Wednesday, January 07, 2009

The Great Prioritization Debate of 2009 Coming to a Company Near You...

As people have returned from the long Holiday break, we have been hearing more and more from our friends, delivery partners, and clients about the grand "prioritization" process that is happening at their companies. With a gloomy economic outlook the desire is always to look inward: what should we be focusing on? What are our highest priorities? Which projects are worth doing now and which should be shelved? What's a luxury and what's a must-have?

Using a prediction market to ask these questions is valuable for a couple reasons:
  • As opposed to the executives hunkering down for several days in a meeting room and arbitrarily deciding what projects should move forward and what should get cut, this is a credible process everyone has been involved in. No employee can say later they weren't asked for their input.

  • Ad hoc prioritization exercises kill internal morale and productivity, plain and simple. I've personally been the victim of and participated in these meetings. As onlookers we all sat around gossiping about what was going to get cut, what would get saved, and looked for any piece of information that would give us a clue as to what was going on in the meeting room. When one of our bosses would walk out there would be intense, hushed discussion. "Did she look stressed? Pissed?" And participating in these exercises as a manager wasn't much better. Much of the talk was arbitrary horse jockeying and was rarely based on reality. The loudest talker or the person with the highest position always preserved their projects regardless of merit. Not to mention it took days to get through and no one got any work done.
Running a market to go through this exercise is simple. Figure out a verifiable metric you are going to measure projects against and ask about each. For example one of our clients is running a market like this:

Q: Which of these research projects will be included in a product design by the end of 2009?

Possible AnswerCurrent Probability
Project 150% Chance
Project 250% Chance
Project 350% Chance
Project 450% Chance

After a couple weeks they saw something like this in the market:

Possible AnswerCurrent Probability
Project 15% Chance
Project 285% Chance
Project 340% Chance
Project 465% Chance

This was great input to the decision makers. People didn't feel very confident Project 1 was going to make it while people felt very confident Project 2 would. Projects 3 and 4 are close to even odds so maybe they are given additional resources to increase their odds, or shelved. Regardless, the decision points are now being discussed based on how the projects will affect the business, not on whose pet project it is.

Even better, as the year continues this market is continuing to run and managers are watching how probabilities change based on their actions, say if they decided to put more resources in to Project 4, do people now think it has a higher chance of making it in to a product design?

Using Inkling to prioritize projects doesn't remove or hijack the decision making responsibility managers have but it focuses the discussion on business value of projects and makes everyone feel like they have skin in the game about the decisions being made, which is crucial at a time when it's easy to just sit around and talk about how bad everything is and get nothing done in the meantime.

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