This is a prioritisation tool that explicitly recognises that the normal bottleneck in implementation is a company’s capacity to lead change.
When is it useful?
When you have identified more possible strategic actions than you can pursue, and you want to decide which to do and which not to do
How do you do the analysis?
The Vertical axis requires us to estimate the bottom line impact for each initiative. Base this on the specific measurable objective of the initiative. Some initiatives, e.g. cost reduction are easy to quantify. Others (e.g. cultural change) are harder. At the very least, a breakeven number can be created and used to judge impact relative to other initiatives. “In order to have greater impact than the cost cutting initiative, the cultural change programme would have to add 2% to our growth rate – do we think it will achieve that result?” This attempt to quantify will trigger the most useful executive team debate, as the team’s underlying assumptions about the initiatives are drawn out. We are not looking for perfect accuracy, but to identify order-of magnitude differences.
Again, try to quantify the leadership required. Estimate the leadership commitment required to do the initiative properly, not just the minimum to get by. How many of the executive team will be involved? How much time per week will they have to spend? How much of their leadership credibility/energy will they have to expend? Does the initiative require large numbers of people to change their daily behaviour (e.g. moving from a centralised bureaucratic culture to a decentralised entrepreneurial culture) or can it be delivered with a small team (e.g. an acquisition)? Will it take years of sustained leadership to deliver, or will we break the back of the initiative in the first 2 months? Again, we are not looking for perfect accuracy, but to sort the initiatives into different buckets.
Once we have plotted each initiative, and are confident that their relative position is approximately right, we can read off priorities, starting in the top right. At any point, we can draw the line and . The temptation will always be to stretch and do just one more initiative. Try to resist – usually it will be better to have fewer initiatives and drive them as fast as possible with managements’ full leadership behind them than to dissipate that energy over a long shopping list.
The underlying assumption of this framework is that Leadership capacity is the bottleneck resource in implementation. Any significant change requires leadership, and the leaders cannot focus the organisation’s attention on many areas simultaneously. The framework axes are selected to optimise that resource, making sure we prioritise the initiatives that deliver the biggest bottom-line impact from our limited leadership capacity. It also highlights the imperative to continuously grow our leadership capacity so we can take on more
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How can you adapt this concept?