Archive for February, 2011

Doing More with Less? 4 Tips to Avoid Traffic Jams

Tuesday, February 15th, 2011

When times are tough, we all want to do more with less.  But, more of what?

A recent study reported in Visions magazine takes a look at the portfolio management pain points on the minds of product development stakeholders.  The results indicate to me that companies have trouble answering the question “more of what?”

The Problem

Four of the top five reported pain points (1) were:  

  • Too many projects for available resources
  • Decisions that go back and forth
  • No consistent and transparent way to measure projects’ value
  • Not being able to drive innovation fast enough.

It seems to me that all of these problems orbit a single central issue: companies are overbooking development resources.  Too many projects create a traffic jam on the new product expressway, so unimportant projects block progress on the important ones.  Slow market response can be a vicious cycle when all your resources are already tied up on existing projects, so you can’t grab a new opportunity until it, too, is delayed to market.

Back and forth decisions can also be the result of a project traffic jam, when priorities get set by politics and the product champion with the loudest voice gets priority until another voice gets louder.

And without a consistent and transparent value yardstick for projects, priorities only get more confused.

Four things you can do

If you want to do more with less, you have to clearly understand what “more” means and avoid creating a project traffic jam.  Here are some steps to take.

  1. Set up good metrics for project value that all stakeholders support. The best value metrics won’t help control traffic if some individuals can ignore metrics to push through their pet projects.  You usually need only a few metrics to make priorities clear, and too many metrics can be confusing.  You should have just enough metrics to cover the key value dimensions–financial return, strategic alignment, risk, and time horizon.
  2. Recognize that setting priorities doesn’t mean deciding what to do, it means deciding what not to do.  Steve Jobs is reported to have said the secret to innovation is “saying no to 1000 things.” (2)  Far too often, priority exercises conclude that some projects have top priority, but you still have to make progress on all the rest.  This is weak-kneed management.  You have to put some projects in the parking lot if you want the others to move quickly down the expressway.
  3. Set up models for the financial value of time to market. These tell you, for example, that a month’s delay on a particular project costs $50,000 in lifetime profit. Although these models can be straightforward (3), most companies I know don’t use them.  I believe that stakeholders at both the top and bottom management levels are afraid of them.  Top managers are afraid that developers will use them to justify spending increases to accelerate projects.  And developers themselves are afraid that the models will be used to punish them when schedules slip.  In fact, good financial models will lead to better decisions up and down the management chain.
  4. Finally, be realistic about resource planning–you don’t make money by starting projects, only by finishing them.  Give-and-take (sometimes, push-and-shove) negotiations don’t result in realistic resource plans.  Often the engineers don’t want to push back on plans until resources are stretched to the point of real pain, and other stakeholders are only too willing to let them schedule themselves into an undeliverable project.  As a solution, I know one company that has a question on the business case summary page, asking what the team could do with 30% more resources.  If that would result in a more competitive schedule or product, the portfolio committee shouldn’t start the project until the extra resources are available.

End notes

(1) Data in this post are from PDMA Visions, March 2010 pp13-18.  The full study report is available on the Planview website.

(2) The Steve Jobs quote is from “Innovate the Steve Jobs Way,” Carmine Gailo http://learn.gotomeeting.com/forms/NA-G2MC-WP-SteveJobs-7Prin-S?ID=701000000005Ypv

 (3) A good reference for modeling the cost of delay is Developing Products in Half the Time, Preston G. Smith and Donald G. Reinertsen, John Wiley, Chapter 2