Many organizations fail to maximize the benefits from their capital investment initiatives.

While few executives would argue with this statement, many (if not most) would deny that it is happening at their organization.  We assert that most probably don’t know whether they are achieving maximum benefit.  And, we are confident in our assertion for several reasons – three are described below.

First, research indicates that fewer than 12% of organizations even have the capability to measure benefits. Hence, understanding whether benefits are maximized is not even an issue that can be addressed. Even if your organization does measure benefits, chances are there are some real gaps in the analysis (read on for an explanation).

Second, business cases that justify and fund an investment are nearly always “single point” estimates for cost, timing and benefit components. This approach ignores the realities of variability in these components and impedes legitimate assessment of the results of a pilot or test phase.

Third, without understanding that actual cost, timing and benefit components of an investment initiative will vary from the most likely “point estimate,” it is impossible to distinguish reasonable/expected outcomes from unreasonable/unexpected outcomes. Of particular interest are the “unexpected” outcomes.  While these incidences can reveal a problem with the initiative that needs to be addressed in order to rescue an initiative and get it back on track, these incidences can also reveal an opportunity. If some outcomes are out-performing the rest, finding out the cause and determining whether it can be replicated can lead to significant increases in investment returns. 

For example, analysis of pilot results for one of our client’s initiatives identified some positive outliers – i.e., individuals who exhibited far superior performance.  Further investigation into these outliers revealed they received special training.  While there would be a cost to providing this training to the rest of the group, the benefits dramatically outstripped the cost – to the tune of millions of dollars of incremental net returns.

Just because you don’t look for the hidden benefits in your capital investments, doesn’t mean they aren’t there. With virtually every client, using our proprietary approach and technology, mining for hidden benefits has produced gold.