Persuading Line Management to Invest in Capital

Management Matters Webinar
Available On Demand Now!

Sponsor

This presentation is brought to you by PolyScience. Discover how PolyScience is changing the world of temperature control by visiting https://www.PolyScience.com/.

Lab managers are responsible for providing the tools, software, and infrastructure required to execute the science within the lab. Many of the investments needed are expensive and require line management's approval to purchase. To be successful, lab managers need to effectively identify and advocate the capital investment needs of the lab to those who can approve the purchases. This process requires different skills, including prioritization, budgeting, communication, influence, persuasion, and execution. This presentation will explore the process of identifying capital needs and building the case to obtain the required approvals.

Learning objectives

Determine needs
Prioritize and rank needs
Manage the budget reality
Develop a communication strategy
Use influence and write an effective business case
Advocate for the lab

Speaker

Scott Hanton
Editorial Director
Lab Manager

Hello, everyone, welcome to land managers management matters webinar series. My name is Mary Beth de Donna and I'll be moderating today's discussion persuading line management to invest in capital. We like our webinars to be very interactive, so we encourage you to submit your questions to us at any point during today's webinar. Our speaker will address these questions during the question and answer session following his presentation. To ask a question or leave a comment, simply type your query into the q&a box located on the right hand side of your screen.

We will try to address as many questions as possible during our time together. But if we happen to run out of time, I will forward any unanswered questions to today's speaker and he can respond to you directly if possible. Additional resources for today's presentation also located on the right hand side of your screen and the handout section. The handout section also includes more information about our in person Leadership Summit, which will be held in College Park, Maryland in April 2023.

I would like to remind you that this webinar recording will be available on demand shortly following the slide presentation. So please watch for an email from lab manager on how to access this free video once it's available. This presentation is brought to you by our partners at Poly Science. at Poly Science. Our award winning line of precise temperature control equipment has been manufactured in the United States for six years with the same core values in mind, quality, reliability, durability, and sustainability.

Our patented technology and innovative environmentally friendly features provide you with an easy to use safe and precise temperature control. Serving every continent in the world. We are here to manufacture the trusted equipment that will help deliver the results that you need to be successful. To find out more visit poly science.com. And please see the handouts available in the handouts section on the right hand side of your screen. With that I'd like to introduce our presenter for today's webinar.

Scott Hanson is the editorial director of lab manager he spent 30 years as a research chemist, lab manager and business leader at Air Products and Intertek, he earned a BS in chemistry from Michigan State University and a PhD in physical chemistry from the University of Wisconsin Madison. Scott is an active member of ACS, ASM s and Alma Scott married his high school sweetheart and they have one son, Scott is motivated by excellence happiness and kindness he most enjoys helping people in solving problems away from work, Scott enjoys working outside in the yard playing strategy games and coaching youth sports. Scott, thanks for joining us today. Thank you, it's a pleasure to be here. I'm glad to be able to contribute to this important topic, about convincing line management to invest it's a vital topic for all lab managers. If we don't have the tools, we can't do the science.

Before I dive into the meat of the talk, I always like to start with acknowledgments make sure in case I go long that I think the right people. So thank you to lab manager for having me here and hosting the management matters webinars and to my boss, Ken who pays me to do fun things like this, which I greatly enjoy. Also to some of my colleagues and the systems I learned from Air Products and Intertek and to the CPO, the Center for positive organizations, which is a an organization that's part of the Ross business school at the University of Michigan, where I've learned a lot about positive psychology and positive organizations that contribute to things like encouraging people to invest in your lab.

So these are the things we're going to talk about, in order for you to be a good advocate for your lab and get that capital equipment, you're going to have to determine needs, you're going to have to prioritize, there's a fair amount of budgeting that's involved, although not the real detailed parts of budgeting, a communication is vital. We're going to talk a lot about using influence and writing business cases. And so we'll get to all of these things in due course through that, as the presentation proceeds.

So let's start at the beginning. When we talk about capital needs, we were really talking about the needs of your lab. And the needs are related to your core values. So what are your labs core values? You heard some of my core values in the introduction, things around excellence, and happiness and kindness. And those are some of my personal core values. But what are the core values of your lab? And the better that you can connect the equipment you need the science you do the people who do them to your core values, the more likely you are to be able to convince line management, that the price that you're asking to pay for the capital equipment is aligned with the business. So I think it's important for you to take a moment and think about those core values.

And so they need to have roots in core values. And all the different labs can have different kinds of core values and there aren't correct answers to this, right. There aren't core values that are better than other core values. The important thing is that you know what your core values are.

Some common core values include things like safety, when I worked at Air product safety was the number one core value of the company. And if I went to line management and said, I need to spend some money for this guest sensor, this gas cabinet, or this fire suppression system, and I could link it directly to our number one core value of safety, it greatly improved the chances that that particular request would be funded.

Other labs have other core values, and maybe it's the quality of your results or the quality of the science that you produce. Or maybe it's been able to hit deadlines, or the ability to invent new things and participate in core innovation. It doesn't really matter what your core values are, so long as you know what they are. And it gives you a bridge to communicate needs up and down the company or the organization in a way that's easy and fluent.

One of the challenges in determining what to invest in and how to convince other people to invest in it, is to really distinguish needs versus wants. And in my 30 years in the lab, we often had these conversations, is that piece of equipment that you're asking for that you're pitching lab management for? Is it a need or a want. And so I came up with this kind of example, needs are things that solve problems, they are also things that are well aligned with the core values of the lab.

So for example, maybe they keep people safe, or they protect the quality of the results, or they enable the lab to meet its purpose and its mission. Once solve inconveniences, and a lot of scientists out there might be saying, having newer, faster, better equipment, that's a need I have to have that, well, why do you have to have it, if you have to have it because it makes your life a little bit easier. That's just solving an inconvenience. If it's not easily attached to the core problems of the laboratory, and to those core values, it's probably not a need.

And these can be difficult conversations with scientists, you know, I am a scientist, I love having new tools in the lab, it's better than Christmas, frankly, to get a new, you know, fancy piece of equipment that allows you to do your your science in a more effective way is just really great when you're in, in the bench in the lab at the bench. But as the lab manager, you're going to have to choose. And so one of the first ways to choose is to differentiate your needs and your wants.

So alright, let's identify those needs. And I like this Einstein quote, I think too often, we spend a lot of time thinking about the solution, having only thought about the problem for a short bit of time. I think Einsteins, right? Let's think a lot longer about what those needs actually are, and how we're going to justify them and how we're going to be able to get the support of line management in order to buy them. Let's start with asking the right questions. And let's make sure that the questions we're asking are related to the core values of the lab, not to the state of the art of the technology,

then let's understand what those core problems are that the lab is facing, and how capital investments are going to be part of that solution. Then, like in any other problem solving activity, we are going to collect options, we're going to be able to develop actionable solutions. And those solutions can cover a lot of ground. Not all of them are capital purchases, but some of them are. So a lot of times when we're looking at things like hardware or software improvements or having to change infrastructure. It's definitely capital. But if we've done our homework right and solve the right problems, we at least have a list of things we can justify.

Now we need to do prioritization. And why do I bring that up? Well, there's never enough money to solve all of the needs of any laboratory. And as a lab manager, some of the most difficult decisions you need to make are high value, core problem items that you want to buy. But you're told that your capital budget for the lab is less than that. And how are you going to get those things in the right priority?

Personally, I like the Eisenhower matrix, which I've shown here on the screen. I learned about it in some book by Stephen Covey. And it's a simple matrix, right? It's for business people, not scientists. So it's a simple two by two matrix where we're going to look at any particular decision we need to make, we're going to understand whether it's higher, low importance, or higher, low urgency. If it's high high, we're going to do it now. And it's the same now for capital purchases, if it's very high importance, and it's very high urgency that needs to percolate to the top of the list.

And then what Eisenhower is telling us is that if it's not high, high. How do we prioritize importance versus urgency. And the real learning from this matrix is that high importance is more important than high urgency.

And so let's next prioritize the things that are important. And then let's deal with things that are urgent, and things that are low importance and low urgency, they go off the list, we don't have enough money to support those activities. Anyway, once we've done this kind of gross prioritization, then we can get to a rank order of our needs. And we can name the different items that we want to invest in as this is number one, number two, number three, etc. For a lot of my career, I didn't get past number two, for some of my most recent career, I didn't even get number one. But making the ranking process is important. And we know that to communicate this, we're going to have to share the whole process, we have to have the data that's going to support these conclusions. And we'll talk a lot later about the communication that's going to be necessary.

So there's a lot of different ways to do capital planning. I like to start with a strategy, let's make sure that we understand the core purpose of the laboratory, and what the overall vision for the laboratory is. And let's make sure that our investments are enabling us on that road to those objectives. I like developing a three year rolling capital plan, it allows me some flexibility, because things change over time. And if something doesn't get funded one year, then it stays on the rolling plan and moves into the next. Or if some new situation or crisis develops, I may have to accelerate something from year two or three into the current year, in order to deal with the new data.

Having that rolling plan also allows me to communicate broadly within the lab about what our intentions might be around capital A allows me to get input from a lot of different people. And it also helps me to balance the replacement items versus the new items. And it depends sort of on what your lab does and what your focus is. But for the labs that I was in charge of, we had to balance simultaneously doing new and different things, and replacing old equipment so that we continue to do the things we've done over the years, and finding that balance was difficult. But using a three year rolling capital plan gave us another tool to help make that balance work better.

Course, this is a planning exercise. And on my desk, I keep a crystal ball. And I encourage many of you who are lab managers and asked to predict the future that you keep a crystal ball handy.

It really frankly, between you me, it doesn't work. But it helps me demonstrate to line management who are asking me to predict the future how futile that sometimes can be. But so we're going to build a three year capital plan. And then our plan is going to be like the top image, it's going to be everything's going to work perfectly right. But reality doesn't work that smoothly. So one other thing we want to do when we're building capital plans is keep a little reserve, and it'll be different for different labs would often worked for me was to keep 10% of my capital budget in reserve for the instrument that broke or died or needed a key repair, you know, halfway through the year. And if I had spent all my capital at that point, then I wouldn't have the ability to address that need.

So by keeping a little bit of reserve and doing some more reality based planning, it helps us to be flexible and helps us to be agile to deal with what can come.

So now we're going to develop the actual capital budget plan. And so there's a lot of key considerations, I have my rank order of what my needs are. But have I taken into account the things like the age of the equipment, or when something might go off of being covered by service? And have I collected all of the data, because I'm going to need this data in order to justify the purchase requirements. When I go to the finance group or I go to line management for the various approvals that I need. Some of that data will include things like usage and utilization. Where are the equipment really heavily used? Where is that heavy use having an impact on the equipment itself, or our ability to deliver to customers? Is there a way that I can trade off between repairing instruments and buying new ones.

And again, getting back to those core values and also including a little bit about new opportunities?

So here's some additional thoughts on building capital budgets, just some things that I've learned over my career that they might be obvious, but they've been important to me. One is, if you have a capital budget, that's 10% of the real value of the all of the equipment you have in your lab. That means your average piece of equipment is 10 years old, for the work that you are doing in your

lab is that okay? There is equipment that's 10 years old still effective to deliver on your purpose in your mission?

If the answer is no, my field changes too fast. In order to be effective, we have to be six years old, well, you can do the math, and that means you're gonna need a bigger capital budget.

Often depreciation or your ability to bring new equipment into the lab is usually less than 10% of your annual budget. In most laboratories, people space and consumables occupy bigger shares have the budget, then new equipment, capital equipment, and sometimes repair and maintenance can be bigger than your capital budget. So you're not going to have much flexibility in that budget unless you can get new money from someplace.

I mentioned before that my labs had to balance between doing new things and continuing to do traditional things. And so for us, it was always hard to allocate more than 50% of our capital budget to new things, because the old instruments would wear out die or not be effective anymore. And so we were constantly faced with the challenge of what's the balance between replacing old equipment or dead equipment, and bringing in new applications, new science into our laboratory. For your lab, you're going to have to work on the strategy and decide just how much new science plays in your strategy and your purpose. And that will help you figure out the right ratio.

Another thing is that leasing and outsourcing can help move those costs of being able to deliver on the science, from a capital investment to an operational budget. And for much of my career, operational budgets were approved in a very different way than capital budgets, we had a much higher barrier to get approval for capital than we did to get approval for operations. And so it's worthwhile to explore different leasing options, especially lease to own options. And outsourcing can be very effective, especially if you're looking at a capital investment to do a short term project, or to do something that's very different from the other things you do. There's a remarkable amount of diversity out there in the contract research organizations. And you might do I'll be able to find somebody who can provide that service and move that cost from an operation to from capital to operation, and then use your capital money on things that are more core to your business.

It's always important to understand the approval process and the approval criteria. We're gonna go through several of these steps in future slides. But let's make sure that as we're building our cases, to go to line management for approval, that we understand the process and the criteria.

So first of all, let's calculate a return on investment. In my experience in the labs that I worked in, this was one of the first questions Well, the first question from line management is it budgeted? Which means we're building budget plans? The next question is, what's it going to do for us, and what they mean by what's it going to do for us is not the wonderful and great science that it's going to deliver. It's really a financial question. And so a return on investment is a financial calculation, what we need to do is to monitor monetize the benefits of investment.

And so as scientists, we might know that it's going to give us greater resolution or greater sensitivity, or greater separation, or ability to do a synthesis that we couldn't do before, or a scale up. But that's all science language. Ultimately, the people who are going to approve these purchases, they largely don't speak the science language, certainly not as well as we do. But they speak finance really well. And so now we need to monetize those benefits. The ROI formally, is calculated as the income subtract the cost divided by the cost. So the the income is the monetized benefit, the cost is what we spend to get it. And so some labs calculate this as a ratio.

A lot of the labs that I worked in calculated it in time. So the ROI was in months or years that it would take for us to earn back the cost of buying the instrument. What it requires for you as a lab manager, is you have to be able to monetize the value of the benefit. So you say we get greater resolution, or we can run samples faster, or we can run samples with less attention. All of that has to be translated into dollars in order to calculate an effective ROI.

So here's an example. So we want to purchase a new LCMS instrument, the thing costs $300,000. The benefits, it's going to speed up the work well how much is it going to speed up the work? We think is going to speed it up by 10%. All right, our existing work pool is a million dollars, so I get a 200 per $100,000 benefit. Another benefit is it allows us to

do an experiment we couldn't do today, that customer project is worth 100 grand. So now I've got another 100, I get higher resolution, now I've been having a customer who's threatened to leave. In fact, I think they're gonna leave, if I can't deliver on the resolution they require, that's worth four and a quarter. So I've got a total, a benefit of six and a quarter, and an instrument that it's going to cost me 300,000. So now I've got a little bit over one is my benefit my ROI. I can also calculate that in time, so that 625,000 divided by 12 months, gives me 52k a month, it's gonna take me a little short of half a year to get that back. And so whichever language your organization speaks, whether it's more traditional finance ROI, or it's in time units, which is what my organization did, you can calculate those numbers.

The very most important thing in trying to go forward for approval is to make decisions. So you've ranked your most important needs, you've got alternatives and options, you're doing the problem solving thing of discussing risks. So you're going to build this capital budget based on the reality of your lab. And we have to make those decisions, there's this is no place for ties, it's no place for wishy washy language, we have to figure out what the number one decision is the number two and so on down the line. Sometimes this is hard work. And it may need a fair amount of facilitation skill on your part as the lab manager to get your leadership team or your senior scientists to finally agree to what that order is.

So once you're ready to go forward, it's just absolutely imperative that you understand your approval process. Let's start with who needs to improve. So what is the next step? So if you're a lab manager, maybe you report to a director of research or something like that, or a higher level manager, or maybe a vice president, but you know, who that is you report to this person? What's important to them? How do they make these decisions? And who do they talk to about them? And what is their approach? And so let's get them what they need in order to say Yes, unfortunately, one of the best ways to figure out what they need is to not give it to them and receive a no. And then you ask what the know is, and you understand what they're looking for and how they evaluate proposals, the more you understand who is going to approve and what's important to them, the more you can do your homework and make sure it's in there.

The next piece is the approval process. How does your organization work? Is there a specific time that's important? Are the required forms? Are there different approval levels that make a specific item escalate to higher bosses up the executive line? And do they have key criteria. For example, when I worked at Intertek, one of the key criteria was an ROI of less than one year, there could be exceptions for that for specifically, very expensive equipment. Like when we went and bought an NMR, there was a bit of grace on that one year requirement. But for everything else, if the ROI was greater than 12 months, it was a no, it failed the first criteria of the process. And so we knew we had to generate more benefit if we wanted to buy that kind of equipment.

So as you're ready to move forward, it's very important that you create your vision. So why do you need this approval? What is so important about this piece of equipment? How is it going to change your ability to deliver on your purpose in your mission? And then what problem is being solved? So how do we communicate the importance of that problem? And then how is this spend going to solve the problem?

Some of the things we want to take into consideration are who is going to benefit? Our do we? Are we working collaboratively internally with another part of our own company or organization? Do we have external partners, collaborators or customers? And then we've got to get our data and our numbers, right? How much is it going to cost? What exactly are we asking for? And one thing to talk to your approvers about is risk, and there's always risk about approving maybe it's not going to have the ROI that we predict or there's some factor here that we didn't take into consideration. And those conversations generally occur. But what are the risks if the line management says no? And then we talked about those risks, and are those risks acceptable?

So now we need to build a communication plan. The communication plan needs to be concise, and it needs to be simple. We want to discuss our options. We want to make sure that the benefits are part of it. We want to have clear communications about risks both the risks of moving forward with the proposed

though, and the risks of denying and stepping back, we need to make sure that we understand just how much money we need. So it's not maybe it's not just the capital cost of the item, maybe we need to hire another halftime person to run it. Or maybe we need to blow out a wall in the lab to make it fit. We got to make sure we get all of the costs. And then we want to be good with our communication. And we want to make sure that we're communicating with the people that we need to in order to get approval.

Which leads us to the politics of approval. And I've heard so many times, I won't play politics, politics is dirty, I became a scientist, so I never had to deal with politics. Unfortunately, none of that really works as far as getting approval from line management. This is a political process. It doesn't have to be a nasty backstabbing, muckraking sort of process. But it does need to be a process about influence.

And my guidance to the lab managers who reported to me is you can absolutely opt out of the politics, just know that you're going to lose, because somebody else is going to go make their case, they're going to advocate effectively, they're going to influence line management for what they want. And if you don't do those things, your proposals are going to wither and die. So if this isn't about playing politics, it's really about participating in decision making, and making sure that you're connecting with the right people for the benefit of the lab, the benefit of your staff and the benefit of the overall organization.

So what is it about influence? It's important? Well, most line managers who are facing the decisions to approve big projects won't do it in a vacuum. Right? They're going to talk to other people. So who are they going to talk to? In their products? We talked about building influence charts, right? They sort of look like org charts, but they don't follow the same path as the org chart, we would want to know if our if we were putting a proposal up to our vice president, who would he talk to, because we want to go talk to them.

First, we want to tell them the value of our project, we want to propose our communication plan directly to them, so that they are well educated, so that when the VP goes to talk to them, they understand what the question is, it doesn't mean they're going to agree with us. That doesn't mean they're going to support our proposal. But if we educate them, we give them the opportunity to support our proposal, rather than supporting the other proposals that they know about from their own organizations. So we want to educate people, we're not trying to manipulate them, we're not trying to coerce them. We're just trying to educate them. And by educating people within the organization, especially in a network around the person who's deciding, we're building a network of support for our ideas.

In order to get funded, you need to be trusted. So I love this Stephen Covey, quote, If you want to be trusted, be trustworthy. So earn that trust. A lot of approval questions, especially when you're asking for significant amounts of money for your proposal are based on trust. So do you have a track record of trust? Can you point to that track record of trust in your conversations with the influencers in the approvers? What are some examples of things that are trust builders? And previous projects? Did you deliver? Did you meet your deadlines? Did you meet your budgets? Did you deliver ROIs that made the outcomes valuable to the organization?

Do the approvers feel like you are honest and genuine about what you need it and how you are going to use the funds? Do you have a reputation for high integrity? And can you bring data to your decisions to help you make good decisions. That kind of track record is often rewarded.

For many line managers who are making these kinds of approval decisions, they don't have the intimate understanding of the impact of the investment that you have. And so they're looking at the history of their investments in different parts of the organization, and with different managers. And if you can show a track record of success, you're going to improve your ability to get your most current project funded.

Now we need to build the business case. And I'm going to suggest that your business case needs to be two different documents. It's going to be a Word document that briefly explains the case in words. And so we'll discuss that next. And then it's going to be an Excel document that explains your business case in numbers and shows the business impact. Both of these documents need to be concise, clear and pragmatic. line management doesn't have time to read your 40 page report just to find the activity. I'm just suggest

stating that these documents are a page or two. And they are explaining just the most important points.

So we go into the Word document, we want to discuss the why and the what? So it's why do you need this? So the structure is why is this important? And then it's what you need. And then it's the benefits. And the fourth benefit, the fourth part could be about the risks. It's conceivable that you could do this in one page, I found that mine took two, but it's not 1020 or 100. Right? It's a concise document with the important points right up front. And I want to make sure that I write it in with action verbs, because I want to emphasize what is needed, what exactly am I asking for? And why do I need it?

The second part of the business case is the Excel spreadsheet. And so we want to make sure we get all our numbers, I love this quote from Marcus Lemonis. And it's if you don't know your numbers, you don't know your business, or in this case, you don't know your lab. And so we net, we have to make sure that we get the numbers, right. And we want the real numbers, right? What are the real costs, the all in costs every single bit of cost, because I can tell you that as a line manager, it's extremely frustrating to go through a process like this, to hear the proposal to understand it, to choose it over something else to fund it. And then two months later, have that team back in my office to say, well, we missed some of the costs, and we actually need more money.

It's not fair to the other proposals that were turned down. It's awkward for me for managing my budget. And so it's really important that we get all the costs up front. We also want to include alternatives, we want to share our thinking about how we got to this conclusion. And that will include other costs or other choices. And so it might be that you really know that one instrument is going to be best for this application, there's another one that's cheaper, but you have to explain that difference in terms of value.

To it's not about hiding that lower cost instrument to to make it believe make them believe you're choosing the lowest cost option.

We want to make sure that again that we've calculated all the benefits in currency. So speed or resolution or sensitivity, all calculated to dollars, we want to definitely show the ROI and to show the ROI for different scenarios. And we want to forecast the future. What is next year in the year after that. Or if we expect this instrument to live for 10 years, what's our forecast over that 10 year time period, about the financial benefits to the larger organization. And all of that can be shown in a not too difficult way in a single Excel spreadsheet.

All of this is about communication. And so I strongly encourage you to follow all seven of the seas of communication. So that's let's make sure that our information is correct. And that it's complete, that it's concrete. It's concise because they don't have all day to read. It's coherent, the different pieces work together, right, the spreadsheet and the Word document are complementary the reinforcing the information that we're courteous, let's be fully respectful to all parties, and that we are abundantly clear about what we're trying to accomplish and how we're going to try to accomplish it.

It's so important that we explain why this is important. Most people refuse to do anything until they understand why. And that's just as true of executives in line management as it is of any other humans. So they resist doing something simply because you want them to, they need to understand why it's important in order to take the step forward, and then justify everything that you're doing with data. The lab is full of data, your limbs or elf pens are full of data that you can use to support showing usage and utilization and value and other aspects of your laboratory.

Then be ready to answer questions. Hopefully your line manager does have questions, questions shows their willingness to understand and their willingness to engage with you on this project. An absence of questions starts to feel like no. And when you have the opportunity to talk to your line managers, your approvers make sure that some of the last things you're talking about are your absolute most important point. Why is this needed for the laboratory and what benefits or is it going to bring? And then be sure your follow up managers are super busy people. It can easily fall off their radar fall off their their inbox, and especially if there's a vital timeframe involved. Make sure you're being proactive and following up.

So here are a few additional thoughts around business cases. Make sure you know what your management needs in order to support you

What's assume that they want to say yes? And then what does it take? What are they looking for? What are the minimum criteria or data points that are necessary for them to be able to say, yes. The next one is what's forced line management to make decisions. Let's not self censor. If you really think that this is your number one priority to make your labs successful, then let's build these business cases. Let's build the communication plan. And let's get it in front of them. The fact that they didn't prove last time, or they've never approved something that big, or they're already complaining about budget constraints, let's make them say no. And when they say no, let's make them say why. So that we can learn from the process. And our next proposal can be better.

Make sure you understand your numbers, the numbers are absolutely critical. Even if your approver isn't in a finance role, maybe as a scientist, there's still going to be a finance person somewhere in this process. And that person is going to have to convince the finance person that the numbers make sense. So let's make sure that we have the right numbers, and that we can readily explain them. Another point is that your management cannot have the emotional engagement with the instruments and equipment that you need to do your job.

They are thinking on a different plane, they're not in the day to day fighting with that old equipment or trying to make do because something's broken or gone. So you have to justify the purchase in terms of benefits and purpose that they understand. And it can't just be science has to be more than that. Your communication has to be brief, specific and concise, get to the point, make it clearly and help them move on to the decision making process.

Sometimes no doesn't mean no timing is really important. It might be that in the next budget cycle, or after some situation changes where the data is different, that no can become Yes, I once interacted with a manager at our products. After he said no. And we were all disappointed. He chided us and he said I've only said no twice, you need to come back. He was forcing us to sharpen our argument he was forcing us to give you do a better job of picking the right needs and justifying the purchase.

And we learned a lot through that process. And then understand that for management to do their job. They have to provide you the tools and the people needed to deliver your mission. It can't be no every single time, or they're not contributing to the success of the mission. And there may be little that you can do about it at that point. But at least you understand that if it's no every time, line management isn't interested in helping you meet your mission.

At the end, let's be prepared for yes. And so if you get that, yes, be ready to act have urgency. I've seen cases where proposals were approved, but the team didn't move fast enough. And circumstances changed and that funding was pulled, or the money just expired, it actually slipped into another budget year, and it expired and went away. So once you've done all this work to identify what your need is, be ready to act, have a project plan ready to go and a core team already organized. And as soon as you get that, yes, communicate broadly, and execute the project.

Know that if there's any additional paperwork that's necessary. Like when I was at Air Products, it was important for us to have safety paperwork ready and able to go before we could start operating equipment. So make sure that you're doing the homework that's necessary around documentation from your laboratory, maybe it's getting ready to do a validation, maybe it's safety, it whatever it is for your lab, do your homework and get ready, and then start executing. The sooner you start executing on your project, the more likely you are to meet the assumptions that you used in your ROI calculations. And by meeting that ROI. Now you can go to line management and report success that you have met the expectations of their funding.

So we've covered a lot of ground today. I hope this has helped you to be able to more effectively plan and prioritize the needs of your lab to use capital budget planning to encourage and enable you to get the funding that you need. And then to learn what are the criteria and how to build business cases and communication plans that are going to enable you to advocate successfully to your approvers and then once you get that approval, act with urgency and deliver on the money that they have given to you and your budget

So if you've liked this kind of content, one other place you might look for training and development for lab management is the lab manager Academy. This is a full E Learning Academy. And for the lab management process, we have 20 courses, where we have a certificate of lab manager that lab manager is offering. The program is completely asynchronous, you do it when you want to. It's all online, all you need is a computer and a bit of a quiet space. Every course includes a bit of lecture slides with an informative information, some interactive elements, some activities, some thought experiments to help reinforce the information. And at the end, there's a quiz so you can demonstrate to your boss that you've mastered the information.

The lab manager certificate is broken into four tracks, they'll help you with managing people to be a better leader to improve management of the lab and to improve operations. Right now, we are also currently working on a lab safety management program. And probably the next thing in our queue will be a lab quality management program.

There's also all sorts of other content on lab manager.com, I would encourage you to come have a look. Our object here is to help you run your lab like a business, which means we want to focus around the decisions that you have to make as a lab manager and give you content materials, advice, guidance, the voice of experts in the field to help you better understand those decisions, and to give you more confidence in making them and hopefully more success from the decisions that you do make.

Another source of this kind of information is the Association for lab managers or Alma, our Alma conference is coming up just next week, and I'm really excited to be going there I've got a short course in a presentation. It's not too late. If you wanted to try to register, go on to the ELMO website at lab managers.org. And we'd love to see you in North Carolina next week.

And with that, I will complete my presentation. Thank you very much for your time and your attention. And I'd be very happy to take some questions.

Okay, great. Thanks, Scott, for this wonderful presentation. So at this time, we are going to move into our question and answer session. Again, for those of you who may have joined us late, you can send me your questions by typing them into the q&a box located on the right hand side of your screen. For those of you joining us on LinkedIn live, just send in your question on LinkedIn, and we will be sure that Scott gets it. I'd also like to remind you that you can look under the handouts tab on the right hand side of your screen for more information about our in person Leadership Summit in College Park, Maryland in April 2023. Once again, I would like to thank our sponsor Poly Science. For six years poly Sciences has been delivering award winning temperature control solutions for your application, find out how they can help you at Poly science.com. And please see the handout section on the right hand side of your screen for more information about Poly Science. Scott, thanks again. Let's go to the first question here. where's a good place to start and figuring out my core values?

Well, that's an important question. It's important for us as both as individuals to figure out our core values. But it's also important for us to make sure that we know what the core values of the lab are, I would start by saying what are the very most important things. So the positive way to approach core values is to figure out, I know I'm gonna rank them, what are the very most important things. The other way to think about core values is the negative of what are the biggest disasters that could occur in Air Products. The core value of safety was driven by the death of an employee that happened before I started, it was in a transportation group. But the CEO at the time said, this is never going to happen again, we are going to change fundamentally changed safety in the company. And so it became the core value out of tragedy. So between those two approaches, I think on one side, you can build up and say, what are the very most important things to me and to our lab, and the other side start building down and say, what are the things that just cannot happen? What are the things we have to invest to protect? And by doing those two activities, I think you can come down to your top two or three core values for your lab.

All right, great. Thank you.

Um, let's go. If you scroll down a bit, there's one that says how does one calculate ROI in a compounded sense for industrial chemical products? Well, that's a great question. And the short answer is you can't. And the reason for that is all of the different teams that are contributing to that industrial product, all are trying to share one sense of value, right? So if you say, Oh, here's the price per pound for this chemical product. We're going to sell X

pounds that the company is going to make this much money, it's very hard to take that much money and divide it fairly or accurately across all the different groups that had to contribute to it. You can do the exercise, but the problem is everybody's going to argue about it, right, the analytical group is going to say you never would have gotten the purity, if we hadn't contributed, therefore, we get 50% of the value. And the chemical engineers are going to say, if we hadn't scaled this up, we wouldn't get anything. So we get 90% of the value and the business is going to say, if we hadn't sold it, none of what you did mattered. And so we get 100% of the value. So the short answer is you can't actually calculate an ROI in the compounded sense. But what you can do is you in your organization, wherever you are in that, in that supply chain to deliver that chemical product, you can talk to the next team in line from you, who are you delivering for I was in the analytical group. So I would talk to the synthesis group or the product development group. And I would calculate an ROI based in time. So we can get this done for you in one month, six months, five years, 10 years, whatever. And by making those times shorter, I could demonstrate our value to that supply chain that ultimately delivered that product for the company. But to do it in dollars for us, it proved to be impossible. It's not that no one can do it, but I don't know how to do it.

Okay, great. Thanks. We have another question. Underneath that one. It says for IT projects, how do you make decisions between capitalization and operational expense. So most companies have a definition for capitalization, at least the companies I've worked on have had a very clear definition that comes probably from a real understanding of tech tax law, and then gets translated through the finance groups. And so we had very clear criteria about what we were allowed to capitalize and what we weren't. And so it would have both a scale, like $1 value, but also an impact. And so how that investment was being used in the process. I'm not an expert in IT projects, I can talk about it more clearly in like a chemical or analytical project. But I would suggest to you that people know the answer to this, and I would start with somebody in the finance group. And if they're unsure, then I'd work my way back to a tax group. Because I believe that there's going to be a guidance document there somewhere that's going to help you make these decisions.

Okay, great, thanks.

Here's another question that says what are the biggest ROI items for a Lim's or a complex software? Good question. For me, it comes down to people, my biggest cost in my laboratory and probably in any laboratory is the people. So that's my largest investment. And if I can impact that investment in a positive way, in other words, if I can make the people in my lab more efficient, if I can save them time, so that they can accomplish more for the same people cost by utilizing a software like a Lim's or an elf and then that's going to be the biggest one. Then after that, it's going to be things like, can I save on maintenance costs by understanding my utilization? Or can I be more effective and better in my capital, capital investments, because I'm using better data. So number one will be people and their time. Number two is the value of the data that comes out of the lens and how I'm using it to impact the business. So those I think, are the two biggest ones in order to justify a lens or another complex piece of software.

Great, thank you.

This next question says how can vendors do a better job of supporting managers who are making a funding request for their product?

So I think there's a couple things here, one is, in this, this isn't exactly the answer to your question, we're gonna throw it in here. One is negotiating with you. I think a lot of scientists pay list price, we don't even think about negotiating. And so what a vendor can do is actually engage with you in a negotiation. Maybe the price comes down a little, maybe that doesn't happen, but maybe you get an extension to the warranty, or you get some training thrown in or you get an extra module for the software with no additional cost. So number one, negotiate if you're uncomfortable negotiating Dragon, somebody from finance who negotiates on a daily basis. I learned how to negotiate because it Air Products, they started putting a finance person on all of our capital teams. And so I just watched that person interact with the vendor. It's like wow, you can do that. And actually, we got

benefit from it. That's cool. I need to learn how to do this. And so I became a much better negotiator through that experience. So that's number one.

Number two, they should be able to help you explain in clear, concise words, why you need this, what is the value, in essence, you're taking their sales pitch to you. And you're refining it as you go up the approval ladder. So they can teach you how to sell this product to your manager, because they know how to sell it to you. So they can help you with that. The third thing that they can do is they can make sure that you've got the full cost, right? Is there some ancillary equipment that's necessary? Is there going to be some infrastructure upgrade? Do you have to reinforce that bench? Do you need to buy a cart? Are there other things that are associated with this purchase? That you're not buying directly from them? And can they help you make sure that you've got all of your costs before you go ask for the budget? So those are three things that they can do to help you.

Great, thank you. We have a question here from one of our LinkedIn live viewers, how could we propose manpower for the lab? It's the same question. It's the same exact process. So identify your needs, what sort of people power do you need? What sort of skills do you need? How much do you need half a person, one person 10 people.

And it has to be needs, but you're going to follow exactly the same process, you're going to understand what your needs are, you're going to rank their importance, you're going to propose the you're going to build the business case, both in a Word document and an Excel document, you're going to talk about what your return on that investment is, is that return going to be you're going to make more money because you're in a contract lab, and those people are going to generate more revenue than they cost, or are you going to retain important customers are you going to be able to deliver in the timeframe that's important for your key partner or key stakeholders, and you're going to generate all of those benefits into dollars. And if it costs more than you're gonna get back, it's a bad idea, and you don't actually need people. But if it shows a net positive return, then you're gonna go advocate to your line management and see if you can get this done. So

all of these cases of advocating to management can be used for anything that you need approval for.

In this particular case, I focused on capital investment for equipment, but it's exactly the same process for people.

Okay, great. Thanks. I think we have time for a few more questions here. Let's go to this next one at the top. What is a good way to let senior scientists know that their instruments submissions are wants and not really needs of the lab? Well, the first way is if you've done your homework, and you know your core values, you can ask them questions about how their proposal meets and is aligned with your core values. So for example, maybe your core values are on time delivery and safety. And the proposal comes for some piece of instrumentation that's going to be able to do some new kinds of science, while how does that help you deliver on time? And how does it help you improve safety? Another way to do it is to really dig into what the core problems of the lab are. And ask them the question of how does this purchase enable us to meet the solve the core problems of the lab? I often approach these things with questions rather than misstatements. And by asking questions, I do two things. One is, I lower the defensiveness of the people I'm talking to. And the second is I give myself the chance to learn something, because perhaps I'm wrong. But in this case, let's assume I'm right. And isn't a need is a want. By asking them to answer these questions. Then often they demonstrate to themselves that their wants instead of needs and I don't have to argue with them. I've just led them through a process that shows them the same sort of thought process that I went through.

Great, thanks. This next question says What if some items in the three year capital plan always get pushed off and never purchased? So in my experience, there's really two causes for that. One is they weren't really needs. We didn't distinguish them properly at the beginning and they got on the list. The other is that there's just insufficient capital. And so they have two different solutions. If it's a case of they're not really needs, it means we need to sharpen up the process of how we differentiate between needs and wants. And it then the onus is on us, our internal process isn't good enough. And we need to make it better. And we need to figure out why.

Are we including once when we really only expect needs on this list? The other side is more external. And that's how much capital funding is available? And what's the impact of that capital funding on your laboratory? At that point, it might be time to have a conflict resolution kind of conversation with your line management to ask them. Your Why is the capital budget set where it's set? Why am I not getting a bigger share of it? How am I supposed to deliver on these acknowledged objectives for the lab without this capital input, and to really try to have a heart to heart with line management, one so that you can convince them of your need, and to so you can learn from them about how the process is the way it is?

If at some point, like I had an experience where the company just wasn't going to support us, it just didn't fund our lab with capital for year after year after year. And at some point, I realized it wasn't ever going to happen, then it was time to go do something else.

Okay, thanks. We have a couple more questions here. This one says, My organization never seems to have sufficient capital to meet even our most important needs quite now.

That's sort of the same answer as the last question to some extent, I think it's time first of all, let's make sure that what we have on the list are actually needs, that we're not blinding ourselves, by putting some wants in there and then expecting somebody else to distinguish the wants from the needs. Let's make sure that they are needs, then I think it's back to that line management conversation, let's have an open conversation, where I'm going to ask them open ended questions about capital budgeting and process and their expectations for the lab, and try to teach them about the difference between whatever that fantasy is and our reality on the ground. In an ideal world, you can teach them and that then you'll see some change, maybe not much change, but some change, at least enough change to get past the crisis. If not, then they're not willing to help you. And it's time to, you know, they have obviously decided that your needs are not as important other things, and maybe you should work for somebody who thinks your needs are important.

Okay, great. Thanks. We have time for one last question. This one says, Can you please provide an example of how to translate a technical benefit into dollars for the Excel business case.

Alright, I'm going to scroll back in my slide deck and look for my ROI slide because it has some good examples in it, there was.

So here's a good example, that I say the instrument is going to make our work faster. And that sounds great. And as a scientist, I love the work to go faster. But now I've said I've quantified it right, I know what the total value of the work is. And we've come together together to decide that it's going to go 10% Faster. So now I can say it's going to be faster, and that's worth $100,000. Another one is oh, it has what what what might be something a new customer needs, it's going to have some additional specificity that we didn't have before. And now we can do something that before we had to say no, I'm sorry, we couldn't do it. And that new widget, that new piece of that instrument has that specificity that just brought $100,000 into our lab. So now I have that sort of monetary value. It's not just that we can do do, we can do new things. That's awesome. But how much is it worth? It's worth 100 grand, I can also say, hey, as a scientist, I love this higher resolution that this instrument provides. Now I can directly address a customer complaint. And I can retain a customer who was going to leave, they were going to walk away with $425,000. So now high resolution means this is worth $425,000. To me, those three values go right into the spreadsheet as benefit as value. And it will help offset the capital cost which in this case was $300,000. And I'm sure you can find other examples in your lab that are more specific to exactly what you do in order to justify the purchase of a new instrument for you.

Okay, wonderful. Thanks so much. So this does bring us to the end of this webinar. And just a reminder that this webinar will be available for free on demand viewing shortly following the slide presentation. Please watch your email for a message from lab manager once this video is available. On behalf of lab manager. I'd like to thank Scott Hansen for all the hard work you put into this presentation. And I'd like to thank all of you for taking time out of your busy schedules to join us today. I would once again like to thank our sponsor Poly Science whose support allows lead manager to offer these webinars free of charge for our readers. Find out how they can help you with Polly sign SATCOM. For more information on all of our upcoming or on demand webinars or to learn more about the latest tool

Some technologies for the laboratory, please visit our website at lab manager.com. We hope you can join us again. Thank you and have a great day.