Your Priority Needs a Strategy

I have worked in software for over 20 years, and have helped companies of many different sizes and maturities with their software challenges. One thing that always puzzled me, was how individual teams are doing their prioritization - and why some teams have more freedom to take risks than others.

The Priority Matrix #

One tool often used in this context is the Priority Matrix, which has a few different versions. The one I am most familiar with is the one where you have four quadrants, and you put your items in the quadrants based on their impact and urgency. The idea is that items that are considered to be high impact and high urgency are the ones that you should work on first. Items that are low impact and low urgency are the ones you should work on last.

The problem with the Priority Matrix is that it assumes that the Impact and Urgency of an item can be easily defined. But in reality, this is not the case. Impact and Urgency are often subjective, and they can be defined in many different ways. For example, if you are a developer, you might think that the impact of a bug is high, because it is preventing you from doing your work. But if you are a manager, you might think that the impact of the same bug is low, because it is not affecting your customers directly or in a for the business meaningful way.

Moreover, the Urgency and Impact of an item can sometimes be entirely unclear. Some examples:

• Impact: This is a measure of how many people are affected by the item. But what if the item is a new feature, and you are not sure how many people will use it? How do you determine the impact of a feature that you have not yet built?
• Urgency: This is more of a measure of how much time you have to deliver on the item. But what if no one in the company is even aware of the item’s existence? What if your reporting line is not prioritizing the item?

In the world of software we often deal with this kind of lack of clarity. We are often not sure what the impact of an item is, and we are often not sure how much time we have to deliver on it. This kind of uncertainty is why we need to extend our tools for prioritization, and to be able to do so we must understand the strategic context in which our company (or department) is operating. We need a strategy for our priority!

Our Priority Needs a Strategy #

This is where I came across a blog post by Boston Consulting Group. In this post, BCG describes a tool that they use to help their clients understand what their “Strategy Palette” is. The fact that a palette has a culinary connotation may be purely a coincidence, but in my mind it does coincide nicely with the term “risk appetite” that is often used in the context of setting priorities whilst dealing with uncertainty.

The Strategy Palette is a tool that helps you understand what strategies are available to you, and what strategies you are currently using. It is a tool that helps you understand the strategic context in which you are operating, and explains why. There are two axis that determine your position in the Strategy Palette:

• Industry unpredictability: This is a measure of how much the industry is changing. “High” if the industry is changing a lot and in an unpredictable way, and “Low” if the industry is not changing much.
• Industry malleability: This is a measure of how much you can change the industry. “High” if you have influence over how the industry changes, and “Low” if you do not have much control but have to deal with changes as they occur.

This is a very short description of the tool. BCG published an excellent book on the topic that I highly recommend: The book is called Your Strategy Needs a Strategy, and explains this concept in much more detail.

Combining the Strategy Palette with the Priority Matrix #

In a way, your position in the Strategy Palette is a measure of your risk appetite. If you are in the top right quadrant, you are willing to take a lot of risk. If you are in the bottom left quadrant, you are not willing to take much risk. The reason is that typically you do not need to, and neither do your competitors. If there is less uncertainty, just keep doing what you are doing. If there is less malleability, just keep doing what you are doing.

This is where I started to think about uncertainty that is hurting prioritization using the Priority Matrix model. What if we would marry the two models, and introduce an “unclear” value for Impact and Urgency columns? This would allow us to put items in the Priority Matrix that are not clear in terms of Impact and Urgency. And in addition, depending on what Strategy Palette our company or department is operating in, we can decide how much risk we are willing to take in setting our priorities.

For example, in the Classical Strategy of an oil & gas company, you’d probably not consider prioritizing items that are unclear in terms of Impact and/or Urgency. You’d probably just keep doing what you are doing, and not take any risks. Top-down prioritization is the way to go, and clear direction oftentimes will exist.

In the Adaptive Strategy of for example a fashion company, factors like seasonality and changing consumer preferences make your context more unpredictable. You’d probably be willing to prioritize items that are unclear in terms of either Impact OR Urgency. Maybe not items that are unclear in both Impact and Urgency, but at least one of them. If you don’t know what impact something has but you have top-down “High” urgency, you’ll prioritize it. Likewise, if you don’t know how much time you have to deliver on something but you know it has a “High” impact, you’ll consider it for prioritization.

As we then move to the Visionary Strategy of a tech company, we are dealing with a context that is both predictable and malleable. Items that are unclear in terms of Impact and Urgency are probably the ones that you’d still want to prioritize. In fact; items that have a “High” expected impact but are unclear in terms of Urgency are probably ones you’d still want to prioritize. “We don’t know how much time we have to deliver on this, but we know it has a high impact, so let’s prioritize it!”. Top-down direction can be much less clear, simply because the context is more unpredictable and malleable.

And finally we arrive at the Shaping Strategy where there is both a high sense of unpredictability, and opportunity for industry malleability. Here the argument can be made that even though the Urgency is unclear, you’d still want to prioritize items that have a “High” expected impact. Likewise, even though the Impact is unclear, you’d still want to prioritize items that have a “High” expected urgency. This is because the context is so unpredictable and malleable that you’d want to take as much risk as possible in setting your priorities.

Conclusion #

I hope this gives you something to think about, and perhaps this is something you can bring to your next prioritization meeting. I’d love to hear your thoughts on this, and if you have any questions, please let me know!