Many readers of these blogs will also watch the TV programme ‘Dragons’ Den’, now shown in more than 25 countries from Afghanistan to the USA. For those of you not familiar with this show, people pitch their business idea to five successful entrepreneurs (the Dragons) who decide whether to invest in the business, in exchange for part ownership. Some leave with large sums of investment funding, but many leave with nothing except a bruised ego. All have to undergo a series of gruelling questions and rigorous interrogation, where their ideas are robustly challenged, criticised (and sometimes ridiculed). Inevitably, most give away a bigger share of their business than they would like to, to secure the funding they need.
There are some interesting parallels with developing and proposing an HR business case, whether it’s to fund new technology, or any type of HR initiative. Here’s how I think Dragons’ Den can teach HR some good lessons about building a business case:
- Everyone that enters the Dragons’ Den believes they have a good business idea. However, those who have not thought it through, show no real commitment, or have limited potential are quickly found out. So the first lesson is to ask yourself “If I were investing my own money, would I put it into this idea?” What are you personally prepared to put at stake (part of your bonus? a promotion? your reputation?) to show how much you believe in your proposal?
- Many who enter the Den are hopelessly deluded as to the size of the market for their product, often over-valuing the potential of the idea. For your HR proposal, ask whether the idea is solving a real problem and whether the risks involved are offset by the benefits that might be achieved.
- Some entrants to the Den ask for too much money, but others ask for too little, given the scale of the work to be done. This is a sure sign that they do not understand their business or the implications of the idea. Big ideas sometimes need a big investment to get a good return. A common question that many struggle with is “what are you going to do with the money?” – it’s a good test of whether you actually understand your proposal, what needs to be done and whether the benefits are fully understood.
- One of the most common reasons for failure is that Den applicants have a poor grasp of the numbers. Many seem to pluck figures from nowhere about potential sales, cost of production, potential customers etc. Often, pitchers rely on flimsy information or weak assumptions, leading one weary Dragon to say recently “you seem to know more about the future than you do about the present”. An HR business case needs to be supported by clear data that will stand up to questions about planned benefits, how they will be delivered, what it will cost to implement and what assumptions you have made.
- When a really innovative idea is presented, the Dragons usually ask about patents and copyright, because an idea is less attractive if there are other good alternatives. The equivalent for the HR business case is to make sure that you have considered other options. If your idea is simply based on doing what everyone else is doing, rather than anything genuinely different or original, it won’t grab anyone’s attention. The only exception to this is where there is a legal or compliance reason for the initiative, but otherwise any investment should give the business some form of competitive advantage or unique capability.
- The Dragons also ask themselves whether the business idea is investable – is there enough substance behind the proposition to make it a higher priority than other opportunities for investment? An investment has to have a good payback to make it worthwhile. Just because it’s a good idea, it doesn’t mean that it deserves investment – Dragons often say “it’s an interesting idea, but it’s not a business I can invest in” or “I like you but I don’t like the idea”. Make sure your HR business proposal doesn’t just rely on your personal charisma to carry it through.
- One reason why people go to the Dragons’ Den rather than to their bank is because they know that having a high-profile investor on board will open doors that would otherwise be closed. Recognise that sponsorship is important to any business proposal – no matter how good your business idea is, it needs to be championed by a significant sponsor. Success tends to go to those who can take a good idea to market, not necessarily those who had the idea.
- There is often a killer moment in each pitch where one of the Dragons spots a ‘fatal flaw’ that totally undermines the years of development that have gone into the product. For example, baby products that put children at risk; egg boilers that don’t actually cook the egg; things that fail to work at a crucial moment and so on. This is great entertainment, but don’t let it happen to you – check there are no howling errors in your proposition.
So if you have a proposal for an HR investment, imagine you are about to pitch to the Dragons – check that your idea is investable, that the investment opportunity is real, that you understand the numbers, the assumptions you are making and look for fatal flaws. Otherwise, you might just hear your potential investors tell you “I’m out”.