The X Matrix for Strategy
To organize, prioritize, and track the work of an organization’s most important strategic initiatives, we use an x matrix that is specific to this purpose. This is a living document, an iterative method for focusing on top strategic priorities, deselecting less-than-critical projects, and keeping the work aligned with the resources at hand. It is separate from the way in which we consider and prioritize operational initiatives and only comes into play after the leadership team has completed its strategic development process. Figure 10.1 (see next page) shows an example. A downloadable template is available at www.createvalue.org/x-matrix.
FIGURE 10.1 X Matrix
The first time working through an x matrix is time intensive and requires a deep understanding of each breakthrough strategy, the work that will be attached to launching strategic initiatives,1 and the resources required. Each of the strategic initiatives should have an A3 or a project plan behind it, with a clear statement of the issue and current conditions so that all questions can be answered during the executive leadership’s deselection meetings.
Once the leadership team is acquainted with the x matrix layout, the decision-making filter (shown later in this chapter), and the rhythm of this work, it will focus the team on what is most important, provide a way to track initiatives, and determine which new ones to launch. Once the leadership team trusts this method, it can cut down on a lot of arguing.
Because the x matrix is information rich, it can be intimidating to look at. Here, we will break it down into sections, spiraling from the center in a clockwise motion, beginning at nine o’clock (Figure 10.2).
FIGURE 10.2 The Basic X Matrix
In the center is the basic operating unit of the x matrix: metrics, priorities, initiatives, and resources. In an x matrix for breakthrough strategies, the categories can be renamed True North, breakthrough strategies, initiatives, and resources. We describe each category in the rest of this chapter.
Figure 10.3 focuses on the True North wedge. Begin by listing the organization’s True North metrics to the left. These are the critical metrics that help you understand if you are creating and delivering value to the customer. Metrics are generally organized into categories such as quality, cost, delivery, human development and morale, customer satisfaction, and safety.
FIGURE 10.3 True North Wedge
In creating this x matrix, we seek to understand the interplay between True North and each of the other areas:
• How will the breakthrough strategies help us achieve positive movement on our True North metrics?
• Which of the initiatives most strongly support the breakthrough strategy that is aligned with True North?
• Do the required resources exist to achieve the initiative?
The brand-new breakthrough strategies are usually the most exciting topics of discussion. But we always begin with True North because these are the metrics that guide all of our work.
This chapter assumes that the organization has already undergone a recent strategic development process.2 At twelve o’clock on the x matrix is the product of that work: the list of high-level strategies that will differentiate the organization in the marketplace. None of these strategies will be incremental improvements. This is the list of must-haves that will carry your organization into the future. The goal is to have three to five breakthrough strategies each year. Figure 10.4 focuses on the breakthrough strategies wedge.
FIGURE 10.4 Breakthrough Strategies Wedge
The final line of the breakthrough strategies carries a dose of reality. This is where we list the mission critical must-haves that we call big rocks: huge projects that suck up a lot of resources without necessarily differentiating your organization. A new installation of Epic software, for instance, can cost millions of dollars and thousands of hours in training and other human activities. It is a technological upgrade, but it does not make your organization unique in the marketplace. We can also argue that a new hospital is similar: expensive and time consuming without leaping into the future.
Breakthrough strategies and big rocks alike need an A3 or project plan that defines the initiatives, each of which will go through the deselection filter and move to the three o’clock position.
The list of projects then must include—and clearly differentiate—the great leaps and the big rocks. Every project on this list is a priority, just be clear about which ones are breakthrough and which are necessary undertakings. Color-coding may be in order.
The next step is to create a list of initiatives that are necessary to support True North and the breakthrough strategies, then select which of those initiatives gets priority. Figure 10.5 illustrates the initiative categories. Before the team begins this sometimes-contentious work, we create the lens through which we will view each initiative.
FIGURE 10.5 Initiative Categories
A decision filter is one of the best time-saving, aggravation avoidance tools we can offer. Leaders who care will always argue passionately for the initiatives that, from their point of view, matter most. The decision filter is a path to settle arguments for the greater good.
Creating a decision filter for initiatives first requires that everyone on the team agrees on the meaning of each category. What is mission critical? What is important? Definitions must be shared. We propose these definitions but encourage every team to rewrite the words for themselves:
• Mission critical. Most deserving of our precious resources at this time. The results will have high impact on both True North and the chosen breakthrough strategies. These are time critical.
• Important. Will pursue now but with less emphasis than those deemed mission critical.
• Wait list. Will focus on these as soon as resources are freed up from previous categories.
• Deselected. We do not have enough information to decide, or the project falls outside the current scope.
Next, create a series of simple yes-or-no questions. The answers to these questions will lead the team to place each initiative into its proper category. Questions include:
• Do we have enough information to know its impact on True North?
• Is this strongly aligned with our True North metrics?
• Is this part of a breakthrough strategy?
• Is this an operational versus a strategic initiative?
• Is this a statutory, regulatory, or safety requirement?
• Does this initiative benefit the entire system, or is it intended for a single entity or service?
• Is this time sensitive? Do we need to start now to meet a mandated deadline?
In the example shown in Figure 10.6, you can see how each answer leads the team toward one of the four priority categories. This initiative filter is also iterative. If you find that the one you created still leaves you with 25 mission-critical initiatives, it is time to revisit and rewrite the filter. Once the filter is working for you, it is time to select the mission-critical initiatives.
FIGURE 10.6 Initiative Filter
At three o’clock in the x matrix is where the executive team earns its pay. This is where breakthrough strategies and big rocks are broken down into the component initiatives that will make them work. The executive team will then assess each initiative for its importance to the organization’s mission and divide them into three or four categories: mission critical, important, wait list, and deselected.
Mission critical includes the 5 to 10 initiatives that cannot wait. This is the work that should begin immediately. If the team believes it has 20 initiatives that cannot wait—and this 195is where most executive teams get tripped up—it is time to identify the total resources that each initiative requires, list them below, and use the deselection filter. Knowing the limits of your resources will assist you in deselecting initiatives from the mission-critical list.
For instance, each initiative will require some hours every week from the PI team, from IT, from organizational development for training, and from maintenance and facilities. Will physicians and nurses be on teams to plan or execute the initiative? How about oversight from the lead executive in that area? Figure 10.7 focuses on the resources wedge.
FIGURE 10.7 Resources Wedge
List the resources required, by function, for all projects on the x matrix. To the right of that list, note the time required, per week, for each of those functions. Resources required can be color-coded, such as:
• Red: 5 or more hours per week
• Blue: 2 to 4 hours per week
• Green: less than 2 hours per week
Additionally, we encourage people to use fill-in colors to indicate if those resources are available. If a nurse-midwife was needed on a project for at least three hours a week, for instance, but a staffing fluctuation meant that none were available, there would be a blue dot in a pink square in the “nursing” resource category for that project. This is important information as the project is considered for mission-critical status or put off for a time.
Part of the regularly scheduled work of the executive team, going forward, will be to revisit the list to update work completed in the mission critical category, review what resources are available, and move projects off the waiting list and into mission critical or important, using the selection filter.
Creating a process that executives use to hold each other responsible to accomplish what is on the x matrix is another critical part of this process. If the x matrix languishes in a computer folder and only gets pulled out once a year, all of this will have been a waste of time.
Responsibility can be created, for instance, when each executive creates a list of standard questions to ask of subordinates throughout the management ranks. Some examples include:
• What are your top three priorities?
• Where does this fall on the x matrix?
• What are you going to do next, after this is completed?
When questions that are directly related to the x matrix are part of an executive’s standard work with subordinates, the answers will help drive regular updates of the mission-critical projects.
Categories such as wait list and deselected can also provide the time to bring initiatives to greater maturity. Remember that every initiative will most likely have an active problem-solving A3 behind it. Some big rocks like Epic may have project plans that have been created by the IT team, but most other initiatives will require a regular study-and-adjust phase that is best supported by an A3. If a wait-listed initiative does not have an A3, use the time this initiative spends in waiting to create an A3. Digging deeper into the needs of the initiative will only help the executive team in its evaluation.
1. By “initiative,” we mean an activity that requires system resources such as IT, HR, finance, marketing, and so on, to accomplish. An initiative may or may not align with breakthrough strategy; if it does not it should be wait-listed, deselected, or determined to be simply work in progress.
2. See Jeff Hunter’s Patient-Centered Strategy (Catalysis, 2018) as a guide to the strategic development process.