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Article
Toothpaste or Toilet Paper
By
Ron Zimmer
Senior Consultant
In a recent article, an author posed this question: If you have only
enough money for one, which would you buy—toothpaste or toilet paper?
The responses were about even. It seems there are "toothpaste people"
and "toilet paper people."
We are forced to make this kind of choice on a regular basis; we must
decide which initiative(s) to fund out of many worthwhile projects. All
of the candidates may have benefits, but we are limited by budget or
other constraints.
In this economy, many corporate budgets are even more limited than
usual. So if you find yourself in this situation, forced to choose among
many good projects, how should you make the decision? Developing an
objective decision-making model can both help you choose the best
projects and build corporate buy-in. Following are five steps to help
you determine which project to focus on first.
Identify the mandatory initiatives (e.g., regulatory compliance)
and separate them from the discretionary choices. If the projects are
truly mandatory for this next year, allocate resources to these tasks
first.
If there are a lot of discretionary contenders, it can help to separate
them by urgency and importance. Try this:
 | Create an Urgent vs. Important grid |
| Eliminate subjective influence and place the candidate on
the grid by rating its urgency and importance |
| Focus on the items that are both important and urgent |
|
Urgent but not Important |
Urgent and Important |
|
Not
Urgent or Important |
Important but not Urgent |
Clearly identify the limitations/constraints, corporate goals, and
decision criteria. Be sure to make this a common goal and a shared
problem to solve. It is helpful to also have shared consequences such as
incentive compensation.
| Identify the decision criteria before you start and get
agreement—this is a corporate-level decision |
| Determine the scoring system and weights |
A decision grid might look like this:
|
Criteria / Initiatives |
A |
B |
C |
|
Cost to Develop |
|
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|
Expected Benefits
|
Revenue / Profit |
|
Expense Savings |
|
Soft Benefits |
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|
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Supports Corporate Strategy
|
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Value to Customer |
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Differentiators |
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Other Resource Constraints |
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Gather information to satisfy the decision criteria. This may
involve creating a business case for each of the potential initiatives.
(Be as complete and accurate as possible, but don’t let this turn into
"analysis paralysis.")
| Estimate costs as accurately as possible |
| Base potential revenue and profitability on facts
(market size, penetration rate, competitor strength,
etc.) |
| Identify other constraints, such as key resources,
systems, or knowledge |
| Recognize soft benefits, such as brand, reputation,
or ease of doing business |
| Determine if this initiative will create sustainable
differentiation in the marketplace |
| Most important, does it add value from a customer
perspective (i.e., does it fulfill an important need)? |
Define customer needs by specific market
segments. Many customer expectations (e.g., competency,
efficiency, friendliness, courtesy, and professionalism
in delivering service) can be anticipated. Make sure you
understand what has changed for your customers. Basic
research uncovered that 90% of the U.S. respondents to a
recent survey said that they had reduced spending as a
result of the recession and that a growing percentage do
their own research on the Internet for product features,
comparisons, and price. Determine what these and other
trends and requirements mean for your initiatives.
Evaluate the choices. Objectively score the
candidates for each of the decision criteria. A range of
1=low to 5=high is usually sufficient. Watch for traps
like corporate politics, squeaky wheels, "big agent"
pressure, mediocre-is-good-enough mind sets, or hidden
stuff that was not disclosed. Typically, this creates a
priority ranking. But if the scores are too close,
re-score using a forced ranking system. (For each
decision criteria, rank the candidates against each
other).
You may think you are done after you have identified
the top projects, but don’t stop there. Because you are
offering fewer new products or services this year, ask
what is needed to make it special, innovative, or more
appealing. What would take it to the next level?
Be sure to complete the package of product, service,
training, communications, executive sponsorship, product
introduction, and market rollout. And remember to
measure and monitor results and course-correct as
needed. |
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