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My 80/20 Rule for Strategy that Won’t Overflow

You are most likely familiar with a Pareto Principle which states that 80 percent of the effects come from 20 percent of the causes; this is the traditional 80/20 rule so frequently referred.  However, for strategic plan success, I have developed a different 80/20 rule.

My 80/20 rule states to set strategic goals that will last (even with today’s fast pace of change) teams must allocate only 80 percent of their capacity when finalizing a strategic plan. They need to retain ideally up to 20 percent of their capacity to address change in their market. If they do this, they provide the balance required to stay both vision-driven and market-responsive.

In last week's post, I shared the exercise we use to help teams rank and order initiatives or ideas during strategy development; read Big Rocks First or and download our exercise and use it to prioritize with your team. However, agreeing on priorities is only part of the challenge in developing plans that work. You must also prepare for executing of your priorities with the ability to respond to changing conditions without blowing up your plan. This is where my 80/20 rule comes in.

When finalizing the objectives of your plan, you must phase and stage when you plan to achieve your objectives over time while balancing three competing priorities:

  • LEGACY BUSINESS PRIORITIES: managing your existing commitments at the highest level of excellence.
  • NEW STRATEGIC PRIORITIES: building out the plans and integrating new activities in support of new initiatives and new strategic objectives.
  • EMERGING PRIORITIES: evaluating and responding to emerging issues that spring from new or changing assumptions. Even the exploration of these issues can take teams off track, yet it is required to maintain clarity and confidence in the strategic direction and to provide strong leadership focus.

Typically, the business uses close to 100 percent of its capacity on legacy business priorities at the start of a strategic planning process. So, making decisions about what to off-load, eliminate or reduce focus on should be part of your planning agenda. However, if a firm merely reallocates its capacity from legacy business priorities to new strategic priorities, it is ignoring the reality of the dynamic environments we exist in today. No team will be able to maintain its strategic focus without also planning to flex. When a leadership team fails to plan for emerging priorities, they appear unfocused or that they lacked commitment to long-range goals when change is required. Their need to flex is viewed as an ability to make or stick to decisions and productivity can suffer.  By leaving a small percentage of capacity (20, 15, or even 10) unallocated during the annual budgeting process, firms can flex to meet the demands of their market while maintaining their strategic focus.

Don’t leave making these tough decisions to the implementation phase or you will be setting your strategy up for strategy failure. READ Epic Strategy Failure to learn more about the common causes of strategy failure and how to combat them.

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Post Tags: Strategic Planning

Cecilia Lynch

WRITTEN BY:Cecilia Lynch