Back in April of 2007 I wrote here about my philosophy of making three lists. I feel it’s appropriate to revisit the topic because I still see a lot of people in our industry struggle by working exceptionally long hours doing…things…stuff…random tasks without any sort of KPI or understanding of ‘why’ they are doing it.
The old article referenced above is still pretty valid, but I want to expand upon it since even after I wrote it, my philosophy has continued to evolve in ways that might help out similarly optimization-centric people focus on the right tasks.
It all starts with a vision of the future and what you want it to be. As a business owner, head of a department, and an employee, I see a company from different lenses. Keep in mind that this isn’t about job satisfaction or work life balance, which are subjects others are far more suited to write about than I, this is about financials. Here’s what I see:
- Business owner one year vision: valuation of $XX+ million (shhh)
- Department head 1 year vision: to have more than thousand concurrent clients averaging $5,000/mo
- Employee 1 year vision: to earn $X in direct commissions, $Y from our revenue team commission pool, and increase salary to $Z
An ambitious guy can dream, can’t he?
From that one year vision, I find it helpful to have a quarterly brainstorming session, to blue sky about any idea that may or may not help me achieve that vision. Examples? Sure, why not.
- Business owner brainstorming: get product X launched; solve bottleneck Y; join Illuminati.
- Department head brainstorming: streamline marketing to auto populate CRM with prospects from source A; reverse engineer best competitive email sales pitches for A/B testing; incorporate client service calls mid-project to head off potential issues before they arise; buy a digital whip to crack when sales pipeline protocol not followed.
- Employee brainstorming: become the content marketing equivalent of Christoph Cemper and always be selling; get on Y more assistive phone calls; take incriminating photos of the CEO hanging out with some chicks.
From here I would then begin the distillation process, the more quantifiable the better because it’s time for math!
In my old way of doing the three lists, I’d simply dump the various line items into buckets: increases revenue, decreases costs, and everything else. From there I’d try to rank them based on the almighty $ attached. If you’re not inclined to go nuts with analysis and are unfocused, just doing that can have huge results.
What’s my new way? So kind of you to ask.
- V = $ impact (i.e. selling a $2,000 infographic would be X = $2,000)
- W = time required in hours (i.e. an hour lunch)
- X = % probability of occurring (i.e. coin flip of 50%, verbal yes already of 80%, etc)
- Y = $ investment required (i.e. if I have to buy the $50 lunch in order get the signature)
- Z = ( (V*X) – Y)/W
Dead simple right? In that example above, if I already had a verbal which I estimate at 80% probability, the price of our handy handy static IG is $2,000, and I just have to take my friend out to lunch (which is 1 hour) to close the deal, my Z is $1550. Oversimplified I realize, but by attaching probabilities and taking into account investment costs, you’ll see that your lists skew. Let’s return to those brainstorming notes then.
1. As a business owner I can probably quantify how much revenue is attached to launching a product (I’d better or I have no business considering it), can guess what likelihood of it occurring is, and can estimate what the all-in investment is likely to be. This one is pretty obviously revenue focused, so to the first list it goes.
2. Solving a bottleneck might save some money, with a probability of whatever my assumptions behind the bottleneck support, and again associated with likely some sort of investment in labor, materials, etc. Saving money sounds like a cost issue, so that list it goes.
3. Joining the Illuminati…I just don’t know what to make of it. Will it make me money? Save me money? How much? How likely is it to occur? When in doubt, dump the item in the third list of everything else.
Since I have multiple roles in my life, I need to consider the various impacts of all of them, so I’d keep going down the list.
Streamlining marketing could be both a revenue and a cost item – in such cases, use best judgment. Reverse engineering for better pitches? Sounds like revenue. Client service calls to cut potential problems? Mmm, I could go either way but I’ll say cost. Digital whip? Damn, I have to put it on the everything else list. As an employee, upping my sales game would be a definite revenue list, as would being more available for team phone calls. Incriminating photos? Clearly revenue. 100% revenue.
The penultimate part to the exercise is to sort in descending order for your Z value, by taking into account the probability of things occurring, the investment costs, and (most importantly) how much time is required, one can see just how valuable it is to do some of the more overlooked tasks. Picking up the phone isn’t sexy; e-mailing someone in your network and asking for their business isn’t sexy; I am not sexy. But all three work.
Since I got to use the word penultimate, I can now say the final piece is to take the list and build out your work week. Do this every Friday before you leave the office! My personal preference is to take whatever is my top Z value item and attempt to accomplish it, plus chip away at some of the top V items, since they may have a longer term focus, and then just take an honest approach to hitting the list in order as best I can, dealing with the various fires that happen to pop up.
Occasionally, since pushing 90 hour weeks will result in a bit of burn out, it can be helpful to throw one of the ‘everything else’ tasks on your plate…just don’t overload yourself with them because if you don’t have a Z value that corresponds to some sort of useful KPI, well…the Illuminati aren’t going to be getting back to you and you might want to update your resume.
P.S. Writing this was on my list. Comment below on which one you think it is. The first person to guess and guess what the Z value was, I’ll make a He-Dad vine video for.