Strategic prioritization is challenging for many reasons. The toughest may be that it requires overcoming 300,000 years of human evolution.
In theory, using advanced prioritization methods and being disciplined about applying them would be all you need to do to focus on the most critical projects and increase the odds of accomplishing them. But no matter what a company’s prioritization maturity level is, there are human nature forces to contend with.
In this article, the strategic portfolio experts from Integrated Project Management Company, Inc. (IPM) reveal how our inherent biases work against prioritization and what you can do about it. While there are many biases that affect prioritization, we focus on three of the most impactful: the desire for control, the reluctance to say no, and the planning fallacy.
This article is adapted from an IPM white paper, “Prioritization’s Toughest Challenge: Human Nature.” Download the white paper →
Strategic prioritization requires management to put the organization’s needs above our own and to make decisions as a team. People don’t like to give up control in this way. This is especially true for executives, who often attribute their success to their decision-making and direction. While that may be true, human nature biases also play a role. It’s natural to believe that good outcomes are our doing and negative outcomes are due to other people or factors. This in turn can drive overconfidence and thinking our ideas will be more effective or more vital to the business than others’ ideas.
Even without these biases, evolution seems to have favored the desire for control. In studies where control is restricted, people—even infants—expressed fear and negativity, and made a greater effort to regain control.
Establishing and maintaining effective prioritization requires some degree of individual influence and control to be exchanged for collective decision-making, which is uncomfortable for many leaders.
Some executives may choose not to prioritize because they see benefits in being able to make quick decisions and change their mind when they get new information. Others may agree to a prioritization process, then subvert or circumvent it—which only leads to diminishing confidence in the process and more dilution as people try to accomplish both the official objectives and those of their functional leaders.
Decision-making as a team takes away some autonomy. Executives might not always get their way. Favorite projects may be put on hold or rejected outright. If they have a brilliant idea in the shower, they can’t initiate it when they get to the office. If they think acting quickly on good ideas makes the company “nimble,” they may reject the planning and discipline that prioritization requires.
First, executive leadership must make an explicit choice to prioritize. If we want the benefits of prioritization, we need to accept the downsides. (Download the white paper to read “The Pros and Cons of Strategic Prioritization.”)
To do it well, prioritization requires leaders to make difficult decisions. The best process will not produce data that tells you what to do. The data will always be imperfect or incomplete (but work to make it as accurate as possible). Prioritization and portfolio management will provide useful information to make better decisions, but still difficult ones. Leaders will still have to say no to a lot of good ideas that could benefit the organization, without knowing for certain if the decisions are the right ones.
The commitment must extend to trusting the prioritization leadership or governance team, who should be able to push back on executives when they have to.
IPM worked with a family-run food company whose owners made final decisions on every project. Running everything up the ladder caused frustration and slowed down progress. Once the owners committed to the prioritization model—and saw it working—the governance team was empowered to make the right decisions for the business, gaining efficiency.
It’s worth noting that the commitment and ongoing involvement of the leadership team is an important part of change management. Even if the executive team is ready and willing to change how decisions are made and projects are prioritized, the organization may not be open to new ways of working. To address this, IPM applies a change readiness model that assesses the people, organization, and projects to help overcome potential barriers and resistance to change.
Another human nature bias—and challenging hurdle to prioritization—is that we don’t want to say no. Most people don’t want to be the “bad guy” and turn somebody down. We especially don’t want to deny an idea with merit. And effective prioritization almost always means turning down good ideas.
We’re also uncomfortable with ambiguity. Because strategic objectives often don’t have historic precedent, we don’t know if we’re making the right decisions—certainly not in the short term. In an article for HBR.org, author and consultant Ron Carucci wrote, “For leaders who struggle with the ambiguity that often comes with decisions that have long-term implications, the anxiety over being wrong can be consuming. They try to impose certainty by analyzing more data and soliciting more opinions, but the real issue is their fear of looking stupid. … Taking action in the face of incomplete data is an executive’s job. You sometimes won’t know if the decision was ‘right’ until long after it’s made.”
Similarly, it’s easier in the short term to defer the discomfort and rationalize that we will figure out a way to get it all done later.
Then later, when a project or initiative isn’t going well, we find it difficult to overcome the sunk cost fallacy. We’re hesitant to discontinue something we’ve invested time, money, or other resources into. This is related to confirmation bias, which causes people to ignore information that disagrees with their decision and look for information that confirms it. In high-pressure, high-reward situations, this bias tends to get even worse. It’s a dangerous situation for building and maintaining a rational and objective strategic portfolio.
It’s easier to say no when you understand the opportunity cost. What will you gain from doing each project—and what will you lose from not doing it well? Be disciplined about project evaluation and use the best data available. If every idea for a new initiative—even a c-level executive’s favorite project—must go through a charter stage with consistent information collected, decision-making is more objective. Information required should include the business benefit, expected costs, resources required, risks and mitigations, and any assumptions about how you arrived at the data.
If it’s too hard to say no, say “not yet.” Doing so conveys that the project is still very important, but the company needs to complete this other thing first. Put those ideas in a “hopper” or “parking lot.”
“We let people know we put their idea in the hopper and we’re not operating on it now because we have bigger opportunities,” an executive director of a division of a global candy company explains. “If it’s a great idea, you will get prioritized over the one that’s not doing well. And that’s also another hard thing. We have to tell our people who work on projects that you’re dating these projects, you’re not marrying them. So you can let it go if it’s failing.”
Planning fallacy is our tendency to underestimate how much time things take to do. We oversimplify, neglecting to consider obstacles or delays. We plan to succeed, not to fail. We idealize the situation and don’t consider procrastination or multitasking. (Multitasking, by the way, has been found to reduce productivity by up to 80 percent.) We’re overconfident, and, ironically, overconfidence is often rewarded.
Along that vein, optimism bias makes us plan for what we want or hope will happen. IPM has surveyed more than 1,300 people over the course of six years when assessing project portfolios, and our data back this up. Fully 56 percent of people say they’re confident in their ability to meet their strategic goals. Yet only 40 percent say their projects finish on time.
The candy company executive says managing optimism is the most challenging part of prioritization. “If everybody’s optimistic about what they’ll do, then you have an overly optimistic portfolio,” he says. “That’s a challenge because if the portfolio isn’t anywhere near correct, you lose credibility with all your stakeholders. It has to be dosed with reality. Optimism has you taking unnecessary risks. It leads you to have overly aggressive timelines.”
The candy company executive offers some guidance on overcoming overoptimism. “You have to ask the right questions,” he says. “You have to have subject matter experts who care enough to ask the really difficult questions, despite how it might make someone look. And then when someone asks you those questions and you don’t have the right answer, you feel comfortable with that and know your career is not at risk.”
Regular portfolio health checks and maintenance will help refine timelines and budgets. When the project starts, estimates may be broad due to assumptions. But as the project progresses, the accuracy needs to improve.
The candy executive says, “I want people to learn that if you are overly optimistic, you have to live with it. If we come back a couple months later and we’re doing milestone check-ins and you don’t cry uncle, you have to own it. I want them to recognize, this is what happens. The decisions you make have an impact.”
At the end of the day, companies that adopt strategic portfolio prioritization—and manage the human nature factors that challenge it—are able to focus the entire organization on the work that is most critical for success.
There are many biases that impact decision-making, including decisions about strategic plans, resourcing, and, of course, prioritization. Download the white paper for a list of biases to overcome for effective prioritization. →
Authors:
Greg Kain, Managing Director
Tanya Roberts, Senior Director, Project and Portfolio Management Services
Scott Grzesiak, Executive Vice President of Strategic Growth
Integrated Project Management Company, Inc.
Service: Project Portfolio Management
Industries: Consumer Products