Investment cases include far more than just an analysis of return on investment. At best, they are fully-fleshed out value equations, considering the benefits and costs that matter most to investors of financial resources, reputation, and time and attention. Keep this in mind in any change management effort.
Investment Case
Any good investment case lays out the context for the investment to understand how it fits with the enterprise’s objectives and priorities, the cost of the investment, and the return on the investment. (Click here for a free copy of our investment case tool for M&A.)
But different buyers look at and approach investments differently. This is because the value equation is not just about benefits and costs, but more about perceived benefits and costs considered in relation to other options.
Buyers
We’re using the Miller Heiman definitions of buyers.
Economic buyers give final approval as the single person or group who can say “yes” when others say “no”, and can veto other buyers’ approval.
Economic buyers tend to be the most logical. They make decisions with an eye on what’s good for themselves, the enterprise, and its stakeholders primarily in terms of the financial return on the financial investment.
Thus, the investment case for economic buyers should lead with finances, all adding up to improved EBITDA, cash flow, and enterprise value
Benefits:
- Organic growth drivers
- Inorganic growth drivers
- Operational improvements
Costs:
- Capital expenditures
- Operating expenditures
- Risks
Technical buyers screen out options. They focus on the product and service, can’t give a final yes, but often give a final “no”. May be several.
Coaches help you navigate the buying organization and identify other buying influences. May work for buying organization, or not.
I’ve grouped technical buyers and coaches because the best technical buyers rise above their bias to say “no” to look for ways to coach the economic buyer and team to a better “yes.” Emotions come in to play with technical buyers and coaches. They’re investing their reputations, and care more about doing good for the people they influence.
The investment case for influencers includes the financial case for economic buyers and layers on:
Benefits:
- Strengthening the enterprise and economic buyer’s brands
- Enhancing their own brand and influence
Costs:
- Their own time and attention
- Risks to brands and influence
User buyers use the product and their success is tied to it, make judgments about impact. There may be several.
Investments are personal for user buyers/implementers because they want to invest their own time and attention in doing what they are best at.
The investment case for user buyers is about the return on their time and attention.
Benefits:
- Impact on their remit and mission (which should nest within the enterprises mission.)
- Impact on their own and team’s well-being.
- Giving them new knowledge, skills, or experience to get better at what they do
Costs:
- Their own and team’s time and attention.
- Risk to other things they are working on.
Change Management
Almost by definition, if you’re considering investing in something, you’re doing that to change things. Almost everyone says they are in favor of change. But what they mean is that they want others to change. Inertia is a powerful force. And change management is about overcoming inertia.
The basic change management equation is that A x B x C has to be greater than D in which
A is the reason to change
B is a vision of a brighter future – in which each can see themselves
C is a call to action so all can be part of the change instead of having it done to them.
D is inertia.
If you skip A, B, or C, you can’t overcome D
The change management case is different for different groups.
Economic buyers/deciders will most likely be motivated by an economic reason to change. Their vision of a better future will involve a better state for themselves and the enterprise. Their call to action should be logical.
Technical buyers/coaches will most likely be motivated by others’ pain. Their vision of a better future will likely involve people feeling better and being perceived better. Make an emotional call to action with them.
User buyers will likely be motivated by things not working as well as they could and can envision things working better. Make personal calls to action with them.
