Note: This article is updated at What are You Optimizing?
This is such a fundamental question. It has an enormous impact on your product design and how you structure your product life cycle.
For example, are you optimizing time? ... money? ... impact? ... innovation? ... resource utilization? If you don't answer this question first, it's very easy to pick the wrong hammer for your screws.
A few things I use to help me figure out what to optimize are I figure out my objectives, I figure out my constraints, and I look for my possible high ROI paths. I always want more out of what I do. The trick is to know when doing more, gets you less. Your objectives keep you grounded along the way.
What I like about this question is it universally applies to any activity you do, including how you design your day. Are you optimizing around results, or connecting with people? Are you optimizing for enjoyment along the way or for reward in the end?