Project Prioritization Becomes More Strategic Very few organizations have the luxury of committing to a range of projects without having an effective way of prioritizing these. One could argue that this issue is more likely to be experienced by organizations that are relatively immature in their operational excellence or strategy execution journey. We’re not necessarily finding that. As companies continue to look to cut waste, improve efficiencies and improve the effectiveness of their strategy processes, project prioritization has become a hot topic. Last year, i-nexus conducted a Strategy Deployment Maturity assessment. One of the survey questions had to do with the way in which goals and projects are being prioritized. Here are the options available with summarized results.

Level 1. Aside from major strategic initiatives, project prioritization is largely driven by local management agendas

18.75%

Level 2. Aside from major strategic initiatives, project prioritization is largely carried out by prioritization of project ideas against predefined criteria (typically using a weighted evaluation matrix). In addition to feasibility and resources, these criteria will often include alignment with strategic objectives, but this will typically be subjectively evaluated.

31.25%

Level 3. Project identification is increasingly driven from a more strategic review of actual business performance vs. expected performance.

In addition to the major strategic initiatives, there is on-going attempt to align the operational improvement projects with the annual performance improvement goals identified in the goal cascade.

Process based diagnostic tools such as Value-Stream Mapping are used to pinpoint improvement opportunities and the potential impact of these opportunities on the KPIs that track achievement of the strategic/operational goals is considered during project prioritization.

43.75%

Level 4. On-going project prioritization is an integral part of the hoshin cascade and periodic operational review meetings. See Infographic Hoshin 6 Stages

The derivation and chartering of projects is driven through the Hoshin Kanri process through the development of A3′s for each goal and ultimately each project.

The chartering of projects includes specifically identifying the impact that the project will have on the KPIs that track achievement of the goal and identifying the resource implications of the projects such that the portfolio of projects can be optimized to maximize the impact of goals and fit within the available resources allocated through the Hoshin Kanri deployment process.

A distinction is clearly made in project prioritization between the actions plans to realize objectives (developed through A3 thinking) and the actions/countermeasures that need to be implemented to bring performance back

6.25%

on track based on PDCA analysis of problems that occur during implementation of the action plans.

Essentially, the challenge in prioritization is to make the right decisions for project investments with regards budget and resource allocation, based on the value that they will contribute to the business. In all cases where a company has a business strategy in place (which one would hope would always be the case), the value to the business will be best measured based on a projects alignment with and support for the business strategy and objectives. This is supported in the survey results above where level 3, in which the majority of respondents felt their organizations was placed at the time, included prioritization based on alignment to a strategic review and measurement of actual business performance vs. expected performance. While only 6% of respondents felt their organization was in the 4th level, this is not surprising given that, although Hoshin planning is being implemented in many areas, we’re still a little time away from a large number of case studies and the accumulation of widespread experience in the area. Effective project prioritization therefore requires the establishment of a governance structure to ensure adherence to an agreed policy and process for prioritization. Here are some useful tips in this regard:

A prioritization matrix is often the best tool to use to rank projects. While most organizations will choose different criteria within their prioritization matrix, the alignment with the strategy and demonstrated impact on the achievement of strategic objectives are the most critical factors for project selection.

A prioritization matrix does help to take some of the emotion out of the process. It also provides a consistency in related decision making that should become respected – if not immediately, then over time. This is particularly so as the criteria used should provide significant input into the measures and metrics to be used to determine the project’s success, hence the need to align to strategic business objectives from as early In the process as possible.

It’s important to realize that the filtering process should start as early as the idea generation for projects. Even at this early stage, ideas need to be filtered and evaluated by a clear set of criteria so that those that are not going to have sufficient impact on the business success will never come to life.

Of course, project prioritization also means that tough decisions have to be made. This might include closing down a high profile project if it is not delivering or no longer directly supports the strategy. But the sooner this is highlighted and management can take informed decisions in this regard, the better.

In practice the process often filters in increments. A large number of prospective projects can be quickly excluded based on the agreed criteria. This provides sufficient time and focus for the evaluating team to then discuss the remaining contenders in greater depth and to take a deeper dive into the benefits and resources required.

The i-nexus Strategy Execution software solution fully supports complex organizations through project prioritization process including use of the prioritization matrix. This includes from the outset, enabling staff anywhere in organizations to generate, capture and evaluate ideas for improvement projects and after successful evaluation and prioritization, ideas can be simply promoted into projects in i-nexus. It would also include access to a full suite of program governance reporting, delivering personalized, fully drillable reporting to the in-boxes of all key executive and management stakeholders. Watch this demo for an oveview. These features are some of the reasons for the growing demand by successful businesses for the solution and growing recognition of i-nexus, including as a Gartner 2014 Cool Vendor in Business Process Management.

Most importantly, i-nexus also ensures that a holistic view of projects across the organization is possible. In so doing, the solution clearly shows standard performance indicators aligned to strategic breakthrough objectives, enabling a common framework for communicating progress and the need for action, which could include the prioritization or reprioritization of projects. This ensures that the relevant information and tools are available for the company to strategically plan, prioritize and manage company-wide execution processes. This could include through use of an effective EPMO or strategic

PMO, taking into consideration the available capacity and capital across the organization and how this aligns to achievement of overall strategic business objectives and goals. See also our latest blog on The Role of the PMO in Strategy Execution The i-nexus strategy execution suite includes market leading Hoshin features and implementation tools and we take pride in implementing our software quickly and professionally to support our client’s strategy execution success. See i-nexus.com/watch-hoshin-demo and request a callback if our solution could support your success.

I welcome your feedback and comments

Paul Docherty, i-nexus Founder & Executive Director

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e-mail: paul.docherty@i-nexus.com i-nexus