A Better Way to Set Strategic Priorities
We believe that strategy is fundamentally about two things: (1) Making difficult choices about which big bets matter most, and (2) how to stretch limited resources to make those big bets succeed. Not all strategies, markets, customers, investments, programs, resources or approaches are of equal value. Successful leadership teams agree upon which strategic initiatives deserve priority in terms of focus, investment, and duration.
How to Set Strategic Priorities
Many companies adopt the practice of ranking strategic initiatives. Some even set and communicate up to twenty five top initiatives. But too many priorities can dilute focus and performance. How can you possibly allocate limited resources to twenty five priorities with the confidence that they will all be accomplished on time, on budget, and at the right quality?
A Better Way to Set Strategic Priorities
Here is a better way to set strategic priorities that keeps limited resources strategically focused on what matters most while taking into account the day-to-day realities of running the business. We recommend sifting agreed-upon strategic initiatives into three different priority categories – Big Rocks, Pebbles, and Running the Business. Actually, as you begin your strategic analysis, there may be a fourth category – an initiative that belongs “on the shelf.”
Big Rocks – The Critical Few
These are the top 2-3 initiatives that deserve topmost priority because they have the greatest comparative correlation to success. Together, the Big Rocks should account for 50% or more of the probability for strategic success, command the greatest attention and receive all of the necessary resources. The Big Rocks should be at the top of your strategic dashboard, monitored weekly, and directly tied to your performance management, workforce planning, and compensation plans.
The Pebbles – Significant but Not Crucial
The pebbles are important initiatives that, even though they are less important comparatively than the Big Rocks, can have a positive impact on overall business performance. They deserve designated resources but their objectives and time frames may vary depending on the shifting needs of projects in the Big Rocks category. In other words, the Pebbles should only be completed if they do not negatively impact the Big Rocks.
Running the Business – A “Given” to Keep Things Going
Strategic Planning Sessions often identify the big initiatives but fail to account for what is required to run the business on a daily basis. For example, an HR team cannot focus on attracting top executive-level talent if current interviewing practices are illegal. A CEO cannot focus on a game-changing acquisition if current margins are not up to par. And the head of sales cannot focus on selling new solutions if the current pricing and compensation plans are not aligned with the new go-to-market plans. Do not underestimate the need to allocate resources toward ensuring things do not break or create toxic levels of misalignment.
The Bottom Line
Strategic categories force prioritization, create transparency and drive workforce alignment. Every employee should know how and why their unique contributions fit into the categories. At the end of the day, the Big Rocks must get done and the business cannot have any big failures. Then the pebbles should ill in the remaining space if you have the time and resources to make them happen.
To learn more about a better way to set strategic priorities, download 3 Big Mistakes to Avoid When Cascading Your Corporate Strategy
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