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The Curious Case of “Prioritization”

February 1, 2017

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Lots been written and said about digital disruption and the need for transformation. Companies around the world are undergoing massive efforts to deal with disruption. Some time back, I had written about why it is hard for companies to transform, even when they have the intent and the wherewithal to do so. One of the key drivers of successful change is a company’s and its leaders’ ability to prioritize what is most important. This, of course, makes sense and we fundamentally understand that prioritizing the critical few brings focus, enables speed to market and helps deliver the desired return on investment (ROI). In fact, strategy documents are all about the top few priorities that a company will focus on in the year(s) ahead. And, yet, data shows that very few companies and individuals are able to do this well. In my view, there are two big issues that prevent leaders from driving brutal prioritization.

Firstly, within any large company, there are lots of initiatives underway, most of which are believed to have some sort of positive ROI associated with them. So, even though strategy dictates what needs to be focused upon, the ability of the organization and its leaders to discontinue all the other work which is not aligned with the strategic priorities remains weak. Fear of impacting people and jobs, rationalization of how this “other” work is also aligned with strategic priorities, or justification of how this “other” work does not really slow down the strategic work are some of the common causes. Consequently, team and leadership bandwidth continues to be spread thin and clutter continues unabated. 

Secondly, leaders often have a genuine fear that if you don’t pursue some of the new ideas (that seem outside the ones outlined in the strategic roadmap), you are going to “miss the boat”. With the competition innovating aggressively, it is hard not to fall trap to the “shiny penny” syndrome. These new ideas may often have an emotional appeal for both the internal stakeholders as well as the media and investors. Sometimes, these new ideas genuinely have great returns associated with them and it may seem foolish to ignore them altogether.

So, how does one drive effective prioritization? A few routines can greatly enable this:

1.     Constrain resources – start with fixed dollars / rupees and people. The estimate of the constrained amount / number need not be perfect the first time around. However, starting with something challenging compared to the current base, and iterating upon it over time can be a good way to get going. Industry benchmarks are a good way to assess how current spend percentages rank against the best in class. Constraining resources also forces the notion of creating backlogs versus trying to boil the ocean at once.

2.     Drive bottoms up or zero base planning – start every year with a fresh justification of each spend. All investments should be aligned with the strategic priorities and be required to deliver meaningful impact (above an agreed upon threshold). Ongoing projects should also be required to justify fresh investment. A strong partnership with finance is key to making this happen. Alignment at the senior most leadership levels in the organization is key to ensuring that no “pet” projects continue to get funded.

3.     Build strong operational routines: monitor progress against decisions made and establish go/no-go tollgates. Assign resources only to what has been prioritized. More importantly, take away all resources from projects that have not been prioritized. This is often the hardest part for leaders and this is where the rubber hits the road. Often, in order to maintain relationships with stakeholders or to avoid discouraging teams, leaders relent and make some cuts but keep the non-prioritized projects afloat. Learning to say “No” without feeling like they are letting someone down is a muscle leaders just have to learn to develop.

This finally leads us to the question: does prioritization kill creativity within a company? Or, does it make the culture too rigid? In my opinion, the answer is “No” but the reasoning is more nuanced, and this is where the art part of the equation comes in.

For example, for a strategic investment aimed at fixing a broken capability, brutal prioritization is perhaps most important. Often, companies have the tendency to add more bells and whistles to that capability vs. fixing the process end to end. This can lead to diluted efforts with incremental or weak impact.

On the other hand, for an investment focused on developing a new revenue stream, enabling “test and learn” makes a lot of sense. This allows for some flexibility to explore, design new processes and fail fast. This does not however mean jumping from one new big bet to another, should the chosen investment yield less than desired results. It is recommended that the team go back to the prioritization table and follows the same disciplined approach again.

Developing the leadership muscle to prioritize is harder than it seems and requires practice. Those who get it right see dramatic results.


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