But what do the quadrants mean?Įach quadrant needs a category that determines the priority status for initiatives. The relative value and risk assigned to each of your initiatives should result in them being split across the 4 quadrants. The vertical axis will measure risk, with the lowest risk at the top and the highest risk at the bottom. Use the horizontal axis to delineate value, with the lowest value on the left and the highest value on the right. For example, failing to implement a business change required to meet legislative compliance requirements can be a significant risk to the organization’s licence to operate.ģ steps to build a 2×2 Prioritization Matrix Step 1: Draw Your 2×2 Prioritization Matrixĭivide your page or slide into 4 equal quadrants. At the initial planning stage, this will probably be your best guestimate, as you are unlikely to have a good understanding of the complexity, effort or cost early on.īusiness risk takes into account the risk of not implementing an initiative in addition to the risks of implementing it (delivery risk). The delivery risk of an initiative assesses the potential impact of implementing it based on complexity, effort and cost. profit, revenue, margin, cashflow, funds, etc.Ĭonsider 2 questions to evaluate the risk of your initiatives: The more the initiative increases the value proposition to your customers, the higher the value.Īn initiative has more value when it positively impacts the organization’s preferred financial measures, e.g. There are too many measures of value to list, but you should start by answering these 3 questions for each initiative:Īssuming your strategic goals are right, then the initiatives most aligned with these will deliver higher value. saving lives) are very different from those of a publicly listed bank (e.g. Organizations’ value drivers vary vastly for example, the value drivers of a non-profit (e.g. The measures of an initiative’s value are usually tied to your organization’s value drivers. Just ensure that you are consistent and apply the same definition of value and risk when evaluating each initiative. The complexity of how you evaluate the value and risk of an initiative is up to you, relative to the level of sophistication and accuracy required and effort afforded. Using value and risk as the evaluation criteria is key to substantiating where initiatives should sit in the list of priorities. To use your prioritization matrix accurately, you need to determine how to define “value” and “risk”. The resulting visualization is a far more compelling tool for building consensus and identifying the initiatives that aren’t quite right. With a 2×2 matrix, you plot initiatives into one of the four quadrants by evaluating their relative value and risk. How to Build a Prioritization MatrixĪ two-by-two (2×2) prioritization matrix is an effective means of prioritizing initiatives (as well as more granular tasks and projects). While there is nothing wrong with listing your initiatives in a spreadsheet, you can easily transform your spreadsheet into something far more visual that is simpler to interpret: a 2×2 prioritization matrix. Once you have scored each initiative as high or low value and high or low risk, you will be able to prioritize them.ĭoing this process in a spreadsheet looks like this: You will need weigh up how much value and risk each initiative carries in the context of the organization achieving its strategic vision.įor example, score each item out of 4 for both risk and value, with 1 being “very high” and 4 being “low”. These initiatives are what you need to prioritize to increase efficiency and reduce waste. The first step is to list everything you need to achieve in order to realize your organization’s strategic vision. One of the best ways to gain consensus on priorities is by building a prioritization matrix. Prioritizing strategic initiatives for your function or organization is key to the efficiency and success of strategy execution. Ready to plot your projects or initiatives on a prioritization matrix?ĭownload our free prioritization matrix templates This puts your organization’s strategic vision at risk! This impatience compromises the evaluation of their initiatives’ risk and value, and results in inefficient allocation of resources. Many organizations make a common mistake: they create a list of projects or initiatives, based on a strategic vision or set of goals, and jump straight into implementation. This is why nailing your prioritization matrix is so important. When prioritization is done well, it can be the difference between a strategy’s success or failure.
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