Overview of Dimension 4 Methodology

Overview and History

The Dimension 4® (D4) method has been in use for 25 years, following the development of the method within a number of different organisations. It was created by the Chairman of Isochron, Alan Fowler, a former Executive Consultant in EY.  The method has been licensed and used in to over 25 organisations, including PwC, the Scottish Government and Serco, either to use as-is, or as the white-labled base for their own methodology.

D4 is an end-to-end planning and change approach which is focused on achieving the end-game business outcomes and works backwards from there.  As well as establishing a shared  vision, it defines the tangible outcomes, the plan for getting there, the costs and benefits for achieving the these outcomes, and how to manage the people involved in delivering these.  

The method can be used to achieve overall business outcomes, such as the desired financial results of a business exit, or to implement specific business change, e.g. organisational transformation to meet new client requirements.  However the method is also flexible enough to be used at the individual level for personal or career planning.


Visioning

Phase One is to establish the Vision for the organisation or outcome to be achieved.

The vision is the ideal end-state for both the person and the organisation.  Under d4, we use this to establish tangible outcomes for the business and stakeholders.  We call these Recognition Events® (REs), and the objective is to make the Vision deliverable.  A recognition event

  • Is a real-life happening that tells the sponsor and stakeholders that their expectation has been met (a ‘Show-me’ test)
  • Needs a date, location and context so it can be inspected
  • Once agreed, not negotiable - it's the end goal that must be achieved
  • But... how to make it happen is flexible; the vision and REs are not determined by how you get there.

They are described in the present tense in terms of what is observed at the time, i.e. you place yourself into the future and describe what you see.  For example:

"It's September 20__ and I am present at the opening ceremony of my new headquarters building."
“I am touring the office and see the new procedures working everywhere.  It is 9th June 20—”
“I am meeting a Focus Group of customers and they tell me that we have exceeded their expectations and they show me how. It is 10th January 20—”

It is also important to note that the REs should reflect the needs of all the stakeholder that are paying for the business outcome.  

We would aim to have no more than 5 of these REs, otherwise the planning to achieve these becomes excessively complex.  As such, these may reflect relatively high level, rolled-up, business outcomes.

Visions are often amorphous, soft (aspirational), premature (driven by the solution, e.g. focused on the how rather than why), and unrealistic (unachievable targets).  By having these tangible 'show-me' outcomes (REs) which demonstrate that the vision has been achieved, you avoid these issues.


Planning

The Second phase is to work on the Planning for these Recognition Events.

We assume that people are competent and capable, and will achieve the outcome so long as there is a clear direction with broad support.  The direction is provided by the REs, so the next step is to figure out how to get there.  As with the vision, we start from the end (using imaginary hindsight) and look back in time from each RE by asking the question "...and how did that happen?".

When planning is done from the start to the end, there is an explosion of uncertainty as you move into the future.  By starting from the destination and working backwards, you force yourself to think about the key milestones or Tipping Points that make it inevitable that you achieve the REs.  Only once you have this overall backcast plan in place, should you start considering the forecast planning to address how to achieve the individual tipping points.

 Recognition Event and Tipping Point Examples

Recognition Event and Tipping Point Examples

Individual already do this in their day to day lives, e.g. when going on holiday and need to catch a plane, they plan backwards to work out when they need to be at security, check-in, the car-park and ultimately when they need to leave home (and taking this to the extreme - when they need to have booked the flight in order to get the one they want at a price they are willing to pay).  However, this is commonly ignored in the work environment, and forecast planning from the start to the end is the default choice.

For each RE, we recommend that the "...and how did that happen?" question is asked up to 3 times to establish those Tipping Points.  These Tipping Points (TP) become the milestones in your Backcast Plan.  Each TP may be linked to more than one RE which means that if there are problems achieving a TP, this can influence more than one outcome. When combined with the Financial estimation approach described below, the financial impact that a problem with a TP will have becomes clear, providing a clear business mandate for addressing this issue.

Ideally, responsibility for achieving TPs will be delegated to the management team - indeed, they should actively take responsibility for them.  This pushes the responsibility for delivery of the REs down into the heart of the business, and avoids the need for detailed project management.  While each TP will have significant forward planning underneath it, the planning and delivery for this lies with the business, not with any individual.  

 Backcast Plan Example

Backcast Plan Example

When it comes to executing against the plan, a GPS analogy can be used.  The end destination (RE) is fixed, but how you get there (via TPs / milestones) is adjustable - you can reroute your journey.  Specifically in this case, problems in achieving the TPs can be used as a challenge to figure out a smarter way to achieve the RE.  


Financial Estimation

The Third phase is the Financial Estimation.

The objective here is to establish the Financial Benefits (and costs) of the Vision.  We use the Value Drivers in the business to show this, i.e. how will your RE by:

  • Increasing Revenue
  • Decreasing Cost
  • Increasing Asset Value

For each RE, we would ask “If this is how the business works in the future, what would the (benefit) impact be on the cashflow / costs / assets?”.  We would then extend this by further comparing the vision to all possible value drivers (Isochron uses a reference list of 70 Value Drivers, but this is defined by the nature of the business and the chart of accounts) to see if there are any other sources of value.

By understanding when and how these financial outcomes will be achieved, we can establish the Value Flashpoints® where this can be recognised - separately from the REs, e.g.:

  • “I am shown the payment received from sale of the empty property”
  • "The business is sold and my investors receive a satisfactory price for their shares"

The usual problem is that financial planning is fixed and complex.  Business cases built in Excel are notorious for having the wrong basis and containing significant errors.  Research has shown that estimates by experts are often wrong by orders of magnitude.

To avoid this, we use two techniques - Fermi Estimation and the Monte Carlo Box.  Fermi Estimates are often used in science, and are:

  • Acknowledged to be wrong (but to a relatively very small degree)
  • Simple in their calculation and methodical in approach
  • Allow easy identification, validation and change of faulty assumptions
  • Provide a valuable check on the acceptability of results

The Monte Carlo Box uses 4 point analysis of Best case, Worst Case, Most Likely and Risk-Factored (each using Fermi Estimates) to provide a narrow band of expected outcomes, and a wider band of potential outcomes.  The same approach can be taken to calculate range of costs at the Tipping Point Level, i.e. how much will it cost to achieve that TP, rolled up to understand the total financial requirements.

Each Value Flashpoint will be enabled by multiple REs which means that you can map the two together to link the financial outcomes to your business outcomes, and therefore how these financial values can be linked back to your Backcast Plan, and demonstrate the real financial impacts when the TPs need to change due to issues.

You can also use the detail defined in these Value Flashpoint to very quickly and simple build a Value Case for the CFO, investors and value tracking.


People and Delivery

Of course, all of the above is pointless if the change cannot be delivered.  Management of delivery resources is key to the achievement of this

Using all of the above information, we have all the information, including an engaging vision, to get people to support and enable the change without resorting to coercion.  

An example of a technique Isochron uses to overcome objections is Transfiguration.  This involves engaging people who are resisting change and working with them to understand the reverse of their position.  By driving them to come up with the opposite position, and then building that into the plans (as an RE, TP, TP Planning item, adjusting finances), you can demonstrate to them that they are being listened to - often causing them to become engaged and avid supporters of the change.

When all the above comes together, the TPs and REs will have named owners and dates and an engaged delivery team is working together towards achieving these outcomes.  When things go wrong, the organisation pulls together to establish the different path (re-routing the GPS), to ensure that the REs are achieved.