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What is "Business Impact?"


Before we can delve into deeper topics, we need an understanding of the concept of "business impact."  This blog entry will attempt to define this concept in clear terms.

Giving credit where it is due, this is derived from the amazing course by Force Management called Command of the Message and is but a drop in the massive bucket of knowledge that you'll get if you take their course.  (And I highly recommend it if you are interested in learning about this topic in substantially more detail.)

Essentially, every business is on a never-ending journey that can be represented by the following graphic.



To explain the graphic, there is no business that is completely happy with its current state.  In order to constantly provide value to its shareholders (or owners, if privately held) it needs to continually evolve.  This process of evolution involves identifying operating characteristics of the business in its current state that are not ideal.  In some instances, these can be downright detrimental to the business.

Once you've identified the negative consequences of the Current State*, the business then defines "what good looks like" as it relates to these Negative Consequences.  In other words, what would the new operational characteristics of the business be if the ones that resulted in the negative consequences were eliminated or changed for the better?  And once you've changed, what are the Positive Business Outcomes that are the result of this change?

Finally, businesses cannot simply wave a magic wand to transition from the current state to the Desired Future State.  The journey is often defined in terms of one or more years, and with a timeline of this length you not only need an understanding of how you are to accomplish your goals - Force Management calls these Required Capabilities - you also need to constantly assess where you are in the journey so that course corrections can be made if you stray from the path that you mapped out.  (These are uninterestingly called Metrics by Force Management.)

In this explanation of the graphic, business impact is therefore the journey from the current state to the future state.  Put another way, any activity that advances the journey in the correct direction toward the desired future state is considered to have "business impact."

This does not have to be viewed through the lens of strategic initiatives for an entire company, however.  In fact, I often coached my wife to ask the question "what's the business impact?" whenever someone would propose a new process in her organization or a significant change to an existing process.  If you cannot answer the question in a way that aligns with the financial goals of the business then you must also challenge the reasons behind the change request.

Thank you for taking the time to read this.  See you next time.

* Certain phrases have been capitalized and highlighted in a different color.  These are terms that are used specifically by Force Management in their course.

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