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Prioritization is hard. It’s always hard, and it’s always a high-leverage area of improvement. Working on the right things at the right time is 90% of the battle.
This is an area that I’ve personally and professionally sucked at lately, so I’m quite excited to dive into this and see what we can learn. Here’s the structure of the post:
- Start with Strategy
- 3 Models of Opportunity Cost (order of projects)
- 3 Models of Leverage (importance of projects)
- 3 Models for Avoiding Prioritization Mistakes
If you need a primer on Mental Models, there’s none better than Farnam Street’s.
Let’s do it.
Can’t have a priority without a strategy
Before we even get to prioritization, there is a prerequisite — strategy. You know your strategy is lacking when everything looks equally important. If prioritization seems impossible, it’s not because you need to work harder (or smarter) on prioritization. You need to go up a level and work on your strategy.
Your strategy should help make it clear which work is most important, or at least cut away huge chunks of possibilities. If it doesn’t, it probably needs improvement.
3 Models of Opportunity Cost
Much of the challenge of prioritization is one of Opportunity Cost. Where to allocate resources and effort, given our goals and strategy. (Even with infinite money, we’ll always be constrained by time.)
Find the Bottleneck
One of the most commonly-assigned readings in business schools is The Goal, by Eli Goldratt. This book explains the “Theory of Constraints” and the summary is “Find and improve the constraining factor — no other work will matter.”
- What’s the current limit?
- What’s the obvious way to improve the limit?
The key is to look at the whole system to find the limit. In a company, is the limit sales? Some aspect of production? Delivery? (Lots more great examples in Pearson’s post.)
If you’re working on anything that isn’t improving the bottleneck, then you’re not improving the throughput of the system. Essentially wasting time and resources, where any improvement to the bottleneck would be a massive payoff.
Cost of Delay
Cost of Delay is the newest (to me) and most exciting of the ideas and resources sent in for this edition. I had a vague, intuitive sense that we weren’t measuring the right things, or properly appreciating the cost of misprioritization, and this is the framework that made it “click.”
From the site BlackSwanFarming.com:
Cost of Delay is a way of communicating the impact of time on the outcomes we hope to achieve.
Cost of Delay combines urgency and value — two things that humans are not very good at distinguishing between. To make decisions, we need to understand not just how valuable something is, but how urgent it is.
Click here to watch a 3-min intro video about Cost of Delay.
In the example in video above, the Cost of Delay for this feature was actually more than $200,000 per week! So, the 38 weeks that this opportunity spent waiting in various queues cost the organization nearly $8m in lost revenue.
Knowing this puts the cost of waiting into perspective, doesn’t it? If they had taken the 5 minutes needed to estimate the Cost of Delay for this feature then a number of key decisions would have been made quite differently.
It’s one thing for an organisation to be blind to queues. It’s another level of blindness to have no clue what those queues are costing. If we’re going to make better decisions, we really need to understand the Cost of Delay of the things flowing through the system.
So the key questions to ask yourself are:
- How urgent is this?
- How valuable is this?
- What is the cost of not having this done yet, each week? (relative to other options)
There are so many great insights on these posts, and there are too many posts to link to, so go dive into BlackSwanFarming.com and read for yourself. I’m going to read deep into it this week, for sure.
Forever indebted to Denis Krizanovic for sending this in. Super valuable.
Eisenhower Matrix (Urgent vs. Important)
A quick 2x2 that asks only two questions:
- How urgent is this?
- How important is this?
And it gives you immediate next steps based on the answers to those questions. You’ve probably seen something like this box before:
Super handy lightweight mental “tool” for quickly triaging ideas and to-dos.
The problem I find with it is inflation of importance and urgency… you wind up with too many things in the top-left box, and can’t prioritize amongst those. Then you ask yourself “what is the MOST important? What is the MOST urgent?” which is when some of these other methods come in handy.
The Black Swan Farming post on Urgency Profiles can help answer “what is most urgent?”, and hopefully this next section will help you answer “what is most important?”
(Master of segues, at it again)
3 Models of Leverage
Understanding which possible feature, initiative, or task is the “most important” is not an easy task. There are a few tools or mental models we can use to find out which projects will get us the most leverage (most progress toward our goals, given resources needed).
What project solves the most problems?
This is how Chesky does his to-do lists:
I make a long list of tasks, as exhaustive as possible. Then I try to group them. It’s like a game of leverage. What one action can take care of those 3? And I do this over and over again.
If you have a list of 20 things to do, you often realize that if you do 3 big things, these other 20 things are going to be solved in some way by 3 big things. So it’s my way of finding out how to do fewer, bigger things.
There is a subtle shift there, from looking at tasks to looking at problems. It’s also something that Matt Donovan taught me at Zaarly. Look at the problems you need to solve and the possible solutions on separate levels. They triage very differently.
Multiple problems can be solved with one project, but it rarely works by accident. You need to do this exercise to find out which solutions can knock out a few problems for you.
There’s also an similar version of this question from Tim Ferriss:
What is one thing that, if completed, makes the rest of these tasks easier?
So it doesn’t have to remove the need to complete the other tasks — just ordering projects in a way that makes the other easier, faster, or cheaper can be a great investment of time.
The 80/20 Rule (and Fractal 80/20)
I’m quite sure if you’re reading this, that you know all about Pareto’s Law. Basically that 80% of the outcome is decided by 20% of the inputs. From Farnam Street’s Mental Models:
Named for Italian polymath Vilfredo Pareto, who noticed that 80% of Italy’s land was owned by about 20% of its population, the Pareto Principle states that a small amount of some phenomenon causes a disproportionately large effect.
The Pareto Principle is an example of a power-law type of statistical distribution — as distinguished from a traditional bell curve — and is demonstrated in various phenomena ranging from wealth to city populations to important human habits.
My friend Jesse Koltes recommended the book 80/20 Sales and Marketing, which is about getting the most impact from your inputs.
The most interesting thing about the book was the concept that the 80/20 rule is Fractal — meaning that of the top 20%, there is a disproportionately impactful top 20%, etc. As Jesse said:
“There are very likely 5 minutes each year that account for 50% of your output. I try to think hard about what those 5 minutes are.”
I’m going to work hard on that, too.
Look at long-term ROI for skills and systems
Some projects (even super small ones) can have enormous payoffs over a lifetime, if they save you time and mental clutter.
My favorite example of this is Tim Urban’s (Wait But Why) answer to the question “What’s Something I Can Learn or Do in 10 Minutes That Would Be Useful for the Rest of My Life?”
He said: Learn Gmail Keyboard Shortcuts.
I learned them, and now agree completely. Now, I’d also add: Use Gorgias (or another text expander).
Where are there other super high-leverage skills (or decisions) like that?
- Set up automatic savings? Bill pay?
- Get groceries delivered?
- Learning to prioritize? (oh look, you already are!!)
Aside from skills, another approach is to see where you can apply tools or systems that will automate some of the rote tasks of your life. Saas tools for low-value tasks at work or setting up IFTTT for daily or weekly tasks can pay off very quickly by removing distractions and freeing up time.
Jason Evanish has a good post about this specifically for managers on the lighthouse blog. Find out the hourly cost of your time, and do the simple math to find out how long the ROI is of simple tools $10/month seems like a lot until you realize it’ll save you one hour ($40) per week. That’s a no-brainer.
If you see something with that kind of payoff, where a 10-minute investment in a skill or system will save you time every day, every week, or every time you repeat an action.
3 Models of What to NOT do when Prioritizing
As always on Evergreen, we like to look at what NOT to do. How to avoid problems, not just what the solutions might be. Here are some tools to avoid common pitfalls in prioritization.
Find Your Worst Enemies
Or: “Don’t have too many priorities”
The most annoying prioritization tool I’ve come across is Warren Buffett’s “2 List Strategy.” It’s annoying because it presents a reality that I was very much in denial about, and it seems so correct about that pleasing piece of denial being very unproductive.
Here’s the (maybe apocryphal) story:
Flint (Buffett’s pilot) was talking about his career priorities and Buffett instructed him to do this:
STEP 1: Buffett started by asking Flint to write down his top 25 career goals. So, Flint took some time and wrote them down.
STEP 2: Then, Buffett asked Flint to review his list and circle his top 5 goals. Again, Flint took some time, made his way through the list, and eventually decided on his 5 most important goals.
STEP 3: At this point, Flint had two lists. The 5 items he had circled were List A and the 20 items he had not circled were List B.
Flint confirmed that he would start working on his top 5 goals right away. And that’s when Buffett asked him about the second list, “And what about the ones you didn’t circle?”
Flint replied, “Well, the top 5 are my primary focus, but the other 20 come in a close second. They are still important so I’ll work on those intermittently as I see fit. They are not as urgent, but I still plan to give them a dedicated effort.”
To which Buffett replied, “No. You’ve got it wrong, Mike. Everything you didn’t circle just became your Avoid-At-All-Cost list. No matter what, these things get no attention from you until you’ve succeeded with your top 5.”
Doesn’t that just feel like a punch in the gut? Are you telling us that we can’t do absolutely everything that we ever dreamed possible for ourselves? Hm, shit. Yea. I guess that’s probably right.
So, the lesson here is to cultivate a healthy fear (bordering on paranoia) about your “secondary” priorities leeching productivity from your main priorities.
(This exact problem is a large part of the reason for the intermittence of these posts over the past 18 months, to be honest with you.)
After reading this a little bit ago, I changed the name of the “Business Ideas” list in my phone to “Worst Enemies” — a helpful little reminder to keep focus on the things that matter most.
All Possibilities should have Probabilities
I’m assuming you’ve all bought a copy of Principles, by Ray Dalio already. If not, please take a second to do so now. It’s a must read.(I don’t say that often.)
There are a TON of lessons on prioritization in there, through the larger study on decision-making. One specific principle jumped out as a “don’t”:
Watch out for unproductively identifying possibilities without assigning them probabilities, because it screws up prioritization.
You can recognize this with phrases like “It’s possible that…” then going on to say something that’s improbable and/or unimportant, rather than something like, “I think there’s a good chance that…” followed by something that’s important or probable. Almost anything is possible. All possibilities must be looked at in terms of their likelihoods and prioritized.
If you’re trying to prioritize and everything looks equally important, a pass through to assign probabilities to your possibilities will loosen up the impasse.
Rule: Don’t let uncertain outcomes look equally uncertain. Assign probabilities.
Don’t be a Prioritization Pansy
The sad truth is that the secret to prioritization is not in the tools; it’s in you. The discipline is what makes the method work, not the method itself.
As my friend Adam Hofmann points out: the reason there are 1,000,000 prioritization methods is because people fail using one and try the next. Really, bringing discipline to any of them would work well enough. It’s not the method, it’s how thoroughly you follow it.
So don’t be a pansy when it comes to prioritization. Just like Strategy, you know you’re doing well then the decisions you’re making feel agonizing, but clear.
Make the hard choices.
Then, stick with the plan. Don’t creep into your “B List” or sneak in a small feature that doesn’t have a high score on the Cost of Delay chart.
Be disciplined in your behavior.
Extra Reading (More tactical tools/methods)
Essentialism — Our most recommended book on Prioritization!
Getting Things Done — The oft-recommended classic of productivity
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Massive appreciation for those who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Chris Butler, Eugene Tsyrklevich, Nabila Amarsy, Julie Lyle, Anthony Suporia, Denis Krizanovic, Aaron Johnson, Ali Grovue, Mark Stansbury, Taylor Pearson, Khanh Tuong, Jesse Koltes, Mike Smith, Scott Norris, Amy Young, Roger Cauvin, Colin Hewitt, Matt Donovan, Mike Dariano, Greg Meyer, Tiago Forte, Kevin Indig, Derek Baynton, Blas Moros, Zach Pettet, Benjamin Kinnard.
Many thanks for being a part of this project! Not every suggestion is able to make it to the final edit, but every single suggestion is read and appreciated.
As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.
If you liked this, check out other Editions of Evergreen:Building and Managing a Team:How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
Why Employee Onboarding is holding you back
How to Boost Employee Retention
How Performance Reviews are being Reinvented
Secrets to Perfecting Organizational Communication
How to Manage Scale, and Operate in Scaling Organizations
How to Fire an Employee
What you actually need to know about Company Culture
How to Interview Prospective HiresStrategy and Competitive Advantage:How to Master the Craft of Strategy
Competitive Advantage: How to Build a Winning Business
The Power of Network Effects
How Cost Leadership Builds Powerful Businesses
Why the Best Brands Stand Out
Scale as Competitive Advantage
Barriers to Entry are Confusing
Flywheel Effect: Meta-Competitive AdvantageBuilding the Business:How to get good business Ideas: Mental Alchemy of Ideation
How to Choose the Right Business Ideas
Product/Market Fit: What it really means & How to Measure it
How to Failure-proof your business with Customer Development
How Strategy and Psychology Work Together to Perfect Pricing
The Most Important Equations in Business - CAC (Part 1)
The Simple Math Behind Every Profitable Business - CLV (Part 2)
How Psychology behind Word-of-Mouth Works
The Secret Core of Every Successful Business--Distribution
The Most Important Lessons in Sales
Why Value Creation is the Foundation of Business
Why Value Capture is the most important idea you haven't read about
The Misunderstood and Underestimated Genius of AdvertisingHow to be a Great Human:How to Start a New Job: Handling Career Transitions like a Boss
How to Master the Discipline of Product Management
The Ancient Origins of Storytelling, and how to Apply Them
How to Prioritize Using These 9 Mental ModelsI've also written about How & Why we started Evergreen:How a prototype's failure created the next iteration
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