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 more than 1,300 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 organization’s ability to meet their strategic goals, yet only 40 percent say their projects finish on time.
Apple co-founder Steve Jobs is quoted as saying, “I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
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.
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.
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.
When a company has too many priorities, or none at all, people are busy working on everything without making real progress. 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, there is a good chance companies need a new approach.
In a diluted organization, people typically are overworked and often exhausted. Employees must multitask and task-switch, which only further reduces their productivity. With too much to do, their focus is on what’s urgent rather than what’s important. Company leadership can ask people to go above and beyond for a short period, but over time it can cause employee burnout, health issues, and turnover.
When organizations aren’t aligned, executive leaders compete with one another for the same resources. Everyone thinks their project is more important than the rest, and it is challenging to continually try to agree on what is more critical.
Complicating the challenge, most companies have multiple strategic goals that may seem to conflict, such as accelerating growth and saving costs. When the specific objectives aren’t clear and prioritized, not only are people working on too many things, but they can be working at cross purposes.
Eventually, employees and shareholders can lose confidence in leadership as the inability to accomplish strategic initiatives leads to stagnant business, unhappy customers, and loss of market share to competition.
Good prioritization starts with good fundamentals. These include alignment to the strategic goals, a governance process that requires a business case and project charter, and executive involvement and advocacy.
IPM has found the most effective prioritization framework is a multicriteria weighted scoring model. This model defines the critical criteria for importance to the business as well as for complexity and uncertainty. The benefit is increased objectivity and alignment to strategic goals.
Getting prioritization right also means overcoming a subtle and covert challenge: human nature. The human nature biases working against prioritization include overoptimism, a desire for control, and a reluctance to say no. Acknowledging these biases exist is a good first step; overcoming them takes vigilance and governance.
The most successful companies do indeed make progress on their multiple strategic goals each year. But they adopt and rigorously maintain a strategic portfolio prioritization model to focus the entire organization on the work that is most critical for success while reducing organizational conflict and exhaustion.
Download the white paper, “Prioritization’s Toughest Challenge: Human Nature,” for solutions that include advanced approaches and ways to overcome the human nature elements that make prioritization challenging. →
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.
Services: Project Portfolio Management, Strategic Realization
Industries: Consumer Products