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At face value it’s hard to argue against strategic prioritization. It makes sense that when you channel your efforts and resources toward one goal, you’ll be more likely to accomplish that goal. And if you try to spread your efforts among 100 things, you will get nothing done—at least not well or on time. As Warren Buffet said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”
Research bears this out. For example, companies that select fewer priority initiatives are 16 percent more likely to be in the top tier of their industry than those who have many or no priorities, according to a Booz & Company study. Those with many or no priorities are 10 percent more likely to be in the bottom tier of their industry. And McKinsey found that organizations that invest in strategic prioritization deliver 40 percent more value.
The problem is most organizations are not very good at prioritization. Integrated Project Management Company Inc. (IPM) has surveyed 1,330 people over the course of six years when assessing project portfolios, and our data back this up. When asked about their biggest challenges to the project portfolio, respondents’ top answer is not enough people to complete the number of projects and their second is changing priorities.
It’s true that many companies try to align large initiatives with their strategy or demand that projects measurably benefit the company. But most still try to do too much or, worse, choose not to centralize prioritization at all. The result is resource dilution, which leads to burnout and turnover and often has teams working on competing objectives. Strategic goals don’t get accomplished or sustained. Indeed, IPM’s research finds that 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.
What Good Strategic Prioritization Looks Like
Good strategic prioritization is not filtering bad ideas from good ideas. You will not be that lucky. It’s filtering the most critical ideas from the many good ones. Companies that are adept at prioritization apply a framework and measures to determine which of those good, worthwhile ideas are likely to have the greatest contribution to accomplishing the overall strategy. They reject or delay a lot of projects so they can focus on the most critical.
“We’re constantly revisiting whether we’re focused on the critical few versus the worthwhile many,” Mike Slubowski, President and CEO of healthcare system Trinity Health, told Fierce Healthcare in an interview. “… We have a lot of ideas that are clearly worthwhile, but they aren’t the critical few that will move us the furthest the fastest. That’s what we need to constantly re-evaluate as we face the future.”
Organizations with effective strategic prioritization also treat the critical projects in a way that’s meaningfully different than their other work. For example, they ensure those projects get the resources they need and protect them from day-job and firefighting distractions. Finally, they align the other organizational and personal goals to the stated priorities.
Effective prioritization and portfolio management is like a healthy diet. If we eat better, we will have a longer, better life. We know how to do it or how to learn how to do it or the tools that will help. We recognize that the benefits might not be easy to see, because the overall impact is long-term.
What’s the Worst That Can Happen?
When you don’t prioritize, you get resource dilution. It is the typical state of most organizations. The opportunity cost is difficult to calculate, but it’s enormous. In our healthy-eating analogy, dilution is a silent killer—the equivalent to high-blood pressure for an organization.
What is resource dilution? Let’s say you have a hammer and a board with 10 nails. The board is your strategy, and the nails are the projects required to accomplish your strategy. The hammer represents the resources available to do the project work. In a diluted organization, you’d hit each nail once, randomly around the board. A more effective method would be to hammer the nails in the four corners first, accomplishing your goal quickly, and then hit the other nails that might support your goal.
Working on everything, making progress on nothing
When a company has too many priorities, or none at all, people are busy working on everything but not making real progress on anything. Strategic projects don’t get done, don’t get done as quickly as they could, or aren’t sustained. When it’s estimated that 67 percent of corporate strategies fail due to poor execution, a company needs all the help it can get.
Exhausting the organization
In a diluted organization, people are overworked and often exhausted. Employees must multitask and task-switch, which only further reduces their productivity. With too much to do, you focus on what’s urgent rather than what’s important. You spend time firefighting rather than doing valuable work. You can ask people to go above and beyond for a short and defined time period. But overwork over time can cause employee burnout and health issues. And these can lead to absenteeism, rising insurance costs, and staff turnover.
“It would show up as staff disengagement,” says Michael Everett, Organizational Excellence Officer at the Illinois Municipal Retirement Fund (IMRF), a defined benefit pension fund for local government employees. A 2019 Malcolm Baldrige National Quality Award winner, IMRF has invested time and attention to maturing its prioritization. “I would imagine that a lot of our staff members would feel overworked. Work-life balance would be reduced.” He notes that even though many people across the organization are working extra hours on a large corporate initiative, their engagement survey shows good scores for work-life balance. “I think it’s because we’re all steering in the same direction. We’re all aligned as to what needs to get done.”
Competing with yourself
When organizations aren’t aligned, executive leaders compete with one another for the same resources. “One of the biggest challenges is competing interests,” Everett says. “One person inside a department thinks that their project holds a bigger weight compared to another person in a different department. It can be a challenge to get everyone on the same page, agreeing on what is more critical.”
Worse, the organization might be working on competing strategies. If the priorities are to save money, expand reach, and improve quality, one effort might defeat another. Not only are people working on too many things, but they’re canceling each other out.
In the worst-case scenario, staff loses confidence in leadership. The inability to accomplish strategic initiatives also leads to stagnant business, unhappy customers, and loss of market share to competition.
Getting Prioritization Right
Good prioritization starts with good fundamentals. In our healthy eating analogy, these are the healthy foods stocked in our pantry. Good fundamentals include enforcing alignment to the strategic goals, an intake process that includes a business case and project charter, and including executive stakeholders in the effort.
IPM has found the most effective prioritization framework is a multicriteria weighted scoring model. This model defines appropriate criteria for importance and complexity, then weights them on a 100 percent scale. The benefit is increased objectivity.
IPM has also learned that there are human nature biases working against prioritization, including overoptimism, a desire for control, and a reluctance to say no. Acknowledging these biases exist is a good first step, but overcoming them takes vigilance.
Companies that adopt and maintain strategic portfolio prioritization are able to focus the entire organization on the work that is most critical for success while reducing organizational conflict and exhaustion.
Authors:
Greg Kain, Managing Director – Healthcare
Tanya Roberts, Senior Director, Project and Portfolio Management Services
Scott Grzesiak, Executive Vice President of Strategic Growth
Integrated Project Management Company, Inc.
Services: Project Portfolio Management, Strategic Realization
Industries: Life Sciences | Healthcare | Consumer Products | Industrial Products