Saturday, July 19, 2008

Systematically Setting Business Priorities

I was chatting with a friend the other day whose business is really starting to take off. It's a great problem to have. As would be expected, juggling priorities and responding to the host of demands on his team's time, attention, and energy is becoming a pretty significant challenge. It's one thing for us to set priorities for our own activities, but as you grow, how do you create a consistent framework that the entire team can use as a guide without having to re-visit each and every new situation? Here are some thoughts for a lightweight, easy-to-use guide:
Prioritizing and Qualifying Business Relationships
There are two paramount factors when setting business priorities:
  • Money, in the form of profit or shareholder value.
  • Time, because a dollar today is worth more than a dollar tomorrow.
Every business faces demands on its time, personnel, infrastructure, and effort, which I’ll refer to as resources. These resources can be quantified in terms of money. If two businesses face similar demands and provide comparable levels of service, the one that targets the highest value activities and executes on them with the greatest efficiency will win.
In rank order, business relationships follow this pattern (and each category, or set, can have its members prioritized within the set’s boundaries):
Customers – parties that are prepared to pay money (or in rare cases, barter) for goods and services. The money provided by customers is the lifeblood of a business, and the more customers and money, the better.
Fundamental qualifying questions:
  • Can the customer convince the vendor that it has the money required to make a purchase? Customers seeking to make the largest purchases take priority, assuming equal decision timeframes. Vendors must ask: Do you have a budget? What size is your budget? Has it been approved? Once a decision has been made, what’s required to release the funds?
  • Is the customer presently in the market as a buyer and how long will it take for them to make a buying decision? If two customers will spend the same amount of money, the one that will make a decision first takes priority. Vendors must ask: What’s your decision timeframe? Will there be any additional approvals required and if so, how long will that take?
Partners – parties that provide access to customers, or by providing quantifiable value, allow a vendor to pursue customers it wouldn’t otherwise be able to attract. 
Fundamental qualifying questions:
  • If a partnership is formed, what do the parties get that they wouldn’t otherwise? 
  • What will ensure that each party gets whatever it is that’s been specified?
  • How much time should be allowed for the specified results to be achieved?
  • What happens if expectations aren’t met? Will one party be liable to the other on a cash basis?
Employees – people who are paid to enhance the value of a business through their labor.
Fundamental qualifying questions:
  • What clearly identifiable skills does the person bring to the business?
  • Can the value of these skills be calculated? Are there specific customers or markets that will make buying decisions as a result of what this hire brings to the team? Similarly, will this hire free other personnel to catalyze buying decisions?
  • What specific knowledge, relationships, or credibility will this person bring to the business? Can these be quantified in monetary terms?
  • Can a durable, highly motivated core or team be built around this person?
Analysts/Media/Consultants – people and organizations in a position to directly influence the behavior of customers.
Fundamental qualifying questions:
  • What relevant customers do these people/organizations serve?
  • Is their influence needed?
  • Aside from consuming the company’s resources, is there a cost for establishing and maintaining a relationship?
  • Is the analyst/consultant or media property credible? How credible is it?
Knowledge seekers – people contacting the business to increase their knowledge without any exchange of value.
Fundamental qualifying questions:
  • Can this person’s questions be answered through existing and readily available material?
  • How much time would be required (or should be allotted) to speak with this person and answer their questions?
  • Is it conceivable that this person might add value or influence customer behavior at a later date?
This framework can serve as a consistent guide, but the exercise of business judgment will always be a necessary ingredient. With experience, different qualifying questions may emerge to suit a specific industry, relationship, or opportunity. Adapting to these changing circumstances will be key.