How to identify, quantify and rank improvements in your business when resources are finite

•11 min read•Pennine Pacific

Every established business has a list. Twenty things that could be better, each one legitimate, each one with somebody willing to argue for it.

The list is not the problem. The order is.

The loudest problem is rarely the most expensive one

Problems do not announce themselves in proportion to what they cost. They announce themselves in proportion to how much friction they create for whoever is nearest.

A system that irritates fifteen people daily generates constant complaint. A pricing structure that has not kept pace with the value delivered generates none, because nobody experiences it as a problem. One of those is a nuisance. The other might be the largest single number in the business.

Left to itself, an improvement programme follows volume of complaint. That is not irrational. It is just measuring the wrong thing.

Think of a road bridge. Drivers complain about potholes every week, so resurfacing gets the budget, while nobody complains about a crack in a pier they cannot see. Growth is heavier freight. The crack decides whether the bridge carries it, not the potholes.

The potholes get the complaints, the crack decides the load A road bridge on two piers. Potholes on the deck are labelled seen daily and complained about weekly. A truck labelled heavier freight, standing for growth, is driving onto the deck. One pier carries a coral hairline crack, labelled out of sight, nobody calls about it, and decides what the bridge can carry. The potholes stand for the system fifteen people complain about. The crack stands for pricing that stopped matching the value. WHAT GETS THE COMPLAINTS IS NOT WHAT CARRIES THE LOAD HEAVIER FREIGHT growth POTHOLES Seen daily. Complained about weekly. HAIRLINE CRACK Out of sight. Nobody calls about it. Decides what the bridge can carry. Potholes: the system fifteen people complain about. The crack: pricing that stopped matching the value.
Figure 1Complaint follows what people can see. The load falls on what they cannot.

Five steps, in this order

The sequence matters more than any individual step, because each one filters what the next one considers.

A triage nurse does not see the loudest cough first. They take observations, then set the order. Improvement work needs the same discipline: measure first, rank last.

Triage sets the queue by observations, not by noise Three patients in a waiting room. Patient A is loud with steady observations and is seen third. Patient B is quiet with deteriorating observations and is seen first, outlined in coral. Patient C is moderately loud with observations worth watching and is seen second. Noise is how a problem announces itself. The observations are what it is costing. THE QUEUE IS SET BY THE OBSERVATIONS, NOT THE NOISE PATIENT A NOISE OBSERVATIONS steady SEEN THIRD PATIENT B NOISE quiet OBSERVATIONS deteriorating SEEN FIRST PATIENT C NOISE OBSERVATIONS worth watching SEEN SECOND Noise is how a problem announces itself. The observations are what it is costing.
Figure 2Measure first, rank last. The quiet case with the worst observations goes to the front.
  1. Evidence. What is actually happening, established from more than one source. Not what people believe is happening, which is a different and also useful thing to know.
  2. Maturity. How well each area of the business is built, scored consistently so areas can be compared to each other rather than described in isolation.
  3. Materiality. How much of the business each weakness touches. A gap in something peripheral matters less than the same gap in something central, regardless of how bad it looks.
  4. Economic consequence. What it is costing the business. Alternatively, what it is preventing the business from reaching. This is where most lists fall apart, because it requires putting a number against things nobody has numbered.
  5. Priority. What to do first, given cost to fix, time to benefit and the risk of doing it.

Run those in a different order and the answer changes. Start with priority and you are ranking assumptions. Start with economic consequence and you will attach numbers to the wrong things, because you have not yet established what is true.

The five steps, and the two places a list can start Five numbered steps in a left to right chain: evidence, maturity, materiality, economic consequence, priority. A teal arrow beneath the first step is labelled where it has to start. A coral arrow above the fifth step is labelled where most lists start. Each step filters what the next one sees, so entering at the fifth means ranking assumptions rather than evidence. THE ORDER MATTERS MORE THAN ANY ONE STEP WHERE MOST LISTS START 1 Evidence 2 Maturity 3 Materiality 4 Economicconsequence 5 Priority WHERE IT HAS TO START Each step filters what the next one sees. Enter at five and you are ranking assumptions.
Figure 3Each step filters what the next one considers. Starting at priority means ranking assumptions rather than evidence.

Why the fourth step is where programmes usually fail

Most businesses can do steps one to three. Plenty do them well.

Step four is harder because it demands a judgement that feels uncomfortable. Putting a figure on a weakness means committing to an estimate that could be wrong, in front of people who will remember it.

The temptation is to avoid it and rank by severity instead. Severity is easier to agree on. It is also nearly useless for deciding where to spend, because a severe problem in a small area can matter less than a moderate one across the whole operation.

The way through is to use ranges rather than points, state the assumptions, then let the ranges do the sorting. A weakness worth somewhere between eighty and two hundred thousand a year outranks one worth between five and fifteen. You do not need precision to see that.

Two lists, not one

A prioritised roadmap that only lists problems is half a roadmap.

Alongside the things costing money sit the things not yet earning it. Capability already paid for. A channel with demand the business cannot currently serve. Data that would sharpen pricing if anyone used it that way.

Those belong in the same ranking, on the same basis, because they compete for the same money and the same attention. Separating them into a problems list and an opportunities list guarantees the second one never gets funded.

The test of a good roadmap

It should be possible to disagree with it specifically.

If somebody senior looks at the order and says "that should be second, not fifth", the roadmap is working, because the reasoning is visible enough to argue with. A ranking nobody can challenge is usually one where the basis was never made explicit.

The second test is whether anything was left out. A list of twenty items with no exclusions is a list that has not been prioritised. Deciding what not to do this year is most of the value.

How to rank your own list without a project

The fourth step, economic consequence, is the one that stalls lists. It stalls because people reach for precision they cannot get. Ranges remove that problem entirely.

Take your top ten items. For each, find a single number that bounds it.

Item on the listWhere the bounding number livesThe range to write down
A process people work aroundTimesheets or a job system, hours on the workaroundHours a year, times a loaded hourly cost
A system nobody trustsCount of side spreadsheets, plus who maintains themMaintenance hours, plus the delay before a figure is trusted
Errors reaching customersCredit notes in the ledger, refunds in the gatewayTwelve months of credits and refunds
Capacity sitting idleUtilisation or seat-usage reportsUnused capacity, at your own charge-out rate
Demand you turn awayCRM opportunities marked lost on capacity groundsValue declined in a year
A supplier or licence nobody defendsSupplier ledger, sorted by recurring spendThe annual charge, as a floor

Write the range, not the number. Eighty to two hundred thousand a year beats a confident 140. The width of the range is itself information: a wide one means the finding is real while the sizing is not yet trustworthy, which changes how much you should commit to it.

Then sort by the bottom of each range. Sorting by the top rewards whoever was most optimistic. Sorting by the floor gives you the order you can defend in a room.

Could you rank your own list right now?

Most businesses can produce the list of twenty things. Ordering it by what each is actually worth is a different exercise. It decides whether the next year of effort lands where it should.

If your current list is ordered by who asked most recently or by what is easiest to start, that ordering is worth knowing before the budget is committed.

The Free Health Check gives you a rough sense of where the weight sits, in about three minutes. If you want the list properly evidenced and sequenced, that is what a diagnostic delivers.

Where this applies to you

The Free Health Check scores your business across six operating areas in about three minutes, or read how the independent diagnostic works.

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