You're probably doing prioritization wrong

Why most companies spend more than 50% of their time on waste

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My colleagues at Hotjar have probably heard me say the following statement at least one thousand times:

“Everyone, working on the most important things, every day”

This is my aspirational goal for how efficient I want us to be at Hotjar. We believe in a healthy work-life balance, and we demand 100% of our team - nothing more and nothing less. Yet we believe we can continue building a hyper-growth business without stretching our people too much. How you might ask? Superior prioritization.

Now let’s start by exploring some of the ways some of you are doing prioritization wrong, starting by the very obvious one:

#1 You’re not prioritizing at all

If you’re reading this, chances are you are doing some form of prioritization. I don’t think in this day and age there are any startups that don’t at least attempt to prioritize and focus on what is important. But let me tell you a story that will sound all too familiar:

You spend some time deciding on what your priorities are for the next quarter, but you’re an ambitious and hard working individual so you end with a list of around 10 “priorities”. The quarter kicks off and you start working on these priorities, but you uncover a few other problems along the way, so you start adding more things to your list. Half-way through the quarter your list of “priorities” now has 20 things on it, and you feel way too overwhelmed and you wonder if your problem is time management.

Let me start by telling you, don’t worry your time management skills are just fine - your problem is prioritization. First of all, there isn’t such a thing as 10 priorities because 10 is way too many. If everything is important then nothing is. I know some people go to the extreme of saying you need the one singular priority, but I find this to be too restrictive. What has worked well for me is a simple rule of thumb: just 3-5 things. The other thing to talk about is what to do when new things come up after you’ve set your 3-5 priorities. Mike Tyson has famously said “Everyone Has a Plan Until They Get Punched in the Mouth” - it is absolutely normal for things to change along the way and for new priorities to emerge. The most important thing is replacing priorities instead of adding priorities; in other words something needs to get off your list for something else to get on your list.

#2 You’re prioritizing based on gut-feeling vs. based on numbers

Most of us claim to be more data-driven than we really are. I’ve seen product managers for example believe themselves to be very data-driven because they spend time looking at metrics in Mixpanel or Amplitude, but when it comes to prioritization you end up with a RICE matrix that looks something like this:

I don’t have any particular problem with the RICE framework, although I don’t personally use it. The main issue that I have with this example is, how are you evaluating Reach, Impact, and Confidence?

For example Initiatives 2, 4, 5, all have a Reach of 5/5 - Does this mean they have very similar reach? or just different degrees of “very high” reach? If the latter, then it is not helpful, because when we are prioritizing we want to understand which one is “the highest” vs. trying to know which ones are roughly “very high”. Moreover, how are we evaluating reach in the first place? Is it simply our estimate based on gut feeling or is it based on actual figures we see in the data? If its based on figures we see in the data, then let’s please use these figures.

It gets worse in my opinion when we look at impact. How are we evaluating impact? Is it our impression of how valuable or important something will be? Or have we built a business case with real numbers and calculations to estimate the impact of our initiative? Many teams get bogged down by trying to be super accurate with their calculations and end up failing and reverting back to finger-in-the-air estimates. Your calculations don’t need to be accurate, they just need to be directionally correct. I always tell my team I want to understand the rough size of something more than the exact sie: Is this the size of this opportunity roughly $500,000, $1,000,000, $10,000,000, or $50,000,000? Build the muscle of doing back-of-the-napkin math to estimate impact and you’ll go a very long way.

#3 You’re not considering everything when prioritizing

When we are prioritizing most people are trying to answer this one question:

Out of all the things that I know, which ones are the most important things to work on?

But this is the wrong question. The real question is this:

What are the most important things that I should work in general?

Let me explain what I mean by this. When we are evaluating the importance of the initiatives we’re trying to prioritize, we shouldn’t just ask ourselves how do they measure up against each other, but we should also ask ourselves whether they are big enough to matter in the first place, and whether they help us achieve our goals.

For example imagine you’re trying to come up with some initiatives to generate $20 million in revenue. You also know you can only do 5-6 of these in any given year. This means that each initiative should contribute $3-$5 million in revenue. When you’re building your business cases, or reviewing the list of initiatives and ideas you have, it is not enough to just order them according to size, but you should also discard any idea that is worth less than $3-$5 million. If you end up not having enough ideas to generate the upside you’re expecting, you need to go back to the drawing board, and let me tell you it is much better finding out before you start working than finding out at the end of the year when you’re $10 million short.

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