Situational Awareness: How a packaging company saved 50% of the development budget in a business model evaluation project through improved situational awareness

Our client, a large packaging company has a diverse portfolio of exploratory projects where innovation that can drive major future business results is explored. In one of these projects, a major commitment had been made to explore a new business model based on robotics and the promise of cheaper, simpler, and easier implementation of automation. In the industry, a major segment of the market has a component of manual labor that is resource-intensive enough and costly enough that the supply chain for it must be outsourced. The idea was to supply an automated robotic cell implementation that replaces the need for this manual step. The benefit would be several, both in terms of cost but also in terms of control for the customers.

When we became involved in the project there were still several options for implementation that were still on the table. Each option had pros and con’s and the team could not really determine which of the options would be the right one. This meant that the project would cover both options. This of course meant that the development work would be significantly more expensive than it would be if a single option could be identified.

By going through and understanding how value to the customer would be delivered in the project and understanding the different components of the project it was possible through direct analysis to understand which option was correct for the project.  By creating a value chain maturity map, the options became extremely clear and it was easy to rule out one of the options.

It was decided to completely let go of the two options strategy and instead completely focus on the option the analysis had shown as the correct one, saving 50% of the cost for  a multi-million € project. It is also likely that delays were minimized through the choice of the correct option in this case.

Details of the case

Lets look at a simplified and anonymized explanation for how we could identify the option and how we can make the claims we do for costs and delays.

What we see above is a value chain maturity map (a “Wardley map” after it’s creator Simon Wardley).

Doing a quick examination we see that at the top of the map we have our customer and the customer’s need that gets served by this project. The things that serve the customer’s needs are what the customer sees as valuable. Further down we have things that help us fulfill that need that the customer does not really see. These are things that are less valuable to the customer.

Things to the left of the map are less mature than things to the right. Things to the left have more uncertainty in them than things to the right. There are in general four levels of maturity going from “genesis” via “custom made” to “product” to “commodity”.

When we look at the map we see that the project means to change a particular process from custom-made (manual labor today) to commodity (an “as a service” automated process). This will create a lot of value for the customer and be much more efficient than the current solution. We also see that we have two identified options with underlying components that we need to put in place in order for us to create value for the customer.  So how did we figure out which one to concentrate on and which one to drop?

If we look closely at the map we see that a specific component in option 1 is at a very low maturity level. It is in fact right in between “genesis” and “custom-made”. What that position on the map implied in this particular project was that the technology was barely commercially available. It was even doubtful that it could be sourced by our client in a reasonable way and it would likely require direct development by our client. By focusing on the arm where all components have a higher maturity level, the project could still deliver value to the end customer, but without spending any precious R&D resources on an immature component that was far from what the customers will actually see and use. The technology development of the option 1 arm of the map was around 50% of the budget for the project upfront. Given the maturity level of the component, it is likely that it would cause major delays and issues if the project moved forward as originally planned.

Using simple but powerful analyses such as the one described above is a great way to make better choices and gain situational awareness. Wardley maps are the best tool we have found for this purpose. A good choice early on in a project or initiative, “doing the right thing” typically has a lot more impact than great execution later on. Doing the right thing (Effectiveness) beats doing things right (efficiency) every time!. You get there with Situational Awareness.

If you would like to know more about how to think about situational awareness you might want to have a look at our whitepaper on transformation seeds.