The Products

The practices of the Investment Management Standard can support a range of functions that organisations undertake to improve the way they operate and manage new investments. The options below have been selected as a useful mix of common functions the practices can support.

Shape a new investment – Shapes an investment that will deliver maximum benefit to the organisation

Prioritise investment proposals – Identifies the major problems a new investment must address and establishes the criteria it then uses to select the most sensible investments

Develop new policy – Defines the need for new policy and specifies the best strategic response

Monitor and measure the delivery of benefits – Provides a continuous focus on benefits during the implementation of an investment and determines whether the expected benefits were delivered

Evaluate a program of investment – Provides an understanding of whether the outcomes sought by a program of investment were actually achieved

Refocus an organisation to improve its effectiveness – Establishes a shared understanding of why an organisation exists, assesses its current effectiveness and identifies the changes that should be made to become more effective

Monitor an organisation’s outcomes – Establishes a shared understanding of why an organisation exists, identifies the measures and targets to be used as evidence of its success, and monitors its progress against those measures.

The only reason an organisation makes an investment is to obtain some benefit – either by solving a problem or taking a new opportunity. If we didn’t have a problem or wouldn’t receive any benefits, what would be the point of making an investment?

The New Zealand Government has adopted the business case as the way that potential investments articulate and justify the case for an investment. In common practice, business case documents have a strong focus on the solution that is planned to be delivered. However, they often fail to adequately describe the problem, explore the strategic options or specify the benefits that the investment will produce. The Investment Logic Map forms part of the Strategic Assessment phase. These practices have been used extensively since 2005. They have been found to:

  • shape investments that are more strategic and drive better outcomes;
  • establish the logic and key content of the business case;
  • reduce the time and cost taken to develop business cases, and
  • improve the chances that an investment will be funded.

This practice is suitable for investments of any type or complexity. Irrespective of the complexity they will all be required to follow the same ‘line of enquiry’ as they develop their respective investment stories. However, the number of informed discussions (workshops) required will be different. Very large or complex investments will require up to four workshops that will produce four documents that complement a business case. Small investments may be able to complete the investment story in just one discussion that would only produce an Investment Logic Map. This guidance may help you anticipate the number of workshops your investment might require.

The four steps involved in this practice are depicted below.

  1. Problem definition
  2. Benefit definition
  3. Strategic response
  4. Solution definition

Four documents are produced through these discussions:

The workshops involved in this exercise are best held at two-weekly intervals. Experience has shown this provides sufficient time for the thinking of the previous workshop to be absorbed and is not so distant that the momentum is lost.

While the practices of the IMS were originally used for single initiatives, they are increasingly being used to establish the logic for programs of investment. This guidance will assist in deciding which type of Investment Logic Map is most appropriate to your need.

The Investment Logic Map (ILM)

Many potentially valuable investments are unsuccessful because:

  • the core need for the investment was never really understood; or
  • the people who were crucial to driving its success were not properly engaged.

Both of these issues are addressed here.

What questions are to be answered?

  1. What is the problem that is driving us to consider a new investment (both the cause and effect)?
  2. Is there evidence to confirm both the cause and effect of the problem?
  3. What benefits can the organisation expect in successfully responding to the problem?

Who should be there?

The key person is the investor – the person who has the business problem and will be responsible for delivering the benefits. The investor would bring together those people who understand the problem(s) and can provide the evidence that will validate that the identified problem(s) are real.

This workshop also provides an opportunity to include key stakeholders who will be important to making the potential investment successful.

The number of people involved will probably be between five and eight, depending on the nature of the investment but could be anything up to 15.

What preparation is required? None. It is expected that the people present will have adequate knowledge to support this discussion.

This uses the structure of an informed discussion of two hours’ duration and should be led by an accredited facilitator. Most time in the discussion will be spent identifying and articulating the problem(s). The problem(s) must be expressed in simple language and communicate both the cause and the effect. Problems must be supported by evidence.

When the problems have been agreed the discussion will then identify the benefits that could be expected to be delivered if the problem is successfully addressed.

In the 48 hours following the discussion, the decisions that have been made will be depicted and circulated among the participants for discussion and finalisation.

What is produced?

A single-page depiction of the problems and the benefits and their relationship to one another. This is in the form of an Investment Logic Map (initiative).

Links to supporting documents:

Investment Logic Map example

What next?

While this will have provided a clear articulation of the problem and the benefits that will be delivered by successfully addressing the problem, before deciding how to respond it is necessary to specify the evidence that is required to demonstrate that benefits are in fact delivered.

The Benefit Definition

In the past, benefit management plans were developed (if at all) after the solution was known. The development of the plan was an exercise in ‘how can we make the case that this is a good idea?‘.

To successfully respond to the problem it is first necessary to define what ‘success’ will mean. Without a clear understanding of the outcome sought how can a response be selected or different options be compared? (Further explanation of this is contained in the guidance, ‘Benefits shape solutions’)

This workshop will establish the basis for success of the investment in the form of the first draft of a benefit management plan, which will be amended as the investment is shaped.

What questions are to be answered
  1. What evidence will be needed to demonstrate that the identified problems have been properly addressed?
  2. What are the key performance indicators (KPIs)?
  3. Against the KPIs, what measures will be used?
  4. What is the current baseline, target values and timelines for these measures?
  5. Who will be responsible for delivering the benefits?
  6. How will the benefits be tracked and reported?

A Benefit Management Plan (BMP) is produced, which a short document that defines the pre-requisites for the delivery of each expected benefit, how the delivery of each benefit will be measured (KPI), and who will be responsible for measuring and realising each benefit.

Strategic Response

Each time there is a need to consider a new investment there is also an opportunity to substantially improve the way things will be done in the future. Instead of just solving problems the way they have always been solved there is an opportunity to consider innovative approaches that are better and cheaper. This workshop aims to explore a broad range of potential strategic responses and decide which one is preferred.

What questions are to be answered
  1. What are the strategic interventions that could be taken to deliver the identified KPIs (and respond to the problem)?
  2. How can these interventions be packaged into a range of sensible strategic options?
  3. Which strategic option is likely to be the most suitable (on the basis of the benefits delivered, cost, timelines, risks and dis-benefits)?

Solution Definition

Solutions are often developed with little knowledge of the organisation’s priorities, policies and strategies. It is only at the point of developing a business case as a precursor to obtaining funding that a ‘policy hook’ is sought to give the solution some credibility – this is the case of a solution looking for a problem.

The three previous workshops have established the need for an investment and the preferred strategic response. It is now necessary to specify a solution consistent with the strategic response – a case of a problem driving a solution.

What questions are to be answered
  1. What business changes will be needed to implement the strategic response?
  2. What assets (if any) will be required to support these business changes?
  3. Will the defined solution (expressed as the changes and assets) deliver the investment KPIs identified in the benefit management plan?
  4. What costs, risks, timeframes and dis-benefits are associated with the defined solution?

An Investment Concept Brief (ICB) is created in the third two-hour workshop that reviews and reshapes the solution depicted in the Investment Logic Map at the previous workshops. The likely timelines, costs, risks and dependencies associated with the solution are then extracted.

Facility requirements

Each facilitated session includes a pre-meeting or discussion, preparation, facilitation of the session, development and circulation of initial draft, and incorporation of feedback into final document/s.

A suitable room with an electronic whiteboard will be required for each session.

Numbers are best kept to between 6 to 8 participants. On the most part, participants should be the decision-makers and senior managers.

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