Identifying What Needs To Be Done
Five answers point to the work that needs to happen
We’ve spent the past several weeks talking about the first five questions every business needs to be prepared to answer:
- Why does your business exist?
- What principles will you never compromise?
- Whom do you serve?
- Why do customers choose you?
- How do you make money?
The sixth and final question “what do you need to do right now?” implies that we need to get to work, but what do we prioritize?
I suggest that we look at three frameworks to help us identify the most important projects to start right now.
The Purpose Pyramid
My favorite strategic framework is the purpose pyramid:
In this framework, the Purpose at the top is the “north star” that guides everything the organization is working towards. The question “why does your business exist?” defines the Purpose.
The strong foundation for this framework are the non-negotiable Principles that define how the business operates. The second question, “what principles will you never compromise?” provides the content for this part of the framework.
Below the Purpose are three Pillars — what are the three things that absolutely need to be true for the business to accomplish its Purpose? While we haven’t framed any of the five questions to identify these pillars, it is likely that the work done in answering the questions “whom do you serve?” and “why do customers choose you?” will have uncovered the core elements necessary to support the Purpose.
It is these three Pillars that point to the work to be done. In the Purpose Pyramid framework, under each Pillar are three Plans. Once the Pillars are well understood, you need to ask the question for each — what do we need to do to firmly establish that Pillar?
The Customer Value Map
The second framework to help identify the work to be done is the Customer Value Map we introduced to help answer the question “why do customers choose you?”.
Based on our deep understanding of our customer, what can we do (in alignment with our market discipline) to increase the value created for them and to reduce or overcome their pains? These potential projects can further strengthen our value proposition and our differentiation.
The Cash Cycle
Finally, we can evaluate work we could do to strengthen our cash flow. The third framework we can use to identify potential projects is the Cash Cycle.
Are there things we can do to reduce our cash conversion cycle, to increase sales, or reduce operating expenses? Are there projects that would meaningfully add capabilities, increase capacity and scale, or increase efficiency?
Prioritizing and Selecting
Hopefully these three frameworks have helped us identify a good list of potential work to do. But, there’s a good chance we can’t do it all, at least not right now.
Most companies have some sort of mechanism for prioritizing potential projects. This is often called a 1:N list, where projects are ranked from 1 to however many there are (N). Only so many can be done based on available resources (cash, developers, systems, facilities…). By ranking the projects, identifying the top ones that can be done with available resources becomes a straight-forward exercise. I recommend factoring strategic alignment, financial impact, and specific resources required into that ranking process.
So by using these three frameworks, we can identify work that could be done. By prioritizing those projects, we identify the most important work to get done. And based on the resources we have, we select the work that we will do.
Tomorrow we’ll talk about actually doing that work.