Effective Prioritization & ZBBEffective Prioritization & ZBBCourse Code: EUR 030311Course Code: EUR 030311Finance Development WeekFinance Development WeekOctober 16-20, 2006October 16-20, 2006J. ZuidemaJ. ZuidemaRev. 1.0, Oct 2006Rev. 1.0, Oct 2006
2Course ObjectivesCourse Objectives1. Better understand how to apply ZBB conceptsand prioritize activities in a highly challengingcorporate environment.2. Create an action plan to apply these conceptsfor yourself and/or your team.
3What 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 bejustified each new period, as opposed to only explaining theamounts requested in excess of the previous periodsfunding.• For example, if an organization used ZBB, each departmentwould have to justify its funding every year. That is,funding would have a base at zero. A department wouldhave to show why its funding efficiently helps theorganization 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 bejustified each new period, as opposed to only explaining theamounts requested in excess of the previous periods funding.• For example, if an organization used ZBB, each departmentwould have to justify its funding every year. That is, fundingwould have a base at zero. A department would have to showwhy its funding efficiently helps the organization toward itsgoals.Source: investopedia.com
4Broader Terminology at Intel – ZBB is…Broader Terminology at Intel – ZBB is…• A Process: a resource management tool used at alllevels to allocate available resources to a prioritized list ofprojects. Helps managers define a realistic set ofdeliverables when the amount of work exceeds theresources available.• A Document: a list of projects and/or activities that areprioritized and allocated some level of resource (e.g.support now, postpone, delegate/reassign, or dropcompletely).
5Point 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 ofmanagement and leadership in every job.
6Exercise 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 teamrepresenting what you would like to take away fromthis course.“my (our) ZBB goal is to…”
7Why 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
8Selection 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 theurgent 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
9Generic ZBB GoalGeneric ZBB GoalMaximize business impact & contribution,within job scope, while maintaining healthycontrol over workload.Focus is on maximizing impact• Objective is to choose and execute on the highest ROI activitiesgiven finite resource budget (time, money, expertise).• Same concept as financial ZBB.
10Priority Setting ProcessPriority Setting Process
11Priority Setting ProcessPriority Setting ProcessStep 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
12Plans - iMBO’s or MBPs(Quarterly)Plans - iMBO’s or MBPs(Quarterly)Understand: (1) where the business and org are going, (2) whatneeds to be done, and (3) your capabilities to meet the needs andadd value. Find the intersection of opportunity and capability.Understand: (1) where the business and org are going, (2) whatneeds to be done, and (3) your capabilities to meet the needs andadd value. Find the intersection of opportunity and capability.Organizational Needs• Higher level business objectives• Team charter• Milestones• Expected timeframe• Inter-group dependenciesOrganizational Needs• Higher level business objectives• Team charter• Milestones• Expected timeframe• Inter-group dependenciesTeam / Individual DevelopmentSkills or capabilities needed forsuccess. Can take the form of:• Development objectives• Training & education• Career growth or stretch objectivesTeam / Individual DevelopmentSkills or capabilities needed forsuccess. Can take the form of:• Development objectives• Training & education• Career growth or stretch objectivesStep 1: Understand Org and Dept ObjectivesStep 1: Understand Org and Dept Objectives
13EB TargetsEB TargetsMissionMissionGoalsGoalsINPUTSSLRPSLRPPLANPLANPLBPPLBPObjectivesObjectivesKey ResultsKey ResultsPOR/ZBBPOR/ZBB3 – 5 Yr3 – 5 Yr1 – 3 Yr1 – 3 YrQuarterlyQuarterlyOverview of Planning at IntelOverview of Planning at IntelDELIVERABLES TIMELINE1 Yr1 YrMegatasksMegatasksiMBO’s, MBPs, etcStrategiesStrategiesWhere arewe going?How will weget there?CharterCharter
14• Analyze your “Time-Spent”: how does where you spendyour time align with value & impact to organization’sobjectives?• Start with a “zero-base”: do not automatically assumecarry-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/orotherwise made more efficient?o What processes, reports, controls, or projects could be stopped with minimalbusiness impact? Which deadlines or performance goals could be reset? Canwe 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 createthe time to do it?Step 2: Develop key deliverables that supportStep 2: Develop key deliverables that supportobjectivesobjectives ((but before you do…but before you do…))Challenge the status quoChallenge the status quo
15Step 2: Develop key deliverables thatStep 2: Develop key deliverables thatsupport objectivessupport objectives• Collect input from management, team-members, andstakeholders. Without fresh input, the group relies on inertia & carry-overs fromprevious periods. Result is misalignment, low ROI activities, and wastedeffort.• 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.
16Step 3: Prioritize key deliverablesStep 3: Prioritize key deliverables• Objective: identify the highest priority items to maximizeimpact, 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 lessresource?4. Consult with management & stakeholders throughout.Requires making difficult choicesRequires making difficult choices
17Important versus UrgentImportant versus UrgentImportanceUrgencylow highhighQ3Q4 Q2Q1Understand the tradeoffs between Q2 and Q3Understand the tradeoffs between Q2 and Q3Taken from: The Seven Habits of Highly Effective People, Stephen Covey
185 Min Break5 Min Break
19Fun ZBB Videodouble-click
20Exercise 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 prioritizationprocess? What are the consequences of NOT setting goodpriorities 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 2weeks based on steps 1-3.
21“In my 18 years at Intel, there has always been more work to do than time to do it. This is not a newproblem. Every employee has the responsibility to prioritize their work, and more importantly, level setand 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. Dont 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 maytake 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 As (ie. B priority), what can be zbbd (ie. Cpriority). Once you have a recommended priority list, review with your manager for alignment andcourse corrections. Explain your reasoning to your manager. Be open to the possibility that yourmanager may have other environmental information that may cause you to jointly decide to reprioritize adeliverable. The conversation and ultimate alignment with your manager is critical. You may also needto level set with other stakeholders on your priority recommendations. Repeat this process often until itis 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 orquality or both, upsetting stakeholders. Items that slip as a result of unconscious decision-making maynot be the right things. Im suggesting a habit which proactively identifies which deliverables should bereprioritized (or be zbbd completely) for the benefit of higher impact results, and give you back controlover your workload. Done correctly and regularly, this process will keep you and your stakeholdershappy.”Marty Menard, Intel IT Director for Platform Capability (2005, used with permission)
22Step 4: Allocate resources & draw ZBB lineStep 4: Allocate resources & draw ZBB lineKeyDeliverable PriorityResourceRequiredInterdepen-denciesConsequenceof ZBB’ingCommitDate StatusXXX A Weekly On trackYYY A Ongoing On trackZZZ A WW21 On trackABC B WW25 On track123 B EOQ At risk456 B ZBB Dropped789 C ZBB PushedPropose ZBB’ing items below the line. Escalate and get help if therePropose ZBB’ing items below the line. Escalate and get help if thereare unacceptable business consequences of ZBB’ing.are unacceptable business consequences of ZBB’ing.ZBB LineZBB Line
23Step 5:Step 5: Agree & Align with managers andAgree & Align with managers andstakeholders.stakeholders.• The ZBB process does not work without this step.• Communicate often with your stakeholders (manager,business partners, internal customers, peer functions, yourteam, 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 (yousucceed or fail together).
24Step 6:Step 6: Execute plan and make appropriateExecute plan and make appropriateadjustments.adjustments.• Focus on Execution–Plan out your quarter, week, day.–Leave some buffer time for unexpected requests.–Practice good time management – discipline yourself to workon the most important items first (vs. the easiest, etc…).• Be Flexible and Make Appropriate Adjustments–Recognize that we work in a dynamic business environment. Newitems 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
25Exercise 3Exercise 3• Group Exercise (10 min)Read the case study in your participant guide andanswer the questions.• Individual Exercise (10 min)Write down 3 actions you are going to take inthe next 2 weeks based on steps 4-6.Outline a discussion you will have with yourmanager in the next 2 weeks on your keylearning from this course and what you plan todo differently as a result.
26SummarySummary• ZBB is about maximizing your contribution and deliveringresults using all available resources.• Practicing good prioritization & ZBB is key for the success ofIntel 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!
27Additional ResourcesAdditional ResourcesIntel 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
29Dealing with New RequestsDealing with New RequestsKey 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?