Five Priorities Is Probably Too Many

Willie Pietersen, retired CEO of businesses Lever Foods, Seagram USA, and Tropicana has written a column for Fortune in which he argues that many leaders proclaim too many priorities.  The article is titled, "You can’t have 5 priorities—even Steve Jobs and Bob Iger couldn’t."  He writes:

During my 20 years as the CEO of various enterprises, I developed an ingrained habit. Recognizing that the core responsibility of a leader is to unify an organization behind a clear strategic direction, I followed conventional wisdom and developed five key priorities for the business, and asked each function and business unit to follow suit.  However, at progress review meetings I saw that executives were often trudging through these priorities mechanically like a project checklist, without connecting them to a central strategic thrust or inspiring story.

Pietersen cites research by Don Sull and his co-authors, in which they find that many middle managers can't recall the priorities established by the senior leadership team.  Sull and his co-authors write,

The CEO of a large technology company (let’s call it Generex) recently reviewed the results of her company’s annual employee engagement survey and was delighted that strategic alignment emerged as an area of strength.  Among the senior leaders surveyed, 97% said they had a clear understanding of the company’s priorities and how their work contributed to corporate objectives. Based on these scores, the CEO was confident that the company’s five strategic priorities — which had not changed over the past two years and which she communicated regularly — were well understood by the leaders responsible for executing them.

We then asked those same managers to list the company’s strategic priorities. Using a machine-learning algorithm and human coders, we classified their answers to assess how well their responses aligned with the official strategic priorities. The CEO was shocked at the results. Only one-quarter of the managers surveyed could list three of the company’s five strategic priorities. Even worse, one-third of the leaders charged with implementing the company’s strategy could not list even one.

These results are typical not just in the technology industry, but across a range of companies we have studied. Most organizations fall far short when it comes to strategic alignment: Our analysis of 124 organizations revealed that only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities.  

In short, creating a list of five priorities or more often leads to confusion, misunderstanding, and a lack of organizational alignment.  For me, the lesson is clear.  Leaders need to have a coherent strategic story.  What's the overall direction?  What is the firm's desired competitive position, and how is that distinct from the competition?  Then, with that coherent story established and communicated, leaders need to make clear what matters most.  Perhaps there are five important goals, but are they truly equally important? Which ones are more critical than others?  It is very difficult to answer that final question, but it must be done.  Moreover, leaders need to communicate that overall strategic perspective over and over, through multiple channels and using multiple forums and media.  Then, most importantly, leaders need to take the pulse of the organization.  They have to test whether the message got through to lower levels of the organization.  Leaders have to do that through direct conversation with those at lower levels, through both formal and informal opportunities for communication and conversation.