To really understand the objectives, draw a line of potential year-end outcome pictures on each objective, from best to worst.
You only understand success when you also know what failure looks like. For each objective, you identify exactly what outcomes other than planned success would look like.
First create spaces for the levels of success and failure.
You first create spaces for your pictures. Your line of outcome pictures runs from ‘far better than expected’, through ‘planned success’, to ‘worst imaginable’.
You create a space at each level of success and failure, for each objective.
|Unit Objective: (Put your objective here)|
|Success/Failure level||Outcome pictures|
|Far better than expected|
Then sketch pictures for each space.
Having created the spaces, you sketch a picture in each space. You visualise success and draw that picture in its space. Then you visualise and draw a line of pictures representing better and worse outcomes, each in its planned space.
You capture the ‘pictures’ as verbal descriptions.
They are ‘pictures’ because they must come from a genuine vision of what might happen. They come from visualisation, not word-shuffling.
The boss can be involved in this process, and will have a lot to offer. The how-to steps in the guide assume that the boss is a bit too busy for that.
Lastly, test and improve the pictures.
The pictures must represent your real future world, in full. The qualities of your picture collection are critical.
The ‘pictures’ are only descriptions made from words, but they are must be vivid and they must push emotional buttons. They must push separate emotional buttons. That kind of lasting emotional response makes the difference between talking about doing something and having done it.
The final versions may be formal and precise, if you choose to take extensive steps to maximise the quality of your picture collection after your initial sketches.
|Unit Objective: Minimise total payroll service costs per paid employee (including ICT costs)||Brainstorming seed (complete the sentence)|
|Success/Failure level||Outcome pictures|
|Far better than expected||Sustained payroll service performance is publicly identified as a model or benchmark for ‘best practice’, adding to the prestige of the organisation.||Over the year, the unit achieved a lasting improvement to the organisation’s success by ….|
|Excellence||Payroll service value over the year is seen as exemplary. By the end of the year, there is some talk of providing payroll services to external clients.||The year was successful, and beyond that, the unit can also be credited with …|
|Success||Total recurring real payroll service costs per paid employee did not increase over the year.
Payroll service costs are within industry norms.
|The year-end unit outcome must at least include …|
|Qualified Success||Payroll service costs per employee are fairly high, and service levels are not correspondingly high, but there is some justification.||While we can call the unit’s year successful, the unit must also acknowledge …|
|Partial Success||Payroll service costs per employee over the year have been high, though affordable in the short to medium term.||The year included some successes, but also …|
|Failure||Payroll service costs over the year have been unreasonably high, and remain a cause for active concern at CFO level.||The minimal requirements were not met for …. (Answers can echo the identified Success requirements).
Any successes in the unit function were neutralised or negated by ….
|Worst imaginable||The organisation regrets having set out on the path leading to what the unit did (or allowed to happen) during the year, which included ….|
If you don’t understand the objectives well enough to draw the lines of pictures, you will not be able to evaluate risks.
The International Standard says that risk is the effect of uncertainty on objectives.
Putting International Standards aside, everybody understands that the size of a risk increases or decreases as the effect gets bigger or smaller. Effects are ‘bigger’ when the resulting outcome is further away from planned success. The size of a risk also increases or decreases as it becomes more or less likely that reality will match ‘the risk’ and its effect.
In business planning, the ultimate importance of an ‘effect’ is simply the difference it makes to the position at the end of the business planning period.
You might think that events or ‘impacts’ during the period are also important, perhaps more so. That is a conventional way to understand levels of risk consequence. However, it is not helpful to confuse incidents or impacts with outcomes. The metaphor ‘impact’ is misleading because it suggests something that does not last.
Events and ‘impacts’ are not the effect on objectives. Events and impacts are, by definition, temporary.
If an incident occurs, but does not have any effect on the year-end position, how ‘consequential’ was that incident? Sure, if you lose $10000 on a deal today, and as a result you’re $10000 poorer at the end of the year, the effect is being $10000 poorer. But you might not be $10000 poorer at the end of the year. You might recover today’s lost $10000 and even learn some smart tricks that make your overall year much more profitable than it would have been otherwise. It might put your financial position into a downward spiral, so your unit ends up a dead loss. Losing $10000 today the is not the same as being $10000 worse off at the end of the year. To understand risk in annual business planning, it is the effect at the end of the year that matters.
To understand the potential effect of a risk, you need to understand the range of ways in which the year-end outcome could be different. Defining objectives and drawing pictures is a way of understanding the size of the effect. Only by understanding the size of the effect will you have a way of putting a size on a risk. The risk can be an event or incident that might happen, or an assumption that was incorrect.
These articles emphasise ‘drawing pictures’ of outcomes. That is a choice. There are other ways of understanding the size of an ‘effect’, such as numerical metrics without pictures. The trouble with metrics is that they are hard to relate to the objectives and outcomes that really matter, that is, with the motivating reasons for everything you do. The relationship of metrics with what really matters is usually soft or highly disputable.
If you cannot relate risk effects to outcomes and objectives that matter, you won’t get any useful assurance out of risk management. Neither will you generate any lasting commitment to action.