How to prioritize strategic objectives

How to Prioritize Strategic Objectives

Prioritizing objectives

Once we have used the appropriate analytical technique to translate between an objective and its drivers, we will be faced with the task of prioritizing between possible approaches. In other words, faced with a choice, which of the drivers do we work on to achieve the changed result? Whereas the analysis can be thought of as a scientific process, prioritization is often more of an art form, relying on the skill and experience of workshop participants. It becomes more artful as the cascade descends.

Forced ranking and voting tools (similar to those popular for conducting the strategy definition process) or other decision support mechanisms can be used by the group to determine which potential change activity should be targeted as objectives in the plan. There are two key dimensions to consider:

• How important is the driver to achieving the higher objective?

• How easy is it to achieve the sub-objective suggested?

The results of the voting or ranking process can be presented graphically. The example below shows the output from the management team when voting on how to achieve a targeted improvement in Percentage Profit Margin. They have identified a bundle of potential approaches, but they need to choose which approaches they will take to meet the higher objective.

How to prioritize strategic objectives

Plotting Relative Ease of Achievement horizontally (‘easier to achieve’ is to the right) versus Impact on the Higher Level objective allows us to see the most attractive approaches in the top right hand quadrant and the least attractive in the bottom left. The two diagonals we’ve drawn in chart represent lines along which the degree of attractiveness might be considered equal. In other words, any two objectives lying on the same diagonal line would be equally attractive.

In order to create a dividing line between objectives we will pursue and those we won’t, we need to slide the diagonal far enough towards the bottom left so that the sum of the impacts of the sub-objectives above the line allow us to hit the target in the higher level objective.

We should say that, in reality, decision making rarely gets this complex. Most management teams agree fairly quickly on exactly which drivers are important and in which areas improvements can be most readily made. Simply doing the analysis to the Driver Tree level as a group exercise is enough to gain agreement on what sub-objectives need to be set.

Reaching the Bottom of the Cascade

Within the Planning Cycle, the cascade is finished when a scorecard is agreed at an operationally executable level. This means that the objectives are such that the operational team can start to scope and run projects that directly affect the KPIs on their scorecard. In fact, they can associate each action/project with a projected impact on the KPI. Progress can be judged and monitored by the
achievement of the scorecard objectives, but this does not go as far as integrating the management and review of projects into the same cycle. That is something that is controlled within the ‘Execution Cycle’.

Paul Docherty
    Founder of i-nexus, the leader in cloud-based software for strategy execution. Respected thought leader, adviser and co-architect of the Strategy Execution 2.0 "Business System" that is rapidly becoming the de facto blueprint for how large organizations successfully deploy and execute their strategic objectives.

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