Join Mike Figliuolo for an in-depth discussion in this video Prioritizing your efforts, part of Building High-Performance Teams.
- Once you've created a list of initiatives that you're going to pursue to help you achieve your vision you need to evaluate those initiatives according to objective criteria for comparing them to one another because ultimately you need to prioritize those initiatives and the ones you're going to pursue are the ones that meet the majority of your objective functions. I like to use a tool that I call "strategic filters" for doing this evaluation. Those strategic filters are going to be based upon the objective functions of your organization and the goals that you find to be important.
Once you've constructed your strategic filters you're going to assess every single initiative relative to that set of filters. So allow me to illustrate. Let's say our company is growing and we're also trying to expand internationally and we really want to launch some new products, so we're going to create two types of filters. The first filter set is going to be qualitative. The second filter set is going to be quantitative. So I may construct evaluation filters that look at things like: Is the product new? Is it going to leverage our existing brand or is it white label and non-branded? Is it going to help us be global or is it focused on domestic markets? Lastly, is the product simple or is it going to be complex to launch? Those qualitative filters will help me assess those products and those initiatives based upon my goal of taking my brands global.
Once I've decided if they're a fit with the qualitative filters I also need to look at the numbers and I may have three sets of numbers that I consider as my financial filters. I may look at the net present value of the initiative. I might consider the internal rate of return of that initiative, so if I invest money what's the return I'm going to get on it? Lastly, I might look at the impact of that initiative on my total growth rate for the organization.
Having that complete set of filters will enable me to evaluate initiatives and identify the ones that are going to drive the most objectives as well as rule out or de-prioritize the ones that don't help me achieve my goals. Allow me to walk through an example. Let's say I have a new product. It's going to have our brand on it and I'm going to launch it in Asian markets and my company is mostly based in the United States. This is going to be a brand new product that nobody has ever seen before in Asia.
So now I'm going to evaluate that initiative, that project against my strategic filters, both in terms of the qualitative ones and the quantitative ones. Let's look at this initiative. I already said that this is going to be a new product that nobody in Asia has ever seen before, so it would pass that filter. It's also going to be a branded product, something that's going to carry our brand into that Asian market, so, again, it would pass that filter.
Now clearly expanding into Asia is going to help me achieve that goal of being global. Now unfortunately this new product is highly, highly complex. So according to my strategic filter of launching simple products it's not going to pass that filter. That doesn't mean I'm not going to pursue the initiative. It just doesn't score well against that criteria.
Now as we look at the financial filters and the quantitative evaluation of this initiative I may find out this has a net present value of five million dollars over the life of the launch so it would pass my NPV filter. I may also find out that the internal rate of return is 40 percent which is exceedingly high and may exceed my internal rate that I expect of 10 percent, so it would pass that filter.
Unfortunately, the market isn't quite large enough for it to drive the corporate growth rate where I want it to be, so it might not pass that filter. I now have a profile of that particular initiative and how it's going to help me achieve my organization's goals, and later on when I evaluate all the other initiatives in my portfolio I'll then be able to compare initiative against initiative and see which ones are going to help me achieve my goals more than the others.
So your set of strategic filters should be based upon the objectives of your organization and then as you evaluate your initiatives against them you're going to decide whether it passes a filter or fails or you can use a high, medium, low as you evaluate each initiative against those filters and having done that evaluation you'll be prepared to move into a prioritization process.
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