Major Australian Telco benefits from using CAP

During late 1996, the Critical Assumption Planning process was introduced into the Product Development Group within a major Australian Telecommunications Company.  Listed below are various viewpoints on the effectiveness of the CAP process in this implementation.

Phil was the champion of CAP, and as the Chief Operating Officer, had ultimate responsibility for approving major capital expenditure.  Phil insisted that all projects presented to the senior gatekeepers for funding approval were accompanied by a full CAP review.  The language of CAP was introduced into the company, and questions such as “has that one been capped” were commonplace following the introduction.  Importantly, both senior managers, as well as product developers learned to speak the language of CAP to review and reduce the risk in all new product developments.

Phil commented “The CAP process has been a tremendous benefit…We’ve used the process religiously for all investment decisions that we’ve made and it really has been tremendously beneficial – a real eye opener.  One of the real benefits we see from it is that if you really sit down in a structured way and assess the risks associated with new products and projects, it really adds an element that you don’t really see if you run more on gut feel and just the financial implications”.

Penny, Business Analyst
Penny’s role was to look at longer term capital investments out to 5 years, and assess them against the broader business strategy of the company.  She worked closely with the senior management gatekeepers in analysing and recommending approval of major capital projects.

“Prior to CAP there was no formal process relating to risk…we assumed that all products had the same risk profile which was very unrealistic. With CAP we much more sophisticated in how we look at our risks. CAP gives me a lot more information than I would normally be provided, and have to assume when assessing a new project.”

Lloyd, Product Development Manager
The best way to learn cap is really just to practice it, to start from the back of the envelope starting point, look at those key components of a product, the costs, revenues, the organisational impacts, and really get comfortable with taking a very high level view right from the beginning – don’t try and get down into the detail too quickly.”

Steve, Manager, Product Development
Responsible for all Product Development activities.

“CAP allowed us to put together product developments that has much higher credibility…we took a deliberate decision to introduce CAP into the product development area. We wanted to get it working in one area before we applied it to other areas of the company.

We planned training of development staff as well as training of management and we looked at a period of 6-9 months to implement. It has allowed us to improve the business cases of the product developments we’ve taken on, and it has allowed us to do more development work. In the first 6 months of the CAP implementation, we probably delivered more products to market than we had in the 12 – 18 months before, and I’d put that down to CAP.”

“We took some of the development managers from the training with the best appreciation of the process and set them up as a support team to support the other Development Managers to review CAP submissions so that Product Development could be seen to be producing CAP work of uniform quality no matter who produced the work…and that was important in getting acceptance of the process.”

Read more about the CAP process here.
Read more detail about this case study here.

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