My 80/20 Rule for strategic goals won't overload your capacity

You are most likely familiar with the 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 to.  However, for the success of the strategic plan, I developed a different 80/20 rule.

My 80/20 rule states that 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 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 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 to execute 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 objectives, phase and stage to achieve your goals 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 exploring these issues can take teams off track, yet it is required to maintain clarity and confidence in the strategic direction and to provide a strong leadership focus.

Typically, the business uses nearly 100 percent of its capacity on legacy business priorities at the start of a strategic planning process. So, deciding what to offload, 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 ignores the reality of the dynamic environments we exist in today. No team can maintain its strategic focus without also planning to flex. When a leadership team fails to plan for emerging priorities, they appear unfocused or uncommitted to long-range goals when they make changes without integrating the new into the old. Their need to flex is viewed as an ability to make or stick to decisions, and productivity can suffer.  

By leaving a small percentage (20, 15, or even 10) of capacity unallocated during the resource planning or 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 failure. READ Epic Strategy Failure to learn more about the common causes of strategy failure and how to combat them.