The Million Dollar Rule of Time Allocation

by Jul 10, 2024Advisory Groups, Delegation, Growth

Effective Time Allocation: How to Make More Time for the Things That Matter

Ever feel like your time allocation is not working, like there aren’t enough hours in the day? Now, imagine being the CEO of a growing company. It’s a constant juggle—opportunities to chase, challenges to conquer. It’s easy to get overwhelmed. But here’s a trick I’ve seen work wonders for CEOs: the Million-Dollar Rule. It’s a simple guideline that can transform how you manage your time and priorities.

Let me explain how this rule can make a huge difference in your life as a CEO.

The Origins of the Million-Dollar Rule for Time Allocation

I once worked with a CEO who was drowning in tasks. He had more than he could handle and was at a loss on where to start. That’s when we devised what we later dubbed the Million-Dollar Rule—a straightforward approach to time allocation, which helped him focus on what truly mattered.

The idea behind the Million-Dollar Rule is simple. As a CEO, you should prioritize projects and tasks that have the potential to generate at least a million dollars in profit. Why a million? Well, it’s a substantial enough figure to make a meaningful impact on most businesses, yet adaptable depending on your company’s scale and financial goals.

Time Management – Applying the Rule

Let’s break it down with an example. Imagine your company is pulling in around $5 million in annual profits. According to the Million-Dollar Rule, any project or initiative you tackle should ideally have the potential to add at least another million to your bottom line. This ensures that your efforts are focused on endeavors that significantly contribute to the company’s growth and profitability.

When we applied this rule to the overwhelmed CEO’s situation, it was like a fog lifted. Suddenly, his laundry list of tasks became clearer. He could quickly identify which projects were worth his time and which could be delegated or set aside. This clarity reduced his stress and boosted his productivity and effectiveness as a leader.

Scaling Up and Down

The beauty of the Million-Dollar Rule lies in its scalability. You can adjust the threshold accordingly if your company is a startup generating modest profits or a large corporation with substantial earnings. For instance, if your company makes $10 million in profits, you might set the bar at $2 million projects. This flexibility ensures that the time allocation rule remains applicable and effective regardless of company size or industry.

The Million Dollar Rule of Time Allocation

Balancing Risk and Reward in Time Allocation

While focusing on million-dollar projects is crucial, it’s also essential to consider the risk involved. Not every high-reward opportunity guarantees success. That’s why it’s wise to mix in lower-risk initiatives—what I like to call singles and doubles. These projects may not bring in millions but are more likely to succeed. Think of it as diversifying your portfolio of tasks to mitigate risks while pursuing growth opportunities.

Strategic Delegation

Another critical aspect of the Million-Dollar Rule is delegation. As a CEO, your time is valuable and should be reserved for tasks that align with the rules’ criteria. Anything that doesn’t meet the million-dollar mark can—and should—be immediately delegated to capable team members. This frees up your schedule, empowers your team, and fosters a culture of accountability within the organization.

Continuous Evaluation and Adaptation

What constitutes a million-dollar project can change rapidly in today’s dynamic business environment. Markets shift, technologies evolve, and new opportunities emerge. Therefore, it’s essential to continuously evaluate and adapt the Million-Dollar Rule to stay relevant and responsive. Regularly reassessing your priorities is an important part of time allocation. It ensures you’re always directing your efforts toward the most promising opportunities.

Prioritization and Time Allocation: Covering Your Compensation

Another line of thinking is delivering value far over your compensation. CEOs make good money, which creates the obligation to create a lot of value—ideally, many times your annual compensation. If you make $300,000 a year, you should be creating profit growth of 3-5 times that every year.  

Early in my career, I explained to my boss that I had gained market share in my product line and would deliver $400,000 in new profits to the company.  Against my $35,000 salary, I thought that was pretty good.  He was shocked. Shocked because no one else on the marketing team was thinking about creating value above their compensation.  As CEOs, we need to do that and encourage everyone in the company to do so!

strategic delegation and time allocation

Real-World Examples of Effective Time Allocation

Let’s delve into some real-world scenarios to illustrate the practical application of the Million-Dollar Rule:

  1. Tech Startup: A startup CEO is navigating rapid growth. With projected annual profits of $2 million, the CEO applies the rule by focusing on projects with the potential to double their profitability within a year. This strategic focus helps the startup scale efficiently without spreading resources too thin.
  2. Manufacturing Company: The CEO of a manufacturing company overseeing $50 million in annual profits sets the bar higher. Projects must promise at least $5 million in additional profits to warrant the CEO’s direct involvement. This ensures that the company’s leadership remains aligned with its ambitious growth targets.

The Million Dollar Rule of Time Allocation

Implementing the Rule in Your Organization

If you find yourself overwhelmed with a myriad of tasks and decisions, consider adopting the Million-Dollar Rule to streamline your priorities:

  1. Identify High-Impact Projects: Evaluate your current projects and initiatives based on their potential economic impact. Focus on those that align with your company’s strategic goals and financial objectives. The size starts at a million dollars but scales with the current company profits.
  2. Assess Feasibility and Risk: Gauge the feasibility of each project and assess associated risks. Balance high-reward opportunities with manageable risks to maintain a sustainable growth trajectory.
  3. Delegate Effectively: Delegate tasks that fall below the million-dollar threshold to capable team members. Empower your team to take ownership of projects while you concentrate on driving significant value for the organization.
  4. Adapt and Iterate: Regularly review and adjust the Million-Dollar Rule in response to changing market conditions and business priorities. Flexibility and agility are key to staying ahead in a competitive landscape.

Frequently Asked Time Allocation Questions

  1. What does a CEO do?
  • A CEO (Chief Executive Officer) is responsible for a company’s overall strategic direction and operational management. This includes making major corporate decisions, managing the overall operations and resources, acting as the main point of communication between the board of directors and corporate operations, and being the company’s public face.
  1. What is allocation?
  • Allocation is the process of distributing resources, such as time, money, or manpower, to various tasks or projects. Effective allocation ensures that resources are used efficiently and aligned with organizational goals.
  1. How do you align personal goals with organizational goals?
  • To align personal goals with organizational goals, it is essential to:
    1. Understand the company’s mission and vision.
    2. Set personal objectives that contribute to the achievement of these organizational goals.
    3. Regularly review and adjust personal goals to align with the company’s evolving priorities.
    4. Communicate and collaborate with team members and leadership to ensure mutual support and alignment.
  1. How to manage time?
  • Time management involves several strategies to ensure productivity and efficiency, such as:
    1. Prioritizing tasks based on their importance and urgency.
    2. Breaking down larger tasks into manageable steps.
    3. Scheduling time blocks for focused work and avoiding multitasking.
    4. Using tools and techniques like to-do lists, calendars, and time-tracking apps.
    5. Continuously evaluate and adjust how time is spent to improve efficiency.
  1. How many hours does the average CEO work?
  • The average CEO works approximately 60 hours per week, which can vary significantly depending on the industry, company size, and specific responsibilities. Many CEOs also work beyond standard office hours, including evenings and weekends, to meet the demands of their role.
  1. What is the Million Dollar Rule of Time Allocation?
  • The Million-Dollar Rule of Time Allocation is a strategy in which a CEO focuses on projects and tasks that have the potential to generate at least a million dollars in profit. This approach helps prioritize high-impact activities and ensures that the CEO’s time is dedicated to initiatives significantly contributing to the company’s growth.

Conclusion

In conclusion, the Million-Dollar Rule isn’t just a strategy—it’s a mindset shift for CEOs looking to optimize their time allocation and resources effectively. By focusing on projects with substantial economic potential, CEOs can drive tangible results and propel their organizations toward sustainable growth.

So, the next time you feel overwhelmed by the endless to-do lists and competing priorities, remember the Million-Dollar Rule. It’s not about doing more—it’s about doing what matters most. Start prioritizing like a pro, and watch your business thrive. Take everything off your list that won’t drive a million dollars in profits and shorten your list considerably.

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