effective prioritization & zbb

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Effective Prioritization & Effective Prioritization & ZBB ZBB Course Code: EUR 030311 Course Code: EUR 030311 Finance Development Week Finance Development Week October 16-20, 2006 October 16-20, 2006 J. Zuidema J. Zuidema Rev. 1.0, Oct 2006 Rev. 1.0, Oct 2006

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Page 1: Effective prioritization & zbb

Effective Prioritization & ZBBEffective Prioritization & ZBB

Course Code: EUR 030311Course Code: EUR 030311

Finance Development WeekFinance Development WeekOctober 16-20, 2006October 16-20, 2006

J. ZuidemaJ. ZuidemaRev. 1.0, Oct 2006Rev. 1.0, Oct 2006

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Course ObjectivesCourse Objectives

1. Better understand how to apply ZBB concepts and prioritize activities in a highly challenging corporate environment.

2. Create an action plan to apply these concepts for yourself and/or your team.

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What 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 be justified each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding.

• For example, if an organization used ZBB, each department would have to justify its funding every year. That is, funding would have a base at zero. A department would have to show why its funding efficiently helps the organization toward its goals.

Source: investopedia.com

“ZBB” is a borrowed acronym: Zero Based Budgeting.

Common Finance practice, not specific to Intel.

• A method of budgeting in which all expenditures must be justified each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding.

• For example, if an organization used ZBB, each department would have to justify its funding every year. That is, funding would have a base at zero. A department would have to show why its funding efficiently helps the organization toward its goals.

Source: investopedia.com

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Broader Terminology at Intel – ZBB is…Broader Terminology at Intel – ZBB is…

• A Process: a resource management tool used at all

levels to allocate available resources to a prioritized list of projects. Helps managers define a realistic set of deliverables when the amount of work exceeds the resources available.

• A Document: a list of projects and/or activities that are

prioritized and allocated some level of resource (e.g. support now, postpone, delegate/reassign, or drop completely).

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Point 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 of management and leadership in every job.

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Exercise 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 team representing what you would like to take away from this course.

“my (our) ZBB goal is to…”

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Why 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

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Selection 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 don’t like being “ZBB’d.”

• Cannot get to the really important things – too busy with the urgent process deadlines.

• Everything is “urgent.”

• Meetings, meetings, meetings…

Why is ZBB difficult?Why is ZBB difficult?

Lots of moving parts and constant changeLots of moving parts and constant change

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Generic ZBB GoalGeneric ZBB Goal

Maximize business impact & contribution, within job scope, while maintaining healthy

control over workload.

Focus is on maximizing impact

• Objective is to choose and execute on the highest ROI activities given finite resource budget (time, money, expertise).

• Same concept as financial ZBB.

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Priority Setting ProcessPriority Setting Process

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Priority Setting ProcessPriority Setting Process

Step 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.

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Plans - iMBO’s or MBPs(Quarterly)

Plans - iMBO’s or MBPs(Quarterly)

Understand: (1) where the business and org are going, (2) what needs to be done, and (3) your capabilities to meet the needs and add value. Find the intersection of opportunity and capability.

Understand: (1) where the business and org are going, (2) what needs to be done, and (3) your capabilities to meet the needs and add value. Find the intersection of opportunity and capability.

Organizational Needs• Higher level business objectives• Team charter• Milestones • Expected timeframe• Inter-group dependencies

Organizational Needs• Higher level business objectives• Team charter• Milestones • Expected timeframe• Inter-group dependencies

Team / Individual DevelopmentSkills or capabilities needed for

success. Can take the form of:• Development objectives• Training & education• Career growth or stretch objectives

Team / Individual DevelopmentSkills or capabilities needed for

success. Can take the form of:• Development objectives• Training & education• Career growth or stretch objectives

Step 1: Understand Org and Dept Step 1: Understand Org and Dept Objectives Objectives

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EB TargetsEB Targets

MissionMission

GoalsGoals

INPUTS

SLRPSLRP

PLANPLAN

PLBPPLBP

ObjectivesObjectives

Key ResultsKey ResultsPOR/ZBBPOR/ZBB

3 – 5 Yr3 – 5 Yr

1 – 3 Yr 1 – 3 Yr

QuarterlyQuarterly

Overview of Planning at Intel Overview of Planning at Intel DELIVERABLES TIMELINE

1 Yr1 Yr

MegatasksMegatasks

iMBO’s, MBPs, etc

StrategiesStrategies

Where arewe going?

How will weget there?

CharterCharter

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• Analyze your “Time-Spent”: how does where you spend your time align with value & impact to organization’s objectives?

• Start with a “zero-base”: do not automatically assume carry-overs from previous periods. Look at future impact – work from previous periods is a sunk cost.

Challenge “we’ve always done it like this.” Ask the tough questions:

o What processes can be restructured, re-engineered, streamlined, and/or otherwise made more efficient?

o What processes, reports, controls, or projects could be stopped with minimal business impact? Which deadlines or performance goals could be reset? Can we 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 create the time to do it?

Step 2: Develop key deliverables that support Step 2: Develop key deliverables that support objectives objectives ((but before you do…but before you do…))

Challenge the status quoChallenge the status quo

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Step 2: Develop key deliverables that Step 2: Develop key deliverables that support objectivessupport objectives

• Collect input from management, team-members, and stakeholders. Without fresh input, the group relies on inertia & carry-overs from

previous periods. Result is misalignment, low ROI activities, and wasted effort.

• 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.

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Step 3: Prioritize key deliverablesStep 3: Prioritize key deliverables

• Objective: identify the highest priority items to maximize impact, 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 less resource?

4. Consult with management & stakeholders throughout.

Requires making difficult choicesRequires making difficult choices

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Important versus UrgentImportant versus Urgent

Importance

Urgency

low high

high

Q3

Q4 Q2

Q1

Understand the tradeoffs between Q2 and Q3Understand the tradeoffs between Q2 and Q3

Taken from: The Seven Habits of Highly Effective People, Stephen Covey

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5 Min Break5 Min Break

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Fun ZBB Videodouble-click

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Exercise 2Exercise 2

• Group Exercise (10 min)

1.Read the article by Marty Menard in your participant guide – discuss in your group: What are some of the key elements of the prioritization

process? What are the consequences of NOT setting good

priorities up front?

2.List and share some of your own “Best Known Methods”

• Individual Exercise (5 min)

Write down 3 actions you are going to take in the next 2 weeks based on steps 1-3.

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“In my 18 years at Intel, there has always been more work to do than time to do it. This is not a new problem. Every employee has the responsibility to prioritize their work, and more importantly, level set and get agreement on those priorities with their managers and stakeholders on a regular basis.

“So how can you take control of your workload? Start by listing the deliverables you are working on, and make your best judgment if they are an A, B, or C priority. Don't over-engineer the definition of A, B, or C. The "must do" items get the “A,” things that can wait get a "C", and everything else gets a "B." I can predict what might happen next. You will make a list, and everything will have an "A" next to it. When this happens, make YOUR best judgment on what should wait, and reprioritize the list. This may take a few revisions before you can come to grips with what work must we done now (i.e. A priority), what can be done when you can’t make progress on your A's (ie. B priority), what can be zbb'd (ie. C priority). Once you have a recommended priority list, review with your manager for alignment and course corrections. Explain your reasoning to your manager. Be open to the possibility that your manager may have other environmental information that may cause you to jointly decide to reprioritize a deliverable. The conversation and ultimate alignment with your manager is critical. You may also need to level set with other stakeholders on your priority recommendations. Repeat this process often until it is a habit. The frequency will vary with your role. In some cases weekly priority setting is appropriate, in other cases, monthly is sufficient.

“What are the consequences if you don’t take control of your workload and set individual priorities? Priority decisions will get made unconsciously. Inevitably, some deliverables will slip in schedule or quality or both, upsetting stakeholders. Items that slip as a result of unconscious decision-making may not be the right things. I'm suggesting a habit which proactively identifies which deliverables should be reprioritized (or be zbb'd completely) for the benefit of higher impact results, and give you back control over your workload. Done correctly and regularly, this process will keep you and your stakeholders happy.”

Marty Menard, Intel IT Director for Platform Capability (2005, used with permission)

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Step 4: Allocate resources & draw ZBB lineStep 4: Allocate resources & draw ZBB line

Key Deliverable Priority

Resource Required

Interdepen-dencies

Consequence of ZBB’ing

Commit Date Status

XXX A Weekly On track

YYY A Ongoing On track

ZZZ A WW21 On track

ABC B WW25 On track

123 B EOQ At risk

456 B ZBB Dropped

789 C ZBB Pushed

Propose ZBB’ing items below the line. Escalate and get help if there Propose ZBB’ing items below the line. Escalate and get help if there are unacceptable business consequences of ZBB’ing.are unacceptable business consequences of ZBB’ing.

ZBB LineZBB Line

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Step 5: Step 5: Agree & Align with managers and Agree & Align with managers and stakeholders.stakeholders.

• The ZBB process does not work without this step.

• Communicate often with your stakeholders (manager, business partners, internal customers, peer functions, your team, etc…)

• The communication process should include:

• what is “above the line” AND what you propose to ZBB

• opportunities for stakeholders to influence your ZBB

• negotiation on priorities and due dates

• escalation of any items “at risk” due to lack of resources.

• Ensure you get co-ownership with your management (you succeed or fail together).

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Step 6: Step 6: Execute plan and make appropriate Execute plan and make appropriate adjustments.adjustments.

• Focus on Execution– Plan out your quarter, week, day.

– Leave some buffer time for unexpected requests.

– Practice good time management – discipline yourself to work on the most important items first (vs. the easiest, etc…).

• Be Flexible and Make Appropriate Adjustments– Recognize that we work in a dynamic business environment. New

items will appear and organizational priorities will change.

– Your ZBB process needs to be dynamic too.

– Regularly reprioritize: assess new requests vs. current list. Renegotiate your ZBB list and due dates with management & stakeholders.

You own your ZBBYou own your ZBB

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Exercise 3Exercise 3

• Group Exercise (10 min)

Read the case study in your participant guide and answer the questions.

• Individual Exercise (10 min)

Write down 3 actions you are going to take in the next 2 weeks based on steps 4-6.

Outline a discussion you will have with your manager in the next 2 weeks on your key learning from this course and what you plan to do differently as a result.

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SummarySummary

• ZBB is about maximizing your contribution and delivering results using all available resources.

• Practicing good prioritization & ZBB is key for the success of Intel and your success at Intel.

• Practice the 6 step method:1. Understand the big picture.

2. Write SMART deliverables that have clear value-add.

3. Use a proactive & methodical approach to prioritizing.

4. Allocate resources with focus on impact and quality.

5. Agree and align with managers and stakeholders.

6. Execute and adjust along the way.

• Communicate early and often.

• Take control of your own ZBB – if you don’t, nobody else will!

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Additional ResourcesAdditional Resources

Intel U Web based courses:

– Zero Based Budgeting (F17017660)

– Time & Memory Management (ECP014699)

– Maintaining Balance (WLE014817)

– Listening, Influencing, Handling Tough Situations (ECP014833)

– Negotiating to Win-Win (ECP014698)

– Working with Difficult People (ECP014696)

See Manager Connection website for additional resources:

http://mld.intel.com/managerconnection/mlt.aspx

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Intel Confidential

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Dealing with New RequestsDealing with New Requests

Key QuestionsKey Questions

• Does the request add value for Intel? If not, ok to push back.

• Does this task or project support my key deliverables?

• Am I the right person or should the request be redirected?

• Is there an easier way to solve the problem?

• What is the priority of the new request?

• What trade-offs would I need to make? What would drop?

• What is a realistic deadline?

• Should I consult my manager before committing?