The Hierarchy of Purpose
Every organization needs what I call a "hierarchy of purpose." Without one, it is almost impossible to prioritize effectively. I have over 20 years of experience in prioritizing, selecting, and managing projects. In that time, I have developed a simple framework that I call the "Hierarchy of Purpose." It is a tool that executive teams can use to help them prioritize strategic initiatives and projects as follows:
- 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 on inputs and focus on the outputs instead. At best, prioritizing enhances the strategic dialogue and the alignment at the top of the organization, from where it is then cascaded to the rest of the organization. Once you lead the executive team to understand this, priorities become embedded in the organization and its corporate culture.
Think of your organization's priorities. Are all of your diverse activities prioritized in the best interests of the organization as a whole? What is the best use of the organization's existing and future financial and operational capacities? How would your priorities change in case of a sudden economic downturn?
A well-communicated sense of organizational priorities in an organization helps to align most of the projects and programs to its strategies. But the reality of an organization is much more complex than many suggest. Sometimes the strategic objectives are not clear, or are nonexistent. Often there is a gap and lack of alignment between the corporate strategic objectives and the ones from the different business units, departments, or functions.
In reality, it is impossible to match all of an organization's projects and programs to strategic objectives. Ensuring that at least the most important projects and programs let's say the top 20 are fully aligned with the strategic objectives is more achievable.
By applying the Hierarchy of Purpose, executives learn that changing priorities is a fact of organizational life. Indeed, every time an organization stops a priority, the organization becomes more focused. Every terminated priority is an opportunity to learn and do better next time. Priorities change and, if managed successfully, have the capacity to fundamentally change organizations, but only if top management makes tough choices.