Initiative Evaluation
Initiative evaluation is the practice of judging, before anything gets built, what impact a proposed piece of work will have on profit or on the team's ability to generate more revenue. Most organizations evaluate initiatives after the fact, if at all: the work ships, a metric is chosen to report on it, and the report justifies the next round. Evaluated that way, initiatives accumulate. Each one had a sponsor and a rationale. Nobody compared them to each other, and nobody asked what the portfolio as a whole was supposed to produce.
How it actually works
The standard approval process tests an initiative against its own business case: projected return, alignment with a goal, a sponsor willing to own it. What it does not test is the initiative against the other initiatives. A company can carry dozens of active projects that were approved one at a time and never evaluated as a set, with the overlap invisible because no step in the process looks across departments.
The evaluation that prevents this asks two questions before build. First: what impact will this have on profit, or on the team's ability to generate more revenue, and how would we know? An initiative without an answer is not ready for funding. Second: how does it interact with what is already running? Initiatives with the right intent, not designed to work together, are the standard opening condition of a turnaround.
Evaluation also sets sequence. Ranking funded work by the quickest path to the next proven ROI has two effects: the program funds itself as it goes, and evidence arrives early, so a wrong bet is found at small scale. The alternative, funding everything in parallel and reading results annually, finds wrong bets after a year of budget and a year of time are already gone. Naming a hurdle rate completes the discipline: the minimum risk-adjusted return an initiative must clear to be funded, applied the way finance applies it to capital projects. Rank the portfolio by risk-adjusted IRR subject to that hurdle, sequence by speed of proof so evidence arrives early, and break ties on payback period. An initiative that cannot state its expected return against the hurdle is not ready for the ranking, whatever its sponsor projects.
In practice
In one client review we counted 56 active initiatives; 12 were duplicates of work already underway in another department. Every project had been approved on a reasonable individual case, and the duplication went unnoticed because no evaluation step looked across departments. Removing the overlap freed budget and people without removing a capability. The return on sequencing is measured at Potbelly. Spend was made five times more efficient at level budget, with average order size growing, before anything scaled. That efficiency supported a 30% lift in revenue in 2021 and 19% the following year, with same-store sales up 18.5%, full-year shop-level margins expanding from 7.4% to 10.5%, and net income swinging from a $23.8 million loss to $4.3 million positive (Potbelly Corporation, fourth quarter and full year 2022 results; [the scalability fallacy](/insights/why-your-vendors-win#the-scalability-fallacy)).
Where we come in
We evaluate before building on every engagement: the quickest path to the next ROI, proven, then the next. We also train your team to run the same evaluation, so they keep finding profitable opportunities after the engagement ends. That sequence ran through MrCool's growth from $3 million to $100 million and through the Potbelly turnaround.
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Related terms
- Business case
- The projected justification for an initiative. Necessary, but tested in isolation it approves duplicates and conflicts, because each case only argues for itself.
- Portfolio review
- Evaluating all active initiatives as a set: what each contributes, where they overlap, and what the whole is supposed to produce.
- Proven ROI sequencing
- Funding the quickest provable return first and using its result to fund the next initiative. Evidence arrives early and wrong bets are found at small scale.
- Unmapped dependency
- A requirement one initiative has on another that nobody documented. A single one can add a year to a delivery date.
- Opportunity cost
- What the team could not do because it was doing this. Invisible in any single business case, which is why evaluation happens at the portfolio level.