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The Cake Theory of benefits realisation

Earlier this year, I was delivering benefits realisation training on my birthday (lucky me!). So I decided to take in a cake.

Come coffee time, all of us needed caffeine and sugar, and we all bonded happily over the rather messy distribution of the chocolate fudge cake. That afternoon, we got onto the also rather sticky subject of how we deal with attribution in benefits. Cake seemed like the ideal analogy.

 “There is only one cake,” I stated to the rather amused group in front of me. “And it’s only fair, if more than one person helped bake that cake, that they each get a slice of the cake.” 

Let’s start with the principle ‘there is only one cake’. When an organisation doesn’t have a good grip on the overall picture of what’s going on in its various programmes, the risk of double counting is high. Multiple programmes could be reporting the same benefit, interpreting the shifts in their metrics as being down to their own actions, not someone else’s – or could even be measuring the same benefit in different ways.

Not only that, but our cake cutting starts right at the beginning with the business case. We may be shelling out money twice to get the same cake, with no understanding as to whether the two initiatives will enhance the benefits overall, have the same impact or even counteract each other. It takes a mature and proactive portfolio management office to deal with this effectively, from business case to post-initiative reporting.

So how do we actually divvy up the cake fairly? I’ve developed two methods over the years.

Initiatives with separately identifiable impacts on the same metric

The first and easiest cake to deal with is if you can tell how much each initiative is contributing and the two initiatives are not dependent on each other. Say our local hospital has two initiatives that they plan to implement in their A&E department: Initiative A and Initiative B. The government has set them a target of seeing each patient within four hours. Both of the initiatives should reduce the number of patients who have to wait longer than this.

Let’s say that Initiative A should mean another 80 people per week are seen within four hours. Initiative B expects to enable another 20 people per week to be seen on time. So, for any reduction in the number of people waiting more than four hours in A&E, initiative a should get 80% of the credit and initiative B should get 20%.

Intertwined initiatives with impacts on the same metric

Unfortunately, it’s not always that easy. There are so many things which make a difference to how quickly people are treated in A&E. You also get some circumstances where it is an all-or-nothing proposition: both initiatives are needed to get all the benefit. If you only implemented one of them, you wouldn’t get any benefit at all.

In benefits, we use a concept of ‘willingness to pay’ as a [last-ditch] attempt to put a monetary value on benefits. For example, if we are willing to pay an extra £10 a year in council tax for the potholes in the village high street to be filled in, that is how much value we place on the benefits of smooth roads.

In desperation, I took the concept and turned it around, applying it to attribution.

If the benefits really are all-or-nothing or too intertwined, the whole life cost of implementing those two initiatives are another way of cutting the cake.

Going back to our example, if Initiative A costs £1 million to implement and run for a year, and Initiative B costs £3 million, so in total they cost £4 million. The benefits are divided 25% and 75%, in proportion with the costs.

In this way, we can fairly share out the cake, ensuring everyone who helped back it gets a slice.

Have your cake and eat it

If you would like to share knowledge, experience and cake then why not book to attend APM Benefits Summit on 22 June. I will be facilitating one of six workshops and the programme for the day will include some really tasty presentations and case studies.


 

4 comments

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  1. Merv Wyeth
    Merv Wyeth 16 March 2017, 07:55 PM

    Hi Claire, Thanks for providing such a mouth-watering example of the challenge of attribution in benefits management. In particular, I note and concur with your statement; "It takes a mature and proactive portfolio management office to deal with this effectively, from business case to post-initiative reporting." You are right that benefits management should not be treated as a discreet activity confined to a specific stage in the life of a single project or programme. It needs to be embedded within an organisation at the portfolio-level and operate across the entire project and programme life-cycle - starting with the business case. I look forward to meeting you and hearing your contribution to #apmbmsummit in the summer. Thanks Merv

  2. David Liversidge
    David Liversidge 17 March 2017, 03:59 PM

    Great Blog Claire - I love the cake analogy; as a father of two teenage boys with insatiable appetites, I know the feeling of baking a cake but rarely getting the chance to enjoy the benefit of eating it unless I get in there early! Having faced similar situations in my benefits work, it is also important to understand and recognise the temporal nature of change on your benefits baseline. if you have multiple change initiatives, like it of not, those that get in earlier will have first claim on the benefits cake and if you are later you will have less of the benefits cake to eat. In apportioning benefits, this is an important factor as, a bit like my two teenage boys, your benefits cake may have gone by the time you get there.

  3. Claire Dellar
    Claire Dellar 17 March 2017, 06:21 PM

    Absolutely David - as Merv points out this is where a strong Portfolio Management Office is vital, to ensure your son's haven't cleaned the plate before you get to the table!

  4. Andrew Hudson
    Andrew Hudson 05 April 2017, 09:26 PM

    Is it worth going back to the root cause of the waiting time problem? If the outcome of the changes/initiatives aren't logical or clear then it's hard for the benfeciaries/teams to realise the value directly. Waiting time reduction will be a consequence of other improvements so not sure it's the right cake to be dividing?