effective prioritization & zbb

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1. Effective Prioritization & ZBBEffective Prioritization & ZBBCourse Code: EUR 030311Course Code: EUR 030311Finance Development WeekFinance Development WeekOctober 16-20, 2006October 16-20, 2006J. ZuidemaJ. ZuidemaRev. 1.0, Oct 2006Rev. 1.0, Oct 2006 2. 2Course ObjectivesCourse Objectives1. Better understand how to apply ZBB conceptsand prioritize activities in a highly challengingcorporate environment.2. Create an action plan to apply these conceptsfor yourself and/or your team. 3. 3What is ZBB?What is ZBB?ZBB is a borrowed acronym: Zero Based Budgeting.Common Finance practice, not specific to Intel. A method of budgeting in which all expenditures must bejustified each new period, as opposed to only explaining theamounts requested in excess of the previous periodsfunding. For example, if an organization used ZBB, each departmentwould have to justify its funding every year. That is,funding would have a base at zero. A department wouldhave to show why its funding efficiently helps theorganization toward its goals.Source: investopedia.comZBB is a borrowed acronym: Zero Based Budgeting.Common Finance practice, not specific to Intel. A method of budgeting in which all expenditures must bejustified each new period, as opposed to only explaining theamounts requested in excess of the previous periods funding. For example, if an organization used ZBB, each departmentwould have to justify its funding every year. That is, fundingwould have a base at zero. A department would have to showwhy its funding efficiently helps the organization toward itsgoals.Source: investopedia.com 4. 4Broader Terminology at Intel ZBB isBroader Terminology at Intel ZBB is A Process: a resource management tool used at alllevels to allocate available resources to a prioritized list ofprojects. Helps managers define a realistic set ofdeliverables when the amount of work exceeds theresources available. A Document: a list of projects and/or activities that areprioritized and allocated some level of resource (e.g.support now, postpone, delegate/reassign, or dropcompletely). 5. 5Point to PonderPoint to Ponder Management is doing things right;Leadership is doing the right things.- Peter Drucker and Warren Bennis From this perspective, there are elements ofmanagement and leadership in every job. 6. 6Exercise 1Exercise 1 Group Exercise (10 min)Brainstorm and discuss the following questions. Why is ZBB important? Why is ZBB so difficult? Individual Exercise (5 min) Construct a 1 sentence goal for you or your teamrepresenting what you would like to take away fromthis course.my (our) ZBB goal is to 7. 7Why is ZBB important?Why is ZBB important?Without ZBB Inefficient overall use of time and resources Focus on process vs. results Focus on what we have always done or things w/in comfort zone Tyranny of the Urgent & excessive fire-fighting Lack of alignment with managers and stakeholders Dropped balls with managers and subordinates. Suboptimal business partnering. If you are a manager Poor performance and morale of the team. Inefficiencies are multiplied over many people. More difficult to succeed at Focal.Suboptimal performance and resultsSuboptimal performance and results 8. 8Selection of common responses Difficult to determine the critical few vs. nice-to-haves. Poor direction from management on key focus areas. Management changes priorities and adds work to the pile. Managers do not take any work away. Biz partners make additional requests w/ short deadlines. Negotiating with managers and stakeholders is stressful. Managers and stakeholders dont like being ZBBd. Cannot get to the really important things too busy with theurgent process deadlines. Everything is urgent. Meetings, meetings, meetingsWhy is ZBB difficult?Why is ZBB difficult?Lots of moving parts and constant changeLots of moving parts and constant change 9. 9Generic ZBB GoalGeneric ZBB GoalMaximize business impact & contribution,within job scope, while maintaining healthycontrol over workload.Focus is on maximizing impact Objective is to choose and execute on the highest ROI activitiesgiven finite resource budget (time, money, expertise). Same concept as financial ZBB. 10. 10Priority Setting ProcessPriority Setting Process 11. 11Priority Setting ProcessPriority Setting ProcessStep 1: Understand organizational and dept objectives.Step 2: Develop key deliverables that support objectives.Step 3: Prioritize key deliverables.Step 4: Allocate resources and draw ZBB line.Step 5: Agree & Align with managers and stakeholders.Step 6: Execute to plan and make appropriate adjustments.CommunicateThroughout 12. 12Plans - iMBOs or MBPs(Quarterly)Plans - iMBOs or MBPs(Quarterly)Understand: (1) where the business and org are going, (2) whatneeds to be done, and (3) your capabilities to meet the needs andadd value. Find the intersection of opportunity and capability.Understand: (1) where the business and org are going, (2) whatneeds to be done, and (3) your capabilities to meet the needs andadd value. Find the intersection of opportunity and capability.Organizational Needs Higher level business objectives Team charter Milestones Expected timeframe Inter-group dependenciesOrganizational Needs Higher level business objectives Team charter Milestones Expected timeframe Inter-group dependenciesTeam / Individual DevelopmentSkills or capabilities needed forsuccess. Can take the form of: Development objectives Training & education Career growth or stretch objectivesTeam / Individual DevelopmentSkills or capabilities needed forsuccess. Can take the form of: Development objectives Training & education Career growth or stretch objectivesStep 1: Understand Org and Dept ObjectivesStep 1: Understand Org and Dept Objectives 13. 13EB TargetsEB TargetsMissionMissionGoalsGoalsINPUTSSLRPSLRPPLANPLANPLBPPLBPObjectivesObjectivesKey ResultsKey ResultsPOR/ZBBPOR/ZBB3 5 Yr3 5 Yr1 3 Yr1 3 YrQuarterlyQuarterlyOverview of Planning at IntelOverview of Planning at IntelDELIVERABLES TIMELINE1 Yr1 YrMegatasksMegatasksiMBOs, MBPs, etcStrategiesStrategiesWhere arewe going?How will weget there?CharterCharter 14. 14 Analyze your Time-Spent: how does where you spendyour time align with value & impact to organizationsobjectives? Start with a zero-base: do not automatically assumecarry-overs from previous periods. Look at future impact work from previous periods is a sunk cost. Challenge weve always done it like this. Ask the tough questions:o What processes can be restructured, re-engineered, streamlined, and/orotherwise made more efficient?o What processes, reports, controls, or projects could be stopped with minimalbusiness impact? Which deadlines or performance goals could be reset? Canwe change the materiality level?o Which meetings could be dropped or made less frequent? What are we not doing that we should do, and how can we createthe time to do it?Step 2: Develop key deliverables that supportStep 2: Develop key deliverables that supportobjectivesobjectives ((but before you dobut before you do))Challenge the status quoChallenge the status quo 15. 15Step 2: Develop key deliverables thatStep 2: Develop key deliverables thatsupport objectivessupport objectives Collect input from management, team-members, andstakeholders. Without fresh input, the group relies on inertia & carry-overs fromprevious periods. Result is misalignment, low ROI activities, and wastedeffort. Write crisp deliverables with stated business impact. Be SMART Specific Measurable Achievable Realistic Timely Define success metric, key result, or AMB (as measured by). Follow one of the BKM iMBO templates found in M4E. 16. 16Step 3: Prioritize key deliverablesStep 3: Prioritize key deliverables Objective: identify the highest priority items to maximizeimpact, given scope of job and available resource. Key Elements of the Prioritization process:1. Understand tradeoffs between urgent and important.2. Use help-methods like ABC prioritization, SSM (Start, Stop,Maintain), Pareto Principle (80:20 rule).3. Understand value to Intel for each deliverable. What will happen if the item gets pushed or dropped? Can the deliverable be scaled back to consume lessresource?4. Consult with management & stakeholders throughout.Requires making difficult choicesRequires making difficult choices 17. 17Important versus UrgentImportant versus UrgentImportanceUrgencylow highhighQ3Q4 Q2Q1Understand the tradeoffs between Q2 and Q3Understand the tradeoffs between Q2 and Q3Taken from: The Seven Habits of Highly Effective People, Stephen Covey 18. 185