This article is the first part of my Building Wealth series, and I'll start by introducing the concept of prioritization and why it is so important for building wealth
What is prioritization? If you ask around, and I have, you will probably get something similar to these:
- It's doing the most important things first.
- It's doing the most urgent things first.
- It's doing the things that will generate the most impact or results.
In my opinion, all of those things are related to the concept of prioritizing, but neither translates the concept itself. As I see it, those are prioritization criteria rather than prioritization itself.
Explaining prioritization
As I see it, prioritization comes down to resource allocation. When you need to prioritize tasks, projects, investments, or whatever, you are really deciding which things will get the resources they require.
Resources can be a varied number of things such as money, people, or even time, but whatever the case is, resources are finite by nature, which is why we need to prioritize their allocation.
It makes sense to allocate the most resources to things that are either important, urgent or will generate the most impact/results, and that's precisely why I say those things are prioritization criteria. They help you choose how you will prioritize your resources, but the act of prioritizing only happens when you allocate said resources to a project, task, or whatever.
As a project manager, resource allocation is my bread and butter so let me explain how this is done in a project environment to try and make my point clear.
Let's say we're part of the resource allocation committee of a small company that has a pool of 100 resources. It can be 100 people, 100 million dollars, 100 bricks; it doesn't matter. For the sake of this example, we'll just call it resources. So, we have 100 resources that we must allocate to the projects we want to execute.
Now, imagine that we have two different projects being planned:
- Project A, which requires 80 resources
- Project B, which requires 40 resources
It's easy to see that the two projects combined will require 120 resources while we only have 100 to distribute. A simple solution, in this case, would be allocating 70 resources to Project A and 30 resources to Project B. This way, neither project gets the resources they need, but both get something to work with. This is a valid strategy, and it's done quite often.
However, let's add a level of complexity to our scenario. Our executive board told us that Project A is very strategic for the company, and it must be delivered within the defined schedule. Therefore, it has priority over any other project.
In this case, the only valid strategy would be allocating the 80 resources that Project A demands, so it has a better chance of being delivered on time and meeting all the quality criteria defined on the project plan. But what about Project B?
Well, the project manager responsible for Project B will have to carry on with the 20 resources it will get and adapt the project as needed even if it means increasing the time for completion, reducing scope, or compromising quality.
That's what prioritization is for me. Whatever you define as a priority will get all the resources it demands, and everything else will have to manage with whatever is left. It's important to stress that if we were in a scenario where our hypothetical Project A required all 100 resources, it would get it all since it has priority. Project B would either be put on hold, or other means of securing the resources it needs would have to be found.
It may not sound fair, but the reality is that in 99% of cases, there will be a resource restriction of some sort, and the person in charge of resource allocation will need to do so with reason rather than emotion.
Final thoughts
Urgency, importance, and impact are some of the criteria that can be used to prioritize a task or project but the act of prioritizing said task or project only happens when the available resources are allocated.
It's possible and very likely that the resource allocation will be uneven because resources are finite and usually very limited. That is the true meaning of prioritization.
The following article will discuss how prioritization applies to investments and why it's essential for building wealth.