STEP EIGHT

Prioritizing Tactics and Resources

OVERVIEW

Prioritizing needed resources by four kinds of results: customer, business, learning, and financial

Using cost models to prioritize results

If your organization is like most others, resources are scarce—if you go to your sponsor and stake-holders with your strategic plan in hand and ask them to double your budget, it's most likely that you'll be turned down. Whatever additional resources you need, you'll have to spend some time and effort making a strong case to justify those requirements and explain how they relate to the mission objectives and the business.

The tools in this step will help you prepare and present your case and gain the commitment of key people in your organization who will grant you the additional resources. These tools also will help you arrange your tactics in the same order as your organization's needs and objectives. By prioritizing your methods in this manner, you show your business savvy and your willingness to be part of the team—and that raises the planning group's credibility among its stakeholders and business partners.

In this step we'll address the methods you can use to prioritize your resource requests. Specifically, we'll discuss the following topics:

  prioritizing by customer, business, learning, and financial results

  prioritizing using cost models.

Let's begin this step with two case examples.

Case Examples: Prioritizing Resources

Methods of prioritizing resources differ from organization to organization. What works in one may not even be feasible in another. Your understanding of your organization and what it values will help you decide how best to prioritize your resources and present your needs to management stakeholders. Two case examples demonstrate how important it is to understand your organization's structure and the challenges it faces.

Getting a Realistic Grip on Business Needs to Gather Resources

Sportswear Unique is a large sportswear and leisurewear retail company. In completing Step 7 of the strategic planning process, the planners chose three solid tactics directly related to strategic outcomes previously identified and to the organization's mission. Those tactics are

  create an in-depth incentive program for franchises and business partners to sell new products at top prices

  ensure that sale merchandise is sent to outlet locations rather than put on sale at retail stores

  review and change the accounting system to track with new Securities and Exchange Commission (SEC) regulations for retailers.

When Sportswear Unique began to plan the tactics and identify the resources that each tactic would take, planners decided to prioritize the tactics so they could be implemented over the next several years. All parties agreed to the following order of priorities:

1. The accounting system: Cost modeling, results, and an assessment of business drivers made it clear that if the organization did not make the necessary accounting changes, annual reports might have to be restated, SEC fines could be levied, and the company might face even greater penalties.

2. The move to outlet malls: The cost to implement this move in year 1 would be relatively low, and making the move would create an additional income stream.

3. The incentive program: This tactic was attractive from a sales perspective and management had wanted it to be the top priority, but planners knew that it could be implemented at a later date, whereas the new accounting system could not wait.

POINTER

The strategy design group identified the most critical resources needed to meet the priorities and gained management's approval for these resources. The critical resources were then reassigned and became part of the tactical design implementation team.

Linking Department Tactics and Resource Needs with Corporate-Level Strategy

Electronics Plus is a Fortune 100 manufacturer of computer components. It employs more than 10,000 people globally. To stay competitive, the organization needs to pursue an ambitious strategy for the design, development, and delivery of sales and product training.

A subgroup of members from the training department led the prioritization effort by looking at customer, financial, business, and process measures and resources. The subgroup determined that it was really customer and sales knowledge that needed to drive this tactic. Understanding this, the subgroup was able to work with the strategic team and secure the needed resources.

When the organization's strategic planning group completed its tactical plan, it became clear that one year was not long enough to achieve the desired outcomes. Tactics and resources had to be rank-ordered in terms of benefits and value.

The organization emphasizes corporate strategy guiding department and group strategies, so the planners have decided that the best method of prioritizing the department's tactics and resource needs is to link each tactic to a business objective stated in the corporate strategy. Tactics and resources that have weak or no links to the corporate strategy won't be completed in the first year. Acting on this decision, the strategic planning group has chosen four key tactics and have gained strong buy-in from stakeholders and senior managers.

Example 8.1 illustrates a format for linking department and group tactics to corporate strategies. The business drivers, corporate strategic initiative, and business objective are listed in the first three columns, and the department or group tactic chosen to support the corporate initiative is described in column 4.

Prioritizing Needed Resources by Results

To prioritize by results the resources that are needed for your chosen tactics, you must identify the effects a tactic will have on performance, process, behavior, financial, or business indicators. Results can be grouped into four categories: customer, business, learning, and financial. Let's look in greater depth at each category of results.

Customer Results

The customer category involves results that make an impact on service, delivery, or support involving the customer. Here are some examples of tactics that affect the customer (either the organization's customer or the department's customer):

EXAMPLE 8.1

Sample Format for Linking Department and Group Tactics to Corporate Strategy

   development of a customer service program that promotes call reps' ability to decrease the length of customer calls by training the reps to pinpoint more quickly what information the customer needs

   creation of an electronic performance support system that puts product information, typical customer questions, and other key information at call reps' fingertips

   development of a customer information system that eliminates the need for customers to reenter data when they change addresses or open additional accounts

   initiation of a “know-your-customer campaign” whereby personnel take the time to make contact with their customers and get feedback on their services and programs for future quality enhancements of the product line.

The intent of customer tactics is to align the organization's programs and services more closely to the customer's needs, and to ensure that customers are satisfied and will continue to see you as the provider of choice. Common customer results are

  improvement in customer satisfaction or end-user perception

  repeat business

  referrals or recommendations

  enhanced public perception of the organization and thereby new customers

  unsolicited positive feedback

  increased relationships increased revenue per customer or decreased cost per customer.

POINTER

Business Results

Business results reflect the influence of tactics on the processes, procedures, research, and development of the organization as a whole. Here are some examples of tactics that may affect the business:

  developing and implementing standards for an accounting system to ensure that errors or noncompliance with regulations are quickly identified and resolved

  streamlining the time needed to prepare marketing materials and product packaging so that time to market is reduced

  identifying methods and processes that encourage employees and customers to offer input and creative ideas to the research and development department so that new products or enhancements to existing products can be developed.

The intent of business tactics is to improve process or work flow or to enhance the creation, innovation, or development of new ideas, new research, or problem resolution. Common business results are

  improvement in a manufacturing process as a result of a problem-solving course

  decrease in product launch time

  time-to-market decreases

  cycle time decreases

  decrease in material waste

  increase in new product design or realignment

  increase in productivity through streamlining of process time.

Learning Results

Tactics that produce learning results improve the capabilities of the human resources inside the organization. Here are two examples of organizational tactics that may influence learning:

1. training that retools the skills of employees who may experience layoffs and downsizing into the skills needed by a growing department

2. leadership programs that identify high-potential candidates for team leadership positions and then monitor their ability to motivate team members.

The intent of learning tactics is to improve employee morale, alignment with organizational goals and needs, capability, or retention. Common learning results are

  employee suggestions that improve processes or policies

  decreased employee turnover

  employee skill development or enhancement

  increased number of business plans developed by teams with leadership training

  greater number of teams that voluntarily ask to share incentives for work accomplished.

Financial Results

Even seeing the word financial makes some professionals nervous. But financial results can be realized from most sound tactics. Tactics that ultimately improve revenue, reduce cost, increase productivity, enhance asset utilization, or reduce risk and the resulting cost of risk all produce financial results. Here are several examples:

  development of a streamlined manufacturing process that increases productivity and decreases material waste

  implementation of creativity enhancement programs to produce new goods and services that enhance competitive advantage and increase profits per customer

  launch of a new technology to decrease employee error or increase the time workers can spend on more meaningful tasks

  creation of a branding program that enables customers and prospects to identify more quickly with the product and that creates goodwill in the community

  creation of a sales process package that includes product knowledge development, sales process training, and systems to support the closure of sales

  development of a certification program for production line workers in which training is done on the job and the employees are observed and certified when they meet specific performance levels.

All organizations are concerned with financial objectives. The intent of financial tactics is to align business strategies to ensure the financial health of the organization. Common financial results are

  decreased time to proficiency

  decreased sales cycle time

  decreased time to market

  reduced expenses

  increased sales

  increased revenue generation per employee.

Tool 8.1 can help you identify the results you might expect from your tactics and therefore help you express those results in business terms. For example, if you believe your tactic most likely will decrease a new employee's time to proficiency in product recognition and, ultimately, in sales, then you should describe the tactic as “increasing organizational capacity through rapid product recognition and, ultimately, increasing revenue through sales.”

TOOL 8.1

Identifying Tactic Results

 

Sample tactic description: Design and develop an electronic performance support system that will provide procedures, processes, and troubleshooting information for the organization's call center staff (who resolve customers' problems with products and who process catalog and Web orders)

Part A: Questions to Identify Expected Results (sample answers are in italics)

1. What change do you expect for the employee participating in this initiative?

Increased ability to troubleshoot problems for the customer

2. What impact will this initiative have on the department or group?

Increased positive perception of the organization

3. What impact will this initiative have on the organization?

Increased customer satisfaction and decreased time to employee proficiency

4. If there is a process improvement as a result of this initiative, identify what it is and how you will know the results of the process improvement.

Customer call processes will be in place; call center employee telephone time will decrease and customer satisfaction will remain steady or increase

5. What on-the-job evidence would you look for as a result of this initiative (for example, decreased time to proficiency, increased productivity, increased revenue, decreased costs)?

Increased productivity, increased customer satisfaction, decreased time to proficiency, decreased time per call

6. What overall business impact would you expect from the implementation of this tactic (for example, product sales increase, cycle time decreases, product time to market decreases)?

Repeat business

7. In business terms, what performance improvement do you expect from this tactic (for example, percentage of error reduction, percentage of sales increase, or number of customer calls completed within a given time per employee)?

Number of customer calls completed within 15 minutes

8. Can you identify the baseline of the existing level of performance? If so, how (for example, organizational reports, creation of a form for measurement, management evaluation)?

            Yes, through call reports

Part B: Group Measures by Measurement Category

 

Instructions: In column 2, list the specific measures you have identified for each result category in column 1, and then identify the way in which the tactic will influence that measure.

Result Category	Specific Measure	Tactical Result
Customer	Customer satisfaction	Troubleshooting course will provide call service reps with needed information.
Business	Productivity	Fewer call reps will be needed for call volume.
Learning	Time to proficiency	Call reps will have a shorter period of orientation to the job.
Financial	Resource costs Customer retention	Decrease in staffing costs is greater than the cost of developing the course. Retaining customers is less expensive than recruiting new customers.

 

Part C: Questions to Analyze Your Identified Results (sample answers are in italics)

1. Is the result understandable to the strategic planning group members, stakeholders, sponsors, and other key business partners within your organization?

Yes, this result is important to all parties.

2. Is there linkage between the results? If so, how are they linked? (A customer measure, if met, most likely would influence other measures. For example, increased customer satisfaction usually increases sales, referrals and recommendations, and customer relationships.)

Customers received more accurate and in-depth product information, which increased satisfaction and, therefore, increased sales.

3. Are there any contrary results? (These are results that would make it clear if the tactic did not have an impact—for example, if errors increased instead of decreased, if sales fell, or if time to proficiency increased.)

If customer dissatisfaction continues, we have a problem.

4. What results are most likely to be seen as valuable by the organization, and why?

Customer retention and satisfaction, because our customers are a key focus, and the number of competitors vying for our customers is climbing.

 

When you've identified and categorized the expected results for each of your tactics, it's time to assess the organizational importance of each result. Use worksheet 8.1 to prioritize your tactics and the needed resources using results to identify the more highly valued outcomes. Here are some examples of the resources you may need to implement your tactics:

  human resources, stated in number of full-time equivalents, or FTEs

  systems

  supplier or outsource

  process development

  time

  budget.

You also can use worksheet 8.1 when discussing the following questions about resource allocation:

  Are the results worth the investment of resources?

  Are the results critical to the organization's health?

  Would our stakeholders and management agree that these results are worth the resource investment?

  Should the resources be invested in a more valuable set of results?

Using Cost Models to Prioritize Needed Resources

A cost model can help you prioritize resources by determining the relative cost effectiveness of your tactics. First, you must identify as many costs as possible. Example 8.2 lists various cost categories and potential sources of cost information. Cost information is best compiled using spreadsheet software (such as Excel or any other financial worksheet) so that the calculations can be updated easily as information changes.

This worksheet can be divided into three major categories: (1) the fixed costs (building space, utilities, insurance, taxes, fees and charges), (2) the variable costs (professional fees, inventory, shipping, commissions, advertising, accounting, purchasing), and (3) the benefits (human, customers, processes, business and financial). There also may be one-time special costs, such as hardware acquisition or software package acquisition, that should be identified.

WORKSHEET 8.1

Prioritizing Tactics and Resources by Expected Results

 

Instructions: List each of your tactics in column 1 and, in column 2, identify the resources needed to support each tactic. In column 3, list the results you expect to realize when each tactic is implemented. Be realistic! Finally, in column 4, rank the importance of each tactic's results (all of the results as a package) to the organization. Rank them on a five-point scale (5 = very important, 3 = somewhat important, and 1 = very unimportant). Two examples are offered here as illustration.

EXAMPLE 8.2

Sample Worksheet for Identifying Tactic Costs and Benefits by Month

When you've gathered the cost information, you'll need to build a budget for your chosen tactics. Example 8.2 illustrates such a budget, and it forecasts when a tactic will result in some sort of savings (the benefits to be realized for the costs invested). For example, note the payroll line in example 8.2. In the first few months, payroll is under $35,000. As the product comes closer to its launch, more resources and more overtime are necessary to meet deadlines (months 5–8). Another example is in inventory costs. No expenses occur until prelaunch in month 4, and then restocking occurs in months 7 and 8. You also may want to break out the costs by tactic or provide costs for each tactic with a running total for the overall strategic plan so that the investment in the tactic is clear. When you have completed this work, you'll have an estimate of the start-up costs for each tactic. It's very important to identify and estimate the costs of each tactic for at least six to 12 months. For some tactics you might even have a two- or three-year model. When you've plotted the costs and discovered if any costs are optional, you have a sound start-up budget.

You may need to consult specific cost-model worksheets to identify such costs as a person-month calculation for software development. (A model called COCOMO is sometimes used for this purpose. For additional information and examples of cost models, a good Website to visit is www.softstarsystems.com.) Or perhaps a group of resources must be moved from one location to another for a specific period of time—for example, to launch a new store or work on a specific product. In that case, you may need to use a cost-of-living calculator to identify wage adjustments, cost-of-living comparisons, moving costs calculations, and even a salary calculator. If you start doing business in a new country and need to project the costs in a different currency, then you'll need a universal currency converter. There are also specific cost models for particular industry needs, such as purchasing, advertising and marketing, and human resource development. An Internet search can be very helpful in identifying online models to use for your initial estimates.

Another cost that is sometimes difficult to quantify is human resource allocation. Example 8.3 illustrates a worksheet to help you identify and justify the human resources needed to implement your tactics and, ultimately, your strategic plan. This worksheet describes the additional specialized resources you need to implement your tactics, asks you to explain how the additional resources will contribute to the success of the plan, and gives space to note the number or amount of resources you have on hand or can borrow and the number or amount you have to find.

EXAMPLE 8.3

Sample Worksheet for Identifying the Human Resources Needed to Implement Tasks (Additional Workforce Needs)

The example indicates if an increase of full-time equivalents will be needed, and where you will need those resources—and that provides for better resource planning and prioritization. You should create and complete a similar worksheet for each tactic.

Presenting to your stakeholders and, perhaps, executives the information contained in worksheets you model after the worksheets illustrated in examples 8.2 and 8.3 should trigger spirited discussions about the proposed investment and the expected results. If costs are of concern or if the tactic is considered a high-ticket item, you may want to combine the results-based prioritization with the cost-based prioritization to create a cost analysis (see tool 8.2 for a description of the seven steps needed to complete a cost analysis).

Another way to help executives and others understand the value of a tactic is to calculate the return-on-investment (ROI)—the benefits that the tactic will pay. Using the information you already have gathered, here's a basic three-step process that can illustrate the tactic's pay-off to the organization:

1. Calculate the value of the tactic's benefits. If a tactic will provide specific benefits, identify the monetary value those benefits will yield. (You can use the information you gathered for your cost-benefit analysis, as illustrated in example 8.2.)

2. Determine the total cost of the tactic. Using the same information, identify the total costs (fixed, variable, and one-time), and calculate the monetary value.

3. Compute the tactic's ROI.

Here's an example of an ROI calculation:

TOOL 8.2

Cost Analysis Process

Description of Process Step	Desired Results
1—Identify the business and performance need that you are trying to meet. Identify what the business result of the tactic will be (see tool 8.1 and worksheet 8.1).	Identification of the factors, performance indicators, and changes you wish to effect
	Identification of the benefit the tactic will provide
2—Consider alternatives. Present information on different alternatives or methods. Would it be more practical to do it one way or another?	Comparison of the alternatives or different tactics you are considering
3—Use budgeted, estimated, or actual costs known to date to identify tactic costs (see examples 8.2 and 8.3).	Identification of all probable costs
4—Identify the benefits and potential value of each benefit to the organization (for example, increasing sales by 3 percent would generate $100,500 in revenue for the organization).	For a cost-benefit analysis, a listing of all the dollar costs and all the benefits
5—Finalize the costs and values. Review the costs and benefits with the stakeholders and gain agreement.	Final list of the costs or cost forecasts to date
6—Compare the costs against the benefits.	Determination if any potential costs (or cost savings) or benefits have been missed (for example, the plan should specify that a cost for equipment does not need to be incurred because the equipment was funded by a previous project in the past year)
7—Create a summary of the data gathered in this process, and gain agreement on the tactic.	Final list of costs and benefits that can be reviewed during the implementation of the tactic to ensure that your group is on track

Source: Adapted from S. Barksdale and & T. Lund, “Justifying the Cost of an EPSS,” Technical Training 8(7): 16–20.

Using calculations based on your cost-benefit worksheet, add the monetary value of the benefits and subtract the tactic's fixed and variable costs. You would then divide the total by the fixed costs and multiply the quotient by 100. This number represents a percentage of ROI. Anything over 100 percent is a “value-add” to the organization. Anything less than 100 percent means the tactic won't add monetary value to the organization (although there may be nonmonetary reasons to pursue the tactic, such as regulatory requirements, company philosophy, or other value that can't be quantified in financial terms).

The worksheets that prioritize costs and results can be powerful tools for selling your tactics to stakeholders, executives, managers, and others inside and outside of your organization. However, as Electronics Plus realized in the second case example, you also can prioritize resources and gain commitment by aligning your tactics with the business objectives, strategic initiatives, and business drivers.

Providing this information to your stakeholders and executive management indicates the amount of thought and analysis that went into identifying the expenses. This is a positive indicator that an equal amount of expense monitoring and managing will go into implementing the tactics. This type of information is extremely useful to executives because it equips them to make better and more informed decisions.

When you've established your tactics and prioritized the resources you need, you're ready to start documenting and communicating your strategy. In letting stakeholders know about the plan, you may want to give them the tools you used in this step to demonstrate your thought process and to link your plans explicitly to the business.