Rotman Management — Spring 2017

126 / Rotman Management Spring 2017

strategy that would help to turn the bank around — even-

tually identifying two strategic priorities that they believed

would secure its future.

In a series of townhall meetings, the CEO informed

staff — Sam included — that the new strategy was based on

two priorities: 1) improve the customer experience, increas-

ing satisfaction by 20 per cent; and 2) increase efficiency by

serving 20 per cent more customers per day. The message

was crystal clear: As long as Sam and his colleagues stayed

focused and met the two strategic priorities, the bank’s

future — and their jobs — were assured.

The following day, Sam was extra motivated, after hear-

ing his CEO say that the company he cared so much about

was, basically, in his hands. He kept in mind the two strate-

gic objectives and started to serve customers as efficiently

as possible. That worked fine, until a customer started to

talk about a personal loss and the terrible situation he was

going through. He clearly wanted to talk with Sam, who was

initially pleased with the idea as it would significantly in-

crease customer satisfaction. However, after a few sec-

onds, Sam froze.

What about the second strategic objective, efficiency?

If he spent a few extra minutes talking with this custom-

er, his client-servicing rate would suffer. What should he

do? He didn’t know for certain which objective was more

important, but he had to make a decision. As did all the

other bank tellers, every single day.

The executive team thought that it had clearly com-

municated its strategic objectives, but in fact, it had cre-

ated an operational dilemma. The result: The bank’s

performance didn’t improve and many employees who

worked hard to implement the new strategy were let go.

As this example indicates, all too often, there is a gap and

lack of alignment between corporate strategic objectives

and those of different business units and departments.

To address the challenges of prioritization that I have

confronted throughout my career, I have developed a sim-

ple framework called the Hierarchy of Purpose. Following

are its five principles.

1.PURPOSE: ‘Vision’ and ‘mission’ are often used inter-

changeably, and their key differences are not well

understood. The sad result: staff don’t know what

really matters. My advice: Use the term purpose in-

stead: State the purpose of your organization and

the strategic vision supporting it. The purpose must

be crystal clear and understood by everyone. Ama-

zon’s purpose ‘to be earth’s most customer-centric

company’ is clear, compelling and eliminates any

ambiguity.

2.PRIORITIES: The number of priorities an organization

sets is revealing. If the risk appetite of the executive

team is low, they will tend to have a large number of

priorities; they don’t want to take the risk of not hav-

ing the latest technology, missing a market opportu-

nity, and so forth. On the other hand, if the executives

are risk takers, they tend to have a laser-like focus on

a very small number of priorities. They know what

matters, today and tomorrow. My advice: Define the

priorities that matter most to your organization, now

and in the future. Take the example of Amazon: Their

purpose clearly puts the customer at the centre. As

opposed to Sam, everyone working at Amazon knows

what to do when they have to make a decision.

3.PROJECTS: Nowadays, companies have a large num-

ber of projects running in parallel, mostly because

it is easier to start projects than to finish them. Very

If executives don’t clearly prioritize, middle management and em-

ployees will do so themselves, based on what they think is important.

LEGO, Amazon, IKEA and Apple are examples of

companies with a highly-developed sense of priorities.

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