Analysing data from thousands of change projects, we know that around 70% of corporate prioritisation exercises don’t consider ‘do-ability’ at the outset. What results is the predictable ‘Groundhog Day’ disappointment that the prioritised list was not delivered.
This short article examines some of the common issues we’ve encountered in organisations looking to establish an effective corporate prioritisation regime.
It’s coming up to that time of year when public and private sector organisations consider corporate prioritisation and budget setting. Done properly, it allows informed decisions to be made on which initiatives and activities should – and should not – be progressed.
Unfortunately, traditional strategic, finance-oriented or ‘who shouts the loudest’ approaches to prioritisation don’t accommodate the range of project complexities and uncertainties most organisations are now facing.
What we typically see
Few organisations have a supply of funding and resource that matches demand. Most find that once funding for committed activities and projects that are already ‘in-flight’ has been allocated there is limited – if any – funding left for new initiatives.
In the current economic climate, this is likely to get worse.
The changing picture of demand & supply
Switching the focus
There are many alternative approaches to derive a prioritised list of projects.
Typically, the focus of prioritisation is centred around:
- Cost– typically return on investment
- Pet Projects– those projects where powerful stakeholders/function heads ring-fence resources to deliver initiatives they have a personal interest in
- Financial Benefits– whilst this can be a useful criterion, it often results in ‘enabling projects’ (i.e., those projects that deliver no benefit themselves but are essential foundations for other projects) being quickly de-scoped.
Based on our significant experience in helping organisations prioritise and create a ‘do-able’ change portfolio, we see a need for greater focus on the following critical elements:
- Strategic Outcomes– does the spread of initiatives support all the strategic outcomes, or is there a cluster of initiatives around one or two outcomes and few/none around others?
- Key Dependencies– is account taken of key dependencies the prioritised list needs to have in place in order to achieve the stated outcomes?
- Deliverability – does the organisation have the capacity, capability and experience to deliver this spread of initiatives?
- Business Capacity– does the organisation have the capacity to absorb this amount of change without adversely impacting business as usual?
“A strategic portfolio that can’t be delivered is quite common. Too much effort is placed on the strategic planning and not enough on do-ability. There is a need to consider all aspects at the outset of prioritisation, by developing greater clarity in an iterative way. Typically, 3-4 cycles of iteration will be required before a definitive list is agreed.”
Craig Mackay – CEO, Proteus
Real-world examples
Case study 1: An organisation had a high volume of projects in-flight and a significant number of new initiatives demanding funding. Typically, projects had limited clarity on how they aligned with the organisation’s strategic vision, and tended to focus more on the needs of business units rather than the organisation as a whole. The resultant effect was fierce competition for the same limited resources and funding, and little hope of achieving the organisations stated outcomes.
By adopting a more holistic approach to prioritisation, which was shared and agreed with all business units, the organisation could effectively prioritise the £600m investment more appropriately and generate a more balanced spread of initiatives to optimise their strategic outcomes.
Case study 2: An organisation had adopted a more balanced approach to prioritisation, but had left out the dependency criterion. A list of which initiatives to take forward (and which to stop) was agreed. When the dependency criterion was factored in, a project that was going to be stopped became the No1 project to be done.
Summary
Prioritising the portfolio is not a one-off exercise. Given the acceleration in uncertainty and the changing external landscape, organisations must continue to assess the viability of their initiatives and not shy away from ‘stopping’ initiatives that no longer achieve the anticipated strategic impact or have significantly increased in risk.
