Using a Prioritization Matrix For Your Next Project
By Jibility co-founder Chuen Seet
A surprising number of organizations are woefully inadequate at using a prioritization matrix for their projects or initiatives.
Less surprisingly, prioritization done well can be the difference between success and failure — which makes it all the more mystifying when so many don’t have a firm handle on prioritization.
Why is this so?
We’ve seen that most organizations are capable of creating a list of projects or initiatives based on a strategic vision or set of goals. However, they then spend insufficient attention on building a prioritization matrix for these initiatives. Instead, they dive straight into implementation. This will always put the success of the strategic vision at risk.
Evaluating and prioritizing is vital.
Evaluate your Initiatives
The go-to evaluation method for many organizations is a simple spreadsheet. There’s nothing wrong with this — but you can easily transform it into something far more visual and quick to interpret.
The Prioritization Matrix
A more effective (yet still simple) method for prioritizing initiatives is the two-by-two (2×2) matrix. With the matrix, you plot initiatives into one of the four quadrants by evaluating their value and risk.
The resulting visualization is a far more compelling tool for building consensus and identifying the initiatives that just aren’t quite right.
Defining Value and Risk
Using value and risk as the evaluation criteria is key to substantiating where initiatives should sit in the list of priorities. However, these are subjective terms.
The complexity of how you evaluate the value and risk of an initiative is up to you, relative to the level of sophistication and accuracy required and effort afforded. Just ensure that you are consistent and apply the same definition of value and risk when evaluating each initiative.
How do you determine an initiative’s value?
The measures of an initiative’s value are usually tied to your organization’s value drivers. Each organization’s value drivers can vary vastly; for example, the value drivers of a non-profit (e.g. saving lives) are very different from those of a publicly listed bank (e.g. shareholder return).
There are too many measures of value to list, but here are three definitions of value which are commonly applied to prioritization of initiatives:
Assuming your strategic goals are right, then the initiatives most aligned with these will deliver higher value.
The more the initiative increases the value proposition to your customers, the higher the value.
An initiative has more value when it positively impacts the organization’s preferred financial measures, e.g. profit, revenue, margin, cashflow, funds, etc.
How do you determine an initiative’s risk?
There are two common considerations when evaluating an initiative’s risk:
The delivery risk of an initiative assesses the potential impact of implementing it based on complexity, effort and cost. At the initial planning stage, this will probably be your best guestimate, as you are unlikely to have a good understanding of the complexity, effort or cost early on.
Business risk takes into account the risk of not implementing an initiative in addition to the risks of implementing it (delivery risk). For example, failing to implement a business change required to meet legislative compliance requirements can be a significant risk to the organization’s licence to operate.
Prioritize the Evaluated Initiatives
Once you have determined an initiative’s value and risk, you can plot it on the 2×2 in relation to all the other initiatives. The quadrant into which it falls should help to determine the priority for its investment or implementation. To this end, the quadrants are labelled Challenge, Implement, Possible and Reconsider (clockwise from top left).
Confirm your Priorities
If you imagine a series of curved bands radiating from the top right corner towards the bottom left corner, then working from left to right and top to bottom is generally the priority order for your initiatives.
With your initiatives thus prioritized in a logical and reasoned manner, you’re in good stead to start planning your implementation to reach your strategic goals.
A Tool for Building your Prioritization Matrix
Jibility is a SaaS product for building strategy roadmaps, of which the prioritization matrix is a key component. Our interactive matrix makes it easy to plot your initiatives and highlight the priorities, with all changes you make flowing through the other steps of the app to keep everything in sync.
Visit the features page for more information.