three considerations or make changes as needed in order to deliver maximum stakeholder value upon completion. This last activity, represented by the red helix in Figure 7.2, results in the integrated EPM process, reflected by the green arrow in the figure.

Moving from “current results” to “results accomplished” thus reflects in part traditional project management activities. However, in an organization applying value-based management, project management additionally incorporates the rebalancing of resources, results, and risks on an ongoing basis as the insight into these three elements evolves and adjusts over time. The goal, of course, is to deliver maximum stakeholder value at the point of delivery and not be constrained by assessments of proposed results, resources, and risks that may have become inaccurate over time. The need for this ongoing reengagement among results sought, resources allocated, and risks accepted should not be new to any experienced project manager. VBM simply makes this balancing act explicit, and ties the need for such a three-way balance to strategy not just within a specific project, but vertically across all levels of the organization and horizontally across all functional and programmatic areas of the organization.

It should be noted that the changes reflected in the solid line of Figure 7.3 do not necessarily reflect a reduction in results or value over time, but simply a change. As project management occurs to change current results to proposed results, new opportunities or insights may arise that were not available or envisioned when the proposed results were first established. The solid line in Figure 7.2 is thus simply a recognition that effective results management requires ongoing adjustments to evolving challenges and opportunities.

OPTIMIZING RESULTS IN VALUE-BASED MANAGEMENT

As was discussed in Chapter 2, optimizing value across the overall organization requires a portfolio view of how value is created and delivered on behalf of the organization's stakeholders. This requires an integrated view of the balance of results sought, resources allocated, and risks accepted across the organization, both horizontally across all functional and programmatic areas of the organization, as well as vertically from the top of the organization to the bottom. Accomplishing this integrated view begins with an understanding of what constitutes stakeholder value at the highest levels of the organization, and then cascading those value-based strategic goals and objectives downward through the organization in terms of supporting elements results, resources, and risk.

Relative to the management of results, this requires determination of what proposed results are for the highest levels of the organization, and then decomposing these desired results into subordinate results that must be achieved in order to accomplish the higher-level results. This decomposition of results, which at every level of decomposition must be balanced with risks and resources, was illustrated in Figure 2.5 and is repeated here as Figure 7.4.

PROCESS IMPROVEMENT: A RESULT SOUGHT OR PART OF RESULTS MANAGEMENT?

The authors have referred above to the management of actions to achieve proposed results as “project management.” This is because project management can be thought of as management of a process or set of processes designed to accomplish a particular output. In this case, project management is a set of coordinated, time-constrained actions required to achieve the delivery of “proposed results.” Considering how to run a project designed to deliver a proposed result effectively and efficiently is thus a process and a candidate for formal process design and control.

However, it is important to recognize that process control and improvement could also be a desired result. For example, an organization may decide that a significant strategic goal could be to improve effectiveness and efficiency of existing processes. A desired result thus need not be limited to a new product or service. Simply delivering an existing product or service more effectively or efficiently through improved process control and redesign can be a justifiable result sought.

LEAN, QUALITY, AND BUSINESS PROCESS MANAGEMENT

As noted, process improvement can be an end-objective, and consideration of results desired, resources allocated, and risks accepted can inform the implementation of such a goal. However, during the reengagements to pursue the proposed results, the existing end-to-end processes are frequently involved. This includes productivity improvement typically from cycle time reduction and quality improvement. This involves programs referred to as lean management, quality management, often using Six Sigma techniques, and business process management (BPM). To clarify the last one – BPM – it is not another synonym with EPM. EPM is associated with being strategic and is holistically enterprise-wide. In contrast, BPM is associated with being operational and tactical, focusing on various end-to-end processes to remove waste and increase effectiveness and efficiency.

Much has already been written about these, so they will not be described in any depth in this book. They are simply referenced here so that they are not completely omitted, because they do serve a role in balancing the three Rs and maximizing stakeholder value – the end game of VBM.

Resource management (including cost management) will next be addressed in Chapter 8, which examines the aspects of capacity management and the language of money – financial information.