Prioritization, a New Responsibility
When I first joined BNP Paribas Fortis, two younger and more dynamic banks had just overtaken us. Although we had been a market leader for many years, our new products had been launched several months later than the competition in fact, our time to market had doubled over the previous three years.
Behind that problem was a deeper one: We had more than 10 large projects (each worth over 500,000 euros) under way. No one had a clear view of the status of those investments, or even the anticipated benefits. The bank was using a project management tool, but the lack of discipline in keeping it up to date made it largely fruitless. Capacity, not strategy, was determining which projects launched and when. If people were available, the project was launched. If not, it stalled or was killed.
In my roles as Director of PMO and Portfolio Management, I have learned that prioritization at a strategic and operational level is often the difference between success and failure. But many organizations do it badly. Take another real example: a postal service company delivering packages to customers. Like many other postal services, the company has been struggling to survive in an era of increasing competition and digital substitutes. Senior leaders gathered employees together at a series of town hall events where the CEO asked them to focus on two operational priorities: efficiency (reducing delivery times) and customer satisfaction (ensuring customers had a good experience).
One employee, Mary, got the message. And it worked fine until she was out delivering packages and was met at the door by an elderly man who asked her to come in and talk for a while. Mary's natural inclination was to spend a little time with the lonely old man. It would be a kind thing to do, and surely it would also increase customer satisfaction.
But then she froze. What about efficiency? If she spent even a few minutes chatting with her customer, her delivery times would suffer. What was she meant to do? Thousands of employees at this company were facing similar trade-offs every day. The predicament is a typical one. The senior management of the postal company thought they had communicated clear priorities, but in fact they had created an operational dilemma that resulted from strategic confusion.
Contrast this with other successful companies. The European budget airline Ryanair, for example, is absolutely clear that it is a no-frills operation where efficiency is the operational priority and efficiency takes precedence over customer service. The people who work for Ryanair know what the priority is, and thus know how to allocate their time on the job. Prioritizing increases the success rates of strategic projects, increases the alignment and focus of senior management teams around strategic goals, clears all doubts for the operational teams when faced with decisions, and, most important, builds an execution mindset and culture.
Of course, sometimes leaders simply make the wrong decisions; they prioritize the wrong thing. But in my 20 years as an executive, the problem I see more often is that leaders don't make decisions at all. They don't clearly signal their intent about what matters. In short, they don't prioritize.
For the organizations I have worked with, and others such as Apple, Amazon, Lego, Ikea, and Western Union, that have highly developed senses of priorities, the payoffs are considerable. Companies that start prioritizing can experience significant reductions in costs (in my experience, roughly 15%) as less-vital activities are cut and duplicated efforts are consolidated.
The number of priorities admitted to by an organization is revealing. It is notable that if the risk appetite of a senior executive team is very low (or if they are not able or inclined to make the tough choices), they will tend to have a generous portfolio of priorities. They don't want to take the risk of not being compliant, missing a market opportunity, not having the latest technologies, and so on. But in my experience, the most successful executives tend to be more risk taking and have a laser-like focus on a small number of priorities. These executives know what matters today and tomorrow. At the extreme, this might mean simply having a single priority. The more focus, the better. All these have become new responsibilities of, what I coined, as the modern value driven PMO. I plan to cover these in a future article.