As an output of a strategic planning process, organizations often can readily identify a long list of opportunities to improve or new things to consider that are then translated into possible strategic initiatives. A challenge, then, is how to rank or prioritize the list. I sometimes suffer what I affectionately describe as a desire to 'eat the elephant.'
Rarely does trying to do it all at once work. We need a way to eat the elephant in manageable bites at a time to maximize organizational benefit while modulating costs, level of effort, and risk.
Some assumptions about strategic initiatives and their prioritization:
- Prioritization is an informed and methodical questioning and decision making process.
- Some strategic initiatives offer more benefit and/or are more strategic than others.
- An organization cannot do all things immediately given available resources including people, $$, time, and/or other materials.
- An organization and her people may experience fatigue from too many new initiatives at once.
- There is more than one way to prioritize – key is to question, think, assess, and then put a plan in place.
- This process is scalable for organizational, department, program, or process level planning and prioritization.
Variables to Consider
Generally, the relative value of any proposed strategic initiative can be assessed using a multi-variable framework that includes strategic, financial, business, human, social, and environmental value potential. For any proposed initiative, ask: If implemented, what would the potential impact be in terms of each value category.
Strategic Value = how well this initiative and its benefits are aligned with organizational mission and values including extending the reach of the organization to include new service areas, access to potential customers, etc.
Financial Value = revenue or other $$ directly derived from this initiative or has a possibility of contributing to lower costs and/or cost avoidance, etc.
Business Value = related to process efficiencies or optimization, customer service, or service delivery.
Human value (Internal) = improvement in work culture, communication, leadership, or other factors related to personnel learning and growth.
Social Value (external) = contributive to efficiently, effectively, and sustainably addressing a social problem or opportunity pertinent to the organization or its context.
Environmental Value = contributive to sustainable environmental practices related to operations, production, or other initiatives.
Once you've evaluated each initiative to determine its relative value and/or impact, then assess each with regard to potential risk, vulnerability, or impact to business continuity.
Business Risk Factor = the overall relative complexity of this initiative based on a number of factors including such factors as:
- Level of effort (# of people required + $$ + Duration) in relation to other initiatives
- Potential impact to multiple business critical information or other technology systems
- Multiple divisional or organizational interfaces
- Extensive programmatic or operational change
- Potential impact to business continuity or related emergency response function or capacity
- Vulnerability related to external customer perception or other system impacts
Sample Matrices to Support Decision Making and Documentation
It's important to have a matrix to capture your value assignments and decisions. I tend to like simple approaches and have found that a matrix or table similar to the sample Strategic Initiative Prioritization matrix presented provides a useful and simply way to document the results of estimated value, risk, and relative ranking.
The Effort/Impact Matrix and Cost/Benefit Matrices are examples of visual ways to assess strategic initiatives. Sometimes it's helpful to have a visual way to plot results. In both examples,
- Little to No Effort or Low Cost with some impact or benefit may represent those Quick wins, those initiatives that contribute immediate value and/or benefit that should be done now.
- Low Effort or Cost and High Impact or Benefit = High Value and should be prioritized as such
- Significant effort or cost and low impact or benefit = Low Value and should be prioritized as such
- High Effort and High Cost with Significant Impact or Benefit can be a bit trickier. I tend to assign a high value designation and a higher risk given the significant organizational effort, duration, or costs.
The sample risk assessment matrix I've included is okay - it's not exactly my favorite way to consider risk because it assumes an analysis of risk in relation to scenarios (thus the probability axis). If I'm assisting with vulnerability assessments, emergency response planning, or business continuity planning - I'm more likely to use this matrix. When doing strategic planning, I tend to use a relative range of 1-4 where 1 = low and 4 = high risk, based on the business risk categories identified or a list of categories based on discussion with the client.
Assuming you have a list of possible strategic initiatives:
1. Determine your value categories. Are there other value categories that should be considered or are not applicable for your organization or program?
2. Discuss and define low/high values or or other criteria for assigning a low/high value for each category. I often use a 1-4 ranking where 1 = low value and 4 = high or one of the matrices presented.
3. Discuss and define business risk categories including what defines a low/high value for each category.
4. Analyze each strategic initiative for each Value Category and then for business risk. It's not uncommon for the first few efforts to result in a refinement of analysis criteria. One thing I like to do is have each person on the analysis team do this task independently, then come together to discuss. This discussion is a great way to learn biases, assumptions, concerns, and values within the team. Disparity in value or risk assignment provides an opportunity to discuss difference and to determine why or how the differences exist.
5. Document your analysis. In a 3 to 5 year plan, remembering what the process was and why certain decisions were made can fade or be affected by a sort of revisionist history (grin). A few bullet points here or there can be helpful when confronted with a What were we thinking moment.
6. Calculate the Total Value and then assign a ranking based on results. Rarely do I recommend accepting the ranking at face value. Instead, I do a sanity check with the team to see if it 'reads right' meaning - does the ranking seem correct based on the team's perception of organizational need. Are there any surprises? Is there anything about the ranking that seems out of sync or inconsistent with operational concerns?
7. Consider conducting a workshop with those responsible for implementation where the strategic initiatives are presented. Then give each person 3 to 5 votes to vote for their top initiatives that they feel if implemented would have the largest impact on operations or organizational mission. The # of votes varies depending on the number of initiatives. I've used colored dots, #1-X to denote votes. One good way to facilitate this is to have all the initiatives presented on posters, have each person vote, and then visually you have a pretty easy way to see priority. Depending on the scope of participation, I've had work groups discuss and prioritize (when there are multiple work groups in the room). If there are disparities in priority, this can be a great opportunity to discuss differences or if the implementors priorities are different than the original assessment (#6) - then it's important to understand the differences between the two groups.
8. Following this meeting, the analysis team should meet to discuss results of workshop and to revise (if appropriate) the table and finalize the ranking.
This simplified discussion of strategic initiative prioritization hopefully provides some useful considerations for prioritizing strategic initiatives. This is one of my favorite parts of strategic planning because of the If This, Then what type questioning which I find so much FUN!