Recommendation Memo

Page 1 of 7

RECOMMENDATION MEMOS for IS Projects

A recommendation memo is a routinely used document in leading firms, and you may be writing such memos to executive leadership to “sell” or elevate an initiative. Therefore, it is essential that you gain some practice at writing them. The purpose of a recommendation memo is to concisely recommend a course of action and provide rationale supporting the recommendation. This note describes how your team should approach writing a recommendation memo for the case assignments. The second part of this note gives you a sample memo that you should use to write your own memos for these assignments. Note that the format of the memos may vary from company to company. Therefore, while following the memo format as given in this note, bear in mind that the goal here is to expose you to memo writing rather than force a memo format on you.

WHAT IS A RECOMMENDATION MEMO?

The recommendation memo is a one-two page document (not including exhibits) that

recommends your course of action and rationale. This format promotes a concise and clear strategic thought process. Equally importantly, it mimics managerial practice. If your memo exceeds 2 pages, it is TOO long!

ELEMENTS OF A RECOMMENDATION MEMO

1. FIRST PARAGRAPH This paragraph expresses your intent or action (This recommends……).

● Topic overview (the “what”, not “when” or “how”): costs, funding, etc. ● Ends with the hook: selling idea, the “why” or payoff: this part reveals the author’s point of view.

Checklist

● Is there a clear purpose, objective? 2. BACKGROUND

This paragraph explains why we are talking about this today. It lays out the story. ● Historical: not “new” news (i.e., none of your case analysis will appear here). ● Highlights what brought us to this moment, why we are in this position, what brought about the

need to make this decision. ● Dimensionalize the importance to the organization (e.g., important profit goal). ● Constraints – such as budget, capacity, technology, people, etc. ● This section is both brief and factual.

Checklist ● Is the background clear, concise, and easy to follow? ● Does it explain why action is needed now? ● Does the appropriate sense of urgency come across?

Page 2 of 7

3. RECOMMENDATION Here, you detail what to do, when to do it and how to do it.

● The details of “what”, “when”, and “how”. NO “why”. ● This section should be very specific (100% clear). It must be actionable (How much will it cost, when,

how, who). The reader should be able to read this and know how to carry out this recommendation. ● Some cases will require more than one recommendation.

Checklist

● Is the recommendation clear and actionable? Could someone else implement it?

4. BASIS FOR RECOMMENDATION Here the reader learns WHY each recommendation is the UNIQUE right thing to do.

● 2-3 solid reasons are typical. Any other action should seem less appealing. ● This section flows from the opening “hook”; links to the original recommendation. ● Support includes impact on profit, share, AND anything else affecting long-term business goals. ● Analysis should address applicable quantitative issues such as NPV, break even analysis, pro

forma statement of project budget, sensitivity analysis; as well as qualitative issues, such as, technology consistency, architectural conformance, innovation potential, etc.

● Appeals to precedent and anecdotal evidence in absence of data, but only in limited, carefully constrained manner.

● Shows how the recommendation will put the firm at a competitive advantage or is simply a competitive necessity.

● The goal is to read the basis and conclude the recommendation.

Checklist ● Is the recommendation an inescapable conclusion of the basis? ● Does the basis for recommendation appropriately consider:

1. Core competencies and consistency with mission? 2. External customers and internal clients? 3. Competitors? 4. Attractiveness – quantitative measures if applicable (e.g., NPV, ROI, break-even,

payback)? ● Are all assumptions explicitly stated (e.g., needs, technology trends)?

Page 3 of 7

5. DISCUSSION ● Outline other alternatives not selected. ● Discuss risks and key assumptions (use full disclosure, reference Options Grid) of your

recommendation. ● When you give a precise number or range, you must support the basis as well.

Checklist ● Is the analysis thorough with key alternatives fairly considered (see the attachment Options

Grid)? ● Risks associated with recommendation are properly addressed?

6. NEXT STEPS

● Orient to the reader ● Specify date and action needed (what will be done, by whom, and by when)

Checklist ● Clear follow-up/next steps? ● If appropriate, lay out timeline with key milestones to implement recommendation.

7. EXHIBITS ● An Exhibit can be a graph, grid, or simple table (more than four lines).

● List assumptions used in calculations. Do not assume that the reader can read between the lines. So, make every assumption explicit.

● Exhibits should have Title, sources, footnotes to calculation. The point of the Exhibit should be instantly clear to the reader.

● Exhibits should be cited in the proper order (i.e., do not cite Exhibit 4 first in your Memo and then Exhibit 2).

Checklist

● Is the analysis precise, accurate, and data-based? ● Are the exhibits clearly laid out, titled, and referenced in the memo? ● Is every assumption explicitly listed?

NOTE: Every memo may not include every element described above. The specific case will

dictate what must be included. An example is attached.

Page 4 of 7

SAMPLE MEMO FORMAT To: (Name of supervisor goes here) From: Your team designation/title/cohort and number

Date:

SUBJECT: NAME OF CASE AND RECO TOPIC

This recommends

Implementation will take place within days of approval. Improved sales, reliability, profitability, productivity, and/or reduced costs will result from these actions (state specifics). Sales (Name), Finance (Name), and Manufacturing (Name) concur (If applicable).

Background

● These key facts help explain why we are thinking about this situation today. ● At times, the background paragraph is a good place in a recommendation memo to document the gap

between the “real” and the “ideal”. When you use it this way, be sure it sets up each of the reasons in the “Basis for Recommendation” section of the memo.

● Do not include obvious or unnecessary facts. Do not include information found while looking into the situation. This is for information that caused us to look into the situation.

● It is best to simply tell a simple and concise story.

Recommendation ● This describes what we are going to do and how we intend to do it. Limit this section to major points.

Implementation details and caveats are discussed in the “Discussion” section following the “Basis for Recommendation” section.

● Our objective is to

Basis for Recommendation ● We state our most important reason here. It is numbered, underlined, and stated in a full sentence. We

present data here to prove the claim made in point 1, making sure that the first sentence of this section clearly extends from the data. The claim must be the inescapable conclusion of the data. If there are more than four rows of data, use an exhibit (i.e. refer to Exhibit 1). Exhibits must be clearly labeled and numbered.

● We state our second most important reason here. We present data to prove the claim made in point 2. (3 points are typical)

Discussion:

● Here we discuss a) implementation details, and b) qualifiers, such as risks and rejected alternative

solutions.

Next Steps: Here we tell the readers exactly what we want them to do and when we want them to

Page 5 of 7

do it. We also lay out a timetable of key milestones to implement the recommendation. A throw-away schedule should be prepared if high stakes are involved.

Page 6 of 7

ONE EXAMPLE OF ONE POSSIBLE EXHIBIT (there are many ways to provide supportive data from the case or for an initiative)

THE OPTIONS GRID

It is important to recognize that every marketing problem has more than one solution. Our task in marketing (in fact, in management in general) is to make educated decisions that we can communicate to others. In doing this, it is helpful to have some tools to evaluate each option facing us. For the marketing core, we will rely on what we call an Options Grid. You are required to complete options grids for each of the assignments. This is so we believe that the more you use them, the more clarity you will gain in examining alternative courses of action in any given marketing/management situation. In addition, options grids will help you to organize your thoughts for writing up memos for the marketing core assignments and could potentially help you in other courses as well. However, note that the options grid and the memo are not meant to be substitutes for formats that other professors expect you to follow for their courses.

The key areas that are included in an Options Grid are as follows:

– Description of Option:This is a brief description of what each option entails. It is good practice to describe no more than 4 options. 3 is optimal.

– Overall Assessment: Whether you recommend the option or not, AND WHY.

– Strategic Fit: How does this option fit with the company’s

core competencies and vision?

– Attractiveness: What is the technical attractiveness of this option? What is the NPV or break even for the project or option (if applicable)?

– Noteworthy Risks: For every option, we make assumptions that

we hope prove true. If they don’t, outcomes could change. Here is the area to point out what those risks and limitations could be.

In general, we want to ‘sell’ our point of view and the Options Grid is a good place to do

that. However, in doing so, we may sometimes lose sight of objectivity. Be aware of this fallacy and be brutally critical of your recommendation in writing up this options grid. Do not become a victim of what psychologists call the ‘self-serving bias’.

Attached you will find an example of an Options Grid but from a marketing rather than an IS

example. When you use Options Grids for our class of course you will be focusing on IS decisions, please use the attached general format. An options grid, when used, must be an attachment (and not in the main memo itself) and it must not exceed ONE-PAGE.

Page 7 of 7

Example of an Options Grid

Marketing Management

Name:

Case: OPTIONS GRID – Wal-Mart- P&G Case

Option 1 Option 2 Option 3 Description of Option

Maintain Pampers as a premium brand and fully support Luvs

Discontinue support behind Pampers and Luvs

Maintain Pampers as a premium brand and move Luvs into private label position

Overall Assessment

Do not recommend because of high B/E volume and potential cannibalization.

Do not recommend because of move away from core competency and competitive marketplace

Recommend because of high B/E volume, expected market share growth from current product and anticipated market segmentation (provides product to all consumers and dealers)

Strategic Fit (Core Competencies)

Provides innovative product offerings and capitalizes on marketing strengths.

Moves away from strong brand identity. Known for marketing strengths.

Provides superior benefit for premium brand and relationship with discount channels through private label. Provides strong financial outcome

Financial Attractiveness

Unit B/E Volume = 11.3 million Dollar B/E Volume = $174.7 million

Unit B/E Volume = 11.5 million Dollar B/E Volume = $165.7 million

Unit B/E Volume = 10.8 million Dollar B/E Volume = $156.6 million

Noteworthy Risks

• Does not identify cannibalization. • Ability to increase selling prices based on superior technology. • Does not anticipate competitive reaction. • B/E is short run oriented (1 year). • Substantial change in market growth of category.

• Flat to declining market share expected. • Does not identify cannibalization. • B/E is short run oriented (1 year). • Substantial change in market growth of category. • Perceived by customer as a move away from premium differentiation.

• Substantial market share increases expected. • Does not account for cannibalization. • B/E is short run oriented (1 year). • Does not anticipate competitive reaction.