1. Effective Prioritization & ZBBEffective Prioritization & ZBB
Course Code: EUR 030311Course Code: EUR 030311
Finance Development WeekFinance Development Week
October 16-20, 2006October 16-20, 2006
J. ZuidemaJ. Zuidema
Rev. 1.0, Oct 2006Rev. 1.0, Oct 2006
2. 2
Course ObjectivesCourse Objectives
1. Better understand how to apply ZBB concepts
and prioritize activities in a highly challenging
corporate environment.
2. Create an action plan to apply these concepts
for yourself and/or your team.
3. 3
What is ZBB?What is ZBB?
“ZBB” is a borrowed acronym: Zero Based Budgeting.
Common Finance practice, not specific to Intel.
• A method of budgeting in which all expenditures must be
justified each new period, as opposed to only explaining the
amounts requested in excess of the previous period's
funding.
• For example, if an organization used ZBB, each department
would have to justify its funding every year. That is,
funding would have a base at zero. A department would
have to show why its funding efficiently helps the
organization toward its goals.
Source: investopedia.com
“ZBB” is a borrowed acronym: Zero Based Budgeting.
Common Finance practice, not specific to Intel.
• A method of budgeting in which all expenditures must be
justified each new period, as opposed to only explaining the
amounts requested in excess of the previous period's funding.
• For example, if an organization used ZBB, each department
would have to justify its funding every year. That is, funding
would have a base at zero. A department would have to show
why its funding efficiently helps the organization toward its
goals.
Source: investopedia.com
4. 4
Broader Terminology at Intel – ZBB is…Broader Terminology at Intel – ZBB is…
• A Process: a resource management tool used at all
levels to allocate available resources to a prioritized list of
projects. Helps managers define a realistic set of
deliverables when the amount of work exceeds the
resources available.
• A Document: a list of projects and/or activities that are
prioritized and allocated some level of resource (e.g.
support now, postpone, delegate/reassign, or drop
completely).
5. 5
Point to PonderPoint to Ponder
• “Management is doing things right;
Leadership is doing the right things.”
- Peter Drucker and Warren Bennis
• From this perspective, there are elements of
management and leadership in every job.
6. 6
Exercise 1Exercise 1
• Group Exercise (10 min)
Brainstorm and discuss the following questions.
– Why is ZBB important?
– Why is ZBB so difficult?
• Individual Exercise (5 min)
– Construct a 1 sentence goal for you or your team
representing what you would like to take away from
this course.
“my (our) ZBB goal is to…”
7. 7
Why is ZBB important?Why is ZBB important?
Without ZBB…
• Inefficient overall use of time and resources
– Focus on process vs. results
– Focus on what we have always done or things w/in comfort zone
– “Tyranny of the Urgent” & excessive fire-fighting
• Lack of alignment with managers and stakeholders
– Dropped balls with managers and subordinates.
– Suboptimal business partnering.
• If you are a manager…
– Poor performance and morale of the team.
– Inefficiencies are multiplied over many people.
• More difficult to succeed at Focal.
Suboptimal performance and resultsSuboptimal performance and results
8. 8
Selection of common responses…
• Difficult to determine the “critical few” vs. “nice-to-haves.”
• Poor direction from management on key focus areas.
• Management changes priorities and adds work to the pile.
• Managers do not take any work away.
• Biz partners make additional requests w/ short deadlines.
• Negotiating with managers and stakeholders is stressful.
• Managers and stakeholders don’t like being “ZBB’d.”
• Cannot get to the really important things – too busy with the
urgent process deadlines.
• Everything is “urgent.”
• Meetings, meetings, meetings…
Why is ZBB difficult?Why is ZBB difficult?
Lots of moving parts and constant changeLots of moving parts and constant change
9. 9
Generic ZBB GoalGeneric ZBB Goal
Maximize business impact & contribution,
within job scope, while maintaining healthy
control over workload.
Focus is on maximizing impact
• Objective is to choose and execute on the highest ROI activities
given finite resource budget (time, money, expertise).
• Same concept as financial ZBB.
11. 11
Priority Setting ProcessPriority Setting Process
Step 1: Understand organizational and dept objectives.
Step 2: Develop key deliverables that support objectives.
Step 3: Prioritize key deliverables.
Step 4: Allocate resources and draw ZBB line.
Step 5: Agree & Align with managers and stakeholders.
Step 6: Execute to plan and make appropriate adjustments.
CommunicateThroughout
12. 12
Plans - iMBO’s or MBPs
(Quarterly)
Plans - iMBO’s or MBPs
(Quarterly)
Understand: (1) where the business and org are going, (2) what
needs to be done, and (3) your capabilities to meet the needs and
add value. Find the intersection of opportunity and capability.
Understand: (1) where the business and org are going, (2) what
needs to be done, and (3) your capabilities to meet the needs and
add value. Find the intersection of opportunity and capability.
Organizational Needs
• Higher level business objectives
• Team charter
• Milestones
• Expected timeframe
• Inter-group dependencies
Organizational Needs
• Higher level business objectives
• Team charter
• Milestones
• Expected timeframe
• Inter-group dependencies
Team / Individual Development
Skills or capabilities needed for
success. Can take the form of:
• Development objectives
• Training & education
• Career growth or stretch objectives
Team / Individual Development
Skills or capabilities needed for
success. Can take the form of:
• Development objectives
• Training & education
• Career growth or stretch objectives
Step 1: Understand Org and Dept ObjectivesStep 1: Understand Org and Dept Objectives
14. 14
• Analyze your “Time-Spent”: how does where you spend
your time align with value & impact to organization’s
objectives?
• Start with a “zero-base”: do not automatically assume
carry-overs from previous periods.
Look at future impact – work from previous periods is a sunk cost.
Challenge “we’ve always done it like this.” Ask the tough questions:
o What processes can be restructured, re-engineered, streamlined, and/or
otherwise made more efficient?
o What processes, reports, controls, or projects could be stopped with minimal
business impact? Which deadlines or performance goals could be reset? Can
we change the materiality level?
o Which meetings could be dropped or made less frequent?
What are we not doing that we should do, and how can we create
the time to do it?
Step 2: Develop key deliverables that supportStep 2: Develop key deliverables that support
objectivesobjectives ((but before you do…but before you do…))
Challenge the status quoChallenge the status quo
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Step 2: Develop key deliverables thatStep 2: Develop key deliverables that
support objectivessupport objectives
• Collect input from management, team-members, and
stakeholders.
Without fresh input, the group relies on inertia & carry-overs from
previous periods. Result is misalignment, low ROI activities, and wasted
effort.
• Write crisp deliverables with stated business impact.
Be “SMART”
Specific
Measurable
Achievable
Realistic
Timely
Define success metric, key result, or “AMB” (as measured by).
Follow one of the BKM iMBO templates found in M4E.
16. 16
Step 3: Prioritize key deliverablesStep 3: Prioritize key deliverables
• Objective: identify the highest priority items to maximize
impact, given scope of job and available resource.
• Key Elements of the Prioritization process:
1. Understand tradeoffs between “urgent” and “important.”
2. Use help-methods like ABC prioritization, SSM (Start, Stop,
Maintain), Pareto Principle (80:20 rule).
3. Understand value to Intel for each deliverable.
– What will happen if the item gets pushed or dropped?
– Can the deliverable be scaled back to consume less
resource?
4. Consult with management & stakeholders throughout.
Requires making difficult choicesRequires making difficult choices
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Important versus UrgentImportant versus Urgent
Importance
Urgency
low high
high
Q3
Q4 Q2
Q1
Understand the tradeoffs between Q2 and Q3Understand the tradeoffs between Q2 and Q3
Taken from: The Seven Habits of Highly Effective People, Stephen Covey
20. 20
Exercise 2Exercise 2
• Group Exercise (10 min)
1.Read the article by Marty Menard in your participant guide
– discuss in your group:
What are some of the key elements of the prioritization
process?
What are the consequences of NOT setting good
priorities up front?
2.List and share some of your own “Best Known Methods”
• Individual Exercise (5 min)
Write down 3 actions you are going to take in the next 2
weeks based on steps 1-3.
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“In my 18 years at Intel, there has always been more work to do than time to do it. This is not a new
problem. Every employee has the responsibility to prioritize their work, and more importantly, level set
and get agreement on those priorities with their managers and stakeholders on a regular basis.
“So how can you take control of your workload? Start by listing the deliverables you are working on,
and make your best judgment if they are an A, B, or C priority. Don't over-engineer the definition of A,
B, or C. The "must do" items get the “A,” things that can wait get a "C", and everything else gets a "B."
I can predict what might happen next. You will make a list, and everything will have an "A" next to it.
When this happens, make YOUR best judgment on what should wait, and reprioritize the list. This may
take a few revisions before you can come to grips with what work must we done now (i.e. A priority),
what can be done when you can’t make progress on your A's (ie. B priority), what can be zbb'd (ie. C
priority). Once you have a recommended priority list, review with your manager for alignment and
course corrections. Explain your reasoning to your manager. Be open to the possibility that your
manager may have other environmental information that may cause you to jointly decide to reprioritize a
deliverable. The conversation and ultimate alignment with your manager is critical. You may also need
to level set with other stakeholders on your priority recommendations. Repeat this process often until it
is a habit. The frequency will vary with your role. In some cases weekly priority setting is appropriate,
in other cases, monthly is sufficient.
“What are the consequences if you don’t take control of your workload and set individual priorities?
Priority decisions will get made unconsciously. Inevitably, some deliverables will slip in schedule or
quality or both, upsetting stakeholders. Items that slip as a result of unconscious decision-making may
not be the right things. I'm suggesting a habit which proactively identifies which deliverables should be
reprioritized (or be zbb'd completely) for the benefit of higher impact results, and give you back control
over your workload. Done correctly and regularly, this process will keep you and your stakeholders
happy.”
Marty Menard, Intel IT Director for Platform Capability (2005, used with permission)
22. 22
Step 4: Allocate resources & draw ZBB lineStep 4: Allocate resources & draw ZBB line
Key
Deliverable Priority
Resource
Required
Interdepen-
dencies
Consequence
of ZBB’ing
Commit
Date Status
XXX A Weekly On track
YYY A Ongoing On track
ZZZ A WW21 On track
ABC B WW25 On track
123 B EOQ At risk
456 B ZBB Dropped
789 C ZBB Pushed
Propose ZBB’ing items below the line. Escalate and get help if therePropose ZBB’ing items below the line. Escalate and get help if there
are unacceptable business consequences of ZBB’ing.are unacceptable business consequences of ZBB’ing.
ZBB LineZBB Line
23. 23
Step 5:Step 5: Agree & Align with managers andAgree & Align with managers and
stakeholders.stakeholders.
• The ZBB process does not work without this step.
• Communicate often with your stakeholders (manager,
business partners, internal customers, peer functions, your
team, etc…)
• The communication process should include:
• what is “above the line” AND what you propose to ZBB
• opportunities for stakeholders to influence your ZBB
• negotiation on priorities and due dates
• escalation of any items “at risk” due to lack of resources.
• Ensure you get co-ownership with your management (you
succeed or fail together).
24. 24
Step 6:Step 6: Execute plan and make appropriateExecute plan and make appropriate
adjustments.adjustments.
• Focus on Execution
–Plan out your quarter, week, day.
–Leave some buffer time for unexpected requests.
–Practice good time management – discipline yourself to work
on the most important items first (vs. the easiest, etc…).
• Be Flexible and Make Appropriate Adjustments
–Recognize that we work in a dynamic business environment. New
items will appear and organizational priorities will change.
–Your ZBB process needs to be dynamic too.
–Regularly reprioritize: assess new requests vs. current list.
Renegotiate your ZBB list and due dates with management &
stakeholders.
You own your ZBBYou own your ZBB
25. 25
Exercise 3Exercise 3
• Group Exercise (10 min)
Read the case study in your participant guide and
answer the questions.
• Individual Exercise (10 min)
Write down 3 actions you are going to take in
the next 2 weeks based on steps 4-6.
Outline a discussion you will have with your
manager in the next 2 weeks on your key
learning from this course and what you plan to
do differently as a result.
26. 26
SummarySummary
• ZBB is about maximizing your contribution and delivering
results using all available resources.
• Practicing good prioritization & ZBB is key for the success of
Intel and your success at Intel.
• Practice the 6 step method:
1.Understand the big picture.
2.Write SMART deliverables that have clear value-add.
3.Use a proactive & methodical approach to prioritizing.
4.Allocate resources with focus on impact and quality.
5.Agree and align with managers and stakeholders.
6.Execute and adjust along the way.
• Communicate early and often.
• Take control of your own ZBB – if you don’t, nobody else will!
27. 27
Additional ResourcesAdditional Resources
Intel U Web based courses:
– Zero Based Budgeting (F17017660)
– Time & Memory Management (ECP014699)
– Maintaining Balance (WLE014817)
– Listening, Influencing, Handling Tough Situations (ECP014833)
– Negotiating to Win-Win (ECP014698)
– Working with Difficult People (ECP014696)
See Manager Connection website for additional resources:
http://mld.intel.com/managerconnection/mlt.aspx
29. 29
Dealing with New RequestsDealing with New Requests
Key QuestionsKey Questions
• Does the request add value for Intel? If not, ok to push back.
• Does this task or project support my key deliverables?
• Am I the right person or should the request be redirected?
• Is there an easier way to solve the problem?
• What is the priority of the new request?
• What trade-offs would I need to make? What would drop?
• What is a realistic deadline?
• Should I consult my manager before committing?
Editor's Notes
5/5 Also cover: Expectations and course objectives from class Ground rules of class
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1/8
1/9
15/24
4/28
4/32
2/34
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4/42 Need to factor in high level business objectives, what the team is chartered to accomplish, and what the individual needs to do to be successful Note that these inputs can be business related or specific (personal) to the employee Note: Doesn’t matter if you use MBPs or iMBOs. The point is to articulate and discuss plans on a regular basis.
2/38 This slide describes how to provide a line of sight from the individual contributor IMBOs to the Group mission and goals. The planning terms have two distinguishing characteristics 1) time horizon and 2) vision-oriented (describe a picture of where are we going) vs measure-oriented (describe how we will get there) The SLRP and PLBP are the Strategic/Vision for the organization. This is relative to the time frame you are looking at. As you get to the bottom of the slide you become more tactical and tangible deliverables (products/releases) Mission: A mission statement is a written statement of purpose that can be used to initiate, evaluate, and refine business activities. Goals : 3 – 5 year strategic goals, set during the SLRP process and reviewed as part of the PLBP process each year. Megatasks: Key tasks that need to be accomplished; a rallying cry for the organization. Owned by an organization’s executive staff and business group staff and updated annually. Serve to drive yearly EB goals, strategies and objectives, and quarterly key results . Strategies: Specific commitments a business group strives to meet within a 1 – 3 year period. Owned by business group staff, updated annually and reviewed every 6 months. Charter: A Charter is a statement of purpose or function - what we are striving to accomplish. Employee Bonus Goals: After annual planning, goals are set to help prioritize key activities necessary to meet the business direction. EB exists to motivate and reward employees by making a part of their cash compensation directly dependent on growth of corporate earnings per share and on the business’s performance to these key strategic goals. EB’s derive from the Objectives but are not exclusive to the Objectives. EB’s usually scale to the success of the organization deliverables. iMBOs (Intel Managing by Objectives) or MBP (Management by Planning): Two processes we use at Intel to document our objectives and plans.
