How do you answer summarize resulting impact against your priorities?

One of the most important challenges that organizations face today is how to prioritize their strategies, their objectives, their projects, and their day-to-day activities. Significant evidence exists that organizations with the strongest focus on prioritization outperform the competition. Their leaders are laser-focused, not afraid of making tough decisions, and highly disciplined in executing their strategies until goals are achieved.

Despite the strategic relevance of prioritization, the available methods for carrying it out are what I call “academic”: They perform well in a test environment; they look good on paper; yet, when they are applied to a real work situation, they fail miserably.

I have been working a prioritization concept - the Hierarchy of Purpose - that works in the field, which is useful for the senior leaders, but also for middle management, for project leaders and the people running the day to day activities. I describe this concept in an article featured in Harvard Business Review last December: "How to Prioritize Your Company's Projects"

Prioritizing is usually seen as an individual skill that some are good at, others not so much. We prioritize whenever we think about how we will spend our time today, this week, this month—or this year. However, the fact is, prioritizing is also a key organizational capability. Indeed, how and why organizations prioritize their activities is vital to their success. Surprisingly, this is one of the least understood and most neglected areas of organizational life.

The word priority appears in the English language as early as the 14th century. The Merriam-Webster dictionary defines it as, ‘what matters most.’ In organizational terms, prioritization sets the agenda in terms of what really matters, which is reflected in how resources are allocated – especially the scarce resources: time and money.

Based on 20-plus years of executive experience with large corporations, I have found that one of the main reasons companies fail in this area is that they lack a clear sense of what is truly urgent and simply select the wrong priorities. The results can be calamitous, as evidenced by a classic corporate failure of recent times.

It wasn’t that Kodak didn’t foresee the rise of digital photography, but that it chose to prioritize the wrong things. In the 1990s, Kodak invested billions of dollars into developing technology for taking photographs using mobile phones and other digital devices. But in a classic case of Clay Christensen’s innovator’s dilemma, it held back from developing digital cameras for the mass market, because it feared that it would cannibalize its all-important film business. Meanwhile, the Japanese company Canon recognized the strategic priority presented by digital photography and rushed in.

If an executive team doesn’t clearly prioritize, middle management and employees will do so, based on what they think is best for the organization. At first, this might appear to be a good practice: empowering people to make decisions is something that has been heralded since the times of Peter Drucker. The key is to have a clearly prioritized set of strategic objectives to work from.

A Real Life Example on the Implications of Lack of Prioritization

To illustrate this, let’s look at a real-life example. ‘Sam’ worked as a teller in a local bank, serving customers. He loved his job: his father had also spent his entire career in the same bank, but like many other banks, the company was struggling to survive due to low interest rates, increased competition and the burden of cumbersome regulation. The executive team worked for months to identify a new strategy that would help to turn the company around—eventually identifying two strategic priorities that they believed would secure the company’s future.

In a series of townhall meetings, the CEO informed staff—Sam included—that the new strategy was based on two priorities: a) improve the customer satisfaction, increasing satisfaction by 20 percent; and b) increase efficiency by serving 20 percent more customers per day. The message was crystal clear: as long as Sam and his colleagues kept focused and met the two strategic priorities, the company’s future—and their jobs—were assured.

The following day, Sam was extra motivated, after hearing his CEO say that the company he cared so much about was, basically, in his hands. He kept in mind the two strategic objectives and started to serve customers as efficiently as possible, always with a smile. That worked fine until a customer started to talk about a personal loss and the terrible situation he was going through. He clearly wanted to talk with Sam, who was initially pleased with the idea as it would significantly increase customer satisfaction. However, after a few seconds, Sam froze.

 But what about the second strategic objective, efficiency? If he spent a few extra minutes talking with this customer, his client-servicing rate would suffer. What should he do? He did not know for certain which objective was more important, but he had to make a decision. As did all the other bank tellers, every single day.

The executive team thought that it had clearly communicated the strategic objectives, but in fact, they had created an operational dilemma. The result: the bank did not improve performance and many employees who loved their jobs and worked hard to implement the new strategy, were fired. As this example indicates, all too often, there is a gap and lack of alignment between corporate strategic objectives and those of different business units and departments. 

The Hierarchy of Purpose 

To address the challenges of prioritization that I have confronted throughout my career, I have developed a simple framework called the Hierarchy of Purpose. Following are its five principles.

• Purpose. What is the purpose of the organization and how is that purpose best pursued? What is the strategic vision supporting this purpose?
• Priorities. Given the stated purpose and vision, what matters most to the organization now and in the future? What are its priorities now and over the next two to five years?
• Projects. Based on the answers to the first two points, which projects are the most strategic and should be resourced to the hilt? Which projects align with the purpose, vision, and priorities, and which should be stopped or scrapped?
• People. Now that there is clarity around the strategic priorities and the projects that matter most, who are the best people to execute on those projects?
• Performance. Traditionally, project performance indicators are tied to inputs (e.g., scope, cost, and time). They are much easier to track than outputs (such as benefits, impact, and goals). However, despite the difficulty companies have in tracking outputs, it’s the outputs that really matter. What are the precise outcome-related targets that will measure real performance and value creation? Reduce your attention to inputs and focus on those instead.

Think of your organization’s purpose and priorities. Are all of your employees working according to those priorities? Are their activities prioritized to align with the best interests of the organization as a whole? How would your priorities change in case of a sudden economic downturn?

--------------------------------------------------------------------------------------------------Antonio Nieto-Rodriguez (www.antonionietorodriguez.com) is the world's leading champion of Project Management and Strategy Implementation. He is the creator of concepts such as the Hierarchy of Purpose, or the Project Manifesto; which argue that projects are the lingua franca of the business and personal worlds from the C-suite to managing your career or relationships.

Antonio has been recently awarded the title of Thinker of the Month by the prestigious Thinkers50, who identifies the most influential management thinkers in the world, including Michael Porter, Clayton Christensen, Rita McGrath.

He is author of the best-selling book The Focused Organization*; has taught at leading business schools (including Duke CE, IE Business School, Skolkovo); has been featured in several magazines, including The Economist, Singapore Management Institute, and Strategy Business Review. 

Antonio is a much in demand speaker at events worldwide. Over the past 10 years, he has presented at more than 160 conferences around the world, regularly evaluated as the best speaker. 

He is the founder of one of the largest LinkedIn think-tank for Strategy Execution, StrateXecution, which has more than 5.500 members worldwide.

Born in Madrid, Spain, and educated in Germany, Mexico, Italy and the United States, Antonio has an MBA from London Business School and is fluent in six languages. 

* use the 50% discount promotional code 'FO230'

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